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Board of Governors of the Federal Reserve System.
Final rule.
The Board of Governors of the Federal Reserve System (Board) is publishing a final rule amending the requirements relating to operational risk management in the Board's Regulation HH, which applies to certain financial market utilities (FMUs) that have been designated as systemically important (designated FMUs) by the Financial Stability Oversight Council (FSOC) under Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or Act). The amendments update, refine, and add specificity to the operational risk management requirements in Regulation HH to reflect changes in the operational risk, technology, and regulatory landscape in which designated FMUs operate. The final rule also adopts specific incident-notification requirements.
Emily Caron, Assistant Director (202-452-5261) or Katherine Standbridge, Senior Financial Institution and Policy Analyst (202-452-3873), Division of Reserve Bank Operations and Payment Systems; or Corinne Milliken Van Ness, Senior Counsel (202-452-2421) or M. Benjamin Snodgrass, Senior Counsel (202-263-4877), Legal Division. For users of TTY-TRS, please call 711 from any telephone, anywhere in the United States.
Title VIII of the Dodd-Frank Act, titled the “Payment, Clearing, and Settlement Supervision Act of 2010,” was enacted to mitigate systemic risk in the financial system and to promote financial stability, in part, through an enhanced supervisory framework for designated FMUs. Section 803(6) of the Act defines an FMU as a “person that manages or operates a multilateral system for the purpose of transferring, clearing, or settling payments, securities, or other financial transactions among financial institutions or between financial institutions and the person.”
The Board adopted Regulation HH, Designated Financial Market Utilities, in July 2012 to implement, among other things, the statutory provisions under section 805(a)(1)(A) of the Act.
In October 2022, the Board published for comment a notice of proposed rulemaking (NPRM) to amend the requirements relating to operational risk management in Regulation HH. The Board proposed to update, refine, and add specificity to the operational risk management requirements in Regulation HH. The proposed amendments reflected changes in the operational risk, technology, and regulatory landscape in which designated FMUs operate since the Board last amended Regulation HH in 2014. The Board also proposed to adopt specific incident-notification requirements.
FMUs provide essential infrastructure to clear and settle payments and other financial transactions. Financial institutions, including banking organizations, participate in FMU arrangements pursuant to a common set of rules and procedures, technical infrastructure, and risk-management framework.
If a systemically important FMU fails to perform as expected or fails to effectively measure, monitor, and manage its risks, it could pose significant risk to its participants and the financial system more broadly. For example, the inability of an FMU to complete settlement on time could create credit or liquidity problems for its participants or other FMUs. An FMU, therefore, should have a robust risk-management framework, including appropriate policies and procedures to measure, monitor, and manage the range of risks that arise in or are borne by the FMU.
In recognition of the criticality of FMUs to the stability of the financial system, Title VIII of the Dodd-Frank Act established a framework for enhanced supervision of certain FMUs. Section 804 of the Act states that the FSOC shall designate those FMUs that it determines are, or are likely to become, systemically important. Such a designation by the FSOC makes an FMU subject to the supervisory framework set out in Title VIII of the Act.
Section 805(a)(1)(A) of the Act requires the Board to prescribe risk-management standards governing the operations related to payment, clearing, and settlement activities of designated
A designated FMU is subject to examination by the federal agency that has primary jurisdiction over the FMU under federal banking, securities, or commodity futures laws (the “Supervisory Agency”).
Section 234.3 of Regulation HH includes a set of 23 risk-management standards addressing governance, transparency, and the various risks that can arise in connection with a designated FMU's payment, clearing, and settlement activities, including legal, financial, and operational risks. These standards are based on and generally consistent with the PFMI. The Regulation HH standards generally employ a flexible, principles-based approach. In several cases, however, the Board adopted specific minimum requirements that a designated FMU must meet in order to achieve the overall objective of a particular standard.
Section 234.3(a)(17) of Regulation HH, as amended in 2014, requires that a designated FMU manage its operational risks by establishing a robust operational risk-management framework that is approved by its board of directors.
Although the term “operational risk” is not defined in current Regulation HH, when the Board proposed amendments to § 234.3(a)(17) in 2014, it described operational risk as the risk that deficiencies in information systems, internal processes, and personnel or disruptions from external events will result in the deterioration or breakdown of services provided by an FMU.
Importantly, the Board believes that effective operational risk management, in combination with sound governance arrangements and effective management of general business risk (including the risk of losses from operational events), promotes operational resilience, which refers to the ability of an FMU to: (1) maintain essential operational capabilities under adverse conditions or stress, even if in a degraded or debilitated state; and (2) recover to effective operational capability in a time frame consistent with the provision of critical services.
When the Board proposed amendments to Regulation HH's risk-management standards in 2014, the Board recognized that there was ongoing work and discussion domestically and internationally on developing operational risk-management standards and guidance and planning for business continuity with respect to cybersecurity and responses to cyberattacks.
More recently, new challenges to operational risk management have emerged, including a global pandemic and severe weather events. In addition, certain types of cyberattacks that were once thought to be extreme or “tail-risk” events, like attacks on the supply chain and ransomware attacks, have become more prevalent. Technology solutions for the mitigation and management of various operational risks have also advanced since 2014, including the development of new technologies that have the potential to improve the resilience of designated FMUs. Finally, the legal, regulatory, and supervisory landscape in which designated FMUs operate has evolved to reflect these changes in the broader operational risk environment. For example, in July 2021, the Board, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) proposed guidance for banking organizations on managing risks associated with third-party relationships.
The Board proposed to amend the operational risk management standard to reflect changes in the operational risk and threat landscape, as well as to reflect developments in designated FMUs' operations and technology usage since the Board last amended Regulation HH in 2014. The proposed amendments focused on four areas: (1) review and testing, (2) incident management and notification, (3) business continuity management and planning, and (4) third-party risk management. The Board also proposed several technical or clarifying revisions throughout §§ 234.2 and 234.3(a).
The Board received six public comment letters. Two letters were from entities that operate designated FMUs, one letter was from a non-profit organization, and three letters were from individuals. The Board considered each of these comments as well as subsequent staff analysis in developing the final rule. The Board is adopting the proposed rule text with modifications to certain sections, as discussed below.
Commenters were generally supportive of the proposed amendments. Of the three substantive comments received, one commenter expressed support for the amendments as proposed. Two commenters, while expressing support for the overall proposal, raised concerns that aspects of the proposal were broader than necessary. These commenters suggested additional clarifications to and refinements in the scope of the proposed amendments. Both of these commenters raised concerns that amendments to Regulation HH should permit a designated FMU to apply a risk-based and proportionate approach to operational risk management. This comment was made both generally and with respect to specific aspects of the review and testing, business continuity management and planning, and third-party risk management sections of the proposed amendments. The Board generally understands a “risk-based and proportionate approach” as an approach whereby entities identify, assess, and understand the risks to which they are exposed and take measures commensurate with those risks.
The final rule does not expressly specify that designated FMUs may use a risk-based and proportionate approach to comply with the amended operational risk management standard. The Board believes that it is unnecessary to do so. Designated FMUs currently use risk-based and proportionate approaches to manage operational risk, as the Board generally has implemented principles-based requirements in Regulation HH. The proposed amendments were not intended to affect designated FMUs' ability to continue to use risk-based and proportionate approaches where appropriate. Furthermore, other parts of Regulation HH's risk-management standards, such as the framework for the comprehensive management of risks found in § 234.3(a)(3), do not expressly specify a risk-based and proportionate approach. Thus, adding such language to the operational risk management standard could result in a difference in drafting not driven by a difference in intended meaning.
The Board has, however, amended certain aspects of the proposal to incorporate several specific concerns raised by the commenters. These concerns and the Board's response are described in the sections that follow.
In the NPRM, the Board proposed an effective and compliance date of 60 days from the date the final rule was published in the
The Board is adopting the final rule with an effective date of April 15, 2024. Designated FMUs are expected to comply with the requirements of the final rule no later than September 11, 2024, with the exception of the requirement to establish a documented framework for incident management, set forth in in § 234.3(a)(17)(vi). Designated FMUs are expected to comply with § 234.3(a)(17)(vi) no later than June 13, 2024. Designated FMUs are encouraged, however, to comply with the provisions as soon as possible.
After consideration of the public comments as well as internal analysis, the Board is providing additional time to allow sufficient time for designated FMUs to review their existing policies, procedures, practices, and contracts against the requirements of the final rule and to minimize burden on designated FMUs and the markets they serve. However, the Board adopted an earlier compliance date for the requirement to establish a documented framework for incident management, set forth in § 234.3(a)(17)(vi). The Board believes that designated FMUs can leverage existing practices for incident management and notification and that an earlier compliance date balances the need for prompt conformance with § 234.3(a)(17)(vi), which the Board considers of critical importance to both the Board and designated FMUs' participants and other stakeholders, with the overall burden on designated FMUs.
Section 234.3(a)(17)(i) of Regulation HH requires designated FMUs to identify the plausible sources of operational risk, both internal and external, and mitigate their impact through the use of appropriate systems, policies, procedures, and controls that are reviewed, audited, and tested periodically and after major changes. This general review and testing requirement applies broadly to the systems, policies, procedures, and controls that the designated FMU develops to mitigate sources of operational risk. The Board proposed to amend § 234.3(a)(17)(i) to provide more specificity regarding its expectations around testing, review, and remediation. Just as the current general review and testing requirement in § 234.3(a)(17)(i) applies broadly to a designated FMU's systems, policies, procedures, and controls, the proposed amendments would also apply broadly to the systems, policies, procedures, and controls developed to mitigate the impact of the designated FMU's sources of operational risk.
Specifically, proposed § 234.3(a)(17)(i)(A) and (B) set forth the Board's expectations regarding review and testing. In § 234.3(a)(17)(i)(A)(
In § 234.3(a)(17)(i)(B), the Board proposed to require a designated FMU to conduct a review of the design, implementation, and testing of systems, policies, procedures, and controls after the designated FMU experienced any material operational incidents (which are discussed in section III.C.1 below). The Board also proposed in § 234.3(a)(17)(i)(B) to require a designated FMU to review the design, implementation, and testing of systems, policies, procedures, and controls after significant changes to the environment in which it operates.
Finally, the Board proposed in § 234.3(a)(17)(i)(C) to require a designated FMU to remediate, as soon as possible and following established governance processes, any deficiencies identified during tests and reviews.
One commenter welcomed the additional clarity provided by the proposed amendments to § 234.3(a)(17)(i) generally, and another commenter appreciated the proposal's testing and review expectations. Two commenters suggested that all of § 234.3(a)(17)(i), including paragraphs (a)(17)(i)(A), (B), and (C), be amended to expressly contemplate the designated FMU taking a risk-based approach to testing, review, and remediation activities.
Commenters did not suggest other revisions to proposed § 234.3(a)(17)(i)(A). With respect to the proposed review requirements set out in § 234.3(a)(17)(i)(B), two commenters raised a concern that the proposed language could be interpreted to require a designated FMU to review
One commenter further suggested that, in the case of significant changes to the environment, § 234.3(a)(17)(i)(B) require a review only when the change is reasonably likely to create operational risk. The commenter noted such an approach would avoid reviews when there are changes to the environment that do not reasonably create operational risk.
The Board is adopting proposed § 234.3(a)(17)(i)(A) and (B) with certain revisions based on internal analysis and public comments.
Consistent with the preamble to the proposed rule, the Board has clarified in § 234.3(a)(17)(i)(A)(
The Board has adopted two amendments to proposed § 234.3(a)(17)(i)(B). First, the Board has modified the rule text in § 234.3(a)(17)(i)(B) to reflect that a designated FMU's review of design, implementation, and testing after material operational incidents or after changes to the environment in which the designated FMU operates applies only to
Second, consistent with statements in the preamble to the NPRM and in response to comments, the Board has clarified that § 234.3(a)(17)(i)(B) requires designated FMUs to conduct reviews when a change to the environment in which the designated FMU operates could significantly affect the plausible sources or mitigants of operational risk.
For the reasons described in section III.A,
Similar to the comments on the testing and review requirements, two commenters suggested that the rule text clarify that a designated FMU may take a risk-based approach to the remediation process. One commenter specifically recommended that the rule allow a designated FMU to remediate or mitigate an identified deficiency in a manner that is consistent with the designated FMU's risk appetite. As part of a risk-based approach, one commenter suggested that a designated FMU should be able to accept the risks associated with certain deficiencies so long as the risks are within the designated FMU's risk appetite.
One commenter noted that, while proposed § 234.3(a)(17)(i)(C) stated that a designated FMU's remediation of deficiencies in systems, policies, procedures, or controls should follow established governance processes, it was unclear if the requirement to follow governance processes referred solely to the need to validate remediation steps or if it was intended to be broader. The commenter suggested that governance processes for managing and overseeing remediation should include processes for decision making on prioritization of remediation approaches in addition to validation. One commenter noted that the proposed rule did not address expectations regarding validation of remediation steps. The commenter suggested that validation should be risk-based and proportionate to the deficiency that is being remediated.
The Board is adopting § 234.3(a)(17)(i)(C) with one modification in response to concerns raised by commenters.
The Board expects that a designated FMU will conduct an internal risk analysis of all deficiencies identified in review and testing, as required in § 234.3(a)(17)(i)(A) and (B), and use established governance processes to determine how to address and prioritize identified deficiencies in order to reduce the level of risk posed by those deficiencies.
Finally, commenters noted that proposed § 234.3(a)(17)(i)(C) did not specifically address validation but that the NPRM stated that it would be imperative for a designated FMU to perform subsequent validation to assess whether the remediation measures have addressed deficiencies without introducing vulnerabilities. The Board continues to believe that designated FMUs should assess the effectiveness and broader impact of any changes they make to remediate a deficiency.
The Board proposed in § 234.3(a)(17)(vi) to require a designated FMU to establish a documented framework for incident management that provides for the prompt detection, analysis, and escalation of an incident; appropriate procedures for addressing an incident; and incorporation of lessons learned following an incident.
Specifically, in § 234.3(a)(17)(vi) the Board proposed to require that a designated FMU's incident management framework include a plan for notification and communication of material operational incidents. This plan, among other things, would need to identify the entities that would be notified of operational incidents, including non-participants that could be affected by material operational incidents at the designated FMU. Relevant entities may also include appropriate industry information-sharing fora, such as groups that are designed to share information about cyber threats or support cyber risk management.
In § 234.3(a)(17)(vi)(A), the Board proposed to require a designated FMU to notify the Board immediately when it activated its business continuity plan or had a reasonable basis to conclude that (1) there was an actual or likely disruption, or material degradation, to any of its critical operations or services,
In § 234.3(a)(17)(vi)(B), the Board proposed to require a designated FMU to establish criteria and processes, including the appropriate methods of communication, to provide for timely communication and responsible disclosure of material operational incidents to its participants or other relevant entities that have been identified in its notification and communication plan. As proposed, this incident notification requirement would arise in two circumstances. First, under proposed § 234.3(a)(17)(vi)(B)(
One commenter broadly supported the proposal and viewed incident management and notification as the most important part of the Board's proposed amendments to Regulation HH. Two commenters did not object in concept to the requirement for a documented framework for incident management but expressed concerns with specific aspects of the proposed requirement to have a plan for notification and communication of material operational incidents. These concerns are discussed in sections III.D.2 and III.D.3,
The Board is adopting the introductory portion of § 234.3(a)(17)(vi) as proposed and, as discussed below, has adopted § 234.3(a)(17)(vi)(A) and (B) with certain modifications. In line with the all-hazards approach to operational risk management in this standard, the Board reiterates its belief that it is important for a designated FMU to be prepared to detect, address, and learn from any type of operational incident, regardless of the scenario or source of risk and the level of severity. Different types of incidents may require different levels of escalation internally or externally, and may require different strategies for containment or eradication. For example, given the increasing prevalence of cyberattacks in the financial sector, a designated FMU should plan for an incident where a participant (or another type of connected entity), rather than the designated FMU itself, is experiencing a cyberattack. In this scenario, a designated FMU should be operationally prepared to take, and should have a legal basis to take,
Two commenters expressed concerns regarding the circumstances that would trigger a notice requirement to the Board. One commenter noted that proposed § 234.3(a)(17)(vi)(A) would require a designated FMU to notify the Board any time the designated FMU activated its business continuity plan. This commenter highlighted that activation of the business continuity plan may not involve an actual disruption to the designated FMU's critical operations or services and that the proposal could result in unnecessary notifications. Two commenters indicated concern with the words “likely” in proposed § 234.3(a)(17)(vi)(A)(
These commenters suggested a number of specific revisions to the proposal. One suggested limiting notification to the Board to actual disruptions or material degradations. Another suggested limiting notifications of an unauthorized entry, or the potential for unauthorized entry, to situations which could result in a serious detriment to participants or other relevant entities, and more generally suggested granting more discretion for a designated FMU to determine appropriate circumstances for notice based on the probability and severity of an event.
One commenter supported the requirement to provide “immediate” notification to the Board and affected parties. Two commenters requested clarification of the term “immediately” as used regarding notification of material operational incidents in proposed § 234.3(a)(17)(vi)(A) and (a)(17)(vi)(B)(
Finally, two commenters responded to a question in the NPRM regarding the process by which a designated FMU should provide notice to the Board. These commenters suggested that notices be provided to the team responsible for ongoing supervision of the designated FMU. One of the commenters noted that a designated FMU's supervisory team would likely continue to expect notice regardless of whether a designated FMU was required to notify a central point of contact. One of the commenters also suggested that the Board specify contacts and provide a method for delivering notices outside of business hours.
The Board is adopting § 234.3(a)(17)(vi)(A) as proposed, with two revisions that respond to comments received. First, as proposed, § 234.3(a)(17)(vi)(A)(
Second, the Board has clarified that a designated FMU must notify the Board of incidents “in accordance with the process established by the Board.” The Board will provide actual notice of this process to affected designated FMUs.
Other than with respect to these revisions, the Board has adopted § 234.3(a)(17)(vi)(A) as proposed. Given the large volume and value of payment, clearing, and settlement activity processed by designated FMUs and their interconnectedness with financial institutions and markets, material operational issues occurring at designated FMUs could have financial stability implications. Therefore, the Board continues to believe that it is critical for the Board to be notified immediately of these types of issues.
Except as described above, the Board continues to believe that notification is appropriate when a designated FMU has a reasonable basis to conclude that there is (1) an actual
For the same reasons, the Board does not believe it is appropriate to limit notice to the Board with respect to unauthorized entries, or vulnerabilities that could allow unauthorized entry, to situations that could result in a serious detriment to participants or other relevant entities or to afford designated FMUs discretion to determine appropriate circumstances for notice based on the probability and severity of an event.
Similarly, the Board understands that activation of a business continuity plan does not mean an actual incident must have occurred. Activation does mean, however, that the probability of an event occurring that could adversely impact the designated FMU's continued operations was high enough to meet the threshold for the designated FMU to trigger its business continuity plan.
As noted above with respect to notices required to be made to the Board, one commenter noted it was judicious and sensible to require designated FMUs to immediately notify affected participants of material operational incidents. Two commenters requested clarification of the term “immediately” as used regarding notification of material operational incidents in proposed § 234.3(a)(17)(vi)(B)(
One commenter expressed concern that the requirements under proposed § 234.3(a)(17)(vi)(B)(
The Board is adopting proposed § 234.3(a)(17)(vi)(B) with certain revisions to clarify the circumstances in which the Board expects a designated FMU to provide notice of material operational incidents to participants (including unaffected participants) and other relevant entities, consistent with the concept of “responsible disclosure,” and to respond to commenters' concerns that disclosure under proposed § 234.3(a)(17)(vi)(B) could result in false alarms to third parties, give an impression of unreliability, or desensitize parties to notifications.
With respect to § 234.3(a)(17)(vi)(B)(
When designing its communication plan, the Board would expect a designated FMU to consider the timing, content, recipients, and method of notification for a range of potential material operational incidents. In determining the scope of disclosure for a particular incident, the Board would expect a designated FMU to consider factors such as the risk-mitigation benefits arising from early warning to the financial system, the safety and soundness of the designated FMU, and any financial stability implications of disclosure.
The following is a non-exhaustive list of operational incidents that the Board would consider to be material for purposes of the final rule.
(1) A failed system upgrade or change results in widespread user outages for participants and designated FMU employees.
(2) Large-scale distributed denial of service attacks that prevent the designated FMU from receiving its participants' payment instructions.
(3) A severe weather event or other natural disaster that causes significant damage to a designated FMU's production site and disrupts core payment, clearing, or settlement processes, necessitating failover to another site during the business day.
The Board would expect examples 4-7 to trigger immediate notification to the Board, but a designated FMU would determine when and whether to notify participants and other relevant entities based on the criteria in its notification and communication plan.
(4) A severe weather event or other natural disaster that causes significant damage to a designated FMU's production site and necessitates failover to another site during the business day, but the designated FMU's core payment, clearing, or settlement processes remain available to participants.
(5) Malware on a designated FMU's network that poses an imminent threat to its critical operations or services (such as its core payment, clearing, or settlement processes, or collateral management processes), or that may require the designated FMU to disengage any compromised products or information systems that support the designated FMU's critical operations and services from internet-based network connections.
(6) A ransom malware attack that encrypts a critical system or backup data.
(7) A zero-day vulnerability on software that the designated FMU uses and has determined, if exploited, could lead to a disruption to or material degradation of its critical operations or services.
Section 234.3(a)(17)(vi) of the current rule (under the proposal, renumbered as § 234.3(a)(17)(vii)) requires that a designated FMU have business continuity management that provides for rapid recovery and timely resumption of its critical operations and fulfillment of its obligations, including in the event of a wide-scale or major disruption.
Specifically, the Board proposed to amend current § 234.3(a)(17)(vii)(A) to update terminology related to required backup sites. The Board proposed to replace the references to a “secondary site” and “primary site” with a general reference to “two sites providing for sufficient redundancy supporting critical operations and services” that are located at a sufficient geographical distance from “each other” to have a distinct risk profile (collectively, “two sites with distinct risk profiles”).
The Board did not propose substantive amendments to the requirements under current § 234.3(a)(17)(vii)(B) and (C) (renumbered as § 234.3(a)(17)(viii)(B) and (C)), which require a designated FMU's business continuity plan to be designed to enable recovery and resumption no later than two hours following disruptive events and completion of settlement by the end of the day of the disruption, even in case of extreme circumstances. The Board proposed a technical amendment to § 234.3(a)(17)(vii)(B) to clarify that the two-hour recovery time objective applies to critical operations and services.
In § 234.3(a)(17)(viii)(D), the Board proposed to require that a designated FMU's business continuity plan set out criteria and processes that address the reconnection of a designated FMU to its participants and other entities following a disruption to the designated FMU's critical operations or services.
The Board proposed to separate current § 234.3(a)(17)(vii)(D) of Regulation HH, which requires the business continuity plan to be “tested at least annually,” into two requirements (renumbered as § 234.3(a)(17)(viii)(E) and (F)). In § 234.3(a)(17)(viii)(E), the Board proposed to maintain the requirement for at least annual testing and clarify that this requirement covers the designated FMU's business continuity arrangements, including the people, processes, and technologies of the two sites with distinct risk profiles.
In § 234.3(a)(17)(viii)(F), the Board proposed to require a designated FMU to review its business continuity plans, pursuant to the general review requirements described in section III.C.1 above, at least annually, to: (1) incorporate lessons learned from actual and averted disruptions, and (2) update the scenarios considered and assumptions built into the plan in order to ensure responsiveness to the evolving risk environment and incorporate new and evolving sources of operational risk (
The Board received no comments on proposed § 234.3(a)(17)(viii)(A).
The Board is adopting § 234.3(a)(17)(viii)(A) as proposed. This amendment accommodates data center arrangements with multiple production sites, rather than reflecting only the traditional arrangement where one site is considered “primary” and another site is treated distinctly as a backup site. A designated FMU will still be required, however, to maintain a minimum of two locations that are sufficiently geographically distant from each other to have distinct risk profiles. Consistent with the Board's explanation when it adopted the current text of Regulation HH in 2014, the Board noted in the
Two commenters suggested that the Board incorporate into the text of Regulation HH the Board's statement in the NPRM that the recovery time objectives set forth in § 234.3(a)(17)(vii)(B) and (C) (renumbered as § 234.3(a)(17)(viii)(B) and (C)) should not be interpreted as a requirement for a designated FMU to resume operations in a compromised or otherwise untrusted state.
The Board is adopting this section as proposed, without substantive change from the previous version of the rule. Regulation HH requires a designated FMU to have a business continuity
Since the Board established these requirements in Regulation HH, the two-hour recovery time objective has been a particular area of focus during bilateral discussions with Board-supervised designated FMUs, as well as in broader domestic and international fora, specifically in the context of extreme cyber events. At the center of those discussions is the balance between (i) timely recovery and resumption of critical operations and (ii) appropriate assurance that critical operations are restored to a trusted state. The Board continues to believe it is imperative to financial stability that a designated FMU be able to recover and resume its critical operations and services quickly after disruptive events, both physical and cyber, and to complete settlement by the end of the day of the disruption. In related discussions with Board-supervised designated FMUs, and supported by provisions in the CPMI-IOSCO Cyber Guidance, Board staff has emphasized that recovery time objectives are necessary and critical targets around which plans, systems, and processes should be designed.
Threats to designated FMUs' operations continue to evolve, and the Board expects that a designated FMU will update on an ongoing basis the scenarios in its plan to reflect evolving threats. The Board also expects that a designated FMU will seek and implement solutions that are designed to enable it to meet its recovery and resumptions objectives. For many types of disruptive scenarios, technologies and methods already exist to enable a designated FMU to recover and resume operations within two hours of the disruption. For example, if an earthquake damages a designated FMU's infrastructure and disrupts operations at one data center, the designated FMU may continue to operate from or fail over to another location that is outside the earthquake radius.
The Board recognizes, however, that certain threats to designated FMUs' operations, as well as the technology to mitigate those threats, are continually evolving. In areas where threats and technology are still evolving, such as is the case for extreme cyberattacks (
One commenter expressed support for the proposal's requirement that a designated FMU have plans in place regarding reconnection to its participants following a cybersecurity disruption. Another commenter indicated that the criteria and processes for reconnection should be risk-based to account for the fact that a reconnection process may not be necessary for all disruptions or that aspects of such a process may not be needed in all cases. Another commenter suggested removing the term “reconnection” because not all disruptions result in a disconnection, thus a reconnection may not be required. This commenter suggested revising proposed § 234.3(a)(17)(viii)(D) to use the phrase “resumption of access” rather than “reconnection,” and to specify that resumption of access to the designated FMU includes resumption of access to relevant functionalities. The commenter noted that, in a cyberattack scenario, in addition to disconnection, risk mitigants might include limiting or restricting a participant's access to the designated FMU or a particular functionality.
The Board has amended the text of proposed § 234.3(a)(17)(viii)(D) to require a designated FMU's business continuity plan to set out criteria and processes by which the designated financial market utility will “reestablish availability” for “affected” participants and other entities following a disruption to the designated FMU's critical
The Board believes that the term “reestablish availability” better captures the Board's expectations for designated FMUs. Proposed § 234.3(a)(17)(viii)(D) was intended to emphasize the importance of
For the reasons discussed in section III.A,
Two commenters noted that there may be circumstances in which recovery within two hours following disruptive events is not currently possible. One commenter expressed concern specifically with respect to § 234.3(a)(17)(viii)(E)(
The Board did not receive comments on the proposed requirements for business continuity testing and review in § 234.3(a)(17)(viii)(E)(
The Board recognizes the ever-evolving nature of cyber threats and acknowledges that there are certain cyber scenarios which may result in extreme data loss or data corruption for which the designated FMU may not be able to demonstrate that its solutions for data recovery and data reconciliation enable it to meet the recovery and resumption objectives under § 234.3(a)(17)(viii)(B) and (C). The Board has therefore amended the final rule text in § 234.3(a)(17)(viii)(E)(
Designated FMUs should continue to plan for and test extreme scenarios from which they may need to recover, including wide-scale and major disruptions. Scenario testing should include functional testing of the designated FMU's ability to recover and resume settlement in the case of extreme cyber-based scenarios that cause data loss or data corruption. In some circumstances, a designated FMU may not be able to demonstrate that it can recover and resume operations within two hours, or complete settlement by end of day. The designated FMU should be able to demonstrate to supervisors, however, that (1) it is assessing the capability of its systems and effectiveness of its procedures against its recovery, resumption, and settlement objectives; and (2) it has an understanding of the circumstances in which it may not be able to recover and resume critical operations and services within two hours following disruptive events or complete settlement by the end of the day. The designated FMU should also be able to demonstrate that it is working to increase the capability of its systems and effectiveness of its procedures to be able to meet those objectives in the future. The Board reiterates that Federal Reserve supervisors will continue to work with designated FMUs through the supervisory process as designated FMUs identify reasonable approaches to prepare for and recover from extreme cyber-attacks.
The Board expects a designated FMU to conduct its activities—whether conducted directly by the designated FMU or through a service provider—in a safe and sound manner.
Specifically, the Board proposed to add a definition of “third party” in § 234.2(n), and to add § 234.3(a)(17)(ix) regarding the management of risks associated with third-party relationships. In § 234.2(n), the Board proposed to define “third party” as “any entity with which a designated FMU maintains a business arrangement, by contract or otherwise.”
In § 234.3(a)(17)(ix), the Board proposed to require a designated FMU to have systems, policies, procedures, and controls that effectively identify, monitor, and manage risks associated with third-party relationships. Additionally, for any service that is performed for the designated FMU by a third party, a designated FMU's systems, policies, procedures, and controls would need to ensure that risks are identified, monitored, and managed to the same extent as if the designated FMU were performing the service itself.
In § 234.3(a)(17)(ix)(A) and (B), the Board proposed specific requirements for three components of third-party risk management: risk assessments, information-sharing arrangements, and business continuity management and testing. In § 234.3(a)(17)(ix)(A), the Board proposed to require a designated FMU to regularly conduct risk assessments of its third-party relationships and establish, as appropriate, information-sharing arrangements with third parties. In § 234.3(a)(17)(ix)(B), the Board proposed to require a designated FMU to include third parties in its business continuity management and testing, as appropriate.
Two commenters supported the addition of the third-party risk management rule to Regulation HH, but one of these commenters suggested the rule incorporate concepts of proportionality and criticality. Two commenters expressed concern with the scope of the definition of “third party.” These commenters suggested narrowing the definition in a number of ways. One commenter suggested distinguishing between services the commenter considered “outsourced” and other third-party services. One commenter noted that the proposed definition may unintentionally capture entities with which a designated FMU has a business relationship, such as participants in a designated FMU and employees, but which it does not treat as traditional service-providing vendors. One commenter suggested that the “third party” definition should include only entities that could have a material impact on the designated FMU's designated activities.
One commenter suggested § 234.3(a)(17)(ix) be amended to permit the designated FMU to have risk-based systems, policies, procedures, and controls and to be flexible in managing third party risk. Another commenter explained that a designated FMU should be able to apply its most stringent risk management controls to third parties that provide services essential to performing the services for which the FMU was designated as systemically important. Both of these commenters also provided comments to the more specific requirements set forth in proposed § 234.3(a)(17)(ix)(A) and (B), which are addressed in sections III.F.2 and III.F.3,
Finally, these commenters noted that the definition of third party would include central banks and other entities that may be unable or unwilling to establish formal information-sharing relationships or participate in a designated FMU's business continuity management and testing. Both commenters suggested excluding central banks from the definition, and one commenter recommended narrowing the definition by expressly excluding real-time gross settlement systems and their operators from the definition of “third party.”
After considering the comments received, the Board has made one modification to the definition of “third party.” Additionally, the Board is adopting as proposed the risk-management standards requirement set forth in the introductory portion of § 234.3(a)(17)(ix), but the Board has amended the specific requirements set forth in proposed § 234.3(a)(17)(ix)(A) and (B) to more expressly recognize that not all third parties present the same risk to a designated FMU.
As discussed in the NPRM, products and services provided by third parties can include a wide variety of arrangements, from heating, ventilation, and air conditioning (often referred to as HVAC) services that support the physical infrastructure of a designated
A broad definition of third party does not mean, however, that the Board expects a designated FMU to address all third parties in the same manner. Although the Board, for the reasons described in section III.A,
While the Board generally believes a broad definition of third party is appropriate, the Board has, in response to comments, clarified in the final rule that relationships between a designated FMU and its participants are not “third-party” relationships when the participant is acting in that capacity only.
As discussed in section III.F.1, commenters raised concerns about the scope of the definition of third party. As an alternative to definitional changes, one commenter suggested that the requirement to conduct risk assessments could apply broadly, but that specific information-sharing and business continuity testing requirements should apply only to third parties that provide critical services. Comments on the information-sharing and business continuity management and testing requirements are discussed in section III.F.3,
The Board is adopting the risk assessment requirement in § 234.3(a)(17)(ix)(A) substantially as proposed but has moved the information sharing requirement to § 234.3(a)(17)(ix)(B) (and, consequently, the business continuity management and testing requirement to § 234.3(a)(17)(ix)(C)). To assess risk levels of third parties and monitor any changes in these risk levels that may affect a designated FMU and its ecosystem, the Board expects the designated FMU to regularly conduct risk assessments for each third party with which it maintains a business relationship. The Board expects that a designated FMU could incorporate a risk-based approach to prioritizing and determining the frequency and scope of risk assessments.
In general, and as discussed in the NPRM, the Board expects a designated FMU to take a rigorous and comprehensive approach to identifying, monitoring, and managing risks associated with third-party relationships. To do this effectively, it would be prudent for the designated FMU to understand
Two commenters raised concerns about the requirement to enter into information-sharing arrangements with third parties and include third parties in business continuity and testing, as appropriate. One of the commenters suggested that, in lieu of narrowing the proposed definition of “third party,” the Board could apply information-sharing and business continuity management and testing requirements only to third parties that provide critical services. That commenter also requested further clarification with respect to any specific expectations or relevant objectives in connection with information-sharing arrangements and business continuity management and testing.
The same commenters noted that a designated FMU may not have the negotiating power to require certain third parties to enter into information-sharing arrangements or participate in the designated FMU's business continuity management and testing.
The Board received a comment outside the scope of the proposal. The commenter noted that several third parties provide services to multiple designated FMUs and foreign systemically important FMIs. The commenter suggested that the Board and its foreign counterparts arrange scenario exercises involving designated FMUs and foreign FMIs. The commenter also recommended that the Board evaluate whether to have direct or collective oversight over certain third parties.
The Board is adopting § 234.3(a)(17)(ix)(B) and (C) with two substantive revisions in response to comments received. In addition, the Board has made structural changes to the rule text: the information-sharing requirement has been moved from proposed § 234.3(a)(17)(ix)(A) to § 234.3(a)(17)(ix)(B) and the business continuity management and testing requirement in proposed § 234.3(a)(17)(ix)(B) has been moved to new § 234.3(a)(17)(ix)(C).
First, the Board has amended the information-sharing and business continuity management and testing requirements to apply only with respect to third parties that provide services material to any of the designated FMU's critical operations or services. The Board believes that this limitation strikes an appropriate balance between effective risk management and the efficient use of resources by designated FMUs. A designated FMU should use the risk assessments conducted pursuant to final rule § 234.3(a)(17)(ix)(A) to inform its determinations of which third parties are in scope for purposes of § 234.3(a)(17)(ix)(B) and (C).
Second, the Board has amended the business continuity management and testing requirement to accommodate more clearly approaches to business continuity management and testing that do not include the participation of each third party in a designated FMU's testing. Specifically, the final rule provides that a designated FMU must “address” (rather than “include”) in its business continuity management and testing, as appropriate, third parties that provide services material to any of the designated FMU's critical operations or services. The Board recognizes that there are effective approaches to testing that do not involve participation of a third party, such as planning for alternatives to be used in the event of a third party's unavailability. A designated FMU is expected to determine, through internal risk analysis, an appropriate way to address each covered third party, in business continuity management and testing, keeping in mind the overall requirement in § 234.3(a)(17)(ix) that the designated FMU effectively identify, monitor, and manage risks associated with third-party relationships.
The final rule, like the proposed rule, continues to apply an “as appropriate” qualification to the provisions related to information-sharing arrangements and business continuity management and testing. It does not set forth prescriptive requirements that a designated FMU must follow in all circumstances. The Board does not believe that prescriptive requirements would be appropriate, in light of different facts and circumstances a designated FMU may face with respect to each of its covered third parties. A designated FMU should consider what is appropriate in accordance with the risk-management standards articulated in the introductory portion of § 234.3(a)(17)(ix) and the risk assessments it conducts pursuant to § 234.3(a)(17)(ix)(A).
With respect to information-sharing arrangements, a designated FMU should conduct appropriate due diligence on third parties and ensure it obtains the information necessary to appropriately identify, monitor, and manage third-party risk. Information-sharing arrangements should include, where necessary, expectations related to when the designated FMU will be notified of material operational incidents or outages. They should also include, where appropriate, expectations with respect to information regarding the third party's information security controls, operational resilience objectives and capabilities, the third-party's arrangements with its own vendors, and changes in security controls at the third party. Consistent with a risk-based approach, a designated FMU should consider heightened requirements where there is higher risk. For example, with certain third parties that are essential to its critical operations and services, a designated FMU might require mandatory approval from the designated FMU before the service provider may outsource any material elements of its service to another party, in order to manage supply chain risks.
A designated FMU would generally be expected to make reasonable efforts to enter into contractual information-sharing arrangements, given the application of § 234.3(a)(17)(ix)(B) to third parties that provide services material to the designated FMU's critical operations or services. The Board, however, understands that there may be circumstances in which a designated FMU may not be able to negotiate a contractual information sharing arrangement with certain third parties or all of the designated FMU's desired terms. For example, utility operators such as electricity providers, as well as central banks or other operators of FMIs, may have particular needs for uniformity in how they interact with participants and customers.
In such situations, a designated FMU should consider whether it is appropriate to rely on non-contractual arrangements or other risk mitigants. In some cases, such as with central banks, the designated FMU may appropriately rely on informal information-sharing arrangements or, where available, other factors that may mitigate the risk associated with the lack of a contractual arrangement. For example, a designated FMU could consider the availability of public information about a third party or consider whether the designated FMU has sufficient contingency arrangements that would allow the designated FMU to continue to carry out its critical operations and services in a safe and sound manner in the absence of contractual information-sharing arrangements. A designated FMU might also consider the existence of backups, redundant services, or other means of managing third-party risk. If a designated FMU cannot with confidence ascertain and demonstrate that informal arrangements or other mitigants are sufficient, the designated FMU should consider whether it is appropriate to transition to an alternative third party, if available, or choose to keep a service in-house.
The Board expects that a designated FMU would evaluate the sufficiency of its business continuity arrangements with a third party in light of how the designated FMU addresses the third party in its business continuity management and testing. In some circumstances, a designated FMU may determine that it is appropriate for a third party to participate directly in the designated FMU's scenario exercises to ensure that the designated FMU can effectively manage any instances in which the third party experiences an incident causing disruption or material degradation to the designated FMU's critical operations or services. For example, where a cyberattack on a third party could impair the third party's ability to enable a designated FMU to fulfill its obligations on time, it may be necessary for the designated FMU to include the third party in scenario exercises to enable the designated FMU
In other circumstances, a designated FMU may have contingencies in place such that participation by a particular third party in business continuity testing is not essential. If participation is not essential, a designated FMU should consider whether its information-sharing arrangements or other available sources of information afford the designated FMU with access to sufficient information to effectively address the third party in business continuity testing. The sufficiency of information may depend on the services provided by the third party and a designated FMU's ability to conduct critical operations and services safely and soundly in contingency scenarios without the third party. A designated FMU should consider the third party's business continuity planning in any risk assessment of the third party that the designated FMU completes, and, where appropriate, the designated FMU should include information about a third party's own business continuity planning in information-sharing arrangements it establishes with a third party.
In § 234.2(h), the Board proposed to add “operational risk” as a defined term in Regulation HH. The Board proposed to define this term as “the risk that deficiencies in information systems or internal processes, human errors, management failures, or disruptions from external events will result in the reduction, deterioration, or breakdown of services provided by the designated financial market utility.”
The Board received one comment that supported the proposed definition of operational risk.
The Board is adopting the definition of “operational risk” as proposed. This definition is consistent with the definition of operational risk in the PFMI and the Board's definition in part I of the
In § 234.2(d), the Board proposed to add “critical operations” and “critical services” as defined terms in Regulation HH, in order to streamline references to these terms. Under the proposal, these terms were defined as “any operations or services that the designated financial market utility identifies under 12 CFR 234.3(a)(3)(iii)(A).”
The Board received one comment on the definition of critical operations and critical services, which was supportive of the revision.
The Board is adopting the definition of critical operations and critical services as proposed. Under § 234.3(a)(3)(iii)(A), a designated FMU must identify its critical operations and services related to payment, clearing, and settlement for purposes of developing its integrated plans for recovery and orderly wind-down. The Board's amendments to § 234.3(a)(17), related to review and testing, incident management and planning, and business continuity management planning, refer to a designated FMU's critical operations and/or services in multiple places. Amending Regulation HH to include definitions of “critical operations” and “critical services” clarifies that the critical operations or services that the designated FMU should consider under paragraph (a)(17) are the same set of critical operations and services that the designated FMU has identified under paragraph (a)(3).
The Board proposed to streamline and replace the reference to “financial market utilities and trade repositories, if any” in § 234.3(a)(17)(ii) with the phrase “relevant entities such as those referenced in paragraph (a)(3)(ii).” In connection with this, the Board proposed to include “trade repositories” in the list of entities listed under § 234.3(a)(3)(ii).
One commenter had no objection to the addition of the term “trade repositories” to § 234.3(a)(3)(ii), but suggested changing the term “relevant entities” as used in § 234.3(a)(17)(ii) to “identified entities.” The commenter noted that change would allow the word “relevant” to be used elsewhere in the rule when discussing the entities referenced in § 234.3(a)(17)(ii).
The Board has adopted the proposed revisions to § 234.3(a)(3)(ii) and (a)(17)(ii) but has removed the word “relevant” from the latter revision. Upon review, the Board believes that the reference to entities listed in § 234.3(a)(3)(ii) is sufficiently clear without including a modifier like “relevant” or “identified.” The Board believes that, as adopted, § 234.3(a)(17)(ii) is consistent with the requirement under paragraph (a)(3)(ii) for the designated FMU to identify, measure, monitor, and manage the material risks that it poses due to interdependencies with other entities, such as other FMUs, settlement banks, liquidity providers, and service providers.
Section 234.3(a)(17)(iii) requires a designated FMU to have “policies and systems” that are designed to achieve clearly defined objectives to ensure a high degree of security and operational reliability.
A designated FMU is implicitly required to have the operational
One commenter suggested removing the reference to “operational capabilities” in proposed § 234.3(a)(17)(iii) and instead adding a reference to “processes and controls,” in addition to “policies and systems.” The commenter noted this drafting would better align with the terminology used throughout Regulation HH.
Upon consideration of the comment, the Board has removed the term “operational capabilities” in proposed § 234.3(a)(17)(iii) and replaced it with “procedures and controls.” This change aligns the language in § 234.3(a)(17)(iii) with terminology used elsewhere in Regulation HH. Regulation HH frequently uses the term “procedures and controls,” and the Board believes the phrase achieves the suggested drafting consistency and the intended meaning.
The Board expects a designated FMU to establish clearly defined objectives to ensure a high degree of security and operational reliability; to have systems, procedures, and controls designed to achieve these objectives; and to have policies, such as benchmarks, in place for the designated FMU to evaluate its systems' performance against these objectives.
Section 234.3(a)(17)(v) requires a designated FMU to have comprehensive physical, information, and cyber security policies, procedures, and controls “that address” potential and evolving vulnerabilities and threats. The Board proposed a technical change to clarify what it means to “address” potential and evolving vulnerabilities and threats. Specifically, the Board proposed to replace the phrase “that address” with the phrase “that enable the designated financial market utility to identify, monitor, and manage” potential and evolving vulnerabilities and threats.
One commenter supported the proposed change. No other comments were received in response to this proposed revision of § 234.3(a)(17)(v).
The Board is adopting the technical revision as proposed.
The Regulatory Flexibility Act (RFA) generally requires that, in connection with a final rulemaking, an agency prepare and make available a final regulatory flexibility analysis describing the impact of the final rule on small entities.
The Small Business Administration (SBA) has adopted size standards for determining whether a particular entity is considered a “small entity” for purposes of the RFA. The Board believes that the most appropriate SBA size standard to apply in determining whether a designated FMU is a small entity is the SBA size standard for financial transactions processing, reserve, and clearinghouse activities. Under this standard, a designated FMU is considered a small entity if its annual receipts are less than $47 million.
In connection with the proposed rule, the Board stated that it did not believe that the proposal would have a significant economic impact on a substantial number of small entities. Nevertheless, the Board published and invited comment on an initial regulatory flexibility analysis of the proposal. No comments were received on the initial regulatory flexibility analysis.
The Board is finalizing amendments to Regulation HH that would affect the regulatory requirements that apply to designated FMUs other than derivatives clearing organizations registered with the CFTC and clearing agencies registered with the SEC. At present, the FSOC has designated eight FMUs as systemically important; two of these designated FMUs are subject to the Board's Regulation HH. The reasons and justification for the final rule are described above in more detail in this
The Board has considered whether to conduct a final regulatory flexibility analysis in connection with the final rule. However, the annual receipts of designated FMUs subject to this final rule exceed the $47 million threshold under which a designated FMU is considered a “small entity” under SBA regulations. Because the final rule is not likely to apply to any company with annual receipts of $47 million or less, it is not expected to apply to any small entity for purposes of the RFA. In light of the foregoing, the Board certifies that the final rule will not have a significant economic impact on a substantial number of small entities.
As a matter of policy, the Board conducts a competitive impact analysis in connection with any operational or legal changes that could have a substantial effect on payment system participants, even if competitive effects are not apparent on the face of the proposal. Pursuant to this policy, the Board assesses whether proposed changes “would have a direct and material adverse effect on the ability of other service providers to compete effectively with the Federal Reserve in providing similar services” and whether any such adverse effect “was due to legal differences or due to a dominant market position deriving from such legal differences.” If, as a result of this analysis, the Board identifies an adverse effect on competition, the Board then assesses whether the associated benefits—such as improvements to payment system efficiency or integrity—can be achieved while minimizing the adverse effect on competition.
Designated FMUs are subject to the supervisory framework established under Title VIII of the Dodd-Frank Act. The final rule amends current
Under the Federal Reserve Act, the Board has general supervisory authority over the Reserve Banks, including the Reserve Banks' provision of payment and settlement services. This general supervisory authority is more extensive in scope than the Board's authority over certain designated FMUs under Title VIII. In practice, Board oversight of the Reserve Banks goes beyond the typical supervisory framework for private-sector entities, including the framework provided by Title VIII. The Fedwire Funds Service and Fedwire Securities Service (collectively, Fedwire Services) are subject to the risk-management standards in part I of the PSR policy, including applicable principles from the PFMI as set forth in an appendix to the PSR policy. The Board is guided by its interpretation of the corresponding provisions of Regulation HH in its application of the risk management expectations in the PSR policy.
One commenter expressed its appreciation for the Board's commitment to apply risk-management standards to the Fedwire Funds Service that are at least as stringent as those in Regulation HH, but asked the Board to amend the appendix to the PSR policy to more closely align with Regulation HH. The commenter also requested that the Board revise the PSR policy to include the Reserve Banks' National Settlement Service (NSS), along with the Fedwire Services, as a service subject to the appendix of the PSR policy.
The Board recognizes the critical role that the Fedwire Services play in the financial system and, as noted in the proposal, the Board remains committed to applying risk-management standards to the Fedwire Funds Service that are at least as stringent as the Regulation HH standards that are applied to designated FMUs that provide similar services. At the same time, however, the Board continues to believe that a different level of detail is required for Regulation HH than for part I of the PSR policy. Regulation HH is an enforceable rule applicable to designated FMUs other than those supervised by the CFTC or SEC, so additional detail provides greater clarity on the Board's expectations. The PSR policy, on the other hand, is a policy statement that provides guidance about (as relevant here) the Board's exercise of its other supervisory or regulatory authority over other financial market infrastructures (including those operated by the Reserve Banks) or their participants.
The Board continues to believe that the current approach to the appendix to the PSR policy is consistent with the purpose of the document and the Board's long-standing supervisory approach under the PSR policy. In light of the Federal Reserve's oversight framework for the Fedwire Services, the Board does not believe that the amendments to Regulation HH will have any direct and material adverse effect on the ability of other service providers to compete with the Reserve Banks.
Finally, the Board does not believe that the exclusion of NSS from the list of Federal Reserve services subject to the appendix of the PSR policy has a direct and material effect on the ability of other service providers to compete with the Reserve Banks. NSS provides services to a number of financial market infrastructures, but is not itself a competitor with other service providers, and in particular with any service providers to which Regulation HH applies.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320, appendix A, section 1), the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. As noted in the NPRM, for purposes of the Paperwork Reduction Act, a “collection of information” involves 10 or more respondents. Any recordkeeping, disclosure, or reporting requirement that is contained in a rule of general applicability or that is addressed to all or a substantial majority of an industry is presumed to involve 10 or more respondents (5 CFR 1320.3(c), 1320.3(c)(4)). Regulation HH applies to fewer than 10 persons, and these persons do not represent all or a substantial majority of the participants in payment, clearing, and settlement systems. Additionally, Regulation HH is not a rule of general applicability. Therefore, no collections of information under the Paperwork Reduction Act are contained in the final rule. The Board did not receive any comments on this analysis.
Banks, Banking, Credit, Electronic funds transfers, Financial market utilities, Securities.
For the reasons set forth in the preamble, the Board is amending part 234 of chapter II of title 12 of the Code of Federal Regulations as follows:
12 U.S.C. 5461
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
(n)
(o)
The revisions read as follows:
(a) * * *
(17)
(i) Identifies the plausible sources of operational risk, both internal and external, and mitigates their impact through the use of appropriate systems, policies, procedures, and controls—including those specific systems, policies, procedures, or controls required pursuant to this paragraph (a)(17)—that are reviewed, audited, and tested periodically and after major changes such that—
(A) The designated financial market utility conducts tests—
(
(
(B) The designated financial market utility reviews the design, implementation, and testing of affected and similar systems, policies, procedures, and controls, after material operational incidents, including the material operational incidents described in paragraph (a)(17)(vi)(A) of this section, or after changes to the environment in which the designated financial market utility operates that could significantly affect the plausible sources or mitigants of operational risk; and
(C) The designated financial market utility remediates as soon as possible, following established governance processes, deficiencies in systems, policies, procedures, or controls identified in the process of review or testing;
(ii) Identifies, monitors, and manages the risks its operations might pose to other entities such as those referenced in paragraph (a)(3)(ii) of this section;
(iii) Has systems, policies, procedures, and controls that are designed to achieve clearly defined objectives to ensure a high degree of security and operational reliability;
(iv) Has systems that have adequate, scalable capacity to handle increasing stress volumes and achieve the designated financial market utility's service-level objectives;
(v) Has comprehensive physical, information, and cyber security policies, procedures, and controls that enable the designated financial market utility to identify, monitor, and manage potential and evolving vulnerabilities and threats;
(vi) Has a documented framework for incident management that provides for the prompt detection, analysis, and escalation of an incident, appropriate procedures for addressing an incident, and incorporation of lessons learned following an incident. This framework includes a plan for notification and communication of material operational incidents to identified relevant entities that ensures the designated financial market utility—
(A) Immediately notifies the Board, in accordance with the process established by the Board, when the designated financial market utility activates its business continuity plan or has a reasonable basis to conclude that—
(
(
(B) Establishes criteria and processes providing for timely communication and responsible disclosure of material operational incidents to the designated financial market utility's participants and other relevant entities, such that—
(
(
(vii) Has business continuity management that provides for rapid recovery and timely resumption of critical operations and services and
(viii) Has a business continuity plan that—
(A) Incorporates the use of two sites providing for sufficient redundancy supporting critical operations that are located at a sufficient geographical distance from each other to have a distinct risk profile;
(B) Is designed to enable critical systems, including information technology systems, to recover and resume critical operations and services no later than two hours following disruptive events;
(C) Is designed to enable it to complete settlement by the end of the day of the disruption, even in case of extreme circumstances;
(D) Sets out criteria and processes by which the designated financial market utility will reestablish availability for affected participants and other entities following a disruption to the designated financial market utility's critical operations or services;
(E) Provides for testing, pursuant to the requirements under paragraphs (a)(17)(i)(A) and (C) of this section, at least annually, of the designated financial market utility's business continuity arrangements, including the people, processes, and technologies of the sites required under paragraph (a)(17)(viii)(A) of this section, such that—
(
(
(
(F) Is reviewed, pursuant to the requirements under paragraphs (a)(17)(i)(B) and (C) of this section, at least annually, in order to—
(
(
(ix) Has systems, policies, procedures, and controls that effectively identify, monitor, and manage risks associated with third-party relationships, and that ensure that, for any service that is performed for the designated financial market utility by a third party, risks are identified, monitored, and managed to the same extent as if the designated financial market utility were performing the service itself. In this regard, the designated financial market utility—
(A) Regularly conducts risk assessments of third parties;
(B) Establishes information-sharing arrangements, as appropriate, with third parties that provide services material to any of the designated financial market utility's critical operations or services; and
(C) Addresses in its business continuity management and testing, as appropriate, third parties that provide services material to any of the designated financial market utility's critical operations or services.
By order of the Board of Governors of the Federal Reserve System.
Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the Gulfstream Aerospace Corporation (Gulfstream) Model GVIII-G700 and GVIII-G800 series airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. This design feature is an envelope protection function to protect the airplane from over- and rapid-rotation on takeoff. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
Effective March 15, 2024.
Troy Brown, Performance and Environment Unit, AIR-621A, Technical Policy Branch, Policy and Standards Division, Aircraft Certification Service, Federal Aviation Administration, 1801 S Airport Rd., Wichita, KS 67209-2190; telephone and fax 405-666-1050; email
On December 31, 2019, Gulfstream applied for an amendment to Type Certificate No. T00015AT to include the new Model GVIII-G700 and GVIII-G800 series airplanes. These airplanes, which will be derivatives of the Model GVI currently approved under Type Certificate No. T00015AT, are twin-engine, transport-category airplanes, with seating for 19 passengers, and a maximum take-off weight of 107,600 pounds (GVIII-G700) and 105,600 pounds (GVIII-G800).
Under the provisions of title 14, Code of Federal Regulations (14 CFR) 21.101, Gulfstream must show that the Model GVIII-G700 and GVIII-G800 series airplanes meet the applicable provisions of the regulations listed in Type Certificate No. T00015AT, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions
In addition to the applicable airworthiness regulations and special conditions, the Gulfstream Model GVIII-G700 and GVIII-G800 series airplanes must comply with the exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with 14 CFR 11.38, and they become part of the type certification basis under § 21.101.
The Gulfstream Model GVIII-G700 and GVIII-G800 airplanes will incorporate the following novel or unusual design feature:
An envelope protection function within the electronic flight control system (EFCS) to protect the airplane from over- and rapid-rotation on takeoff.
The Gulfstream Model GVIII-G700 and GVIII-G800 series airplanes are equipped with an envelope protection function within the EFCS that is designed to provide enhanced takeoff stall protection (TSP) function. This feature protects against excessive pitch rate and pitch attitude during takeoff using a limitation in the electronic flight controls. It is designed to provide conventional behavior using a normal takeoff technique, including “performance” takeoffs. The limit to pitch attitude will indirectly limit the angle of attack.
The TSP involves a control law update in the on-ground control mode only. The Model GVIII-G700 and GVIII-G800 series airplane's pitch control behavior, with regard to rotation rates and attitudes for normal takeoffs, will be similar to other Gulfstream airplanes equipped with side sticks; however, takeoffs with rapid rotation rates and over-rotation will be influenced by the TSP.
The current regulations in Subpart B of 14 CFR part 25 do not address envelope protections for electronic flight control systems as this technology is novel or unusual for transport category airplanes. These special conditions are specific to the GVIII-G700 and GVIII-G800 series airplanes. These conditions are necessary to ensure that the TSP function supports safe operation and does not interfere with required maneuvering in normal and emergency operations and in foreseeable atmospheric conditions.
The special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
The FAA issued Notice of Proposed Special Conditions No. 25-24-01-SC, for the GVIII-G700 and GVIII-G800 series airplanes. This Notice was published in the
Gulfstream requested that the FAA revise the third paragraph of the Discussion section, to better reflect the content and scope of the proposed special conditions. The FAA agrees with this comment as it aligns with proposed regulation text from the Flight Test Harmonization Working Group Phase 2 Rev A Final Report. The identified text has been revised in a manner consistent with Gulfstream's request.
Gulfstream requested that the FAA remove certain text from the first paragraph of the Discussion section. The FAA finds that the referenced text is unnecessary for the Discussion and has removed it in these final special conditions.
Gulfstream requested that the FAA revise the text of the Special Conditions section (
As discussed above, these special conditions are applicable to the Gulfstream Model GVIII-G700 and GVIII-G800 series airplanes. Should Gulfstream apply at a later date for a change to the type certificate to include another model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would apply to the other model as well.
Under standard practice, the effective date of final special conditions would be 30 days after the date of publication in the
This action affects only a certain novel or unusual design feature on Gulfstream Model GVIII-G700 and GVIII-G800 series of airplanes. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(f), 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Gulfstream Model GVIII-G700 and GVIII-G800 series airplanes, and will be applied by the FAA to the extent necessary to certify the envelope protection function within the electronic flight control system (EFCS) that protects the airplane from over- and rapid-rotation on takeoff.
For airplanes that employ envelope protection functions:
(a) Envelope protection functions must not unduly limit the maneuvering capability of the airplane nor interfere with its ability to perform maneuvers
(b) Onset characteristics of each envelope protection function must be appropriate to the phase of flight and type of maneuver and must not conflict with the ability of the pilot to satisfactorily control the airplane flight path, speed, or attitude.
(c) Excursions of a limited flight parameter beyond its nominal design limit value due to dynamic maneuvering, airframe and system tolerances, and non-steady atmospheric conditions must not result in unsafe flight characteristics or conditions.
(d) Operation of envelope protection functions must not adversely affect aircraft control during expected levels of atmospheric disturbances, nor impede the application of recovery procedures in case of windshear.
(e) Simultaneous activation of envelope protection functions must not result in adverse coupling or adverse priority.
(f) In case of abnormal attitude or excursion of any flight parameters outside the protected boundaries, operation of envelope protection functions must not hinder airplane recovery.
Federal Aviation Administration (FAA), DOT.
Final rule.
The FAA is adopting a new airworthiness directive (AD) for certain Airbus SAS Model A318, A319, A320, and A321 series airplanes. This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. This AD requires revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products.
This AD is effective April 19, 2024.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of April 19, 2024.
• For material incorporated by reference in this AD, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
• You may view this material that is incorporated by reference at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195. It is also available in the AD docket at
Timothy Dowling, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 817-222-5102; email
The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Model A318-111, -112, -121, and -122; A319-111, -112, -113, -114, -115, -131, -132, -133, -151N, -153N, and -171N; A320-211, -212, -214, -216, -231, -232, -233, -251N, -252N, -253N, -271N, -272N, and -273N; and A321-111, -112, -131, -211, -212, -213, -231, -232, -251N, -251NX, -252N, -252NX, -253N, -253NX, -271N, -271NX, -272N, and -272NX airplanes. The NPRM published in the
In the NPRM, the FAA proposed to require a task (limitation) related to the center wing box front spar stiffeners already in Airbus A318/A319/A320/A321 ALS Part 2 DT-ALI Revision 09 or A318/A319/A320/A321 ALS Part 2 DT-ALI Revision 09 Variation 9.2 that are required by EASA AD 2022-0085 and EASA AD 2023-0008 respectively (which correspond to FAA AD 2023-13-10, Amendment 39-22495 (88 FR 50005, August 1, 2023) (AD 2023-13-10)), and that incorporation of EASA AD 2023-0151 invalidates (terminates) prior instructions for that task. This AD therefore terminates the limitations for tasks identified in the service information referenced in EASA AD 2023-0151 only, as required by paragraph (o) of AD 2023-13-10.
The FAA is issuing this AD to address fatigue cracking, accidental damage, or corrosion in principal structural elements, which could result in reduced structural integrity of the airplane. You may examine the MCAI in the AD docket at
The FAA received a comment from United Airlines (UAL). The following presents the comment received on the NPRM and the FAA's response.
UAL requested that the AD allow extensions provided in an Airbus approved Airbus Statement of Airworthiness Compliance (ASAC), when it supports extensions to compliance time of specified ALS part 2 tasks, as an alternative method of compliance (AMOC). UAL noted that Airbus does not have the authority for Design Organization Approval signatures on ASACs, and that Airbus analysis and technical substantiations justifying the extensions provided in an ASAC provide an acceptable level of safety to ensure that the structural integrity of the aircraft is maintained.
The FAA does not agree since the FAA needs to review each individual extension request, which can then be supported through the AMOC process, provided sufficient justification is available. Sufficient justification, supported by an acceptable level of safety, is needed to grant such a request. In such situations, the operator should work with the FAA as early as possible. This AD has not been changed with regard to this request.
This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA reviewed the relevant data, considered the comment received, and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on this product. Except for minor editorial changes, this AD is adopted as proposed in the NPRM. None of the changes will increase the economic burden on any operator.
The FAA reviewed EASA AD 2023-0151, which specifies new or more restrictive airworthiness limitations for airplane structures and safe life limits. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA estimates that this AD affects 1,680 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:
The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the agency estimates the average total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is effective April 19, 2024.
This AD affects AD 2023-13-10, Amendment 39-22495 (88 FR 50005, August 1, 2023) (AD 2023-13-10).
This AD applies to Airbus SAS airplanes specified in paragraphs (c)(1) through (4) of this AD, certificated in any category, with an original airworthiness certificate or original export certificate of airworthiness issued on or before May 12, 2023.
(1) Model A318-111, -112, -121, and -122 airplanes.
(2) Model A319-111, -112, -113, -114, -115, -131, -132, -133, -151N, -153N, and -171N airplanes.
(3) Model A320-211, -212, -214, -216, -231, -232, -233, -251N, -252N, -253N, -271N, -272N, and -273N airplanes.
(4) Model A321-111, -112, -131, -211, -212, -213, -231, -232, -251N, -251NX, -252N, -252NX, -253N, -253NX, -271N, -271NX, -272N, and -272NX airplanes.
Air Transport Association (ATA) of America Code 05, Time Limits/Maintenance Checks.
This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is issuing this AD to address fatigue cracking, accidental damage, or corrosion in principal structural elements, which could result in reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, European Union Aviation Safety Agency (EASA) AD 2023-0151, dated July 25, 2023 (EASA AD 2023-0151).
(1) This AD does not adopt the requirements specified in paragraph (1) and (2) of EASA AD 2023-0151.
(2) Where paragraph (3) of EASA AD 2023-0151 specifies “Within 12 months after the effective date of this AD, revise the approved AMP,” this AD requires replacing that text with “Within 90 days after the effective date of this AD, revise the existing maintenance or inspection program, as applicable.”
(3) The initial compliance time for doing the tasks specified in paragraph (3) of EASA AD 2023-0151 is at the applicable “associated thresholds” as incorporated by the requirements of paragraph (3) of EASA AD 2023-0151, or within 90 days after the effective date of this AD, whichever occurs later.
(4) This AD does not adopt the provisions specified in paragraph (4) of EASA AD 2023-0151.
(5) This AD does not adopt the “Remarks” section of EASA AD 2023-0151.
After the existing maintenance or inspection program has been revised as required by paragraph (g) of this AD, no alternative actions (
Accomplishing the actions required by this AD terminates the corresponding requirements of AD 2023-13-10 for the tasks identified in the service information referenced in EASA AD 2023-0151 only.
The following provisions also apply to this AD:
(1)
(2)
For more information about this AD, contact Timothy Dowling, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 817-222-5102; email
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2023-0151, dated July 25, 2023.
(ii) [Reserved]
(3) For EASA AD 2023-0151, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(4) You may view this material that is incorporated by reference at the FAA, Airworthiness Products Section, Operational Safety Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Final rule; request for comments.
The FAA is adopting a new airworthiness directive (AD) for certain General Electric Company (GE) Model CT7-2E1, CT7-2F1, CT7-8A, CT7-8E, CT7-8F5 engines, and various restricted category helicopters with GE Model T700-GE-700,-701A, -701C, -701D/CC, -701D, -401, -401C, CT7-2D or CT7-2D1 engines installed. This AD was prompted by at least four reports of failures of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly within the last several months. This AD requires a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage, and repair or replacement of the power turbine drive shaft assembly if necessary. The FAA previously sent an emergency AD to all known U.S. owners and operators of these engines and helicopters and is now issuing this AD to address the unsafe condition on these products.
This AD is effective April 1, 2024. Emergency AD 2024-05-51, issued on February 28, 2024, which contained the requirements of this amendment, was effective with actual notice.
The Director of the Federal Register approved the incorporation by reference of certain publications identified in this AD as of April 1, 2024.
The FAA must receive comments on this AD by April 29, 2024.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
• For service information that is incorporated by reference, contact General Electric Company, 1 Neumann Way, Cincinnati, OH 45215; phone: (513) 552-3272; email:
• You may view this service information that is incorporated by reference at the FAA, Airworthiness Products Section, Operational Safety Branch, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call (817) 222-5110. It is also available at
Barbara Caufield, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198; phone: (781) 238-7146; email:
The FAA invites you to send any written data, views, or arguments about
Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to
CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this AD contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this AD, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this AD. Submissions containing CBI should be sent to Barbara Caufield, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.
On February 28, 2024, the FAA issued Emergency AD 2024-05-51 (also referred to as the emergency AD), which applies to certain GE Model CT7-2E1, CT7-2F1, CT7-8A, CT7-8E, CT7-8F5 engines, and various restricted category helicopters with GE Model T700-GE-700, -701A, -701C, -701D/CC, -701D, -401, -401C, CT7-2D or CT7-2D1 engines installed. The emergency AD requires a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage, and repair or replacement of the power turbine drive shaft assembly if necessary. The FAA sent the emergency AD to all known U.S. owners and operators of these engines and helicopters. This action was prompted by at least four reports of failures of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly within the last several months. This condition, if not addressed, could result in improper torque and engine speed indications, which in combination with specific phases of flight, could create an unacceptably high flight crew workload in maintaining control of the aircraft, and result in consequent loss of control of the aircraft.
The FAA is issuing this AD because the agency evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.
The FAA reviewed GE Alert Service Bulletin (ASB) CT7-2E1 S/B 72-A0034, dated February 26, 2024, and GE ASB CT7-8 S/B 72-A0118, Revision 01, dated February 26, 2024, which, among other actions, specify procedures for a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage. This service information also specifies repair or replacement of the power turbine drive shaft assembly if necessary. These documents are distinct since they apply to different engine models.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
Since issuance of the emergency AD, Sikorsky Aircraft Corporation issued ASB 70-04-17, dated February 28, 2024. For the engines installed on restricted category helicopters, this ASB specifies procedures for a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage.
This AD requires a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage, and repair or replacement of the power turbine drive shaft assembly if necessary.
The FAA considers this AD to be an interim action. The manufacturer is currently investigating the root cause of the unsafe condition identified in this AD. If final action is later identified, the FAA might consider further rulemaking.
Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551
An unsafe condition exists that required the immediate adoption of Emergency AD 2024-05-51, issued on February 28, 2024, to all known U.S. owners and operators of these engines and helicopters. The FAA found that the risk to the flying public justified waiving notice and comment prior to adoption of this rule because failure of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly could result in improper torque and engine speed indications, which in combination with specific phases of flight, could create an unacceptably high flight crew workload in maintaining control of the aircraft, and result in consequent loss of control of the aircraft. Since this condition happens rapidly and without warning, the inspection and any necessary repair or replacement must be accomplished before further flight. Thus, the FAA has determined that the affected torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly must be inspected, and repaired or replaced if necessary, before further flight. These conditions still exist, therefore, notice and opportunity for prior public comment are impracticable and contrary to the public interest pursuant to 5 U.S.C. 553(b)(3)(B).
In addition, the FAA finds that good cause exists pursuant to 5 U.S.C. 553(d) for making this amendment effective in less than 30 days, for the same reasons
The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because FAA has determined that it has good cause to adopt this rule without prior notice and comment, RFA analysis is not required.
The FAA estimates that this AD affects 100 engines installed on aircraft of U.S. registry.
The FAA estimates the following costs to comply with this AD:
The FAA estimates the following costs to do any necessary repairs or replacements that would be required based on the results of the inspection. The agency has no way of determining the number of engines that might need these repairs or replacements:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA issued Emergency Airworthiness Directive (AD) 2024-05-51, on February 28, 2024, and was sent directly to affected owners and operators. As a result of such actual notice, that AD was effective for those owners and operators on the date it was received. This AD contains the same requirements as that emergency AD and, for those who did not receive actual notice, is effective on April 1, 2024.
None.
This AD applies to the following products:
(1) General Electric Company (GE) Model CT7-2E1, CT7-2F1, CT7-8A, CT7-8E, CT7-8F5 engines, with any power turbine (PT) drive shaft assembly part number 5123T91G01, 5123T91G02, and 5128T51G01 installed, and the following conditions:
(i) A PT drive shaft assembly with less than 100 hours-time since new (TSN) or 100 hours-time since replacement (TSR) of the torque reference tube, as applicable, as of the effective date of this AD; and
(ii) An engine serial number, PT module serial number, or PT shaft assembly serial number listed in GE Alert Service Bulletin (ASB) CT7-2E1 S/B 72-A0034, dated February 26, 2024 (CT7-2E1 S/B 72-A0034); or GE ASB CT7-8 S/B 72-A0118, Revision 01, dated February 26, 2024 (CT7-8 S/B 72-A0118, Revision 01).
(2) Restricted category helicopters specified in paragraphs (c)(2)(i) through (ix) of this AD, with GE Model T700-GE-700, -701A, -701C, -701D/CC, -701D, -401, -401C, CT7-2D or CT7-2D1 engines installed, with a PT drive shaft assembly that was installed in the engine after January 1, 2020 and has less than 100 hours-TSN or 100 hours-TSR, as applicable. PT drive shaft assemblies manufactured or repaired after January 1, 2024 are not affected by this AD.
(i) Model EH-60A helicopters; current type certificate holders include, but are not limited to, Delta Enterprise; Heliqwest International Inc.; Pickering Aviation, Inc.; and Sixtyhawk TC, LLC.
(ii) Model HH-60L helicopters; current type certificate holders include, but are not
(iii) Model S-70 helicopters; current type certificate holders include, but are not limited to, Sikorsky Aircraft Corporation.
(iv) Model S-70A helicopters; current type certificate holders include, but are not limited to, Sikorsky Aircraft Corporation.
(v) Model S-70C helicopters; current type certificate holders include, but are not limited to, Sikorsky Aircraft Corporation.
(vi) Model S-70C(M) helicopters; current type certificate holders include, but are not limited to, Sikorsky Aircraft Corporation.
(vii) Model S-70C(M1) helicopters; current type certificate holders include, but are not limited to, Sikorsky Aircraft Corporation.
(viii) Model S-70M helicopters; current type certificate holders include, but are not limited to, Sikorsky Aircraft Corporation.
(ix) Model UH-60A helicopters; current type certificate holders include, but are not limited to, ACE Aeronautics LLC; Billings Flying Service, Inc; Blackhawk Mission Equipment; Capitol Helicopters Inc.; Carson Helicopters; Delta Enterprise; Heliqwest International Inc.; High Performance Helicopters Corp.; Northwest Rotorcraft, LLC; Pickering Aviation, Inc.; PJ Helicopters Inc; Reeder Flying Service Inc.; Sixtyhawk TC, LLC; Skydance Blackhawk Operations LLC; Timberline Helicopters, Inc.; and Unical Air Inc.
Joint Aircraft System Component (JASC) Code 7200, Engine (Turbine/Turboprop); 7250, Turbine Section.
This AD was prompted by at least four reports of failures of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly within the last several months. The FAA is issuing this AD to prevent failure of the power turbine drive shaft reference torque tube magnetic insert braze joint. The unsafe condition, if not addressed, could result in improper torque and engine speed indications, which in combination with specific phases of flight, could create an unacceptably high flight crew workload in maintaining control of the aircraft, and result in consequent loss of control of the aircraft.
Comply with this AD within the compliance times specified, unless already done.
(1) For GE Model CT7-2E1, CT7-2F1, CT7-8A, CT7-8E, CT7-8F5 engines: Before further flight, do a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage in accordance with the Accomplishment Instructions, paragraph 3.A.(2) of CT7-2E1 S/B 72-A0034, or CT7-8 S/B 72-A0118, Revision 01, as applicable.
(2) For engines installed on the restricted category aircraft specified in paragraphs (c)(2)(i) through (ix) of this AD: Before further flight, do a phase array ultrasonic inspection of the torque reference tube magnetic insert braze joint of the power turbine drive shaft assembly for inadequate braze coverage using a method approved by the Manager, AIR-520 Continued Operational Safety Branch, FAA.
(3) If during any inspection required by paragraphs (g)(1) or (2) of this AD, any braze coverage of the torque reference tube magnetic insert braze joint is found to be less than 42 percent, before further flight, repair or replace the power turbine drive shaft assembly.
A special flight permit may be issued in accordance with 14 CFR 21.197 and 21.199 to operate the aircraft to a location where the phase array ultrasonic inspection can be performed, provided no passengers are onboard.
(1) The Manager, AIR-520 Continued Operational Safety Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the AIR-520 Continued Operational Safety Branch, send it to the attention of the person identified in paragraph (j) of this AD and email to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Barbara Caufield, Aviation Safety Engineer, FAA, 2200 South 216th Street, Des Moines, WA 98198; phone: (781) 238-7146; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) General Electric Company (GE) Alert Service Bulletin (ASB) CT7-2E1 S/B 72-A0034, dated February 26, 2024.
(ii) GE ASB CT7-8 S/B 72-A0118, Revision 01, dated February 26, 2024.
(3) For service information that is incorporated by reference, contact General Electric Company, 1 Neumann Way, Cincinnati, OH 45215; phone: (513) 552-3272; email:
(4) You may view this service information that is incorporated by reference at the FAA, Airworthiness Products Section, Operational Safety Branch, 1200 District Avenue, Burlington, MA 01803. For information on the availability of this material at the FAA, call (817) 222-5110.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Final rule.
The FAA is adopting a new airworthiness directive (AD) for all Leonardo S.p.a. Model AB412 and AB412 EP helicopters. This AD was prompted by reports of cracks in the lateral mounts of the main transmission support case. This AD requires repetitive visual inspections and fluorescent penetrant inspections (FPI) and, depending on the results, corrective action, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products.
This AD is effective April 19, 2024.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of April 19, 2024.
• For EASA material that is identified in this final rule, contact EASA, Konrad-
• You may view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Parkway, Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222-5110. It is also available at
Sungmo Cho, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: (781) 238-7241; email:
EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2022-0258, dated December 20, 2022 (EASA AD 2022-0258), to correct an unsafe condition on all Leonardo S.p.A. Model AB212, AB412, and AB412EP helicopters.
The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Leonardo S.p.a. Model AB412 and AB412 EP helicopters. The NPRM published in the
The FAA is issuing this AD to detect and address cracking of the main transmission support case. The unsafe condition, if not addressed, could result in the loss of load carrying capabilities of the main transmission and subsequent loss of control of the helicopter. See EASA AD 2022-0258 for additional background information.
The FAA received no comments on the NPRM or on the determination of the costs.
These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA about the unsafe condition described in its AD. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these helicopters. Except for a minor editorial change, this AD is adopted as proposed in the NPRM. The change will not increase the economic burden on any operator.
EASA AD 2022-0258 requires repetitive visual inspections and FPIs of the main transmission support case and, depending on the findings, corrective action. Corrective actions include repairing or replacing the main transmission support case hardware including screws, washers, or case bushings, repairing the lateral mounts, or replacing the main transmission support case.
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA also reviewed Bell Helicopter Component Repair and Overhaul Manual (CR&O) BHT-412-CR&O Chapter 63, paragraphs 63-57 Transmission Main Support Case-Inspection and 63-58 Transmission Main Support Case-Repair, Revision 12, dated February 28, 2020. This service information specifies procedures for inspecting and repairing the main transmission support case.
EASA AD 2022-0258 applies to Model AB212 helicopters, whereas this AD does not because that model is not FAA type-certificated.
The service information referenced in EASA AD 2022-0258 specifies contacting Product Support Engineering for possible repairs regarding corrosion or pitting in the case bushings that exceeds allowable limits, whereas this AD requires repair done in accordance with a method approved by the FAA, EASA, or Leonardo S.p.a. Helicopters' EASA Design Organization Approval.
Where EASA AD 2022-0258 requires performing an FPI, this AD requires that the FPI be performed by a Level II or Level III inspector certified in the FAA-acceptable standards for nondestructive inspection personnel.
The FAA estimates that this AD affects 69 helicopters of U.S. Registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this AD.
Visually inspecting the main transmission support case takes approximately 2 work-hours for an estimated cost of $170 per helicopter and $11,730 for the U.S. fleet, per inspection cycle. Performing an FPI of the main transmission support case takes approximately 2 work-hours for an estimated cost of $170 per helicopter and $11,730 for the U.S. fleet, per inspection cycle.
The FAA has no way of determining the costs pertaining to necessary repairs that are required to be done. Replacing the transmission support case assembly hardware parts including screws, washers, and case bushings takes approximately 2 work-hours and parts cost up to $4,000 per helicopter for an estimated cost of up to $4,170 per helicopter. Replacing the main transmission support case takes approximately 47 work-hours and parts cost approximately $120,000 for an estimated cost of $123,995 per helicopter.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is effective April 19, 2024.
None.
This AD applies to Leonardo S.p.a. Model AB412 and AB412 EP helicopters, certificated in any category.
Joint Aircraft Service Component (JASC) Code: 6320, Main Rotor Gearbox.
This AD was prompted by reports of cracks in the lateral mounts of the main transmission support case. The FAA is issuing this AD to detect and address cracking of the main transmission support case. The unsafe condition, if not addressed, could result in the loss of load carrying capabilities of the main transmission and subsequent loss of control of the helicopter.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, European Union Aviation Safety Agency (EASA) AD 2022-0258, dated December 20, 2022 (EASA AD 2022-0258).
(1) Where EASA AD 2022-0258 refers to its effective date, this AD requires using the effective date of this AD.
(2) Where the service information referenced in EASA AD 2022-0258 specifies contacting Product Support Engineering for possible repairs regarding corrosion or pitting in a case bushing that exceeds allowable limits, this AD requires repair done in accordance with a method approved by the Manager, International Validation Branch, FAA; or EASA; or Leonardo S.p.a. Helicopters' EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.
(3) Where paragraphs (3) and (4) of EASA AD 2022-0258 require replacing a component, this AD requires removing the component from service.
(4) Where paragraph (5) of EASA AD 2022-0258 requires replacing the main transmission support case, this AD requires removing the main transmission support case assembly from service.
(5) Where paragraph (2) of EASA AD 2022-0258 requires accomplishing a fluorescent penetrant inspection (FPI) of the main transmission support case, this AD requires that FPI be accomplished by a Level II or Level III inspector certified in the FAA-acceptable standards for nondestructive inspection personnel.
(6) This AD does not adopt the “Remarks” section of EASA AD 2022-0258.
(1) The Manager, International Validation Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the International Validation Branch, send it to the attention of the person identified in paragraph (j) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Sungmo Cho, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; phone: (781) 238-7241; email:
(1) The Director of the Federal Register approved the incorporation by reference of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2022-0258, dated December 20, 2022.
(ii) [Reserved]
(3) For EASA AD 2022-0258, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; phone +49 221 8999 000; email
(4) You may view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Parkway, Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222 5110.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Final rule.
The FAA is adopting a new airworthiness directive (AD) for all Airbus Helicopters Deutschland GmbH (AHD) Model EC135P1, EC135P2, EC135P2+, EC135P3, EC135T1, EC135T2, EC135T2+, EC135T3, MBB-BK 117 C-2, MBB-BK 117 D-2, and MBB-BK 117 D-3 helicopters. This AD was prompted by the determination that Instrument Flight Rules (IFR) screens obstruct the pilot's view. This AD requires removing certain part-numbered IFR screens, as specified in a European Union Aviation Safety Agency (EASA) AD, which is incorporated by reference. The FAA is issuing this AD to address the unsafe condition on these products.
This AD is effective April 19, 2024.
The Director of the Federal Register approved the incorporation by reference of a certain publication listed in this AD as of April 19, 2024.
• For EASA material identified in this final rule, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email:
• You may view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Parkway, Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222-5110. It is also available at
Dan McCully, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone (303) 342-1080; email
EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2022-0097, dated June 1, 2022 (EASA AD 2022-0097), to correct an unsafe condition on Airbus Helicopters Deutschland GmbH Model EC135 P1, EC135 P2, EC135 P2+, EC135 P3, EC135 T1, EC135 T2, EC135 T2+, EC135 T3, EC635 P2+, EC635 P3, EC635 T1, EC635 T2+, EC635 T3, MBB-BK117 C-2, MBB-BK117 D-2, MBB-BK117 D-3, and MBB-BK117 D-3m helicopters.
The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Helicopters Deutschland GmbH (AHD) Model EC135P1, EC135P2, EC135P2+, EC135P3, EC135T1, EC135T2, EC135T2+, EC135T3, MBB-BK 117 C-2, MBB-BK 117 D-2, and MBB-BK 117 D-3 helicopters. The NPRM published in the
The FAA is issuing this AD to address the obstructed views, which could lead to reduced situational awareness of the pilot and subsequent mid-air collision. See EASA AD 2022-0097 for additional background information.
The FAA received no comments on the NPRM or on the determination of the costs.
These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA about the unsafe condition described in its AD. The FAA reviewed the relevant data and determined that air safety requires adopting this AD as proposed. Accordingly, the FAA is issuing this AD to address the unsafe condition on these helicopters. This AD is adopted as proposed in the NPRM.
EASA AD 2022-0097 requires removing certain part-numbered IFR screens and prohibits installing them on any helicopter.
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA also reviewed Airbus Helicopters Alert Service Bulletin (ASB) EC135-25A-033, ASB EC135H-25A-007, ASB MBB-BK117 C-2-25A-022, and ASB MBB-BK117 D-2-25A-023, each Revision 0 and dated May 23, 2022, which specify procedures for removing the lower, pilot door, and upper IFR screens from the helicopter. This service information also specifies that the lower, pilot door, and upper IFR screens must not be installed on a helicopter and the respective maintenance manual task is invalid and must no longer be used.
EASA AD 2022-0097 applies to Model EC635 P2+, EC635 P3, EC635 T1, EC635 T2+, EC635 T3, and MBB-BK117 D-3m helicopters, whereas this AD does not because those model helicopters are not FAA type-certificated and are not included on the U.S. type certificate data sheet except where the U.S. type certificate data sheet explains that the Model EC635T2+ helicopter having serial number 0858 was converted from Model EC635T2+ to Model EC135T2+.
The FAA estimates that this AD affects 573 helicopters of U.S. Registry. Labor rates are estimated at $85 per work-hour. Based on these numbers, the FAA estimates the following costs to comply with this AD.
Removing the IFR screens takes approximately 0.5 work-hour for an estimated cost of $43 per helicopter and up to $24,639 for the U.S. fleet.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify that this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This airworthiness directive (AD) is effective April 19, 2024.
None.
This AD applies to all Airbus Helicopters Deutschland GmbH (AHD) Model EC135P1, EC135P2, EC135P2+, EC135P3, EC135T1, EC135T2, EC135T2+, EC135T3, MBB-BK 117 C-2, MBB-BK 117 D-2, and MBB-BK 117 D-3 helicopters, certificated in any category.
Joint Aircraft Service Component (JASC) Code: 2500, Cabin Equipment/Furnishings.
This AD was prompted by the determination that Instrument Flight Rules (IFR) screens obstruct the pilot's views. The FAA is issuing this AD to address the obstructed views caused by the IFR screens. The unsafe condition, if not addressed, could result in reduced situational awareness of the pilot and subsequent mid-air collision.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraphs (h) and (i) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, European Union Aviation Safety Agency (EASA) AD 2022-0097, dated June 1, 2022 (EASA AD 2022-0097).
(1) Where EASA AD 2022-0097 refers to its effective date, this AD requires using the effective date of this AD.
(2) This AD does not adopt the “Remarks” section of EASA AD 2022-0097.
Although the service information referenced in EASA AD 2022-0097 specifies to submit certain information to the manufacturer, this AD does not include that requirement.
(1) The Manager, International Validation Branch, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the International Validation Branch, send it to the attention of the person identified in paragraph (k) of this AD. Information may be emailed to:
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Dan McCully, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone (303) 342-1080; email
(1) The Director of the Federal Register approved the incorporation by reference of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) European Union Aviation Safety Agency (EASA) AD 2022-0097, dated June 1, 2022.
(ii) [Reserved]
(3) For EASA AD 2022-0097, contact EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 8999 000; email
(4) You may view this material at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Parkway, Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222-5110.
(5) You may view this material at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, visit
Federal Aviation Administration (FAA), DOT.
Final rule.
This action modifies the Class E airspace extending upward from 700 feet above the surface and removes the
Effective date 0901 UTC, May 16, 2024. The Director of the Federal Register approves this incorporation by reference action under 1 CFR part 51, subject to the annual revision of FAA Order JO 7400.11 and publication of conforming amendments.
A copy of the Notice of Proposed Rulemaking (NPRM), all comments received, this final rule, and all background material may be viewed online at
FAA Order JO 7400.11H, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Keith Adams, Federal Aviation Administration, Western Service Center, Operations Support Group, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-2428.
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 modifies Class E airspace to support IFR operations at Klawock Airport, Klawock, AK.
The FAA published a notice of proposed rulemaking for Docket No. FAA-2023-1801 in the
Class E5 airspace areas are 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 amends the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023, and effective September 15, 2023. FAA Order JO 7400.11H is publicly available as listed in the
FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
This action amends 14 CFR part 71 by modifying the Class E airspace extending upward from 700 feet above the surface and removing the Class E airspace extending upward from 1,200 feet above the surface at Klawock Airport, Klawock AK.
The Class E airspace extending upward from 700 feet above the surface at the airport within a 6.7-mile radius is reduced to a semicircle from the airport's 249° bearing clockwise to the 025° bearing, as operations are not authorized to the southeast of the airport and containment is not needed in that area.
In addition, an extension to the Class E airspace extending upward from 700 feet above the surface is added to the northeast to be within 3 miles northwest and 3.3 miles southeast of the airport's 043° bearing extending to 9 miles northeast of the airport to more appropriately contain departing IFR operations until reaching 1,200 feet above the surface and arriving IFR operations below 1,500 feet above the surface when executing the CAALM TWO Area Navigation (RNAV) Departure Procedure or the RNAV Global Positioning System (GPS) Runway (RWY) 20 and RNAV (GPS) M RWY 20 approaches.
Moreover, the southwest procedure turn area is removed, as it is no longer needed. In its place, a southwest extension to the Class E airspace extending upward from 700 feet above the surface is added to be within 3.3 miles southeast and 3 miles northwest of the airport's 223° bearing extending to 14.6 miles southwest of the airport. This extension better contains departing IFR operations between the surface and 1,200 feet while executing the TURTY FOUR RNAV departure and arriving IFR operations below 1,500 feet above the surface while executing the RNAV (GPS) A, RNAV (GPS) M RWY 02, RNAV (GPS) Y RWY 2, or the RNAV (GPS) Z RWY 2 approaches.
Furthermore, the Klawock Class E airspace beginning at 1,200 feet above the surface is removed as it is redundant.
Finally, the FAA is modifying the airport's legal description. The Klawock nondirectional beacon/distance measuring equipment navigational aid was decommissioned in 2017, and reference to it is removed.
The FAA has determined that this 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 only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 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 6.7-mile radius of the airport from the 249° bearing clockwise to the 025° bearing, within 3 miles northwest and 3.3 miles southeast of the 043° bearing extending from the airport to 9 miles northeast, and within 3.3 miles southeast and 3 miles northwest of the 223° bearing extending from the airport to 14.6 miles southwest.
Bureau of Industry and Security (BIS), Commerce.
Final rule.
In this final rule, BIS amends the Export Administration Regulations (EAR) to apply more restrictive treatment to exports and reexports to, and transfers (in-country) within, Nicaragua of items subject to the EAR. This action is consistent with the State Department's addition of Nicaragua to the list of countries that are subject to a U.S. arms embargo under the International Traffic in Arms Regulations (ITAR). To reflect this changed status under the ITAR, BIS adds Nicaragua to Country Group D:5. BIS's amendments also address concerns regarding the Nicaraguan Government's commission of human rights abuses against citizens and civil society groups, as well as the regime's ongoing military and security cooperation with Russia. Specifically, BIS is moving Nicaragua from Country Group B to Country Group D, a more restrictive country grouping, applying a stringent licensing policy for items controlled for national security reasons, and making the country subject to `military end use' and `military end user' restrictions. This rule advances the U.S. Government's efforts to restrict the availability of items subject to the EAR to Nicaragua's military and security services. Additionally, consistent with BIS's authorities under the Export Control Reform Act of 2018, this rule demonstrates a commitment to using export controls to protect human rights and promote democracy.
This rule is effective March 15, 2024.
Anthony Christino III, Director, Foreign Policy Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, U.S. Department of Commerce, by email at
To address ongoing foreign policy and national security concerns raised by the actions of the Nicaraguan Government under the leadership of President Daniel Ortega, including by Nicaraguan military and security services, BIS is issuing this final rule that would subject the country to more restrictive treatment under the Export Administration Regulations (EAR), 15 CFR parts 730 through 774.
In particular, this rule makes regulatory changes that reflect the U.S. Government's opposition to the trade of arms with Nicaragua and its government consistent with the State Department's March 15, 2024, addition of Nicaragua to § 126.1(p) of the International Traffic in Arms Regulations (ITAR), 22 CFR parts 120 through 130, thereby imposing restrictions (with limited exceptions) on the export of defense articles and defense services destined for or originating in the country.
Additionally, BIS's action addresses the Nicaraguan Government's ongoing dismantling of democratic institutions and attacks on civil society. Since 2018, President Ortega's regime has targeted democratic movements supported by students and middle-class professionals and sought to curb religious expression, including by the Roman Catholic church. In many instances, the government crackdowns have been aided and abetted by the Nicaragua National Police (NNP), the government's primary law enforcement entity, and the Nicaraguan judiciary. The NNP has been responsible for using live ammunition against peaceful protesters and participating in death squads, as well as carrying out extrajudicial killings, disappearances, and kidnappings. As documented by Amnesty International, during a period of several months starting in July 2018, the NNP and other pro-government forces conducted “Operation Clean Up,” an operation in which they deployed lethal force against protesters resulting in hundreds of deaths and injuries. On March 5, 2020, the U.S. Department of the Treasury's Office of Foreign Assets Control designated the NNP and three NNP commissioners, Juan Antonio Valle Valle, Luis Alberto Perez Olivas, and Justo Pastor Urbina, as Specially Designated Nationals.
BIS is also taking this regulatory action to address national security and foreign policy concerns arising out of
Consistent with the foreign policy and national security concerns detailed above, in this rule, BIS is making four sets of changes to the EAR that will subject Nicaragua to more stringent export, reexport, and transfer (in-country) controls involving items that are subject to the EAR. First, BIS is adding Nicaragua to Country Group D:5 (U.S. Arms Embargoed Countries) in supplement no. 1 to part 740 of the EAR. This amendment is made to conform with the State Department's amendment that added the country to § 126.1 (Prohibited exports, imports, and sales to or from certain countries) under paragraph (p). March 15, 2024.
Second, BIS is moving Nicaragua from Country Group B to Country Group D:1 (
Third, Nicaragua is being added to the countries subject to a stringent licensing policy set forth in § 742.4 (national security controls) in connection with the risk of diversion to defined military end uses and end users. Finally, this rule makes the country subject to the `military end use' and `military end user' restrictions in § 744.21.
Existing licensing requirements and related review policies not revised by this rule continue to apply to items subject to the EAR that are destined for Nicaragua. For example, items controlled for reasons identified in supplement no. 1 to part 738 (Commerce Country Chart) by “Xs” in Columns CB1, CB2, NP1, NS1, NS2, MT1, RS1, RS2, FC1, CC1 and CC3 remain subject to the existing controls under the EAR. In particular, BIS will continue to review for national security and foreign policy (including human rights) concerns items controlled for regional stability to Nicaragua as set forth in the “RS1” column on the Commerce Country Chart (
As a result of its placement in Country Group D:5, Nicaragua will be subject to additional restrictions in the EAR, including on
This rule also removes a reference to an outdated State Department website that is currently listed in the footnote to Country Group D:5 (Note to Country Group D:5). As amended, the note directs the public to § 126.1 of the ITAR and to
As a result of its placement in Country Group D:1, Nicaragua will be subject to more restrictive treatment under certain part 744 end use controls (
Removing Nicaragua from Country Group B and placing it in Country Group D:1 also makes certain license exceptions unavailable. The license exceptions made unavailable in full are: Shipments of limited value (LVS) (§ 740.3); License Exception Shipments to Country Group B countries (GBS) (§ 740.4); and Technology and software under restriction (TSR) (§ 740.6). Certain provisions in additional license exceptions that are available to Country Group B countries are restricted to Country Group D:1.
As a result of this rule, a restrictive licensing policy will apply to license applications involving the export, reexport, and transfer (in-country) to Nicaragua of items listed on the CCL and controlled for national security reasons (NS items). Specifically, such applications will now be subject to the licensing policy in § 742.4(b)(7), which specifies that applications involving NS items will be reviewed to determine whether there is a risk of diversion to a defined military end use or end user (
Finally, this rule adds Nicaragua to the countries that are subject to the `military end use' and `military end user' restrictions set forth in § 744.21. As amended by this rule, pursuant to § 744.21(a)(1), a license is required for the export, reexport, or transfer (in-country) of any item subject to the EAR that is listed in supplement no. 2 to part 744 to Burma, Cambodia, the People's Republic of China, Venezuela, or Nicaragua if there is “knowledge” (
Shipments of items removed from license exception eligibility or eligibility for export, reexport or transfer (in-country) without a license as a result of this regulatory action that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on March 15, 2024, pursuant to actual orders for exports, reexports and transfers (in-country) to a foreign destination may proceed to that destination under the previous license exception eligibility or without a license so long as they have been exported, reexported or transferred (in-country) before April 15, 2024. Any such items not actually exported, reexported or transferred in-country) before midnight, on April 15, 2024, require a license in accordance with this final rule.
On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA), 50 U.S.C. 4801-4852. ECRA provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule.
1. This final rule has been determined to be significant under Executive Order 12866.
2. Notwithstanding any other provision of law, no person may be required to respond to or be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
3. This rule does not contain policies with federalism implications as that term is defined under Executive Order 13132.
4. Pursuant to section 1762 of the Export Control Reform Act of 2018, this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation, and delay in effective date. Because neither the Administrative Procedure Act nor any other law requires that notice of proposed rulemaking and an opportunity for public comment be given for this rule, the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601
Administrative practice and procedure, Exports, Reporting and recordkeeping requirements.
Exports, Terrorism.
Exports, Reexports and recordkeeping requirements, Terrorism.
Accordingly, the Export Administration Regulations (15 CFR parts 740, 742, and 744) are amended as follows:
50 U.S.C. 4801-4852; 50 U.S.C. 4601
The addition and revision read as follows:
50 U.S.C. 4801-4852; 50 U.S.C. 4601
(b) * * *
(7)(i) For Burma, Cambodia, the People's Republic of China (PRC), Nicaragua, and Venezuela, all applications will be reviewed to determine the risk of diversion to a military end user or military enduse. * * *
50 U.S.C. 4801-4852; 50 U.S.C. 4601
(a)
(1) Any item subject to the EAR listed in supplement no. 2 to this part without a license if, at the time of the export, reexport, or transfer (in-country), you have “knowledge,” as defined in § 772.1 of the EAR, that the item is intended, entirely or in part, for a ‘military end use,’ as defined in paragraph (f) of this section, in Burma, Cambodia, the People's Republic of China (China), Nicaragua, or Venezuela, or a Burmese, Cambodian, Chinese, Nicaraguan, or Venezuelan ‘military end user,’ as defined in paragraph (g) of this section, wherever located. ‘Military end users’ located outside of Burma, Cambodia, China, Nicaragua, or Venezuela are limited to entities identified on the ‘Military End-User’ (MEU) List under supplement no. 7 to this part.
(2) Any item subject to the EAR without a license if, at the time of the export, reexport, or transfer (in-country), you have “knowledge,” as defined in § 772.1 of the EAR that the item is intended, entirely or in part, for a ‘military end use,’ as defined in paragraph (f) of this section, in Belarus or Russia, or a Belarusian or Russian ‘military end user,’ as defined in paragraph (g) of this section, wherever located. Belarusian or Russian ‘military end users’ located outside of Belarus or Russia are limited to entities identified on the Entity List under supplement no. 4 to this part with a footnote 3 designation.
An entity anywhere in the world, including in Burma, Cambodia, China, Nicaragua, or Venezuela, may be listed on the Entity List as a Belarusian or Russian ‘military end user’ with a footnote 3 designation. If the entity is not a Belarusian or Russian ‘military end user,’ but has otherwise been identified by the End User Review Committee (ERC) as a ‘military end user,’ that entity may be identified under the ‘Military End-User’ (MEU) List under supplement no. 7 to this part. As noted in paragraph (a)(1) of this section, exporters, reexporters, and transferors, even in the absence of any such notification, are not excused from compliance with the license requirements of this paragraph (a) for all entities in Burma, Cambodia, China, Nicaragua, or Venezuela to determine whether the entity is a ‘military end user’ for purposes of paragraph (g) of this section because supplement no. 7 is not an exhaustive listing of ‘military end users’ in those countries. As noted in paragraph (a)(2) of this section, exporters, reexporters, and transferors, even in the absence of any such notification, are not excused from compliance with the license requirements of this paragraph (a) for all entities in Belarus or Russia to determine whether the entity is a ‘military end user’ for purposes of paragraph (g) of this section because supplement no. 4 under this part is not an exhaustive listing of ‘military end users’ in those countries.
(b)
(1)
(i)
(ii)
(e) * * *
(3) Applications for items requiring a license for any reason that are destined for a ‘military end use’ in Belarus, Burma, Cambodia, China, Nicaragua, the Russian Federation, or Venezuela or for a Belarusian, Burmese, Cambodian, Chinese, Nicaraguan, Russian, or Venezuelan ‘military end user,’ wherever located, also will be subject to the review policy stated in paragraph (e)(1) of this section.
Food and Drug Administration, HHS.
Final rule.
The Food and Drug Administration (FDA or we) is revoking the standard of identity and the standard of quality for frozen cherry pie. This action, in part, responds to a citizen petition submitted by the American Bakers Association (ABA). We conclude that these standards are no longer necessary to promote honesty and fair dealing in the interest of consumers. Revocation of the standards of identity and quality for frozen cherry pie will provide greater flexibility in the product's manufacture, consistent with comparable, nonstandardized foods available in the marketplace.
This rule is effective April 15, 2024.
For access to the docket to read background documents or comments received, go to
Rumana Yasmeen, Office of Nutrition and Food Labeling (HFS-820), Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-2371; or Alexandra Beliveau, Office of Regulations and Policy (HFS-024), Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5001 Campus Dr., College Park, MD 20740, 240-402-2378.
The final rule revokes the standards of identity and quality for frozen cherry pie. This action, in part, responds to a citizen petition submitted by the ABA. We conclude that the standards of identity and quality for frozen cherry pie are no longer necessary to promote honesty and fair dealing in the interest of consumers. Revoking these standards will provide greater flexibility in the product's manufacture, consistent with comparable, nonstandardized foods available in the marketplace.
The final rule revokes the standards of identity and quality for frozen cherry pie.
We are issuing the final rule to revoke the standards of identity and quality for frozen cherry pie consistent with our authority under the Federal Food, Drug, and Cosmetic Act (FD&C Act), which directs the Secretary of Health and Human Services (Secretary) to issue regulations fixing and establishing for any food a reasonable definition and standard of identity, quality, or fill of container whenever, in the Secretary's judgment, such action will promote honesty and fair dealing in the interest of consumers.
The final rule affects manufacturers of frozen cherry pie and does not require firms within the frozen cherry pie industry to change their manufacturing practices. Our analyses of current food manufacturing practices and the petition to revoke the standards indicate that revoking the standards of identity and quality could provide benefits in terms of additional flexibility and the opportunity for innovation to manufacturers. Therefore, we conclude that the final rule to revoke the standards for frozen cherry pie will provide social benefits at no cost to the respective industries.
Section 401 of the FD&C Act (21 U.S.C. 341) directs the Secretary to issue regulations fixing and establishing for any food a reasonable definition and standard of identity, quality, or fill of container whenever, in the Secretary's judgment, such action will promote honesty and fair dealing in the interest of consumers. The purpose of these standards is to protect consumers against economic adulteration and reflect consumers' expectations about food.
We proposed the standards of identity and quality for frozen cherry pie in the
We received a citizen petition from ABA asking us, in part, to revoke the frozen cherry pie standards of identity and quality (Citizen Petition from the American Bakers Association, dated August 18, 2005, Docket No. FDA-2005-P-0435 (“petition”)). Among other things, the petition stated that there is no basis for singling out frozen cherry pie for the imposition of standards of identity and quality (petition at page 10). The petition observed that there are no standards of identity and quality for any other types of frozen fruit pies, or for any non-frozen fruit pies, including those filled with cherries (id.). The petition further asserted that nonstandardized fruit pies have been sold throughout the country for many years without any evidence of public confusion (id.).
In the
We stated that we were unaware of any evidence suggesting that consumers have different expectations for unbaked, frozen cherry pies than for other cherry pies (85 FR 82395 at 82396). At the same time, no other cherry pies are subject to a standard of identity or a standard of quality, and we stated that we were unaware of any evidence indicating that such standards are necessary to promote honesty and fair dealing in the interest of consumers or to ensure that those cherry pies meet consumer expectations (id.). Similarly, other fruit pies are not subject to standards of identity or quality, and we stated that we were unaware of any evidence indicating that such standards are necessary to promote honesty and fair dealing in the interest of consumers or to ensure that the pies meet consumer expectations (id.).
We also tentatively concluded that the prohibition of artificial sweeteners in § 152.126(a)(2) (21 CFR 152.126(a)(2)) does not promote honesty and fair dealing in the interest of consumers (85 FR 82395 at 82397). Baked, frozen cherry pie and baked, non-frozen cherry pie may be made with artificial sweeteners to produce reduced-sugar varieties to accommodate consumer preferences and dietary restrictions. Other types of fruit pies are manufactured with artificial sweeteners to produce reduced-sugar varieties. These varieties appear to cater to consumer preferences and needs, and we stated that we were unaware of any evidence that these varieties create confusion or circumvent consumer expectations (id.).
The proposed rule provided a 90-day comment period. We received over 60 comments to the proposed rule, and each comment discussed one or more issues. Trade associations, consumer advocacy organizations, individuals, academia, and industry submitted comments. Some comments appeared to have been submitted as part of a university exercise or assignment.
The comments discussed, among other things, the need for standards of identity and quality for frozen cherry pie. Some comments supported our proposed revocation, but others opposed it, expressing concerns that the revocation could reduce product quality or impact public health.
We are issuing this final rule to revoke the standards of identity and quality for frozen cherry pie consistent with our authority under section 401 of the FD&C Act, which directs the Secretary to issue regulations fixing and establishing for any food a reasonable definition and standard of identity,
We describe and respond to the comments in sections B through F of this section. We have numbered each comment to help distinguish between different comments. We have grouped similar comments together under the same number, and, in some cases, we have separated different issues discussed in the same comment and designated them as distinct comments for purposes of our responses. The number assigned to each comment or comment topic is purely for organizational purposes and does not signify the comment's value or importance or the order in which comments were received.
(Comment 1) In general, most comments opposed the revocation of the frozen cherry pie standards of identity and quality. A majority of comments opposed revoking the standards because of general quality, safety, and public health concerns, without any supporting evidence. The comments asserted that revoking the standards would lower, or remove, the requirements for frozen cherry pie, would not benefit or protect consumers, and would provide frozen cherry pie manufacturers too much flexibility in the manufacture of frozen cherry pie.
(Response 1) We disagree that removing the standards of identity and quality for frozen cherry pie will result in lower protection for consumers. While there will no longer be a standard of quality that prescribes a required weight for the fruit content of frozen cherry pie or a standard of identity specifying requirements for products labeled as frozen cherry pie, other safeguards exist under the FD&C Act to prevent adulterated and misbranded frozen cherry pie products. For example, under section 403(a) of the FD&C Act (21 U.S.C. 343(a)), manufacturers must ensure that all labeling is truthful and not misleading.
Many foods are nonstandardized foods, and they must be labeled with and sold under common or usual names that have been established by common usage. See 21 U.S.C. 343(i)(1) and § 102.5(d) (21 CFR 102.5(d)). As a nonstandardized food, frozen cherry pie must be labeled with its common or usual name, “frozen cherry pie,” which is still in common usage. The final rule recategorizes unbaked, frozen cherry pie as a nonstandardized food, like baked, non-frozen and baked, frozen cherry pies, as well as frozen and non-frozen fruit pies of other varieties. We are unaware of any evidence to suggest aligning unbaked, frozen cherry pie with baked, non-frozen cherry pies, baked, frozen cherry pies, as well as frozen and non-frozen fruit pies of other varieties as a nonstandardized food would create confusion or circumvent consumer expectations. Revoking these standards will provide greater flexibility in the product's manufacture while leaving other requirements under the FD&C Act, such as product quality, ingredient safety, and labeling, in place, consistent with comparable, nonstandardized foods available in the marketplace. For example, revoking the standards will allow for new varieties of frozen cherry pies that cater to consumer preferences and needs, such as those lower in added sugars. We conclude that the standards of identity and quality for frozen cherry pie are no longer necessary to promote honesty and fair dealing in the interest of consumers.
(Comment 2) Some comments supported revoking the standards of identity and quality for frozen cherry pie. In general, the comments agreed that the standards of identity and quality are no longer needed to promote honesty and fair dealing in the interest of consumers, and revoking the standards would:
• Provide benefits in terms of additional flexibility to the manufacturers of frozen cherry pie products; and
• Promote innovation and the introduction of new unbaked, frozen cherry pie products, providing benefits to both consumers and industry.
(Response 2) We agree with these comments. The final rule revokes the standards of identity and quality for frozen cherry pie.
(Comment 3) One comment provided a neutral summary of the frozen cherry pie proposed rule but did not raise any issues or concerns for us to address.
(Response 3) We generally agree with the comment's summary of the proposed rule. We conclude that the standards of identity and quality for frozen cherry pie are no longer necessary to promote honesty and fair dealing in the interest of consumers. The final rule revokes the standards of identity and quality for frozen cherry pie.
(Comment 4) Some comments contended that, upon revocation, consumers would not know what ingredients have been added to frozen cherry pies. A couple comments interpreted the proposed rule as eliminating labeling requirements, stating that if the standards are revoked, there would be no labeling requirements. One comment stated that labeling requirements are not stringent enough for consumers to receive honest information from manufacturers as to what a product is. Other comments stated that consumers deserve to know and should be confident and able to trust that unbaked, frozen cherry pies contain a significant or adequate amount of cherries. Another comment, while supportive of the revocation of the standards, stated concern about improperly labeled food products in various settings.
(Response 4) Although we are revoking the standards of identity and quality for frozen cherry pie, labeling requirements will continue to apply to these products. While standards of identity are typically established under the common or usual name of the food (see 21 U.S.C. 341), a standard of identity does not need to be established for a food to be labeled with and sold under its common or usual name. Most foods are nonstandardized foods, which must be labeled with and sold under common or usual names that have been established by common usage. See 21 U.S.C. 343(i)(1) and § 102.5(d). The use of a common or usual name allows consumers to identify more efficiently the type of nonstandardized food product they find in the store. Revocation of the frozen cherry pie standards of identity and quality will eliminate requirements related to the content and production of frozen cherry pie, and frozen cherry pie will become a nonstandardized food. As a nonstandardized food, frozen cherry pie must be labeled with its common or usual name, “frozen cherry pie,” which is still in common usage (see 21 U.S.C. 343(i)(1)). Thus, products with the name frozen cherry pie will continue to be available to consumers.
Manufacturers must also comply with identity labeling requirements, which require that a food in package form bear a statement of the identity of the product on the principal display panel (§ 101.3 (21 CFR 101.3)), and ingredient labeling requirements, which state that ingredients must be listed by their common or usual name, in descending order of predominance by weight unless
As for the comment about the labeling of food products in different settings, different food labeling requirements exist, depending on whether the food product is, for example, a packaged food sold at a grocery store or a prepared food at a restaurant or cafeteria (see 21 CFR part 101). In the case of noncompliance with our regulations, FDA may take enforcement actions, as appropriate.
(Comment 5) One comment noted that there is no need to revoke the standards of identity and quality because manufacturers can already make frozen cherry pie products that do not conform to the standards and can simply identify on the label that the product falls below the standard of quality.
(Response 5) It is true that manufacturers could produce a frozen cherry pie product not conforming to the standard of quality (
(Comment 6) Several comments expressed concern that revoking the standards for frozen cherry pie may compromise the quality of product and that FDA has a duty to maintain minimum standards of quality. A few comments stressed the importance of retaining the standards to maintain food quality standards and freshness.
(Response 6) Manufacturers must comply with Federal statutes and regulations to ensure a quality product. For example, quite apart from whether a food product is subject to a standard of quality or standard of identity, food products, including raw materials and ingredients, must comply with the quality control operations requirements set forth in current good manufacturing practices (CGMP) (see generally 21 CFR part 117) and are also required to bear truthful and non-misleading labeling, including a listing of their ingredients. We are unaware of, and the comments did not provide, any specific quality concerns for other varieties of unbaked, frozen fruit pies that are currently on the market. Nor did the comments provide support for the concern that revoking the standards for frozen cherry pie may compromise the quality of the product. Similarly, the comments did not describe how revoking the standards would affect the freshness of the product. As a general matter, the standard of quality for frozen cherry pie did not have a requirement for freshness, and we note that the standard of identity allowed for the use of fresh, frozen, and canned cherries in frozen cherry pies. If the comments are referring to freshness in terms of quality of the ingredients, we note that, under the FD&C Act, a food is adulterated if it consists in whole or in part of a filthy, putrid, or decomposed substance or is otherwise unfit for food. See 21 U.S.C. 342(a)(3).
(Comment 7) A few comments asserted that, in the absence of a standard of quality, manufacturers would be free to use subpar or substandard ingredients in their frozen cherry pie products in order to cut costs. Some comments expressed concern that the revocation of the standards for frozen cherry pie would allow manufacturers to add an unlimited number of blemished cherries, lower-quality cherries, or rotten cherries to their pies, or alternatively, that manufacturers would use fewer cherries, any amount or type of cherry, or no real cherries at all in frozen cherry pies. Several comments stated that cherry pie should be required to have cherries or that the standards should require more cherries. Other comments suggested that FDA should require manufacturers to label that a food contains numerous blemished cherries or to otherwise hold industry accountable to ensure that the cherries used are not spoiled. One comment suggested that revocation of the standards might even benefit consumers who are looking to make conscious purchases that mitigate food waste by purchasing a frozen cherry pie using blemished cherries.
(Response 7) We are unaware of any evidence that suggests revocation of the standards of identity and quality of frozen cherry pie may result in manufacturers adding subpar or substandard ingredients. In addition, other safeguards exist to ensure the quality of the food supply. A food is deemed to be adulterated if it consists in whole or in part of any filthy, putrid, or decomposed substance, or if it is otherwise unfit for food. See 21 U.S.C. 342(a)(3). Therefore, a food would be adulterated if it used rotten, spoiled, or otherwise unfit cherries. We also note that any food, including raw materials and ingredients, must comply with the quality control operations requirements set forth in CGMPs (21 CFR 117.80(b)).
As explained in the preamble to the proposed rule, frozen cherry pie is the only fruit pie, either frozen or non-frozen, that is currently subject to a standard of identity or quality (85 FR 82395 at 82396). We are unaware of any evidence suggesting that consumers have different expectations for unbaked, frozen cherry pies than for other fruit pies. We are also unaware of any evidence indicating that such standards are necessary to ensure that frozen cherry pie products continue to be produced with the characteristics consumers expect. FDA disagrees that revocation of the standards may result in having unbaked, frozen cherry pies in the marketplace with fewer cherries. As shown by widespread consumer acceptance of the variety of non-standardized fruit pies in the marketplace, such products meet consumer expectations and demands. Additionally, under the FD&C Act, manufacturers must ensure that all labeling is truthful and not misleading; otherwise, it is deemed misbranded (21 U.S.C. 343(a)). Therefore, a product marketed as frozen cherry pie that does not contain any cherries, would be misbranded. See 21 U.S.C. 343(a) and (b).
Manufacturers also must comply with identity labeling requirements, which require that a food in package form be labeled with its common or usual name, or in the absence thereof, a statement of identity that accurately describes the food on the principal display panel (§ 101.3). If a product is offered for sale under the name of another food (
Regarding the comment stating that manufacturers will now be able to use any type of cherry, we note that neither the existing standard of identity nor the existing standard of quality for frozen cherry pie specified the variety of cherry to be used; however, the standard of identity did allow for fresh, frozen, or canned cherries to be used. Consumers will be able to continue to purchase
(Comment 8) Some comments stated that revoking the standards would allow manufacturers to use unknown additives and fillers to make frozen cherry pies less expensive to produce.
(Response 8) In the absence of a standard of identity, manufacturers will have the flexibility to use different ingredients than those previously allowed to produce products that meet consumer expectations for frozen cherry pie. However, those different ingredients must still be lawful. Manufacturers must comply with ingredient labeling requirements (§ 101.4), as well as food and color additive regulations, which require additives to meet the safety standard of reasonable certainty of no harm under its intended conditions of use (21 CFR 70.3 and § 170.3 (21 CFR 170.3)). Consumers can also look at the product labeling to see the ingredients in frozen cherry pies and can purchase based on their preferences. Removing the standard of identity for frozen cherry pie will allow manufacturers to make products with different ingredients than those allowed under the prior standard of identity, but those products must still comply with the FD&C Act and implementing regulations. We conclude that the standards of identity and quality for frozen cherry pie are no longer necessary to promote honesty and fair dealing in the interest of consumers, and we are revoking the standards of identity and quality for frozen cherry pie.
(Comment 9) Some comments expressed concern over the potential use of unsafe ingredients or dangerous substitutes by manufacturers if we revoked the standards. Some comments stated that revoking the standards would allow manufacturers to use cheaper ingredients, such as artificial sweeteners, that the comments claimed pose serious health risks to consumers. One comment stated that FDA should conduct a comprehensive safety re-assessment of specific artificial sweeteners before encouraging reformulation with them. A few comments supported the revocation on the grounds that it would allow marketing of low-sugar varieties that some consumers may desire and classified artificial sweeteners as acceptable, sometimes desirable, and healthier than the current sweeteners used. Many comments expressed concerns about not knowing whether future frozen cherry pie products would meet any safety standards.
(Response 9) Our regulations, at 21 CFR 70.42 and 170.20, require evidence that each color or food additive used in food, such as an artificial sweetener, is safe at its intended level of use before it may be added to foods. All food additives or ingredients are required to undergo a premarket approval process unless the substance is generally recognized as safe (GRAS) or was approved for use by FDA or USDA prior to the food additive amendments of the FD&C Act (21 U.S.C. 321) (see also 21 CFR parts 170, 171, 130, and 181). Our regulations in § 170.30 (21 CFR 170.30) require that a GRAS determination based on scientific procedures be made by experts qualified by scientific training and experience to evaluate its safety, who have concluded, based on publicly available information, that the substance is safe under the conditions of its intended use. Both substances approved for use as a food additive and those determined to be GRAS must meet the safety standard of reasonable certainty of no harm under its intended conditions of use (§§ 170.3 and 170.30). A prior sanction for a food substance exists only for a specific use(s) in food for which there was explicit approval by FDA or USDA prior to September 6, 1958 (21 CFR 181.5(a)). All known prior sanctions are listed in our regulations, and any such regulation is subject to amendment to impose whatever limitations or conditions are necessary for the safe use of the ingredient (21 CFR 181.5(b)).
Furthermore, all FDA-approved food additives are subject to ongoing safety review. If new evidence indicates that a food ingredient in use may be unsafe, we may prohibit its use or conduct further studies to determine if the use can still be considered safe (21 CFR 180.1). We also note that, under the FD&C Act, a food is adulterated if it bears or contains a naturally occurring poisonous or deleterious substance that may render it injurious to health (21 U.S.C. 342).
As for the comments concerning the safety of artificial sweeteners, we disagree that we should conduct a comprehensive safety reassessment on specific artificial sweeteners before revoking the standards. Our regulations require that only safe and suitable ingredients are used in food production (21 CFR 130.3). An artificial sweetener is regulated as a food additive unless its use as a sweetener is GRAS. FDA-approved artificial sweeteners, as well as those that are GRAS, are safe for the general population. We also disagree with the assertion that we are encouraging reformulation with artificial sweeteners. As a result of revoking the standards, manufacturers will simply have greater flexibility and the opportunity for greater product innovation, consistent with what is currently allowed for other fruit pies. Revocation of the standards of identity and quality will permit the use of artificial sweeteners in frozen cherry pies, thus allowing reduced-sugar frozen cherry pie varieties to be sold in the marketplace under the same common or usual name of frozen cherry pie. We have seen no evidence of dishonesty, confusion, or the use of low-quality ingredients in other nonstandardized fruit pies, and we have no reason to believe that frozen cherry pies would be treated any differently. Therefore, we are revoking the standards of identity and quality for frozen cherry pie.
(Comment 10) A few comments suggested a revision of the standard, instead of a revocation. One comment stated that the requirement to have at least a minimum of 25 percent cherries relative to the pie's weight should not be repealed in order for consumers to know that a frozen cherry pie is made with real cherries. In an effort to prevent substitution of fillers, one comment proposed to eliminate the requirements for sieving and percent blemished fruit but retain the requirement for a minimum of 25 percent fruit, and another comment said we should remove regulations that require certain inspection processes for pies but keep in place the regulations requiring 25 percent minimum cherries and no greater than 15 percent blemished cherries.
(Response 10) We do not see a need for any such modification of the existing standards. As stated in the proposed rule, frozen cherry pie is the only fruit pie, either frozen or non-frozen, that is subject to standards of identity and quality (85 FR 82395 at 82396). Other fruit pies, including baked frozen cherry pie and baked non-frozen cherry pie, are not standardized, and these foods appear to meet consumer expectations in the absence of established definitions and standards. There appears to be no need to treat frozen cherry pie differently from other fruit pies available in the marketplace. Therefore, we have concluded that the frozen cherry pie standards of identity and quality are no longer needed to promote honesty and fair dealing in the interest of consumers or to ensure that those cherry pies meet consumer expectations. Revocation of the standards will provide greater flexibility
(Comment 11) Some comments questioned why there are not standards for other types of fruit pies besides frozen cherry pie and stated that the standards of identity and quality for frozen cherry pie should not be revoked but rather extended to other fruit pies available in the marketplace. One comment questioned why FDA fails to place more regulations, restrictions, and standards on other pies and food items on the American market.
(Response 11) Section 401 of the FD&C Act directs the Secretary to issue regulations fixing and establishing for any food a reasonable definition and standard of identity, quality, or fill of container whenever, in the Secretary's judgment, such action will promote honesty and fair dealing in the interest of consumers. The purpose of these standards is to protect consumers against economic adulteration and reflect consumers' expectations about food. Regarding other types of fruit pies, we are unaware of any evidence, and the comments provided no evidence, indicating that such standards are necessary to promote honesty and fair dealing in the interest of consumers or to ensure that the pies meet consumer expectations. Most fruit pies available in the marketplace, including baked cherry pies (both frozen and non-frozen varieties), are nonstandardized foods that are labeled with and sold under common or usual names. These foods appear to meet consumer expectations in the absence of established definitions and standards. Thus, we simply do not see a need to extend or to create standards of identity for other fruit pies in the marketplace that are currently regulated as nonstandardized foods.
We have the authority to issue regulations fixing and establishing for any food a reasonable definition and standard of identity, quality, or fill of container whenever, in the Secretary's judgment, such action will promote honesty and fair dealing in the interest of consumers, and we will continue to use this authority as needed to protect consumers.
(Comment 12) One comment stated that it is not clear if revoking the standards of identity and quality for frozen cherry pie would benefit consumers. The comment noted a lack of consumer calls asking for a greater variety of frozen cherry pie products and a lack of complaints about frozen cherry pies having too many cherries. The comment added that frozen cherry pie manufacturers could sell reduced-sugar frozen cherry pie products while the standards of identity and quality existed, and therefore, the standards did not create a barrier to marketing or selling reduced sugar varieties.
(Response 12) Standards of identity and quality are established to promote honesty and fair dealing in the interest of consumers. Standards protect consumers against economic adulteration and reflect consumers' expectations about food. Many fruit pies have been in the marketplace as nonstandardized foods for many years, and non-cherry fruit pies, either frozen or unfrozen, are not subject to the requirements of any standard. Unbaked, frozen cherry pie is the only fruit pie that is subject to standards of identity or quality. While these standards did not mandate that a certain amount of sugar be used in product formulation and, therefore, manufacturers could already sell reduced-sugar frozen cherry pie products, the standard of identity prohibited the use of artificial sweeteners (see § 152.126(a)(2)). Revocation of the standards of identity and quality for frozen cherry pie will not only provide greater flexibility in the product's manufacture (
(Comment 13) One comment stated that the proposed rule was the result of a food industry association's petition and not a petition from consumers, and FDA should reject industry attempts to revoke consumer protections.
(Response 13) We disagree that FDA should reject the petition that requested the revocation of the standards because it was from a food industry association and not from consumers. We evaluate all citizen petitions that meet the requirements of our citizen petition regulation at 21 CFR 10.30. After considering the petition and related information, including comments to the proposed rule, we conclude that the standards of identity and quality for frozen cherry pie are no longer needed to promote honesty and fair dealing in the interest of consumers consistent with section 401 of the FD&C Act, and we are revoking the standards of identity and quality for frozen cherry pie.
(Comment 14) One comment stated that this proposal is a poor expenditure of FDA's resources. This comment urged FDA to direct its efforts to priorities that align with the goals of FDA's Nutrition Innovation Strategy by, for example, allowing the use of sodium substitutes such as potassium chloride across standardized foods.
(Response 14) Since FDA first announced its Nutrition Innovation Strategy in 2018, we have shifted our efforts to a general national nutrition strategy. We are prioritizing our nutrition initiatives to ensure people in the United States have greater access to healthier foods and nutrition information that everyone can use to identify healthier choices more easily. The key elements of this strategy are sodium reduction, maternal and infant health and nutrition, labeling and claims, consumer education, and innovation support. FDA is continuing to update its standards of identity program with the goal of maintaining the basic nature and essential characteristics of standardized foods while permitting flexibility with respect to their composition. In the
We have the authority to issue regulations establishing standards of identity and quality to promote honesty and fair dealing in the interest of consumers (21 U.S.C. 341). Standards of identity and quality are intended to protect consumers against economic adulteration, maintain the integrity of food, and reflect consumers' expectations about the food. We will continue to prioritize our efforts as time and resources permit. While our general national nutrition strategy is just one of many priorities for FDA, we have many other projects that we simultaneously work on to carry out our work. For example, Executive Order 13563, “Improving Regulation and Regulatory
(Comment 15) One comment urged FDA to review and identify what factors have changed since the promulgation of the initial rule creating standards of identity and quality for frozen cherry pie, to the extent that evidence remains available to us. The comment also stated that we should explain our reasons for eliminating this specific standard, as distinguished from other identity standards that we would preserve.
(Response 15) In the
Consistent with FDA priorities on nutrition initiatives and Executive Order 13563, “Improving Regulation and Regulatory Review” (January 18, 2011), we will continue to evaluate the necessity of different standards, as appropriate, and may propose changes in the future if we determine a standard is no longer needed to promote honesty and fair dealing in the interest of consumers.
(Comment 16) Some comments mentioned that revocation of the standards of quality and identity would further contribute to the health disparities experienced among lower-income Americans. The comments state that access to quality foods should not be a luxury that only some can afford.
(Response 16) The standards of identity and quality for frozen cherry pie were established to promote honesty and fair dealing in the interest of consumers. Standards of identity do not ensure access to a food nor do they address the price(s) of a standardized food. Standards of identity also do not address consumer health disparity issues. Matters pertaining to access to food, food prices, and health disparities between different populations are outside the scope of this rulemaking.
(Comment 17) One comment mentioned that frozen cherry pie should have to maintain, at a minimum, the standards for frozen foods during transport and storage.
(Response 17) Frozen food product must follow our CGMPs (21 CFR 117.80) and risk-based preventive controls (21 CFR 117.206) among other regulations. The final rule does not impact the other statutory requirements or regulations that food manufacturers must follow.
(Comment 18) One comment stated that revocation of the standards of identity and quality will allow manufacturers to substitute cherries with yams.
(Response 18) A product labeled as cherry pie, but containing yams rather than cherries, would be misbranded under 21 U.S.C. 343(a)(1) because the labeling would be false or misleading. Additionally, section 301(a) of the FD&C Act (21 U.S.C. 331(a)) prohibits the introduction or delivery for introduction into interstate commerce any food that is misbranded.
This rule is effective 30 days after the date of publication in the
We have examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, Executive Order 14094, the Regulatory Flexibility Act (5 U.S.C. 601-612), the Congressional Review Act/Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 801, Pub. L. 104-121), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).
Executive Orders 12866, 13563, and 14094 direct us to assess all benefits, costs, and transfers of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). Rules are “significant” under Executive Order 12866 Section 3(f)(1) (as amended by Executive Order 14094) if they “have an annual effect on the economy of $200 million or more (adjusted every 3 years by the Administrator of the Office of Information and Regulatory Affairs (OIRA) for changes in gross domestic product); or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or tribal governments or communities.” OIRA has determined that this final rule is not a significant regulatory action as defined by Executive Order 12866 Section 3(f)(1).
Because this rule is not likely to result in an annual effect on the economy of $100 million or more or meets other criteria specified in the Congressional Review Act/Small Business Regulatory Enforcement Fairness Act, OIRA has determined that this rule does not fall within the scope of 5 U.S.C. 804(2).
The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because we conclude that this rule would not generate significant compliance costs, we certify that the final rule will not have a significant economic impact on a substantial number of small entities.
The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes estimates of anticipated impacts, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $183 million, using the most current (2023) Implicit Price Deflator for the Gross Domestic Product. This final rule will not result in an expenditure in any year that meets or exceeds this amount.
The final rule would not require firms within the frozen cherry pie industry to change their manufacturing practices. Our analysis of current food manufacturing practices and the petition to revoke the standards indicate that revoking the standards of identity and quality could provide benefits in terms of additional flexibility to manufacturers of frozen cherry pie products. We also conclude that these standards are obsolete because the requirements are not necessary to ensure that frozen cherry pie meets consumers' expectations about the food, and in some respect, place restrictions on the food that are inconsistent with consumers' expectations. Revocation of the standards would allow additional flexibility for, and the opportunity for
We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the final rule. The full analysis of economic impacts is available in the docket for this final rule (Ref. 1) and at
We have determined under 21 CFR 25.32(a) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
This final rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.
We have analyzed this final rule in accordance with the principles set forth in Executive Order 13132. FDA has determined that the rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.
We have analyzed this rule in accordance with the principles set forth in Executive Order 13175. We have determined that the rule does not contain policies that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. Accordingly, we conclude that the rule does not contain policies that have tribal implications as defined in the Executive order and, consequently, a tribal summary impact statement is not required.
The following reference is on display at the Dockets Management Staff (see
Bakery products, Food grades and standards, Frozen foods, Fruits.
Food and Drug Administration, HHS.
Final rule; technical amendments.
The Food and Drug Administration (FDA, the Agency, or we) is amending certain medical device regulations to update a citation for information collection and conform the regulatory provisions to the Federal Food, Drug, and Cosmetics Act (FD&C Act). The rule does not impose any new requirements on affected parties. This action is editorial in nature to correct errors and to ensure accuracy and clarity in the Agency's regulations.
This rule is March 15, 2024.
Madhusoodana Nambiar, Office of Policy, Center for Devices and Radiological Health, 10903 New Hampshire Ave., Bldg. 66, Rm. 5519, Silver Spring, MD 20993-0002, 301-796-5837.
As a part of this technical amendment, FDA is making changes to 21 CFR parts 807 and 814 to update a citation for information collection and to conform the regulatory provisions to the FD&C Act to ensure accuracy and clarity in the Agency's medical device regulations. The changes published in this notice are nonsubstantive and editorial in nature.
On December 29, 2022, Congress enacted the Food and Drug Omnibus Reform Act of 2022, Title III of 131 Division FF of the Consolidated Appropriations Act, 2023 (FDORA) (Pub. L. 117-328), which added and amended various sections of the FD&C Act. Section 3308 of FDORA added section 515C of the FD&C Act (21 U.S.C. 360e-4). Section 515C provides FDA with express authority to approve or clear predetermined change control plans (PCCPs) for devices requiring premarket approval applications (PMAs) under section 515 of the FD&C Act (21 U.S.C. 360e) or premarket notification under section 510(k) of the FD&C Act (510(k)) (21 U.S.C. 360). Under section 515C manufacturers will not need to submit PMAs, including a supplemental application, or a new 510(k) as long as the change is consistent with a PCCP approved or cleared by FDA.
We are amending 21 CFR 807.81(b) and 814.39(b) to include predetermined change control plans cleared or approved, respectively, under 515C consistent with the statutory language in section 515C of the FD&C Act. The regulation, 21 CFR 807.87(m), is being revised to make a nonsubstantive editorial change to remove the incorrect information collection requirement citation. The rule does not impose any new regulatory requirements on affected parties. The amendments are editorial in nature and should not be construed as modifying any substantive standards or requirements.
Publication of this document constitutes final action under the Administrative Procedure Act (APA) (5 U.S.C. 553). Section 553 of the APA generally exempts “rules of agency organization, procedure, or practice” from proposed rulemaking (
FDA has determined that this rulemaking meets the APA's notice and comment exemption requirements under 5 U.S.C. 553(b)(3)(B). All the revisions in this rule are technical or nonsubstantive changes. Some of these revisions update the language in certain regulations to be consistent with the FD&C Act. The balance of these revisions updates an incorrect citation for information collection. Such technical, nonsubstantive changes are “a routine determination, insignificant in nature and impact, and inconsequential to the industry and to the public.”
The APA allows an effective date less than 30 days after publication as “provided by the agency for good cause found and published with the rule” (5 U.S.C. 553(d)(3)). An effective date 30 or more days from the date of publication is unnecessary in this case because the amendments do not impose any new regulatory requirements on affected parties, and affected parties do not need time to “adjust to the new regulation” before the rule takes effect.
Confidential business information, Imports, Medical devices, Reporting and recordkeeping requirements.
Administrative practice and procedure, Confidential business information, Medical devices, Medical research, Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act, and under the authority delegated to the Commissioner of Food and Drugs, 21 CFR parts 807 and 814 are amended as follows:
21 U.S.C. 321, 331, 351, 352, 360, 360c, 360e, 360e-4, 360i, 360j, 360bbb-8b, 371, 374, 379k-1, 381, 393; 42 U.S.C. 264, 271.
(b)(1) A premarket notification under this subpart is not required for a device for which:
(i) A premarket approval application under section 515 of the act, or for which a petition to reclassify under
(ii) There is a predetermined change control plan (PCCP) cleared under section 515C of the act, provided that the change is consistent with the PCCP.
21 U.S.C. 351, 352, 353, 360, 360c-360j, 360bbb-8b, 371, 372, 373, 374, 375, 379, 379e, 379k-1, 381.
(b) An applicant may make a change in a device after FDA's approval of a PMA for the device without submitting a PMA supplement if the change does not affect the device's safety or effectiveness and the change is reported to FDA in post approval periodic reports required as a condition to approval of the device,
Drug Enforcement Administration, Department of Justice.
Final amendment; final order.
With the issuance of this final order, the Administrator of the Drug Enforcement Administration is permanently placing 1-(2-methyl-4-(3-phenylprop-2-en-1-yl)piperazin-1-yl)butan-1-one (commonly known as 2-methyl AP-237), including its optical and geometric isomers, esters, ethers, salts, and salts of isomers, esters, and ethers whenever the existence of such isomers, esters, ethers, and salts is possible within the specific chemical designation, in schedule I of the Controlled Substances Act. This scheduling action discharges the United States' obligations under the Single Convention on Narcotic Drugs (1961). This action imposes the regulatory controls and administrative, civil, and criminal sanctions applicable to schedule I controlled substances on persons who handle (manufacture, distribute, import, export, engage in research or conduct instructional activities with, or possess), or propose to handle 2-methyl AP-237.
Effective April 15, 2024.
Dr. Terrence L. Boos, Drug and Chemical Evaluation Section, Diversion Control Division, Drug Enforcement Administration; Telephone: (571) 362-3249.
The United States is a party to the 1961 United Nations Single Convention on Narcotic Drugs, March 30, 1961, 18 U.S.T. 1407, 570 U.N.T.S. 151 (Single Convention), as amended by the 1972 Protocol. Article 3, paragraph 7 of the Single Convention requires that if the Commission on Narcotic Drugs (Commission) adds a substance to one of the schedules of such Convention, and the United States receives notification of such scheduling decision from the Secretary-General of the United Nations (Secretary-General), the United States, as a signatory Member State, is obligated to control the substance under its national drug control legislation. Under 21 U.S.C. 811(d)(1) of the Controlled Substances Act (CSA), if control of a substance is required “by United States obligations under international treaties, conventions, or protocols in effect on October 27, 1970,” the Attorney General must issue an order controlling such drug under the schedule he deems most appropriate to carry out such obligations, without regard to the findings required by 21 U.S.C. 811(a) or 812(b), and without regard to the procedures prescribed by 21 U.S.C. 811(a) and (b). The Attorney General has delegated scheduling authority under 21 U.S.C. 811 to the Administrator of the Drug Enforcement Administration (Administrator of DEA or Administrator). 28 CFR 0.100.
In a letter dated November 24, 2022, the Director-General of the World Health Organization recommended to the Secretary-General of the United Nations that 2-methyl AP-237 be placed in Schedule I of the Single Convention, as this substance has an opioid mechanism of action and similarity to drugs that are controlled in Schedule I of the Single Convention (
2-Methyl AP-237 has a pharmacological profile similar to other classical opioids such as fentanyl (schedule II), morphine (schedule II) and heroin (schedule I), which act as mu-opioid receptor agonists. Because of the pharmacological similarities of 2-methyl AP-237 to the aforementioned opioids, 2-methyl AP-237 presents a high risk of abuse and has negatively affected users and communities. According to the DEA Toxicology Testing Program (DEA TOX)
In June 2019, 2-methyl AP-237 emerged on the United States illicit drug market as evidenced by its identification in drug seizures.
DEA is not aware of any claims or any medical or scientific literature suggesting that 2-methyl AP-237 has a currently accepted medical use in treatment in the United States. In addition, the Assistant Secretary for Health of the U.S. Department of Health and Human Services, by a letter to DEA dated December 22, 2022, stated that there are no investigational new drug applications or approved new drug applications for 2-methyl AP-237 in the United States; hence, there are no legitimate channels for this substance as a marketed drug product in the United States. Because 2-methyl AP-237 is not formulated or available for clinical use as an approved medicinal product, all current use of this substance by individuals is based on their own initiative, rather than on the basis of medical advice from a practitioner licensed by law to administer such a drug.
Therefore, consistent with 21 U.S.C. 811(d)(1), DEA concludes that 2-methyl AP-237 has no currently accepted medical use in treatment in the United States
In order to meet the United States' obligations under the Single Convention and because 2-methyl AP-237 has no currently accepted medical use in treatment in the United States, the Administrator has determined that 2-methyl AP-237, including its optical and geometric isomers, esters, ethers, salts, and salts of isomers, esters, and ethers, whenever the existence of such isomers, esters, ethers, and salts is possible within the specific chemical designation, should be placed in schedule I of the CSA.
Upon the effective date of the final order contained in this document, 2-methyl AP-237 will be permanently subject to the CSA's schedule I regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture of, distribution of, importation of, exportation of, engagement in research or conduct of instructional activities with, and possession of, schedule I controlled substances, including the following:
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5.
6.
After the initial inventory, every DEA registrant must take a new inventory of all stocks of controlled substances (including 2-methyl AP-237) on hand every two years pursuant to 21 U.S.C. 827 and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.
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This action is not a significant regulatory action as defined by Executive Order (E.O.) 12866 (Regulatory Planning and Review), section 3(f), as amended by E.O. 14094, section 1(b), and the principles reaffirmed in E.O. 13563 (Improving Regulation and Regulatory Review); and, accordingly, this action has not been reviewed by the Office of Management and Budget (OMB).
This action meets the applicable standards set forth in sections 3(a) and 3(b)(2) of E.O. 12988 to eliminate drafting errors and ambiguity, minimize litigation, provide a clear legal standard for affected conduct, and promote simplification and burden reduction.
This action does not have federalism implications warranting the application of E.O. 13132. This action does not have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications warranting the application of E.O. 13175. The action does not have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The CSA provides for an expedited scheduling action where control is required by the United States' obligations under international treaties, conventions, or protocols. 21 U.S.C. 811(d)(1). If control is required pursuant to such international treaty, convention, or protocol, the Attorney General, as delegated to the Administrator, must issue an order controlling such drug under the schedule he deems most appropriate to carry out such obligations, and “without regard to” the findings and rulemaking procedures otherwise required for scheduling actions in 21 U.S.C. 811(a) and (b).
In accordance with 21 U.S.C. 811(d)(1), scheduling actions for drugs that are required to be controlled by the United States' obligations under international treaties, conventions, or protocols in effect on October 27, 1970, shall be issued by order (as opposed to scheduling by rule pursuant to 21 U.S.C. 811(a)). Therefore, DEA believes that the notice and comment requirements of section 553 of the Administrative Procedure Act (APA), 5 U.S.C. 553, do not apply to this scheduling action.
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612) applies to rules that are subject to notice and comment under section 553(b) of the APA or any other law. As explained above, the CSA exempts this final order from notice and comment. Consequently, the RFA does not apply to this action.
This order would modify an existing collection of information requirement under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3521. Pursuant to section 3507(d) of the PRA of 1995 (44 U.S.C. 3507(d)), DEA is adding new reporting and recordkeeping requirements for 1117-0003. This order also involves existing collection 1117-0004, but would not modify the existing collection of information requirement under the PRA. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information, unless it displays a valid OMB control number. Copies of existing information collections approved by OMB may be obtained at
In accordance with the Unfunded Mandates Reform Act (UMRA) of 1995, 2 U.S.C. 1501
This order is not a major rule as defined by the Congressional Review Act (CRA), 5 U.S.C. 804. However, DEA is submitting reports under the CRA to both Houses of Congress and to the Comptroller General.
Administrative practice and procedure, Drug traffic control, Reporting and recordkeeping requirements.
For the reasons set out above, DEA amends 21 CFR part 1308 as follows:
21 U.S.C. 811, 812, 871(b), 956(b), unless otherwise noted.
The addition reads as follows:
(b) * * *
This document of the Drug Enforcement Administration was signed on March 8, 2024, 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
Department of State.
Final rule.
The Department of State is amending the International Traffic in Arms Regulations (ITAR) to add Nicaragua in the list of countries for which it is the policy of the United States to deny licenses or other approvals for exports and imports of defense services and defense articles, except as otherwise provided.
The rule is effective on March 15, 2024.
Ms. Maria Tatarska, Foreign Affairs Officer, Office of Defense Trade Controls Policy, U.S. Department of State, telephone (771) 205-7671; email
Due to growing concerns regarding Nicaragua's continuing dismantling of democratic institutions, attacks on civil society, and increased security cooperation with Russia, to include support of Russia's full-scale invasion of Ukraine, the Under Secretary of State for Arms Control and International Security has determined that it is in the best interests of U.S. national security and foreign policy to restrict, with certain exceptions, the export and import of defense articles and defense services destined for or originating in Nicaragua. This policy reflects the U.S. government's opposition to the trade of arms with Nicaragua and its authoritarian government dominated by President Daniel Ortega Saavedra and his wife, Vice President Rosario Murillo Zambrana. Pursuant to this determination, the Department is adding Nicaragua to ITAR § 126.1 in paragraph (p). The policy of denial toward Nicaragua applies to licenses or other approvals for exports and imports of defense articles or defense services, except that a license or other approval may be issued on a case-by-case basis for non-lethal military equipment intended solely for humanitarian assistance, to include natural disaster relief. Further, in accordance with ITAR § 129.7, no broker, as described in ITAR § 129.2, may engage in or make a proposal to engage in brokering activities subject to the ITAR that involve Nicaragua without obtaining the approval of the Directorate of Defense Trade Controls. Consistent with ITAR § 129.7(d), the Department of State will apply the same policy of denial to such requests.
This rulemaking is exempt from the rulemaking requirements of section 553 of the Administrative Procedure Act (APA) pursuant to 5 U.S.C. 553(a)(1) as a military or foreign affairs function of the United States.
Since this rule is exempt from the notice-and-comment provisions of 5 U.S.C. 553, the rule does not require analysis under the Regulatory Flexibility Act.
This rulemaking does not involve a mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any year and it will not significantly or uniquely affect small governments. Therefore, no actions are deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
The Department does not believe this rulemaking is a major rule within the definition of 5 U.S.C. 804.
This rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this rulemaking.
Executive Order 12866, as amended by Executive Orders 13563 and 14094, directs agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributed impacts, and equity). As a result of this change, certain exemptions to licensing requirements will not be available for exports, reexports, retransfers, and temporary imports destined for or originating in Nicaragua. However, a license or other approval may be issued on a case-by-case basis for non-lethal military equipment intended solely for humanitarian assistance, to include natural disaster relief. Because the scope of this rule does not impose significant additional regulatory requirements or obligations, the Department believes costs associated with this rule will be minimal. This rule has been designated a “significant regulatory action” by the Office and Information and Regulatory Affairs under Executive Order 12866.
The Department of State has reviewed this rulemaking in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.
The Department of State determined that this rulemaking will not have Tribal implications, will not impose substantial direct compliance costs on Indian Tribal governments, and will not preempt tribal law. Accordingly, Executive Order 13175 does not apply to this rulemaking.
This rulemaking does not impose or revise any information collections subject to 44 U.S.C. Chapter 35.
Arms and munitions, Exports.
For the reasons set forth above, title 22, chapter I, subchapter M, part 126 is amended as follows:
22 U.S.C. 287c, 2651a, 2752, 2753, 2776, 2778, 2779, 2779a, 2780, 2791, 2797; Sec. 1225, Pub. L. 108-375, 118 Stat. 2091; Sec. 7045, Pub. L. 112-74, 125 Stat.
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(2) * * *
(p)
Alcohol and Tobacco Tax and Trade Bureau, Treasury.
Final rule; Treasury decision.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) establishes the approximately 167,146-acre “Contra Costa” American viticultural area in Contra Costa County, California. Additionally, TTB is expanding the boundaries of the established San Francisco Bay and Central Coast viticultural areas to avoid a partial overlap with the Contra Costa viticultural area and instead encompass the entire Contra Costa AVA. TTB designates viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase.
This final rule is effective April 15, 2024.
Karen A. Thornton, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005; phone 202-453-1039, ext. 175.
Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act provides that these regulations should, among other things, prohibit consumer deception and the use of misleading statements on labels, and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). In addition, the Secretary of the Treasury has delegated certain administration and enforcement authorities to TTB through Treasury Order 120-01.
Part 4 of the TTB regulations (27 CFR part 4) authorizes TTB to establish definitive viticultural areas and regulate the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved AVAs.
Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region having distinguishing features as described in part 9 of the regulations and, once approved, a name and a delineated boundary codified in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to the wine's geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA is neither an
Section 4.25(e)(2) of the TTB regulations (27 CFR 4.25(e)(2)) outlines the procedure for proposing an AVA and allows any interested party to petition TTB to establish a grape-growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions to establish or modify AVAs. Petitions to establish an AVA must include the following:
• Evidence that the area within the proposed AVA boundary is nationally or locally known by the AVA name specified in the petition;
• An explanation of the basis for defining the boundary of the proposed AVA;
• A narrative description of the features of the proposed AVA affecting viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed AVA distinctive and distinguish it from adjacent areas outside the proposed AVA;
• If the proposed AVA is to be established within, or overlapping, an existing AVA, an explanation that both identifies the attributes of the proposed AVA that are consistent with the existing AVA and explains how the proposed AVA is sufficiently distinct from the existing AVA and therefore appropriate for separate recognition;
• The appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed AVA, with the boundary of the proposed AVA clearly drawn thereon; and
• A detailed narrative description of the proposed AVA boundary based on USGS map markings.
TTB received a petition on behalf of the Contra Costa Winegrowers Association proposing to establish the “Contra Costa” AVA and expand the boundaries of the established San Francisco Bay (27 CFR 9.157) and Central Coast (27 CFR 9.75) AVAs. The proposed Contra Costa AVA is within Contra Costa County, California. The proposed AVA covers approximately 167,146 acres and currently contains at least 60 commercial vineyards covering a total of approximately 1,700 acres, as well as at least 14 wineries. According to the petition, the distinguishing features of the proposed AVA are its topography and climate.
The proposed Contra Costa AVA consists of relatively flat terrain interrupted in places by rolling hills. All elevations within the proposed AVA are below 1,000 feet, and most elevations are below 100 feet. Over 71 percent of the slope angles within the proposed AVA are less than 5 percent, but along the western and southern boundary and in the ridgeline that runs north-south between Concord and Bay Point, slope angles can reach 30 percent. The petition states that cool, heavy marine air stays at lower elevations, leading to diurnal cooling that can cause differences in grape development, the timing of harvest, and sugar accumulation and acidity in the grapes when compared to the same varietals grown at higher elevations.
East of the proposed AVA, the terrain is generally flat as one moves into the California Delta and the San Joaquin Valley. To the south and west of the proposed AVA, the terrain becomes steeper, with slope angles generally exceeding 20 percent and commonly above 30 percent. Elevations to the west and south of the proposed AVA are also generally higher than within the proposed AVA, exceeding 1,300 feet in the region to the west and reaching 3,849 feet at the summit of Mt. Diablo to the south of the proposed AVA.
The petition also includes climate data in the form of growing degree day (GDD) accumulations
To the northeast of the proposed AVA, at Jersey Island, GDD accumulations from 2014 to 2019 were similar to those found in the proposed AVA, but the petitioner chose to exclude this region from the proposed AVA because of its mucky soils that are unlikely to support viticulture. To the south, in Walnut Creek, GDD accumulations were also similar to those within the proposed AVA, although the petitioner excluded this region from the proposed AVA because it is a largely residential area that is not suited for commercial viticulture. Farther south, in Byron, GDD accumulations were significantly higher than those within the proposed AVA. To the east, within the San Joaquin Valley, GDD accumulations were generally warmer than within the proposed AVA, as the marine influence decreases as one moves farther inland. West of the proposed AVA, as one moves closer to San Francisco Bay and the Pacific Ocean, GDD accumulations were lower than within the proposed AVA.
Within the proposed Contra Costa AVA, annual precipitation amounts from 2013 to 2018 ranged from a low of 232 millimeters (mm) to a high of 565 mm. During the same time period, annual precipitation amounts to the west and southwest of the proposed AVA were generally higher, ranging from a low of 374 mm to a high of 1,712 mm. Although the petition included precipitation data for regions to the northeast, east, and southeast of the proposed AVA, TTB excluded the data from the proposed rule document because the data was collected from a period of two years or less and therefore TTB was unable to determine whether precipitation was a distinguishing feature of the proposed AVA in relation to those regions.
The San Francisco Bay AVA was established by T.D. ATF-407 on January 20, 1999 (64 FR 3015). T.D. ATF-407 describes the distinguishing feature of the San Francisco Bay AVA as “a marine climate which is heavily influenced by the proximity of the San Francisco Bay and the Pacific Ocean.” T.D. ATF-407 also notes that the eastern boundary of the AVA was chosen, in part, as a way of separating the AVA from the drier, warmer inland region of the Central Valley, which lacks a strong marine influence. Only the western portion of the proposed Contra Costa AVA lies within the existing San Francisco Bay AVA. To eliminate the partial overlap, the petitioner also proposed expanding the boundary of the San Francisco Bay AVA to encompass the entire Contra Costa AVA. The proposed expansion would increase the size of the San Francisco Bay AVA by approximately 109,955 acres. The proposed Contra Costa AVA shares some of the characteristics of the larger established AVA. For example, similar to other locations in the San Francisco Bay AVA, information provided in the petition to establish the Contra Costa AVA showed that the proposed AVA is
The petition also proposes to expand the boundary of the established Central Coast AVA. The Central Coast AVA was established by T.D. ATF-216 on October 24, 1985 (50 FR 43128). T.D. ATF-216 describes the Central Coast AVA as a region between the Pacific Ocean and the Coast Ranges of California. The Central Coast AVA has a climate that is greatly affected by the marine influence, with the region to the east of the AVA having a more arid climate.
Only the western portion of the proposed Contra Costa AVA lies within the existing Central Coast AVA. To eliminate the partial overlap, the petitioner also proposed modifying the boundary of the Central Coast AVA to encompass the entire Contra Costa AVA. The proposed modification would increase the size of the Central Coast AVA by approximately 109,955 acres. Information provided in the petition to establish the Contra Costa AVA showed that the proposed Contra Costa AVA shares some of the characteristics of the larger established AVA. For example, similar to other locations in the Central Coast AVA, the proposed AVA is affected by cool, moist air from the Pacific Ocean, which enters the region from San Francisco Bay via Suisun Bay. The proposed AVA is also generally cooler and wetter than the region to the east. However, the proposed Contra Costa AVA has some characteristics that distinguish it from the larger Central Coast AVA. For instance, being a smaller region, the proposed AVA has less topographic variety than the Central Coast AVA. Additionally, being adjacent to the shoreline of Suisun Bay, the proposed AVA is more directly exposed to cool marine air than other regions of the Central Coast AVA, such as the Paso Robles AVA (27 CFR 9.84), which is farther inland and, according to T.D. ATF-216, receives its marine air via the Salinas River, which empties into Monterey Bay.
TTB published Notice No. 223 in the
In Notice No. 223, TTB solicited comments on the accuracy of the name, boundary, distinguishing features, and other required information submitted in support of the petition. In addition, TTB solicited comments on the proposed modifications of the established Central Coast and San Francisco Bay AVAs and whether the evidence presented in the proposed Contra Costa AVA petition sufficiently supported the modifications. The comment period for Notice No. 223 closed on May 30, 2023. In response to Notice No. 223, TTB received seven comments. Commenters include local wine industry members, the Contra Costa Winegrowers Association, the Downtown Brentwood Coalition, the mayor of the city of Brentwood, and the original petitioner. All seven comments support the establishment of the proposed Contra Costa AVA. None of the comments specifically addressed the proposed expansion of the San Francisco Bay or Central Coast AVAs.
Additionally, the comment from the petitioner (comment 1) clarified that Viano Vineyards is within both the proposed Contra Costa AVA and the unmodified Central Coast AVA. The petitioner states that TTB's description of Viano Vineyards on page 18476 of the proposed rule document made it seem as if the vineyard was not within the unmodified boundary of the Central Coast AVA. TTB agrees with the commenter that Viano Vineyards is within both the proposed Contra Costa AVA and the unmodified Central Coast AVA boundary. Comment 2 also noted that the second page of Exhibit I to the petition, which is marked as a list of members of the Contra Costa Winegrowers Association, includes persons who are members of the Lamorinda AVA association, not the Contra Costa Winegrowers Association. Exhibit I is not a TTB document, but TTB notes that winegrowers associations may accept members from neighboring regions outside of the particular AVA, and that members listed in the exhibit may be members of both associations. Because TTB did not receive any additional clarification from the petitioner regarding this exhibit, TTB is not amending the exhibit in the docket.
After careful review of the petition and of the comments received in response to Notice No. 223, TTB finds that the evidence provided by the petitioner supports the establishment of the approximately 167,146-acre Contra Costa AVA and the expansion of the boundaries of the San Francisco Bay and Central Coast AVAs. Accordingly, under the authority of the FAA Act, section 1111(d) of the Homeland Security Act of 2002, and parts 4 and 9 of the TTB regulations, TTB establishes the “Contra Costa” AVA in Contra Costa County, California.
Furthermore, TTB expands the boundaries of the San Francisco Bay and Central Coast AVAs to entirely encompass the Contra Costa AVA, after finding that the evidence provided by the petitioner shows that the features of the expansion areas described in Notice No. 223 are consistent with the features of the established AVAs. These changes are effective April 15, 2024.
See the narrative boundary description of the Contra Costa AVA and the expanded boundaries of the San Francisco Bay and Central Coast AVAs in the regulatory text published at the end of this final rule.
The petitioner provided the required maps, and they are listed below in the regulatory text. The Contra Costa AVA boundary and the expanded San Francisco Bay and Central Coast AVA boundaries may also be viewed on the AVA Map Explorer on the TTB website, at
Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a
With the establishment of the Contra Costa AVA, its name, “Contra Costa,” will be recognized as a name of viticultural significance under § 4.39(i)(3) of the TTB regulations (27 CFR 4.39(i)(3)). The text of the regulations clarifies this point. Consequently, wine bottlers using the name “Contra Costa” in a brand name, including a trademark, or in another label reference to the origin of the wine, will have to ensure that the product is eligible to use the AVA name as an appellation of origin. The establishment of the AVA will not affect the use of “Contra Costa County” as a county appellation of origin on wine labels.
The establishment of the Contra Costa AVA will allow vintners to use “Contra Costa” as an AVA appellation of origin for wines made primarily from grapes grown within the Contra Costa AVA if the wines meet the eligibility requirements for the appellation. The expansion of the Central Coast and San Francisco Bay AVAs will also allow vintners to use “Central Coast,” “San Francisco Bay,” or both, as appellations of origin for wines made primarily from grapes grown anywhere in the Contra Costa AVA if the wines meet the eligibility requirements for the appellation.
Bottlers who wish to label their wines with “Contra Costa” as an AVA appellation of origin must obtain a new Certificate of Label Approval (COLA) for the label, even if the currently approved label already contains another AVA appellation of origin. Please do not submit COLA requests to TTB before the effective date shown in the
TTB certifies that this regulation will not have a significant economic impact on a substantial number of small entities. The regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of an AVA name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.
It has been determined that this final rule is not a significant regulatory action as defined by Executive Order 12866, as amended. Therefore, no regulatory assessment is required.
Wine.
For the reasons discussed in the preamble, TTB amends title 27, chapter I, part 9, Code of Federal Regulations, as follows:
27 U.S.C. 205.
The revisions and additions read as follows:
(b) * * *
(44) Benicia, California, scale 1:24,000, dated 2018;
(45) Vine Hill, California, scale 1:24,000, dated 2018;
(46) Honker Bay, California, scale 1:24,000, dated 2018;
(47) Antioch North, California, scale 1:24,000, dated 2018;
(48) Jersey Island, California, scale 1:24,000, dated 2018;
(49) Bouldin Island, California, scale 1:24,000, dated 2018;
(50) Woodward Island, California, scale 1:24,000, dated 2018;
(51) Clifton Court Forebay, California, scale 1:24,000, dated 2018;
(52) Byron Hot Springs, California, scale 1:24,000, dated 2018;
(53) Tassajara, California, scale 1:24,000, dated 2018;
(54) Antioch South, California, scale 1:24,000, dated 2018; and
(55) Clayton, California, scale 1:24,000, dated 2018.
(c) * * *
(4) From this point, the boundary proceeds east along the shoreline of Alameda County and Contra Costa County across the Richmond, San Quentin, Mare Island, Benicia (2018 edition), Vine Hill (2018 edition), Honker Bay (2018 edition), and Antioch North maps and onto the Jersey Island map to the intersection of the shoreline with Bethel Island Road.
(5) Proceed southeast in a straight line 0.7 mile to the intersection of Wells Road and Sandmound Road.
(6) Proceed northeast in a straight line 2.7 miles, crossing onto the Bouldin Island map, to the northernmost point of Holland Tract Road.
(7) Proceed south 1.9 miles along Holland Tract Road, crossing onto the Woodward Island map, to the road's intersection with the 10-foot elevation contour.
(8) Proceed south-southeast in a straight line 4.1 miles to the intersection of Orwood Road and the Mokelumne Aqueduct.
(9) Proceed south-southwest 5.5 miles, crossing onto the Clifton Court Forebay map, to the stream gauging station on Italian Slough, just west of Widdows Island and the shared Contra Costa-San Joaquin County line.
(10) Proceed due west in a straight line to the western shore of Italian Slough, then proceed southwesterly along the shore of Italian Slough to its confluence with Brushy Creek.
(11) Proceed westerly along Brushy Creek, crossing onto the Byron Hot Springs (2018 edition) map and continuing southwesterly along the creek to its intersection with Vasco Road.
(12) Proceed northwest in a straight line 4.3 miles to the intersection of Kellogg Creek and Walnut Boulevard.
(13) Proceed west-southwest in a straight line 2.9 miles, crossing onto the Tassajara (2018 edition) map, to the intersection of Marsh Creek and Miwok Trail.
(14) Proceed northwesterly along Marsh Creek 2.4 miles, crossing onto the Antioch South map, to the creek's intersection with Deer Valley Road.
(15) Proceed northerly along Deer Valley Road 3.1 miles to its intersection with Chadbourne Road.
(16) Proceed northwest in a straight line 0.6 mile to the southwestern terminus of Tour Way.
(17) Proceed northwest in a straight line 3 miles to the intersection of Oil Canyon Trail, Stewartville Trail, and Chadbourne Road.
(18) Proceed northeasterly along the Stewartville Trail 1.9 miles to its intersection with the Contra Loma Trail.
(19) Proceed northwest in a straight line 2.5 miles to the intersection of Somersville Road and Donlan Boulevard.
(20) Proceed west-southwest in a straight line 2.5 miles, crossing onto the Clayton (2018 edition) map, to the intersection of Nortonville Road and Kirker Pass Road.
(21) Proceed southwesterly along Kirker Pass Road approximately 2.5 miles to its intersection with Hess Road.
(22) Proceed southeasterly in a straight line to the 3,849-foot summit of Mt. Diablo.
The additions and revisions read as follows:
(b) * * *
(48) Clayton, California, scale 1:24,000, 2018;
(49) Antioch South, California, scale 1:24,000, 2018;
(50) Tassajara, California, scale 1:24,000, 2018;
(51) Byron Hot Springs, California, scale 1:24,000, 2018;
(52) Clifton Court Forebay, California, scale 1:24,000, 2018;
(53) Woodward Island, California, scale 1:24,000; 2018;
(54) Bouldin Island, California, scale 1:24,000, 2018;
(55) Jersey Island, California, scale 1:24,000, 2018;
(56) Antioch North, California, scale 1:24,000, 2018;
(57) Honker Bay, California, scale 1:24,000, 2018; and
(58) Vine Hill, California, scale 1:24,000, 2018.
(c) * * *
(22) Then proceed in a northwesterly direction in a straight line to the intersection of Kirker Pass Road and Hess Road on the Clayton (2018 edition) map.
(23) Proceed northeasterly along Kirker Pass Road to its intersection with Nortonville Road.
(24) Proceed east-northeast in a straight line for 2.5 miles, crossing onto the Antioch South map, to the intersection of Somersville Road and Donlan Boulevard.
(25) Proceed southeasterly in a straight line for 2.5 miles to the intersection of the Stewartville Trail and the Contra Loma Trail.
(26) Proceed southwesterly along Stewartville Trail for 1.9 miles to the intersection of Oil Canyon Trail, Stewartville Trail, and Chadbourne Road.
(27) Proceed southeast in a straight line for 3 miles to the southern terminus of Tour Way.
(28) Proceed southeast in a straight line for 0.6 miles to the intersection of Chadbourne Road and Deer Valley Road.
(29) Proceed southerly along Deer Valley Road for 3.1 miles to its intersection with Marsh Creek.
(30) Proceed southeasterly along Marsh Creek for 2.4 miles, crossing onto the Tassajara (2018 edition) map, to the creek's intersection with Miwok Trail.
(31) Proceed north-northeast in a straight line for 2.9 miles, crossing onto the Byron Hot Springs (2018 edition) map, to the intersection of Kellogg Creek and Walnut Boulevard.
(32) Proceed southeast in a straight line for 4.3 miles to the intersection of Brushy Creek and Vasco Road.
(33) Proceed northeasterly along Brushy Creek, crossing onto the Clifton Court Forebay map, to the confluence of Brushy Creek with the western shore of Italian Slough to a point due west of the stream gauging station on Italian Slough, just west of Widdows Island and the shared Contra Costa-San Joaquin County line.
(34) Proceed due east to the stream gauging station, then proceed northeast for 5.5 miles, crossing onto the Woodward Island map, to the intersection of the Mokelumne Aqueduct and Orwood Road.
(35) Proceed north-northwest in a straight line for 4.1 miles to the intersection of Holland Tract Road and the 10-foot elevation contour.
(36) Proceed north for 1.9 miles along Holland Tract Road, crossing onto the Bouldin Island map, and continuing to the northernmost point of Holland Tract Road.
(37) Proceed southeast in a straight line for 2.7 miles, crossing onto the Jersey Island map, to the intersection of Wells Road and Sandmound Road.
(38) Proceed northwest in a straight line for 0.7 mile to the intersection of Bethel Island Road and the shoreline of Dutch Slough Road.
(39) Proceed westerly along the shoreline of Dutch Slough and Big Break, crossing onto the Antioch North map, and continuing westerly along the shoreline of New York Slough, crossing onto the Honker Bay (2018 edition) map, and continuing westerly along the shoreline and onto the Vine Hill (2018 edition) map to the intersection of the shoreline and Interstate 680 at the Benicia-Martinez Bridge.
(a)
(b)
(1) Antioch North, California, 2018;
(2) Antioch South, California, 2018;
(3) Benicia, California, 2018;
(4) Bouldin Island, California, 2018;
(5) Briones Valley, California, 2018;
(6) Byron Hot Springs, California, 2018;
(7) Clayton, California, 2018;
(8) Clifton Court Forebay, California, 2018;
(9) Jersey Island, California, 2018;
(10) Honker Bay, California, 2018;
(11) Tassajara, California, 2018;
(12) Vine Hill, California, 2018;
(13) Walnut Creek, California, 1995;
(14) Walnut Creek, California, 2018; and
(15) Woodward Island, California, 2018.
(c)
(1) The beginning point is on the Bouldin Island map at the northernmost point of Holland Tract Road. From the beginning point, proceed south 1.9 miles along Holland Tract Road, crossing onto the Woodward Island map, to the intersection of the road with the 10-foot elevation contour; then
(2) Proceed south-southeast in a straight line 4.1 miles to the intersection of Orwood Road and the Mokelumne Aqueduct; then
(3) Proceed south-southwest in a straight line 5.5 miles, crossing onto the Clifton Court Forebay map, to the stream gauging station on Italian Slough, just west of the Widdows Island and the shared Contra Costa-San Joaquin County line; then
(4) Proceed due west in a straight line to the western shore of Italian Slough, then proceed southwesterly along the western shore Italian Slough to its confluence with Brushy Creek; then
(5) Proceed westerly along Brushy Creek, crossing onto the Byron Hot Springs map and continuing southwesterly along the creek to its intersection with Vasco Road; then
(6) Proceed northwest in a straight line 4.3 miles to the intersection of Kellogg Creek and Walnut Boulevard; then
(7) Proceed west-southwest in a straight line 2.9 miles, crossing onto the Tassajara map, to the intersection of Marsh Creek and Miwok Trail; then
(8) Proceed northwesterly along Marsh Creek 2.4 miles, crossing onto the Antioch South map, to the creek's intersection with Deer Valley Road; then
(9) Proceed northerly along Deer Valley Road 3.1 miles to its intersection with Chadbourne Road; then
(10) Proceed northwest in a straight line 0.6 mile to the southwestern terminus of Tour Way; then
(11) Proceed northwest in a straight line 3 miles to the intersection of Oil Canyon Trail, Stewartville Trail, and Chadbourne Road; then
(12) Proceed northeasterly along Stewartville Trail 1.9 miles to its intersection with the Contra Loma Trail; then
(13) Proceed northwest in a straight line 2.5 miles to the intersection of Somersville Road and Donlan Boulevard; then
(14) Proceed west-southwest in a straight line 2.5 miles, crossing onto the Clayton map, to the intersection of Nortonville Road and Kirker Pass Road; then
(15) Proceed southwesterly along Kirker Pass Road 5 miles to its intersection with Alberta Way; then
(16) Proceed southwest in a straight line 1.5 miles to the intersection of Buckeye Trail, Blue Oak Trail, and Lime Ridge Trail; then
(17) Proceed south-southeast in a straight line 2.6 miles to the intersection of Arroyo Cerro Del and the 400-foot elevation contour just east of North Gate Road; then
(18) Proceed northwest in a straight line 2.5 miles, crossing onto the Walnut Creek map (2018 edition), to the intersection of Brodia Way and La Casa Via; then
(19) Proceed west-northwest in a straight line, crossing onto the Walnut Creek (1995 edition) map, and continue 3.1 miles on the 1995 edition map to the marked 781-foot peak south of the shared Lafayette-Walnut Creek corporate boundary line and north of an unnamed light-duty road known locally as Peaceful Lane; then
(20) Proceed northwest in a straight line 1.7 miles to the 833-foot peak marked “Hump 2”; then
(21) Proceed north-northwest 0.5 mile to the water tank (known locally as the Withers Reservoir) at the end of an unnamed light-duty road known locally as Kim Road, in the Cañada del Hambre y Las Bolsas Land Grant; then
(22) Proceed northwest in a straight line 3 miles, crossing onto the Briones Valley map, to the intersection of Alhambra Creek Road and Alhambra Valley Road; then
(23) Proceed northwest in a straight line 4.1 miles, crossing onto the Benicia map, to the intersection of Highway 4 and Cummings Skyway; then
(24) Proceed north-northwest in a straight line 1.8 miles to the intersection of Carquinez Scenic Drive and an unnamed road known locally as Canyon Lake Drive; then
(25) Proceed northeasterly in a straight line 0.6 mile to the marked post office in Port Costa; then
(26) Proceed southeast in a straight line 0.9 mile to the first unnamed road that crosses the railroad tracks and intersects with the shoreline at Little Bull Valley; then
(27) Proceed easterly along the shoreline approximately 38.3 miles, crossing over the Vine Hill, Honker Bay, and Antioch North maps and onto the Jersey Island map to Bethel Island Road; then
(28) Proceed southeast in a straight line 0.7 mile to the intersection of Wells Road and Sandmound Boulevard; then
(29) Proceed northeast in a straight line 2.7 miles, crossing onto the Bouldin Island map and returning to the beginning point.
Coast Guard, Department of Homeland Security (DHS).
Final rule.
The Coast Guard is amending and updating its safety zone regulations for annual events that take place in the Coast Guard Sector Ohio Valley area of responsibility (AOR). This action is necessary to update the current list of recurring safety zones with revisions, additional events, and removal of events that no longer take place in the Sector Ohio Valley. When these safety zones are enforced, certain restrictions are placed on marine traffic in specified areas.
This rule is effective on March 15, 2024.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email Petty Officer Dalton Johnson, Sector Ohio Valley, U.S. Coast Guard; telephone 502-779-5347, email
The Captain of Port Sector Ohio Valley (COTP) is amending 33 CFR 165.801 to update the table of annual fireworks displays and other events in Coast Guard Sector Ohio Valley Area of Responsibility (AOR). These events
On January 23, 2024, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Safety Zones; Coast Guard Sector Ohio Valley Annual and Recurring Safety Zones Update” (89 FR 4221). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to those recurring safety zones. During the comment period that ended on February 22, 2024, no comments were received.
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 (previously 33 U.S.C. 1231). The Coast Guard is amending and updating the safety zones under 33 CFR part 165 to include the most up to date list of recurring safety zones for events held on or around navigable waters within the Sector Ohio Valley AOR. These events include fireworks displays, air shows, and festivals. The current list in 33 CFR 165.801 requires changes to provide new information on existing safety zones and to include new safety zones expected to recur annually or biannually. Issuing individual regulations for each new safety zone, amendment of existing safety zones creates unnecessary administrative costs and burdens. This rulemaking reduces administrative overhead and provides the public with notice through publication in the
As noted above, we received no comments on our NPRM published January 23, 2024. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.
This rule amends and updates part 165 of 33 CFR by revising the current table for Sector Ohio Valley, and by adding three new recurring safety zones and amending two safety zones as described in the NPRM. Vessels intending to transit the designated waterway through the safety zone will only be allowed to transit the area when the COTP, or designated representative, has deemed it safe to do so or at the completion of the event.
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, as amended by Executive Order 14094 (Modernizing Regulatory Review). 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 zones. These safety zones are limited in size and duration, and are usually positioned away from high vessel traffic areas. Moreover, the Coast Guard would issue a Broadcast Notices to Mariners, Local Notices to Mariners, and Marine Safety Information Broadcasts to inform the community of these safety zones.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
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
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. It is categorically excluded from further review under paragraph L60a of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email 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.
National Highway Traffic Safety Administration.
Final rule.
The National Highway Traffic Safety Administration (NHTSA) is finalizing minor technical amendments to the test procedures for heavy-duty engines and vehicles to improve accuracy and reduce testing burden. These amendments affect the certification procedures for fuel efficiency standards and related requirements. These amendments increase compliance flexibility, harmonize with other requirements, add clarity, correct errors, and streamline the regulations. Given the nature of these changes, NHTSA does not expect either significant environmental impacts or significant economic impacts for any sector.
This final rule is effective on May 14, 2024.
NHTSA has established a docket for this action under Docket ID: NHTSA-2020-0079. For access to the dockets to read background documents or comments received, go to
Seiar Zia, Deputy Division Chief, Fuel Economy Division, Office of Rulemaking, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE, Washington, DC 20590; email:
This action will affect companies that manufacture, sell, or import into the United States new heavy-duty engines and new Class 2b through 8 trucks, including combination tractors, buses, vocational vehicles including municipal, commercial, recreational vehicles, and
Regulated categories and entities include the following:
This list is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the
This action finalizes amendments to the regulations that implement NHTSA's fuel efficiency standards for medium-duty and heavy-duty engines and vehicles. These amendments are technical in nature and include corrections and clarifications to a variety of existing regulatory provisions to improve consistency with related EPA standards and with NHTSA's original intent for those provisions. In other words, this final rule comprises a variety of small changes for multiple types of engines and vehicles.
These amendments parallel similar ones in a rulemaking conducted by the EPA under RIN 2060-AU62.
Most of the amendments being finalized in this rule will modify existing test procedures for medium- and heavy-duty engines and vehicles. These test procedure changes will improve accuracy, and in some cases, reduce test burden.
Other amendments will update NHTSA's regulations to enhance the implementation of existing fuel efficiency standards. For example, some changes will reduce the likelihood that manufacturers will need to conduct unique certification testing for compliance with Canadian and CARB standards, in addition to NHTSA's standards. Some amendments will make it easier for manufacturers to more fully account for the fuel efficiency benefits of advanced fuel efficiency improving technology, which could provide them the opportunity to generate additional fuel consumption improvement values for compliance. These amendments are described in II.
Additionally, as a matter of housekeeping, NHTSA is removing portions of its regulations that were vacated by the United States Court of Appeals for the District of Columbia Circuit. In November 2021, that Court “vacate[d] all portions of the [2016 joint NHTSA and EPA] rule that apply to trailers.”
NHTSA, is however, keeping its definition of standard trailer as well as other specific types of trailers in 49 CFR 535.4 to assist manufacturers in determining tractor performance in the Greenhouse Gas Emissions Model (GEM). In October 2016, NHTSA and EPA issued its Phase 2 Heavy-Duty (HD) National Program final rule that increased efficiency standards beginning in model year (MY) 2021.
This action is limited in scope and is not intended to include amendments that will have significant economic or environmental impacts. NHTSA has therefore not estimated the potential costs or benefits of this final rule.
In September 2011, NHTSA and EPA finalized Phase 1 of the Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles.
Since the promulgation of the Phase 2 regulations, manufacturers have been revising their internal test procedures for compliance with the new
In its May 12, 2020 NPRM, EPA proposed numerous changes to the test procedure regulations to address manufacturers' concerns in addition to other issues it had identified.
NHTSA published the NPRM on September 13, 2022, and provided a 60-day comment period. The agency left the docket open with the intention to consider late comments to the extent practicable. NHTSA's docket received two comments from individual members of the public
The stakeholder organization, Allison Transmission (Allison), commented on the current version of the Greenhouse Gas Emissions Model (GEM). Allison commented that “while the current version of GEM offers adequate modeling of emissions in vehicles, Allison believes that some future changes to GEM could prove to be beneficial in improving the overall accuracy of the model.” Allison then recommended five changes to GEM that it believes “would promote further adoption of current vehicle technologies and strategies that improve fuel economy (FE) . . . as well as continue to enhance the accuracy of the modeled vs actual FE performance.”
NHTSA appreciates the comment from Allison. However, changes to the GEM are beyond the scope of this rulemaking. Although NHTSA relies on outputs from GEM to generate emissions and fuel consumption performance results and allows manufacturers to use GEM for compliance purposes, GEM was developed by EPA, who continues to maintain and update it. Accordingly, while NHTSA provides input to EPA regarding GEM and conducts its own analysis when deciding the appropriateness of using GEM in its fuel efficiency program, comments requesting changes to GEM are more appropriately addressed to EPA.
In conjunction with its final rule issued on June 29, 2021, EPA issued a notice of proposed rulemaking (NPRM) proposing further revisions to GEM.
While none of the comments NHTSA received were within the scope of the proposal, the agency appreciates the information and opinions provided.
NHTSA is largely finalizing the requirements proposed in the NPRM. Although NHTSA is not making any changes based on the comments received, NHTSA is making minor changes to better align NHTSA with the changes EPA finalized regarding updates to the GEM as well as other minor technical amendments. The changes NHTSA is finalizing are described in more detail below.
NHTSA is amending the citation for part 535 to remove reference to 49 U.S.C. 30101 because the provision does not pertain to NHTSA's authority to establish a fuel efficiency program for medium- and heavy-duty vehicles and engines.
NHTSA is amending § 535.1 by removing the reference to trailers from the scope section of MDHD Fuel Efficiency Program regulation, consistent with the 2021 D.C. Circuit decision discussed above.
While NHTSA proposed amending § 535.3(a) to clarify the applicability and compliance provisions of its MDHD Fuel Efficiency Program, NHTSA no longer believes the proposed changes are appropriate. Accordingly, NHTSA is not finalizing any changes to § 535.3(a).
NHTSA is revising § 535.3(c) by removing an outdated reference to 40 CFR part 86 and adding the specific subpart references for 40 CFR parts 1036 and 1037, such that the regulation will now reference 40 CFR part 1036, subpart C and 40 CFR part 1037, subpart C.
NHTSA is removing paragraph (d)(5) from § 535.3, consistent with the 2021 D.C. Circuit decision discussed above, and reserving it for future use.
NHTSA is revising § 535.3(e)(1) by removing details regarding exemptions and just referencing NHTSA's provision at § 535.5(b)(9) that provides complete details about off-road exemptions. This change is intended to reduce confusion by providing details in only one location in NHTSA's regulations. Although NHTSA proposed adding additional details to paragraph (e)(1) to
In the NPRM, NHTSA proposed adding paragraphs (A) and (B) to § 535.3(e)(2)(ii) to discuss two flexibilities to NHTSA's compliance provisions for small manufacturers. While, NHTSA is not finalizing the exact language proposed, NHTSA is finalizing the substance of the proposed change. Vehicle manufacturers that qualify as small businesses are exempt from the Phase 1 standards but must meet the Phase 2 standards beginning January 1, 2022. However, some vehicle families have been certified voluntarily to Phase 1 standards by small manufacturers. To encourage more voluntary early certification to Phase 1 standards, EPA finalized a new interim provision in 40 CFR 1037.150(c)(4) for small manufacturers that certify their entire U.S.-directed production volume to the Phase 1 standards for calendar year 2021 (
NHTSA also proposed allowing Phase 1 compliance credits that small manufacturers generate from model years 2018 through 2022 for vocational vehicles to be used through model year 2027. In the NPRM, NHTSA cited EPA's rationale for making its corresponding change. In its final rule, EPA stated that the agencies believe that the limit on credit life can be problematic for small manufacturers because their limited product lines provide them with less flexibility when averaging their fleets. EPA also stated that the agencies believe the longer credit life will provide small manufacturers with additional flexibility to ensure all their products are fully compliant by the time the Phase 2 standards are fully phased-in for model year 2027. NHTSA continues to believe that the rationale for these changes is valid. However, the scope of the change is smaller than NHTSA recognized when proposing the additional flexibility for small manufacturers. NHTSA's rationale in adopting EPA's reasoning was predicated on an incorrect understanding of the regulation. In proposing the technical amendment, NHTSA believed that all credit carry forwards for vocational vehicles between Phase 1 and Phase 2 were limited by the five-year credit life. This is incorrect. Under the existing regulations, fuel consumption credits a manufacturer generates for light and medium heavy-duty vocational vehicles in model years 2018 through 2021 may be used through model year 2027, instead of being limited to a five-year credit life. These credits, generated under the Phase 1 program, can be used for compliance in the Phase 2 averaging, banking, and trading program. The existing regulations limit the use of fuel consumption credits generated for heavy heavy-duty vocational to a five-year credit life. Therefore, the proposed change would only extend the credit flexibility to heavy heavy-duty vocational vehicles produced by small manufacturers.
As EPA stated in its final rule, the agencies believe that the limit on credit life can be problematic for small manufacturers because their limited product lines provide them with less flexibility when averaging their fleets. The agencies believe the longer credit life will provide small manufacturers with additional flexibility to ensure all their products are fully compliant by the time the Phase 2 standards are fully phased-in for model year 2027. Therefore, NHTSA will finalize an amendment, harmonizing with EPA's regulations, to allow fuel consumption credits generated for heavy heavy-duty vocational vehicles produced by small manufacturers in model years 2018 through 2021 to be used through 2027, instead of being limited to a five-year credit life. This provision, however, is being more appropriately added to § 535.7(a)(8), which includes provisions for credit transfers between Phase 1 and Phase 2.
Additionally, NHTSA is finalizing an amendment to address credit carry forwards for small manufacturers that certify 2022 vehicles to Phase 1 standards if the manufacturer voluntarily certified its entire U.S.-directed production volume to the Phase 1 standards for calendar year 2021. Specifically, NHTSA is adding a provision stating that fuel consumption credits that a small manufacturer generates for vocational vehicles in model year 2022 that are certified to Phase 1 standards as permitted under § 535.3(e)(2)(ii)(B) may be used through model year 2027. This provision is also being more appropriately added to § 535.7(a)(8), which includes provisions for credit transfers between Phase 1 and Phase 2. Although NHTSA's rationale for making this change varies slightly from EPA, the changes themselves maintain program alignment across both agencies.
NHTSA is removing 535.3(e)(3) from its regulations, consistent with the 2021 D.C. Circuit decision discussed above, and reserving it for future use.
In the NPRM, NHTSA proposed adding paragraph (j) to § 535.3. The new paragraph was intended outline eligibility determinations and potential enforcement actions under the NHTSA fuel efficiency program if EPA denies, suspends or revokes, a manufacturer's certificate of conformity in accordance with 40 CFR 1036.255 or 1037.255, due to incomplete, incorrect or fraudulent information. However, NHTSA has decided not to finalize the provision because the agency no longer believes it is necessary. Manufacturers that submit fraudulent information may be subject to enforcement action under 18 U.S.C. 1001. Additionally, there is already an existing provision at § 535.8(a)(3) explaining that manufacturers providing incomplete information may be subject to civil penalties in accordance with 49 U.S.C. 32912 and a provision at § 535.9(a)(10) indicating actions NHTSA may take if EPA suspends or revokes a certificate of conformity.
NHTSA is adding several new terms to its list of definitions and modifying the definitions of several existing terms
NHTSA is amending the introductory text by updating the statutory reference for the definitions of the terms
NHTSA is removing the term
NHTSA is adding the term
NHTSA is amending the definition of
NHTSA is amending the term
Although NHTSA proposed adding the term
NHTSA is removing the terms “Long trailers” and “Short trailers” from the definition of
In its 2021 final rule, EPA amended 40 CFR 1036.225(e) and 1037.225(e) by adding a statement that clarifies the application date for amended applications for the certification of engine and vehicle families submitted to EPA under 40 CFR 1036 subpart C and 1037 subpart C, respectively.
NHTSA is finalizing a technical amendment to remove the definition of
NHTSA is removing the reference to trailers from its definition of
NHTSA is adding the term
Although NHTSA proposed adding the term
NHTSA is adding the term
NHTSA is adding the term
NHTSA is adding the term
NHTSA is adding the term
NHTSA is adding the term
NHTSA is amending 535.4 to place the term
In the NPRM, NHTSA proposed adding the term
NHTSA is adding the term
NHTSA is amending the term
To develop consistency with the revised hybrid powertrain test procedures it recently finalized in 40 CFR part 1036, subpart F, EPA has added the term
To develop consistency with the revised hybrid powertrain test procedures it recently finalized in 40 CFR part 1036, subpart F, EPA has added the term
In the NPRM, NHTSA proposed adding the term
NHTSA is revising its definition for
NHTSA is adding the term
NHTSA is adding the term
NHTSA is adding the term
In the NPRM, NHTSA proposed adding the term
NHTSA is adding the term
NHTSA is removing the reference to trailers from its definition of
NHTSA is adding the term
NHTSA is amending the definition of
NHTSA is amending the definition of
NHTSA is removing trailer subcategories from its definition of
NHTSA is adding the term
NHTSA is adding the term
NHTSA is removing paragraph (3), which includes defined standard payloads for trailers, from its definition of
In the NPRM, NHTSA proposed amending the definition of
NHTSA is amending the definition for
NHTSA is adding the term
In the NPRM, NHTSA proposed adding the term
In the NPRM, NHTSA proposed adding the term
NHTSA is revising the definition of
The recent EPA technical amendments clarify that the classification for tractors, where provisions are the same as vocational vehicles, are applicable to both hybrid and non-hybrid vehicles. The amendments also clarify that Class 8 hybrid and electric vehicles are considered heavy heavy-duty “HHD” vehicles while all other vehicles are classified by GVWR classes.
EPA explained in its final rule that prior to these revisions, manufacturers had expressed concern that the Phase 2 regulations were not specific enough regarding how to classify hybrid vocational vehicles, because vocational vehicles are generally classified by the class of the engines (as opposed to tractors, which are classified based on GVW), which was not applicable to electrically driven vehicles that have no engine.
To address these problems, EPA proposed changes to § 1037.140(g)(1) to clarify that the classification for tractors where provisions are the same as vocational vehicles applies for hybrid and non-hybrid vehicles, and paragraph (g)(4) to clarify that Class 8 hybrid and electric vehicles are Heavy HHVs and all other vehicles are classified by GVWR classes. The changes we are finalizing maintain alignment with EPA's changes.
In the NPRM, NHTSA proposed adding the term
NHTSA is amending § 535.5(a) introductory text to clarify its regulatory standards relating to heavy-duty pickup trucks and vans. More specifically, the agency is adding language that ensures that manufacturers use the same options for purposes of grouping vehicles and/or engines for applying target standards and determining compliance for both EPA's and NHTSA's programs. NHTSA is also adding clarifying language explaining that engines installed in vehicles that are subject to the standards in paragraph (a) are not subject to the standards in paragraph (d) of this section and may not optionally comply with paragraph (d).
NHTSA is amending § 535.5(a)(1) to update an outdated cross reference, such that the reference to 40 CFR 86.1819 now reads “40 CFR 86.1819-14”.
NHTSA is amending the introductory text of § 535.5(b) to clarify its regulatory standards relating to heavy-duty vocational vehicles. More specifically, the agency is adding language that ensures manufacturers use the same options for purposes of grouping vehicles and/or engines for applying standards and determining compliance for both EPA's and NHTSA's programs.
NHTSA is removing paragraph (B) from § 535.5(b)(1)(iii) and reserving it for future use. This change removes the requirement for heavy-duty vocational vehicles that meet the requirement in § 535.5(b)(1)(iii)(A) by being equipped with tire pressure monitoring systems to use low pressure warning and malfunction telltales in clear view of the driver as specified in S4.3 and S4.4 of 49 CFR 571.138. The revision, however, does not remove the requirements in § 535.5(b)(6)(vi)(C) for motorhomes that comply with § 535.5(b)(6)(vi)(B) by having a TPMS.
NHTSA is correcting the Vocational HHD Vehicle Regional compression ignition (CI) standards. The current published standard for this vehicle class
NHTSA is amending the introductory text of § 535.5(b)(9)(i) to align with EPA's technical amendments by adding an exemption provision for vocational vehicles with a date of manufacture before January 1, 2021. With this provision, vocational vehicles automatically qualify for an exemption under § 535.5(b)(9), if the tires installed on the vehicle have a maximum speed rating at or below 55 miles per hour.
NHTSA is amending the introductory text of § 535.5(c) to clarify its regulatory standards relating to truck tractors. More specifically, the agency is adding language that ensures manufacturer options (in terms of grouping vehicles and/or engines for purposes of applying standards and determining compliance) for EPA and NHTSA vehicle standards are aligned across both agencies.
NHTSA is revising its Alternate Fuel Consumption Standards for Tractors above 120,000 pounds GCWR for model year 2021 and later. The revised standards are directly aligned with the revised GHG standards for this class of vehicles proposed and finalized by EPA as part of its technical amendment rulemaking.
As described in EPA's final rulemaking action, the agencies originally defined these alternate fuel consumption and greenhouse-gas standards during the Phase 2 rulemaking, to enable Environment and Climate Change Canada (ECCC) to fully harmonize with the U.S.'s HD Phase 2 standards.
In the interim, ECCC has since adopted final standards for these 120,000- to 140,000-pound GCWR tractors, which differ from the optional standards finalized in Phase 2.
NHTSA is clarifying the introductory text of 49 CFR 535.5(d) to expand its regulatory provision to optionally accommodate powertrain families and subfamilies added by EPA in 40 CFR 1036.108(a), and 1036.230(d), and 1036.230(f). The EPA provisions allow manufacturers to apply CO
NHTSA is also amending the introductory text of § 535.5(d) to add language that ensures manufacturer options (in terms of grouping engines for purposes of applying standards and determining compliance) for EPA and NHTSA standards are aligned across both agencies.
NHTSA is correcting the Heavy-Duty Engine Fuel Consumption Standards for Phase 1 MHD and HHD compression ignition (CI) tractor engines. The current published standards for these engine classes are incorrect, and do not align with EPA GHG standards for these engine types. The incorrect values resulted from an incorrect calculation during the Phase 2 rulemaking which intended to maintain alignment of the NHTSA and EPA standards. The corrected values for these regulatory classes are 4.7839 gallons per 100 hp-hr for MHD CI tractor engines and 4.5187 gallons per 100 hp-hr for HHD CI tractor engines.
NHTSA is correcting the
NHTSA is removing paragraph (e) from § 535.3, which removes the Heavy-duty Trailer standards, consistent with the 2021 D.C. Circuit decision, discussed above.
NHTSA is amending § 535.6(b)(1) by adding a reference to EPA's finalized regulation at 40 CFR 1037.150. This added reference will provide clear guidance that will be used to determine the proper vehicle and vehicle family to select when determining a manufacturer's regulatory subcategories for vocational vehicles and tractors. The addition also maintains program alignment across the agencies.
NHTSA is amending § 535.6(b)(4)(ii) by adding references to EPA's finalized regulations at 40 CFR 1037.525, 1037.527, and 1037.528. These added references clarify how to determine a high-roof tractor's aerodynamic performance. EPA finalized this revision to more clearly relate the drag areas to
NHTSA is revising § 535.6(b)(5)(i) to change the reference to an EPA regulation from 40 CFR 1036.510 to 1036.503. This revision aligns the NHTSA regulations to the revised and finalized EPA regulations, which also keeps the agencies' programs aligned.
NHTSA is adding paragraph
NHTSA is adding paragraph (
Like § 535.5(d), NHTSA is amending the introductory text of § 535.6(d) by adding clarifications to § 535.6(d) to expand its regulatory provision to optionally accommodate powertrain families and subfamilies added by EPA in 40 CFR 1036.108(a), and 1036.230(d), and 1036.230(f). The EPA provisions allow manufacturers to apply CO
NHTSA is updating paragraph (d)(1) to reference to EPA regulation 40 CFR 1036.501 for engines in heavy-duty truck tractors and vocational vehicles that make up each of the manufacturer's regulatory subcategories. This replaces the reference to 40 CFR part 86 and 40 CFR 1036.235. This change maintains alignment across the NHTSA and EPA programs.
NHTSA is amending the introductory text of paragraph (d)(2) to align with the EPA regulation 40 CFR 1036.230(f) by expanding this regulatory provision to accommodate powertrains other than engines and to also include sub-families.
NHTSA is amending § 535.6(d)(3) introductory text by replacing the existing provision with the prescribed emissions tests required for medium HD and heavy HD engines certified as a tractor and other long-haul engine family as well as those certified as a tractor and vocational engine family. In the same paragraph, NHTSA also prescribes the emissions test required for all other engines. These amendments are being made to align with EPA's technical amendments and to provide greater clarity to manufacturers about how compliance must be determined for the different types of engines.
NHTSA is expanding the provisions of § 535.6(d)(3)(ii) to powertrains other than engines and subfamilies in addition to families. This change is being made to maintain alignment with EPA's technical amendments.
NHTSA is removing paragraph (e) from § 535.6, which removes heavy-duty trailers from its measurement and calculation procedures, consistent with the 2021 D.C. Circuit decision.
NHTSA is removing the references to trailer manufacturers and trailers from the introductory text of § 535.7(a), consistent with the 2021 D.C. Circuit decision.
NHTSA is removing the reference to the application of banked or traded credits to trailers from § 535.7(a)(2)(v), consistent with the 2021 D.C. Circuit decision.
NHTSA is removing paragraph (v) from § 535.7(a)(3), consistent with the 2021 D.C. Circuit decision, and reserving it for future use.
NHTSA is amending the introductory text of paragraph (a)(4) to remove reference to trailers, consistent with the 2021 D.C. Circuit decision.
NHTSA is removing paragraph (v) from § 535.7(a), consistent with the 2021 D.C. Circuit decision, and reserving it for future use.
As discussed above, NHTSA is finalizing two amendments to provide greater flexibility to small manufacturers of vocational vehicles. First, NHTSA is finalizing an amendment such that fuel consumption credits a small manufacturer generates for heavy heavy-duty vocational vehicles in model years 2018 through 2021 may be used through 2027, instead of being limited to a five-year credit life (this flexibility is already provided for fuel consumption credits any manufacturer generates for light and medium heavy-duty vocational vehicles in model years 2018 through 2021). Second, as discussed above, NHTSA is finalizing an amendment to address credit carry forwards for small manufacturers that certify 2022 vehicles to Phase 1 standards if the manufacturer voluntarily certified its entire U.S.-directed production volume to the Phase 1 standards for calendar year 2021. Specifically, NHTSA is adding a provision stating that fuel consumption credits that a small manufacturer generates for vocational vehicles in model year 2022 that are certified to Phase 1 standards as permitted under § 535.3(e)(2)(ii)(B) may be used through model year 2027.
NHTSA is amending § 535.7(a)(9)(iv)(B) by adding clarifying details regarding corporate relationship status as it relates to production limits for generating credits for drayage tractors under the custom chassis allowance. In the NPRM, NHTSA proposed language such that the limit would apply with respect to vehicles
NHTSA is adding paragraph (11) to § 535.7(a), which is a provision that prevents manufacturers from generating fuel consumption credits more than once for compliance. NHTSA has updated the text that was proposed in the NPRM to provide greater clarity and to reduce ambiguity.
NHTSA is amending § 535.7(b)(1) to correct the Total MY Fleet FCC equation for HDPUVs.
NHTSA is amending the introductory text § 535.7(c)(1) to correct the Vehicle Family FCC equation for vocational vehicle and tractor families and subfamilies.
NHTSA is amending the introductory text of § 535.7(d)(1) to correct the Engine Family FCC equation for heavy-duty engine families and subfamilies.
NHTSA is amending § 535.7(d)(7) by removing the conditions for when engine credits generated for compression-ignition engines in model year 2020 and earlier can be used in model year 2021 and later and adding them to new lower-level paragraphs in this section.
NHTSA is adding paragraph (i) to § 535.7(d)(7), which states that engine credits generated for compression-ignition engines certified to the tractor engine standards in § 535.5(d) in model year 2020 and earlier can be used in model year 2021 and later. This provision was in the existing regulation and is just being moved down to a lower-level paragraph.
NHTSA is also amending § 535.7(d)(7) by removing the provision that manufacturers may otherwise use fuel consumption credits generated in one model year for certifying vehicles in a later model year without adjustment, even if the consumption standards are different. In its place, NHTSA is adding paragraph (ii) to § 535.7(d)(7), stipulating that fuel consumption credits generated for compression-ignition engines certified to the vocational engine standards in § 535.5(d) in MY 2020 and earlier can be used in MY 2021 and later in accordance with specific requirements. Specifically, the fuel consumption credits may only be used in later years relative to specified family certification levels (FCLs), consistent with EPA's regulations.
NHTSA is adding paragraph (A) to § 535.7(d)(7)(ii), which is the FCL manufacturers should use to calculate credits for compression-ignition medium HD engines certified to the vocational vehicle standards in § 535.5(d) in MY 2020 and earlier and will be used in MY 2021 and later.
NHTSA is adding paragraph (B) to § 535.7(d)(7)(ii), which is the FCL manufacturers should use to calculate credits for compression-ignition heavy HD engines certified to the vocational vehicle standards in § 535.5(d) in MY 2020 and earlier and will be used in MY 2021 and later.
NHTSA is adding paragraph (C) to § 535.7(d)(7)(ii), which is the provision that provides instructions on how to use the FCLs in paragraphs (A) and (B) of this section to recalculate engine credits for compression-ignition engines certified to the vocational vehicle standards in § 535.5(d) that have been generated in Phase 1 but used in Phase 2 of the program.
NHTSA is removing paragraph (e) from § 535.7, which removes the ABT provisions for trailers, consistent with the 2021 D.C. Circuit decision, discussed above, and reserving it for future use.
NHTSA is amending § 535.7(f)(1)(ii) to clarify the final model year in which manufacturers may use the advanced technology credit multipliers to increase the credits they earn for advanced technology vehicles in Phase 2. In the Phase 2 final rule for the Heavy-Duty National Program, NHTSA and EPA jointly explained that we were adopting advanced technology credit multipliers for three types of advanced technologies. As described in the final rule, there will be a multiplier of 3.5 for advanced technology credits for plug-in hybrid vehicles, a multiplier of 4.5 for advanced technology credits for all-electric vehicles, and a multiplier of 5.5 for advanced technology credits for fuel cell vehicles. The agencies stated that their intention in adopting these multipliers was to create a meaningful incentive to manufacturers considering adopting these technologies in their vehicles. The agencies further noted that the adoption rates for these advanced technologies in heavy vehicles was essentially non-existent at the time the final rule was issued and seemed unlikely to grow significantly within the next decade without additional incentives. Because of their large size, the agencies decided to adopt them as an interim program that will continue through model year 2027. These changes, however, were not accurately reflected in the regulatory changes made by the Phase 2 final rule. NHTSA is now amending the introductory text of § 535.7(f)(1)(ii) to clarify that for Phase 2, advanced technology credits may be increased by the applicable multiplier through model year 2027.
NHTSA is adding paragraph (G) to § 535.7(f)(1)(ii) to add a provision clarifying that advanced technology credits increased with a multiplier in Phase 2 cannot be used across averaging sets. In the Phase 2 final rule, the agencies explained that because of the adoption of the large multipliers, the agencies were discontinuing the allowance to use advanced technology credits across averaging sets. This change was not accurately reflected in the regulatory changes made by the Phase 2 final rule; therefore, NHTSA is adding the provision as § 535.7(f)(1)(ii)(G).
NHTSA is removing paragraph (v) from § 535.7(f)(2), which removes the provision that provides manufacturers with the ability to apply the off-cycle provisions of § 535.7(f)(2) and 40 CFR 1037.610 to trailers, consistent with the 2021 D.C. Circuit decision discussed above, and reserving it for future use.
NHTSA is amending § 535.8(a)(6) to correct the mailing address for NHTSA to 1200 New Jersey Avenue SE, NVS-200, Office W45-306, Washington, DC 20590.
Like § 535.6(d)(3)(ii), NHTSA is expanding the provisions of § 535.8(g)(11)(i)(C) to broaden the language to provide clarity that the provision is referring to “engine and powertrain families and subfamilies” as opposed to just “engine families.”
NHTSA is amending § 535.8(g)(12) by removing all references to trailers and trailer manufacturers from its production reporting requirements, consistent with the 2021 D.C. Circuit decision, discussed above.
NHTSA is amending § 535.8(i) to include a statement reminding manufacturers that providing false, fictitious, or fraudulent information may subject them to penalties under 18 U.S.C. 1001.
NHTSA is amending § 535.9(a)(1)(i) by adding additional language and clarifications that NHTSA may conduct audits or perform confirmatory testing on any configuration. Any such testing would be performed as specified in EPA's regulations and NHTSA will collaborate with EPA regarding any potential issues with testing results.
NHTSA is adding paragraph (v) to § 535.9(a)(1) to add a provision stating that NHTSA may require a manufacturer to perform selective enforcement audits with respect to any GEM inputs in its application for certification or in the end of the year ABT final reports. The provision further specifies that any such selective enforcement audit would be required to be conducted in a manner consistent with EPA's corresponding provisions for selective enforcement audits.
NHTSA is removing (a)(3) and reserving it for future use. Although the NPRM proposed clarifying that EPA's compliance requirements 40 CFR 1037.601 and 40 CFR part 1068 apply similarly to NHTSA's fuel consumption program, except for the warranty provisions in 40 CFR 1037.601(a)(5), NHTSA has now concluded that it is not appropriate for NHTSA to incorporate by reference EPA's general compliance provisions for regulations issued under 40 CFR parts 1037 and 1068. Accordingly, NHTSA is removing the provisions at (a)(3) and reserving it for future use.
NHTSA is amending § 535.10(a)(6) by clarifying that vehicles required to meet the fuel consumption standards of this part must also comply with the same requirements as specified in 40 CFR 1037.115(a) and (d). However, while the NPRM proposed only referencing 40 CFR 1037.115, NHTSA has now concluded that it would be more appropriate to place the entirety of the substantive requirements into part 535 and note that the requirements are consistent with 40 CFR 1037.115(a) and (d).
NHTSA is amending § 535.10(c)(2) by removing the reference to box trailers, consistent with the 2021 D.C. Circuit decision, discussed above.
NHTSA is removing § 535.10(c)(3), consistent with the 2021 D.C. Circuit decision discussed above, and reserving it for future use.
We have considered the potential impact of this proposed rule under Executive Order 12866, Executive Order 14094, Executive Order 13563, and DOT Order 2100.6A. The Office of Management and Budget (OMB) has determined that this rule is not a significant regulatory action and, therefore, was not submitted to OMB for review.
This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control numbers 2060-0104, 2060-0287, 2060-0338, 2060-0545, 2060-0641. This rule clarifies and simplifies procedures without affecting information collection requirements.
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant economic impact on small entities. This action is designed to reduce testing burdens, increase compliance flexibility, and make various corrections and adjustments to compliance provisions. We therefore anticipate no costs and no regulatory burden associated with this rule. We further do not believe the benefits of this rule would result in significant economic impact to regulated small entities. Accordingly, we have concluded that this action will have no significant economic impact on regulated small entities.
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, requires Federal agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or Tribal governments, in the aggregate, or by the private sector, of more than $100 million annually (adjusted for inflation with base year of 1995). Adjusting this amount by the implicit gross domestic product price deflator for the year 2010 results in $136 million (110.993/81.606 = 1.36). This rule will not result in a cost of $136 million or more to either State, local, or Tribal governments, in the aggregate, or the private sector or uniquely affect small governments. Thus, this rule is not subject to the requirements of sections 202 of the UMRA.
This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the Federal government and the States, or on the distribution of power and responsibilities among the various levels of government.
This action does not have Tribal implications as specified in Executive Order 13175. This rule will be implemented at the Federal level and affects engine and vehicle manufacturers. Thus, Executive Order 13175 does not apply to this action.
This action is not subject to Executive Order 13045 because it is not
This action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. We have concluded that this action is not likely to have any adverse energy effects because it is designed merely to reduce testing burdens, increase compliance flexibility, and make various corrections and adjustments to compliance provisions.
Under the National Technology Transfer and Advancement Act of 1995 (NTTAA) (Pub. L. 104-113), all Federal agencies and departments shall use technical standards that are developed or adopted by voluntary consensus standards bodies, using such technical standards as a means to carry out policy objectives or activities determined by the agencies and departments. Voluntary consensus standards are technical standards (
NHTSA believes this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). Due to the lack of environmental impact, these regulatory changes will not have a disproportionate adverse effect on minority populations, low-income populations, or indigenous peoples.
Fuel economy, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, NHTSA is amending 49 CFR part 535 as set forth below:
49 U.S.C. 32902
This part establishes fuel consumption standards pursuant to 49 U.S.C. 32902(k) for work trucks and commercial medium- and heavy-duty on-highway vehicles (hereafter referenced as heavy-duty vehicles), and engines manufactured for sale in the United States. This part establishes a credit program that manufacturers may use to comply with standards and requirements for manufacturers to provide reports to the National Highway Traffic Safety Administration regarding their efforts to reduce the fuel consumption of heavy-duty vehicles and engines.
The revisions read as follows:
(c) Vehicle and engine manufacturers that must comply with this part include manufacturers required to have approved certificates of conformity from EPA as specified in subparts C in 40 CFR parts 1036 and 1037.
(e) The following heavy-duty vehicles and engines are exempted from the requirements of this part:
(1)
(2)
(ii) For Phase 2, fuel consumption standards apply on a delayed schedule for manufacturers meeting the small business criteria specified in 13 CFR 121.201 and in 40 CFR 86.1819-14(k)(5), 1036.150, and 1037.150.
(A) Qualifying manufacturers of truck tractors, vocational vehicles, heavy duty pickups and vans, and engines are not subject to the fuel consumption standards for vehicles built before January 1, 2022, and engines (such as those engines built by small alternative fuel engine converters) with a date of manufacturer on or after November 14, 2011, and before January 1, 2022. Qualifying manufacturers may choose to voluntarily comply early.
(B) Small manufacturers that certify their entire U.S.-directed production volume to the Phase 1 standards for calendar year 2021 may certify to the Phase 1 standards for model year 2022 (instead of the otherwise applicable Phase 2 standards).
(iii) Small business manufacturers producing vehicles and engines that run on any fuel other than gasoline, E85, or diesel fuel meeting the criteria specified in 13 CFR 121.201 and in 40 CFR 86.1819-14(k)(5), 1036.150, and 1037.150 may delay complying with every new mandatory standard under this part by one model year.
(3) [Reserved]
(4)
The terms
(1) Heavy-duty pickup trucks and vans.
(2) Light heavy-duty (LHD) vehicles.
(3) Medium heavy-duty (MHD) vehicles.
(4) Heavy heavy-duty (HHD) vehicles.
(5) Light heavy-duty engines subject to compression-ignition standards.
(6) Medium heavy-duty engines subject to compression-ignition standards.
(7) Heavy heavy-duty engines subject to compression-ignition standards.
(8) Engines subject to spark-ignition standards.
(9) Vehicle types certifying to optional custom chassis standards as specified in § 535.5(b)(6) form separate averaging sets for each vehicle type as specified in § 535.7(c).
(1)
(2)
(1) Where the certificate holder is an engine manufacturer that does not manufacture the complete or incomplete vehicle, the date of manufacture of the vehicle is based on the date assembly of the vehicle is completed.
(2) EPA and NHTSA may approve an alternate date of manufacture based on the date on which the certifying (or primary) vehicle manufacturer completes assembly at the place of main assembly, consistent with the provisions of 40 CFR 1037.601 and 49 CFR 567.4.
(3) A vehicle manufacturer that completes assembly of a vehicle at two or more facilities may ask to use as the month and year of manufacture, for that vehicle, the month and year in which manufacturing is completed at the place of main assembly, consistent with provisions of 49 CFR 567.4, as the model year. Note that such staged assembly is subject to the provisions of 40 CFR 1068.260(c). NHTSA's allowance of this provision is effective when EPA approves the manufacturer's certificates of conformity for these vehicles.
(1) Such conditions are substantially included in the applicable Federal emission test procedure for heavy-duty vehicles and heavy-duty engines described in subpart N of this part;
(2) The need for the AECD is justified in terms of protecting the vehicle against damage or accident;
(3) The AECD does not go beyond the requirements of engine starting; or
(4) The AECD applies only for engines that will be installed in emergency vehicles, and the need is justified in terms of preventing the engine from losing speed, torque, or power due abnormal conditions of the emission control system, or in terms of preventing such abnormal conditions from occurring, during operation related to
(1) For tractors and vocational vehicles with a date of manufacture on or after January 1, 2021, the vehicle's
(2) For Phase 1 tractors and vocational vehicles with a date of manufacture before January 1, 2021,
(i) The manufacturer who holds the certificate of conformity for the vehicle must assign the model year based on the date when its manufacturing operations are completed relative to its annual model year period. In unusual circumstances where completion of your assembly is delayed, we may allow you to assign a model year one year earlier, provided it does not affect which regulatory requirements will apply.
(ii) Unless a vehicle is being shipped to a secondary manufacturer that will hold the certificate of conformity, the model year must be assigned prior to introduction of the vehicle into U.S. commerce. The certifying manufacturer must re-designate the model year if it does not complete its manufacturing operations within the originally identified model year. A vehicle introduced into U.S. commerce without a model year is deemed to have a model year equal to the calendar year of its introduction into U.S. commerce unless the certifying manufacturer assigns a later date.
(3) For engines,
(1) Divide compression-ignition engines into primary intended service classes based on the following engine and vehicle characteristics:
(i) Light heavy-duty “LHD” engines usually are not designed for rebuild and do not have cylinder liners. Vehicle body types in this group might include any heavy-duty vehicle built from a light-duty truck chassis, van trucks, multi-stop vans, and some straight trucks with a single rear axle. Typical applications will include personal transportation, light-load commercial delivery, passenger service, agriculture, and construction. The GVWR of these vehicles is normally below 19,500 pounds.
(ii) Medium heavy-duty “MHD” engines may be designed for rebuild and may have cylinder liners. Vehicle body types in this group will typically include school buses, straight trucks with single rear axles, city tractors, and a variety of special purpose vehicles such as small dump trucks, and refuse trucks. Typical applications will include commercial short haul and intra-city delivery and pickup. Engines in this group are normally used in vehicles whose GVWR ranges from 19,500 to 33,000 pounds.
(iii) Heavy heavy-duty “HHD” engines are designed for multiple rebuilds and have cylinder liners. Vehicles in this group are normally tractors, trucks, straight trucks with dual rear axles, and buses used in inter-city, long-haul applications. These vehicles normally exceed 33,000 pounds GVWR.
(2) Divide spark-ignition engines into primary intended service classes as follows:
(i) Spark-ignition engines that are best characterized by paragraph (1)(i) or (ii) of this section are in a separate “spark-ignition” primary intended service class.
(ii) Spark-ignition engines that are best characterized by paragraph (1)(iii) of this section share a primary intended service class with compression-ignition heavy heavy-duty engines. Gasoline-fueled engines are presumed not to be characterized by paragraph (1)(iii) of this section; for example, vehicle manufacturers may install some number of gasoline-fueled engines in Class 8 trucks without causing the engine manufacturer to consider those to be heavy heavy-duty engines.
(iii) References to “spark-ignition standards” in this part relate only to the spark-ignition engines identified in paragraph (2)(i) of this definition. References to “compression-ignition standards” in this part relate to compression-ignition engines, to spark-ignition engines optionally certified to standards that apply to compression-ignition engines, and to all engines identified under paragraph (2)(ii) of this definition as heavy heavy-duty engines.
(1) Heavy-duty pick-up trucks and vans.
(2) Vocational vehicle subcategories have 18 separate vehicle service classes as shown in paragraphs (2)(i) and (ii) of this definition and include vocational tractors. Paragraph (2)(i) of this definition includes vehicles complying with Phase 1 standards. Phase 2 vehicles are included in paragraph (2)(ii) of this definition which have separate subcategories to account for engine characteristics, GVWR, and the selection of duty cycle for vocational vehicles as specified in 40 CFR 1037.510; vehicles may additionally fall into one of the subcategories defined by the custom-chassis standards in § 535.5(b)(6) and 40 CFR 1037.105(h). Manufacturers using the alternate standards in § 535.5(b)(6) and 40 CFR 1037.105(h) should treat each vehicle type as a separate vehicle subcategory.
(i)
(B) Vocational MHD vehicles.
(C) Vocational HHD vehicles.
(ii)
(3) Tractor subcategories are shown in paragraph (3)(i) of this definition for Phase 1 and 2. Paragraph (3)(i) includes 10 separate subcategories for tractors complying with Phase 1 and 2 standards. The heavy-haul tractor subcategory only applies for Phase 2.
(i)
(ii) [Reserved]
(4) [Reserved]
(5) Engine subcategories are shown for each primary intended service class in paragraph (5)(i) of this definition. Paragraph (5)(i) includes 6 separate subcategories for engines which are the same for Phase 1 and 2 standards.
(i)
(ii) [Reserved]
(1) Low-roof means a vehicle with a roof height of 120 inches or less.
(2) Mid-roof means a vehicle with a roof height between 121 and 147 inches.
(3) High-roof means a vehicle with a roof height of 148 inches or more.
(1) Spark-ignition engines, light heavy-duty compression-ignition engines, light heavy-duty vocational vehicles and heavy-duty pickup trucks and vans.
(2) Medium heavy-duty compression-ignition engines and medium heavy-duty vocational vehicles and tractors.
(3) Heavy heavy-duty compression-ignition engines and heavy heavy-duty vocational vehicles and tractors.
(1) For vocational vehicles:
(i) 2.85 tons for light heavy-duty vehicles.
(ii) 5.6 tons for medium heavy-duty vehicles.
(iii) 7.5 tons for heavy heavy-duty vocational vehicles.
(2) For tractors:
(i) 12.5 tons for Class 7.
(ii) 19 tons for Class 8.
(iii) 43 tons for heavy-haul tractors.
(1) Phase 1 and Phase 2 tractors are divided based on GVWR into Class 7 tractors and Class 8 tractors. Where provisions apply to both tractors and vocational vehicles, Class 7 tractors are considered medium heavy-duty “MHD” vehicles and Class 8 tractors are considered heavy heavy-duty “HHD” vehicles. This paragraph applies for both hybrid and non-hybrid vehicles.
(2) Phase 1 vocational vehicles are divided based on GVWR. Light heavy-duty “LHD” vehicles includes Class 2b through Class 5 vehicles; medium heavy-duty “MHD” vehicles includes Class 6 and Class 7 vehicles; and heavy heavy-duty “HHD” vehicles includes Class 8 vehicles.
(3) Phase 2 vocational vehicles with spark-ignition engines are divided based on GVWR. Light heavy-duty “LHD” vehicles includes Class 2b through Class 5 vehicles, and medium heavy-duty “MHD” vehicles includes Class 6 through Class 8 vehicles.
(4) Phase 2 vocational vehicles with compression-ignition engines are divided as follows:
(i) Class 2b through Class 5 vehicles are considered light heavy-duty “LHD” vehicles.
(ii) Class 6 through 8 vehicles are considered heavy heavy-duty “HHD” vehicles if the installed engine's primary intended service class is heavy heavy-duty (see 40 CFR 1036.140), except that Class 8 hybrid vehicles are considered heavy heavy-duty “HHD” vehicles regardless of the engine's primary intended service class. All other Class 6 through Class 8 vehicles are considered medium heavy-duty “MHD” vehicles.
(5) Heavy-duty vehicles with no installed propulsion engine, such as electric vehicles, are divided as follows:
(i) Class 2b through Class 5 vehicles are considered light heavy-duty “LHD” vehicles.
(ii) Class 6 and 7 vehicles are considered medium heavy-duty “MHD” vehicles.
(iii) Class 8 vehicles are considered heavy heavy-duty “HHD” vehicles.
(6) In certain circumstances, manufacturers may certify vehicles to standards that apply for a different vehicle service class such as allowed in § 535.5(b)(6) and (c)(7). If manufacturers optionally certify vehicles to different standards, those vehicles are subject to all the regulatory requirements as if the standards were mandatory.
The revisions read as follows:
(a)
(1)
(b)
(4)
(9) * * *
(i)
(c)
(5)
(d)
(3)
(11) * * *
(i) * * *
(A) 5.3241 gallons per 100 hp-hr for MHD vocational vehicle engines.
(C) 5.0098 gallons per 100 hp-hr for HHD vocational vehicle engines.
The revisions and additions read as follows:
(b) * * *
(1) Select vehicles and vehicle family configurations as specified in 40 CFR 1037.150 and 1037.230 for vehicles that make up each of the manufacturer's regulatory subcategories of vocational vehicles and tractors. For the Phase 2 program, select powertrain, axle and transmission families in accordance with 40 CFR 1037.231 and 1037.232.
(4) * * *
(ii) Coefficient of aerodynamic drag (C
(5) * * *
(i)
(v) * * *
(E) * * *
(
(
(d)
(1) Manufacturers must select emission-data engines representing the tested configuration of each engine family specified in 40 CFR 1036.501 for engines in heavy-duty truck tractors and vocational vehicles that make up each of the manufacturer's regulatory subcategories.
(2) Standards in § 535.5(d) apply to the CO2 emissions rates for each emissions-data engine in an engine or powertrain family or sub-family subject to the procedures and equipment specified in 40 CFR part 1036, subpart F. Determine equivalent fuel consumptions rates using CO2 emissions rates in grams per hp-hr measured to at least one more decimal place than that of the applicable EPA standard in 40 CFR 1036.108.
(3) For medium HD and heavy HD engines certified as tractor and other long-haul engine families, use the CO2 emissions test results from the steady-state duty cycle, which is referred to as the Supplemental Emission Test (SET), as specified in 40 CFR 1036.510 for each model year; for medium HD and heavy HD engines certified as tractor and vocational engine families, use the CO2 test results from the transient duty
(ii) The following engines are excluded from the engine and powertrain families and subfamilies used to determine fuel consumption FCL values and the benefit for these engines is determined as an advanced technology credit under the ABT provisions provided in § 535.7(e); these provisions apply only for the Phase 1 program:
The revisions and additions read as follows:
(a)
(2) * * *
(v) If a manufacturer certifies a vehicle family to an FEL that exceeds the otherwise applicable standard, it must obtain enough FCC to offset the vehicle family's deficit by the due date of its final report required in § 535.8. The emission credits used to address the deficit may come from other vehicle families that generate FCCs in the same model year (or from the next three subsequent model years), from banked FCCs from previous model years, or from FCCs generated in the same or previous model years that it obtained through trading.
(4)
(8) * * *
(i) Fuel consumption credits a manufacturer generates for light and medium heavy-duty vocational vehicles in model years 2018 through 2021 may be used through model year 2027, instead of being limited to a five-year credit life as specified in this part. Fuel consumption credits that small manufacturers generate for heavy heavy-duty vocational vehicles in model years 2018 through may be used through model year 2027, instead of being limited to a five-year credit life as specified in this part. Fuel consumption credits that a small manufacturer generates for vocational vehicles in model year 2022 that are certified to Phase 1 standards as permitted under § 535.3(e)(2)(ii)(B) may be used through model year 2027.
(9) * * *
(iv) * * *
(B) Manufacturers may produce up to 200 drayage tractors in a given model year to the standards described in § 535.5(b)(6) for “other buses”. Treat these drayage tractors as being in their own averaging set. This limit applies with respect to vehicles produced by manufacturers within a control relationship as defined § 534.3.
(11) Fuel consumption credits may not be generated more than once. This means that fuel consumption credits may only be generated once for a given engine or vehicle and fuel consumption credits may not be generated for both a given engine and the vehicle in which the engine is installed. For example, if a manufacturer generates fuel consumption credits for a given hybrid vehicle under this part, no one may generate fuel consumption credits for the associated hybrid engine. This provision, however, does not prevent manufacturers from generating fuel consumption credits for engines that are identical to the given engine in the example if those engines are installed in vehicles for which fuel consumption credits are not generated. This provision does not impact any adjustment factor or multiplier that is applied to the fuel consumption credits as specified or permitted by this part.
(b) * * *
(1) Calculate fuel consumption credits in a model year for one fleet of conventional heavy-duty pickup trucks and vans and if designated by the manufacturer another consisting of advance technology vehicles for the averaging set as defined in § 535.4. Calculate credits for each fleet separately using the following equation:
(c) * * *
(1) Calculate the fuel consumption credits in a model year for each participating family or subfamily consisting of conventional vehicles in each averaging set (as defined in § 535.4) using the equation in this section. Each designated vehicle family or subfamily has a “family emissions limit” (FEL) that is compared to the associated regulatory subcategory standard. An FEL that falls below the regulatory subcategory standard creates “positive credits,” while fuel consumption level of a family group above the standard creates a “negative credits.” The value of credits generated for each family or subfamily in a model year is calculated as follows and must be rounded to nearest whole number:
(d) * * *
(1) Calculate the fuel consumption credits in a model year for each participating family or subfamily consisting of engines in each averaging set (as defined in § 535.4) using the equation in this section. Each designated engine family has a “family certification level” (FCL) which is compared to the associated regulatory subcategory standard. A FCL that falls below the regulatory subcategory standard creates “positive credits,” while fuel consumption level of a family group above the standard creates a “credit shortfall.” The value of credits generated in a model year for each engine family or subfamily is calculated as follows and must be rounded to nearest whole number:
(7) Engine credits generated for compression-ignition engines in model year 2020 and earlier may be used in model year 2021 and later as follows:
(i) For credit-generating engines certified to the tractor engine standards in § 535.5(d), you may use credits calculated relative to the tractor engine standards.
(ii) For credit-generating engines certified to the vocational engine standards in § 535.5(d), you may use credits calculated relative to the following family certification levels (FCLs):
(A) Medium Heavy-Duty Engines = 5.4813 gallons/100 hp-hr
(B) Heavy Heavy-Duty Engines = 5.1572 gallons/100 hp-hr
(C) To transfer Phase 1 credits for use in the Phase 2 fuel consumption program, manufacturers must recalculate credit values for the Phase 1 model years by substituting the FCLs in paragraph (d)(1) of this section with the those in paragraphs (d)(7)(ii)(A) and (B) of this section.
(f) * * *
(1) * * *
(ii) There are no separate credit allowances for advanced technology vehicles in the Phase 2 program. Instead, through model year 2027, vehicle families containing plug-in battery electric hybrids, all-electric, and fuel cell vehicles certifying to Phase 2 vocational and tractor standards may multiply credits by a multiplier of:
(G) Advanced technology credits increased with a multiplier in Phase 2,
(a) * * *
(6) Any information that must be sent directly to NHTSA. In instances in which EPA has not created an electronic pathway to receive the information, the information should be sent through an electronic portal identified by NHTSA or through the NHTSA CAFE database (
(g) * * *
(11) * * *
(i) * * *
(C) The averaging set corresponding to the engine and powertrain families and subfamilies that generated fuel consumption credits for the trade, including the number of fuel consumption credits from each averaging set.
(12)
(i)
(a) * * *
(1) * * *
(i) NHTSA may conduct audits or confirmatory testing on any configuration prior to first sale throughout a given model year or after the model year in order to validate data received from manufacturers and will discuss any potential issues with EPA and the manufacturer. NHTSA may perform confirmatory testing. Any such testing would be performed as specified in EPA's regulations at 40 CFR part 1037. Audits may periodically be performed to confirm manufacturers' credit balances, or other credit transactions or other information submitted to EPA and NHTSA.
(v) NHTSA may require a manufacturer to perform selective enforcement audits with respect to any GEM inputs in its application for certification or in the end of the year ABT final reports. Any required selective enforcement audits would be required to be conducted in a manner consistent with EPA's corresponding provisions at 40 CFR 1037.301, 1037.305, and 1037.320.
The revisions read as follows:
(a) * * *
(6) Manufacturers apply the fuel consumption standards specified in § 535.5 to vehicles, engines and components that represent production units and components for vehicle and engine families, subfamilies and configurations consistent with the EPA specifications in 40 CFR 86.1819, 1036.230, and 1037.230. Vehicles required to meet the fuel consumption standards of this part must also comply with the following additional requirements, consistent with CFR 1037.115(a) and (d):
(i)
(ii)
(c) * * *
(2) For truck tractors, vocational vehicles, and engines the manufacturer's fuel consumption performance for each vehicle or engine family (or subfamily), as determined in § 535.6, is lower than the applicable regulatory subcategory standards in § 535.5.
Issued in Washington, DC, under authority delegated in 49 CFR 1.95 and 501.5.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; quota transfer.
NMFS announces that the Commonwealth of Virginia is transferring a portion of its 2024 commercial summer flounder quota to the State of New Jersey. This adjustment to the 2024 fishing year quota is necessary to comply with the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP) quota transfer provisions. This announcement informs the public of the revised 2024
Effective March 14, 2024, through December 31, 2024.
Laura Deighan, Fishery Management Specialist, (978) 281-9184.
Regulations governing the summer flounder fishery are found in 50 CFR 648.100 through 648.111. These regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through North Carolina. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.102 and final 2024 allocations were published on December 21, 2023 (88 FR 88266).
The final rule implementing amendment 5 to the Summer Flounder FMP, as published in the
Virginia is transferring 2,860 pounds (lb; 1,297 kilograms (kg)) to New Jersey through a mutual agreement between the states. This transfer was requested to repay landings made by an out-of-state permitted vessel under a safe harbor agreement. The revised summer flounder quotas for 2024 are: Virginia, 1,876,941 lb (851,366 kg); and New Jersey, 1,472,958 lb (668,123 kg).
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR 648.102(c)(2)(i) through (iv), which was issued pursuant to section 304(b), and is exempted from review under Executive Order 12866.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; opening.
NMFS is opening directed fishing for sablefish with fixed gear managed under the Individual Fishing Quota (IFQ) Program and the Community Development Quota (CDQ) Program. The season will open 1200 hours, Alaska local time (A.l.t.), March 15, 2024, and will close 1200 hours, A.l.t., December 7, 2024. This period is the same as the 2024 commercial halibut fishery opening dates adopted by the International Pacific Halibut Commission, except the hours are not the same. The IFQ and CDQ halibut season dates are the same as specified by a separate publication in the
Effective 1200 hours, A.l.t., March 15, 2024, until 1200 hours, A.l.t., December 7, 2024.
Adam Zaleski, 907-586-7228.
Beginning in 1995, fishing for Pacific halibut and sablefish with fixed gear in the IFQ regulatory areas defined in 50 CFR 679.2 has been managed under the IFQ Program. The IFQ Program is a regulatory regime designed to promote the conservation and management of these fisheries and to further the objectives of the Magnuson-Stevens Fishery Conservation and Management Act and the Northern Pacific Halibut Act. Persons holding quota share receive an annual allocation of IFQ. Persons receiving an annual allocation of IFQ are authorized to harvest IFQ species within specified limitations. Further information on the implementation of the IFQ Program, and the rationale supporting it, are contained in the preamble to the final rule implementing the IFQ Program published in the
This announcement is consistent with § 679.23(g)(1), which requires that the directed fishing season for sablefish managed under the IFQ Program be specified by the Administrator, Alaska Region, and announced by publication in the
There is a difference in the time of day for opening and closing the halibut IFQ and CDQ commercial fishery and the Alaska IFQ and CDQ sablefish commercial fishery. IPHC regulations open the halibut IFQ and CDQ fishery at 0600 hours on March 15, 2024, and NMFS will open the Alaska IFQ and CDQ sablefish fishery at 1200 hours on March 15, 2024. Therefore, if gear is deployed to fish for halibut in the commercial fishery of Alaska before 1200 hours on March 15, 2024, then IFQ or CDQ sablefish caught from that deployment may not be retained. If a vessel operator holds both halibut and sablefish IFQ or CDQ, and the operator intends to retain sablefish on March 15, then the vessel should deploy its commercial fishing gear after 1200 hours.
IPHC regulations close the halibut IFQ and CDQ fishery at 2359 hours on December 7, 2024, and NMFS will close the Alaska IFQ and CDQ sablefish fishery at 1200 hours on December 7, 2024. Therefore, if gear is deployed to fish for halibut in the commercial fishery off Alaska after 1200 hours on December 7, 2024, then IFQ and CDQ sablefish caught from that deployment may only be retained up to the
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would delay the opening of the sablefish fishery thereby increasing bycatch and regulatory discards between the sablefish fishery and the halibut fishery, and prevent the accomplishment of the management objective for simultaneous opening of these two fisheries. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of March 11, 2024.
The Assistant Administrator for Fisheries, NOAA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; reallocation.
NMFS is reallocating the projected unused amounts of the Aleut Corporation and the Community Development Quota (CDQ) pollock directed fishing allowance (DFA) from the Aleutian Islands subarea to the Bering Sea subarea. This action is necessary to provide the opportunity for the harvest of the 2024 total allowable catch (TAC) of pollock, consistent with the goals and objectives of the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (BSAI).
Effective 1200 hours, Alaska local time (A.l.t.), March 15, 2024, through 2400 hours, A.l.t., December 31, 2024.
Steve Whitney, 907-586-7228.
NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council (Council) under authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR parts 600 and 679.
In the Aleutian Islands subarea, the portion of the 2024 pollock TAC allocated to the Aleut Corporation and CDQ DFA is 13,680 metric tons (mt) and 1,900 mt, respectively, as established by the final 2024 and 2025 harvest specifications for groundfish in the BSAI (89 FR 17287, March 11, 2024).
As of March 8, 2024, the Administrator, Alaska Region, NMFS, (Regional Administrator) has determined that 11,680 mt of the Aleut Corporation's DFA and 1,900 mt of pollock CDQ DFA in the Aleutian Islands subarea will not be harvested. Therefore, in accordance with § 679.20(a)(5)(iii)(B)(
NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion, and would delay the reallocation of Aleutian Islands pollock. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of March 11, 2024.
The Assistant Administrator for Fisheries, NOAA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.
16 U.S.C. 1801
In rule document 2024-04516 beginning on page 15484 in the issue of Monday, March 4, 2024, make the following correction:
On page 15489, in Table 1 the three final entries should read:
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of proposed rulemaking.
The Energy Policy and Conservation Act, as amended (“EPCA”), prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including residential clothes washers (“RCWs”). In this notice of proposed rulemaking (“NOPR”), the U.S. Department of Energy (“DOE”) proposes amended energy conservation standards for RCWs identical to those set forth in a direct final rule published elsewhere in this issue of the
DOE will accept comments, data, and information regarding this NOPR no later than July 3, 2024. Comments regarding the likely competitive impact of the proposed standard should be sent to the Department of Justice contact listed in the
See section IV of this document, “Public Participation,” for details. If DOE withdraws the direct final rule published elsewhere in this issue of the
Interested persons are encouraged to submit comments using the Federal eRulemaking Portal at
(1)
(2)
(3)
No telefacsimiles (“faxes”) will be accepted. For detailed instructions on submitting comments and additional information on this process, see section IV of this document.
The docket web page can be found at
EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Antitrust Division at
Dr. Carl Shapiro, 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: (202) 287-5649. Email:
Ms. Amelia Whiting, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 586-2588. Email:
For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:
The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”),
Pursuant to EPCA, any new or amended energy conservation standard must, among other things, 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))
In light of the above and under the authority provided by 42 U.S.C. 6295(p)(4)(A)(i), DOE is proposing this rule amending the energy conservation standards for RCWs and is concurrently issuing a direct final rule elsewhere in this issue of the
In accordance with these and other statutory provisions discussed in this document, DOE proposes amended energy conservation standards for RCWs. The standards are expressed in terms of energy efficiency ratio (“EER”), measured in pounds per kilowatt-hour per cycle (“lb/kWh/cycle”), and water efficiency ratio (“WER”), measured in pounds per gallon per cycle (“lb/gal/cycle”), as determined in accordance with DOE's clothes washer test procedure codified at title 10 of the Code of Federal Regulations (“CFR”) part 430, subpart B, appendix J (“appendix J”). The EER metric includes active mode, inactive mode, and off mode energy use.
Table I.1 presents the proposed energy conservation standards for RCWs. The proposed standards are the same as those recommended by the Joint Agreement. These standards apply to all products listed in Table I.1 and manufactured in, or imported into the United States starting on March 1, 2028, as recommended in the Joint Agreement.
The following section briefly discusses the statutory authority underlying this proposed rule, as well as some of the relevant historical background related to the establishment of standards for RCWs.
EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include RCWs, the subject of this document. (42 U.S.C. 6292(a)(7)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(g)(2) and (g)(9)(A)), and directed DOE to conduct
In establishing energy conservation standards with both energy and water use performance standards for RCWs manufactured after January 1, 2011, Congress also directed DOE to “determin[e] whether to amend” those standards. (42 U.S.C. 6295(g)(9)(B)) Congress's directive, in section 6295(g)(9)(B), to consider whether “to amend the standards in effect for RCWs” refers to “the standards” established in the immediately preceding paragraph, 6295(g)(9)(A). There, Congress established energy conservation standards with
DOE similarly understands its authority under 42 U.S.C. 6295(m) to amend “standards” for covered products to include amending both the energy and water use performance standards for RCWs. Neither section 6295(g)(9)(B) nor section 6295(m) limit their application to “energy use standards.” Rather, they direct DOE to consider amending “the standards,” 42 U.S.C. 6295(g)(9)(B), or simply “standards,”
Finally, DOE is proposing these standards in this companion NOPR to a direct final rule pursuant to section 42 U.S.C. 6295(p)(4). That section also extends broadly to any “energy or water conservation standard” without qualification. Thus, pursuant to section 6295(p)(4), DOE may, so long as the other relevant conditions are satisfied, promulgate a direct final rule that includes water use performance standards for a covered product like RCWs, where Congress has already established energy and water use performance standards.
DOE is aware that the definition of “energy conservation standard,” in section 6291(6), expressly references water use only for four products specifically named: showerheads, faucets, water closets, and urinals.
The energy conservation program was initially limited to addressing the energy use, meaning electricity and fossil fuels, of 13 covered products. (
Later, Congress further expanded the scope of the energy conservation program several times. For instance, Congress added products and standards directly to 42 U.S.C. 6295, the section of EPCA that contains statutorily prescribed standards as well as DOE's standard-setting authorities.
Congress also expanded the scope of the energy conservation program by directly adding water use performance standards for certain products to 42 U.S.C. 6295. For example, in the Energy Policy Act of 2005, Congress added a water use performance standard (but no energy use performance standard) for commercial prerinse spray valves (“CPSVs”) and did so without updating the list of covered products in 42 U.S.C. 6292 to include CPSVs and without adding CPSVs to the list of enumerated products with water use performance standards in the “energy conservation standard” definition in 42 U.S.C. 6291(6). In the Energy Independence and Security Act of 2007 (“EISA 2007”), Congress amended 42 U.S.C. 6295 by prescribing standards for RCWs and dishwashers that included both energy and water use performance standards. (
In considering how to treat these products and standards that Congress has directly added to 42 U.S.C. 6295 without making conforming changes to the rest of the statute, including the list of covered products in 42 U.S.C. 6292, and the water-use products in the definition of an “energy conservation standard,” DOE construes the statute as a whole. When Congress added products and standards directly to 42 U.S.C. 6295 it must have meant those products to be covered products and those standards to be energy conservation standards, given that the purpose of 42 U.S.C. 6295 is to provide “energy conservation standards applicable to covered products” and to
It would similarly defeat congressional intent for a manufacturer to be permitted to distribute a covered product,
DOE recognizes that some might argue that Congress's specific reference in section 6291(6) to water standards for showerheads, faucets, water closets, and urinals could “create a negative implication” that energy conservations standards for other covered products may not include water use standards.
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 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(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 procedures for RCWs appear at 10 CFR part 430, subpart B, appendix J (“appendix J”) and appendix J2 (“appendix J2”).
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including RCWs. 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 (“Secretary”) 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 if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(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
(6) The need for national energy and water conservation; and
(7) Other factors the 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, as codified, 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))
EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. A rule prescribing an energy conservation standard for a type (or class) of product 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 considers such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate. (
Additionally, pursuant to the amendments contained in the Energy Independence and Security Act of 2007 (“EISA 2007”), Public Law 110-140, final rules for new or amended energy conservation standards promulgated after July 1, 2010, are 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 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)) DOE's current test procedures for RCWs address standby mode and off mode energy use, as do the standards proposed in this NOPR.
Finally, EISA 2007 amended EPCA, in relevant part, to grant DOE authority to directly issue a final rule (
A NOPR that proposes an identical energy efficiency or water conservation standard must be published simultaneously with the direct final rule, and DOE must provide a public comment period of at least 110 days on this proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) Based on the comments received during this period, the direct final rule will either become effective, or DOE will withdraw it not later than 120 days after its issuance if: (1) one or more adverse comments is received, and (2) DOE determines that those comments, when viewed in light of the rulemaking record related to the direct final rule, may provide a reasonable basis for withdrawal of the direct final rule under 42 U.S.C. 6295(o). (42 U.S.C. 6295(p)(4)(C)) Receipt of an alternative joint recommendation may also trigger a DOE withdrawal of the direct final rule in the same manner. (
DOE has previously explained its interpretation of its direct final rule authority. In a final rule amending the Department's “Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” at 10 CFR part 430, subpart C, appendix A, DOE noted that it may issue standards recommended by interested persons that are fairly representative of relative points of view as a direct final rule when the recommended standards are in accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. 86 FR 70892, 70912 (Dec. 13, 2021). But the direct final rule provision in EPCA, under which this proposed rule is issued, does not impose additional requirements applicable to other standards rulemakings, which is consistent with the unique circumstances of rules issued through consensus agreements under DOE's direct final rule authority.
In a direct final rule published on May 31, 2012 (“May 2012 Direct Final Rule”), DOE prescribed the current energy conservation standards for RCWs manufactured on or after January 1, 2018. 77 FR 32308.
For top-loading semi-automatic clothes washers, a design standard currently applies, which requires such products to have an unheated rinse water option. 10 CFR 430.32(g)(1).
As discussed, DOE's current energy conservation standards for RCWs are expressed in terms of IMEF and IWF as measured using appendix J2. (
In a final rule published on June 1, 2022 (“June 2022 TP Final Rule”), DOE finalized a new test procedure at appendix J, which defines new energy efficiency metrics: an energy efficiency ratio (
On September 25, 2023, DOE received a joint statement (
A court decision issued after DOE received the Joint Agreement is also relevant to today's rule. On March 17, 2022, various States filed a petition seeking review of a final rule revoking two final rules that established product classes for residential dishwashers with a cycle time for the normal cycle of 60 minutes or less, top-loading RCWs and certain classes of consumer clothes dryers with a cycle time of less than 30 minutes, and front-loading RCWs with a cycle time of less than 45 minutes (collectively, “short cycle product classes”). The petitioners argued that the final rule revoking the short cycle product classes violated EPCA and was arbitrary and capricious. On January 8, 2024, the United States Court of Appeals for the Fifth Circuit granted the petition for review and remanded the matter to DOE for further proceedings consistent with the Fifth Circuit's opinion.
On February 14, 2024, following the Fifth Circuit's decision in
In a recently issued request for information (“RFI”),
The Joint Agreement recommends amended standard levels for RCWs as presented in Table II.2. (Joint Agreement, No. 505 at p. 9) Details of the Joint Agreement recommendations for other products are provided in the Joint Agreement posted in the docket.
DOE has evaluated the Joint Agreement and believes that it meets the EPCA requirements for issuance of a direct final rule. As a result, DOE published a direct final rule establishing energy conservation standards for RCWs elsewhere in this issue of the
For further background information on these proposed standards and the supporting analyses, please see the direct final rule published elsewhere in this issue of the
When the Joint Agreement was submitted, DOE was conducting a rulemaking to consider amending the standards for RCWs. As part of that process, DOE published a NOPR and announced a public meeting on March 3, 2023, (“March 2023 NOPR”) seeking comment on its proposed amended standards to inform its decision consistent with its obligations under EPCA and the Administrative Procedures Act (“APA”). 88 FR 13520. The March 2023 NOPR proposed amended standards defined in terms of the EER and WER metrics as measured according to appendix J.
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))
DOE considered the impacts of amended standards for RCWs at each trial standard level (“TSL”), beginning with the maximum technologically feasible (“max-tech”) 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. DOE refers to this process as the “walk-down” analysis.
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
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 direct final rule TSD
Table III.1 and Table III.2 summarize the quantitative impacts estimated for each TSL for RCWs. The national impacts are measured over the lifetime of RCWs purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2027-2056 for all TSLs except TSL 2,
DOE first considered TSL 4, which represents the max-tech efficiency levels for all product classes. Specifically for top-loading standard-size RCWs, DOE's expected design path for TSL 4 (which represents EL 4 for this product class) incorporates the use of a direct drive motor, stainless steel basket and more robust suspension and balancing systems (as methods for enabling faster spin speeds), a wash plate (as a means for enabling reduced water levels), reduced hot and warm wash water temperatures compared to temperatures available on baseline units, spray rinse, the fastest achievable spin speeds, and an increase in tub size compared to the baseline (as a means for reducing energy and water use on a per-pound of clothing basis).
For front-loading standard-size RCWs, DOE's expected design path for TSL 4 (which represents EL 4 for this product class) incorporates the use of the most efficient available direct drive motor, the implementation of advanced sensors, the fastest achievable spin speeds, and lower cold water volume (but with no change to total hot water use). Among these design options, the direct drive motor, more advanced sensors, and faster spin speeds reduce energy use only; whereas the lower cold water volume reduces water use only.
TSL 4 would save an estimated 2.12 quads of energy and 2.73 trillion gallons of water, an amount DOE considers significant. Under TSL 4, the net present value (“NPV”) of consumer benefit would be $8.76 billion using a discount rate of 7 percent, and $21.12 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 55.77 million metric tons (“Mt”) of carbon dioxide (“CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At TSL 4, the average life-cycle costs (“LCC”) impact is a savings of $133 for top-loading standard-size, $38 for front-loading compact, $49 for front-loading standard-size, and $188 for semi-automatic clothes washers. The simple payback period is 5.4 years for top-loading standard-size, 8.0 years for front-loading compact, 1.7 years for front-loading standard-size, and 0.6 years for semi-automatic clothes washers. The fraction of consumers experiencing a net LCC cost is 26 percent for top-loading standard-size, 35 percent for front-loading compact, 16 percent for front-loading standard-size, and zero percent for semi-automatic clothes washers. For the top-loading standard-size product class, which represents 71 percent of the market, TSL 4 would increase the first cost by $166, in comparison to an installed cost of $690 for baseline units. For the front-loading standard-size product class, which represents 25 percent of the market, TSL 4 would increase the first cost by $93, compared to an installed cost of $1,027 for baseline units. At TSL 4, the standard for top-loading ultra-compact RCWs is at the baseline, resulting in no LCC impact, no simple PBP, and no consumers experiencing a net LCC cost. Additionally, as a result of lower costs associated with well water and septic tanks in rural areas, about 40 percent of well-water households would experience a net LCC cost at TSL 4.
At TSL 4, the projected change in industry net present value (“INPV”) ranges from a decrease of $1,172.0 million to a decrease of $969.6 million, which correspond to a decrease of 68.6 percent and 56.8 percent, respectively. The loss in INPV is largely driven by industry conversion costs as manufacturers work to redesign their portfolios of model offerings and re-tool entire factories to comply with amended standards at this level. Industry conversion costs could reach $1,321.2 million at this TSL.
Conversion costs at max-tech are significant, as nearly all existing RCW models would need to be redesigned to meet the required efficiencies. Currently, approximately 4 percent of RCW annual shipments meet the max-tech levels. For top-loading standard-size RCWs, which DOE projects will account for 71 percent of annual shipments in 2027, less than 1 percent of current shipments meet this level. Of the nine original equipment manufacturers (“OEMs”) offering top-loading standard-size products, one OEM offers five basic models (representing approximately 1 percent of all top-loading standard-size basic models) that meet the efficiencies required by TSL 4. The remaining eight OEMs would need to overhaul their existing platforms and make significant updates to their production facilities. Those manufacturers may need to incorporate increased tub capacities, wash plate designs, direct drive motors, reinforced wash baskets, robust suspension and balancing systems, and advanced sensors. These product changes require significant investment. In interviews, several manufacturers expressed concerns about their ability to meet existing market demand given the required scale of investment, redesign effort, and 3-year compliance timeline.
At TSL 3 and higher, manufacturers expressed concerns and presented data regarding potential impacts to product performance, including wash temperatures, cleaning and rinsing performance, and fabric care. At TSL 4, such concerns and uncertainties would be further exacerbated. Consumers that experience any such negative impacts on product performance could potentially alter their usage patterns, for example by using more energy-intensive settings more frequently (
Based upon the above considerations, the Secretary tentatively concludes that at TSL 4 for RCWs, the benefits of energy and water savings, positive NPV of consumer benefits, and emission reductions would be outweighed by the potential for negative consumer utility impacts, which may jeopardize the energy and water savings that would be achieved at TSL 4, and the impacts on manufacturers, including the large
DOE then considered TSL 3, which represents the ENERGY STAR Most Efficient level for the front-loading product classes, the CEE Tier 1 level for the top-loading standard-size product class, and a gap fill level for the semi-automatic product classes.
For front-loading standard-size RCWs, DOE's expected design path for TSL 3 (which represents EL 3 for this product class) incorporates the use of the most efficient direct drive motor available, spin speeds that are faster than the baseline level but not as fast as at TSL 4, and lower water volume (but with no change to total hot water heating). Among these design options, the direct drive motor and faster spin speeds reduce energy use only; whereas the lower water volume reduces water use only.
TSL 3 would save an estimated 1.34 quads of energy and 2.33 trillion gallons of water, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $5.96 billion using a discount rate of 7 percent, and $14.68 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 31.22 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At TSL 3, the average LCC impact is a savings of $116 for top-loading standard-size, $8 for front-loading compact, $15 for front-loading standard-size, and $280 for semi-automatic clothes washers. The simple payback period is 5.7 years for top-loading standard-size, 9.5 years for front-loading compact, 1.6 years for front-loading standard-size, and 0.5 years for semi-automatic clothes washers. The fraction of consumers experiencing a net LCC cost is 28 percent for top-loading standard-size, 22 percent for front-loading compact, 20 percent for front-loading standard-size, and zero percent for semi-automatic clothes washers. For the top-loading standard-size product class, TSL 3 would increase the first cost by $160, in comparison to an installed cost of $690 for baseline units. For the front-loading standard-size product class, TSL 3 would increase the first cost by $78, compared to an installed cost of $1,027 for baseline units. At TSL 3, the standard for top-loading ultra-compact RCWs is at the baseline, resulting in no LCC impact, no simple PBP, and no consumers experiencing a net LCC cost. Overall, across all product classes, around 25 percent of consumers would experience a net LCC cost at TSL 3. DOE estimates that about 16 percent of low-income households would experience a net LCC cost at TSL 3, and as a result of having generally smaller households and lower annual usage, about 33 percent of senior-only households would experience a net LCC cost at TSL 3. Additionally, as a result of lower costs associated with well water and septic tanks in rural areas, about 41 percent of well-water households would experience a net LCC cost at TSL 3.
At TSL 3, the projected change in INPV ranges from a decrease of $654.1 million to a decrease of $473.3 million, which correspond to a decrease of 38.3 percent and 27.7 percent, respectively. The loss in INPV is largely driven by industry conversion costs as manufacturers work to redesign their portfolios of model offerings and update production facilities to comply with amended standards at this level. Industry conversion costs could reach $724.6 million at this TSL.
For top-loading standard-size products, approximately 3 percent of shipments meet TSL 3. Of the nine OEMs offering top-loading standard-size products, two OEMs offer 20 basic models (representing approximately 4 percent of all top-loading standard-size basic models) that meet the efficiencies required by TSL 3. At this level, the remaining seven manufacturers would likely implement largely similar design options as at TSL 4, but to a lesser extent for the increase in tub size and hardware changes associated with faster spin speeds (
As discussed above, manufacturers expressed concerns and presented data regarding potential impacts to product performance, including wash temperatures, cleaning and rinsing performance, and fabric care. DOE's analysis of third-party clothes washer performance ratings as well as DOE's own performance testing on a representative sample of top-loading standard-size and front-loading standard-size RCWs suggested that TSL 3 can be achieved with key performance attributes (
Based upon the above considerations, the Secretary tentatively concludes that at TSL 3 for RCWs, the benefits of energy and water savings, positive NPV of consumer benefits, and emission reductions would be outweighed by the potential for negative consumer utility impacts, which may jeopardize the energy and water savings that could be achieved at TSL 3, and the impacts on manufacturers, including the large potential reduction in INPV. DOE estimates the potential loss in INPV to be as high as 38 percent. The potential losses in INPV are primarily driven by large conversion costs associated with redesigning top-loading standard-size RCWs that must be made ahead of the compliance date. Consequently, the Secretary has tentatively concluded that TSL 3 is not economically justified.
DOE then considered TSL 2, which corresponds to the TSL recommended in the Joint Agreement (the “Recommended TSL”) and which also represents the ENERGY STAR v.8.1 level for the top-loading and front-loading standard-size product classes, the ENERGY STAR Most Efficient level for the front-loading compact, and a gap fill level for the semi-automatic product classes.
For front-loading standard-size RCWs, DOE's expected design path for the Recommended TSL (which represents EL 2 for this product class) incorporates the use of a direct drive motor, spin speeds that are faster than the baseline level but not as fast as at TSL 3, and lower water volume (but with no change to total hot water heating energy). Among these design options, the direct drive motor and faster spin speeds reduce energy use only; whereas the lower water volume reduces water use only.
The Recommended TSL would save an estimated 0.67 quads of energy and 1.89 trillion gallons of water, an amount DOE considers significant. Under the Recommended TSL, the NPV of consumer benefit would be $3.28 billion using a discount rate of 7 percent, and $8.71 billion using a discount rate of 3 percent.
The cumulative emissions reductions at the Recommended TSL are 13.96 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At the Recommended TSL, the average LCC impact is a savings of $111 for top-loading standard-size, $9 for front-loading compact, $46 for front-loading standard-size, and $284 for semi-automatic clothes washers. The simple payback period is 6.2 years for top-loading standard-size, 9.3 years for front-loading compact, 1.4 years for front-loading standard-size, and 0.5 years for semi-automatic clothes washers. The fraction of consumers experiencing a net LCC cost is 27 percent for top-loading standard-size, 21 percent for front-loading compact, 2 percent for front-loading standard-size, and zero percent for semi-automatic clothes washers. For the top-loading standard-size product class, The Recommended TSL would increase the first cost by $146, in comparison to an installed cost of $687 for baseline units in 2028. For the front-loading standard-size product class, the Recommended TSL would increase the first cost by $67, compared to an installed cost of $1,021 for baseline units in 2028. At the Recommended TSL, the standard for top-loading ultra-compact RCWs is at
At the Recommended TSL, the projected change in INPV ranges from a decrease of $278.3 million to a decrease of $146.9 million, which corresponds to decreases of 16.3 percent and 8.6 percent, respectively. Industry conversion costs could reach $320.0 million at this TSL.
At this level, many existing top-loading standard-size products would need to be redesigned to meet the Recommended TSL efficiencies; however, there are a wide range of top-loading standard-size models currently available on the market due to manufacturers' participation in the ENERGY STAR program. Currently, approximately 49 percent of RCW shipments meet the Recommended TSL efficiencies, including approximately 31 percent of all top-loading standard-size shipments. Of the nine OEMs with top-loading standard-size products, six OEMs offer 166 basic models (representing approximately 30 percent of all top-loading standard-size basic models) that meet the Recommended TSL efficiencies. These six OEMs that currently offer top-loading standard-size RCW models that meet the Recommended TSL efficiencies collectively account for over 95 percent of overall top-loading standard-size RCW shipments. At this level, a substantial number of front-loading standard-size products are available on the market due to manufacturers' participation in the ENERGY STAR program. Currently, approximately 92 percent of front-loading standard-size shipments meet the Recommended TSL. Of the seven OEMs with front-loading standard-size products, six OEMs offer 169 basic models (representing approximately 89 percent of all front-loading standard-size basic models) that meet the Recommended TSL efficiencies.
For all TSLs considered in this proposed rule—except for the Recommended TSL—DOE is bound by the 3-year lead time requirements in EPCA when determining compliance dates (
At the Recommended TSL, DOE's data demonstrates no negative impact on consumer utility for both top-loading and front-loading RCWs. Manufacturers did not provide any specific data nor express any specific concerns regarding clothes washer performance at the Recommended TSL. In addition, in the second joint statement from the same group of stakeholders that submitted the Joint Agreement states that the DOE's test data and industry experience agrees that the recommended standard level for clothes washer can maintain good cleaning performance and do not preclude the ability to provide high wash temperatures.
After considering the analysis and weighing the benefits and burdens, the Secretary has tentatively concluded that at a standard set at the Recommended TSL for RCWs would be economically justified. At the Recommended TSL, the average LCC savings for all product classes is positive. An estimated 27 percent of top-loading standard-size users, 21 percent of front-loading compact, 2 percent of front-loading standard-size, and zero percent of semi-automatic clothes washer consumers experience a net cost. At the Recommended TSL, the positive average LCC savings across all product classes and cost savings for approximately two-thirds of RCWs consumers, outweigh the negative average LLC savings of $20 for well-water households and the 37 percent of these households that might experience a net cost. DOE notes that its analysis ensures that the financial implications for households with wells and/or septic systems are comprehensively incorporated into the national LCC analysis. In addition, 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 vastly outweigh the cost to manufacturers. At the Recommended TSL, the NPV of consumer benefits, even measured at the more conservative discount rate of 7 percent is over 11 times higher than the maximum estimated manufacturers' loss in INPV. The standard levels at the Recommended TSL are economically justified even without weighing the estimated monetary value of emissions reductions. When those emissions reductions are included—representing $ 0.84 billion in climate benefits (associated with the average SC-GHG at a 3-percent discount rate), and $ 1.62 billion (using a 3-percent discount rate) or $ 0.73 billion (using a 7-percent discount rate) in health benefits—the rationale becomes stronger still.
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 energy savings that are 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 amended energy conservation standards, DOE notes that as compared to TSL 4 and TSL 3, the Recommended TSL has a lower maximum decrease in INPV and lower manufacturer conversion costs.
Accordingly, the Secretary has tentatively concluded that the Recommended TSL would offer the maximum improvement in efficiency that is technologically feasible and economically justified and would result in the significant conservation of energy.
Therefore, based on the previous considerations, DOE proposes to adopt the energy conservation standards for RCWs at the Recommended TSL.
While DOE considered each potential TSL under the criteria laid out in 42 U.S.C. 6295(o) as discussed in the preceding paragraphs, the Recommended TSL for RCWs proposed
The proposed energy conservation standards for RCWs, which are expressed in EER and WER, are shown in Table III.3.
The benefits and costs of the proposed standards can also be expressed in terms of annualized values. The annualized net benefit is (1) the annualized national economic value (expressed in 2022$) of the benefits from operating products that meet the proposed standards (consisting primarily of operating cost savings from using less energy), minus increases in product purchase costs, and (2) the annualized monetary value of the climate and health benefits.
Table III.4 shows the annualized values for RCWs under the Recommended TSL, expressed in 2022$. 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 proposed standards is $513.1 million per year in increased equipment costs, while the estimated annual benefits are $998.9 million in reduced operating costs, $46.9 million in climate benefits, and $90.3 million in health benefits. In this case, the net benefit would amount to $623.0 million per year.
DOE will accept comments, data, and information regarding this proposed rule unit the date provided in the
Submitting comments via
However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment.
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 not secured, 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 and, if possible, they should carry the electronic signature of the author.
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
As stated previously, if DOE withdraws the direct final rule published elsewhere in this issue of the
DOE proposes adding a new paragraph (ii) into section 10 CFR 430.32(g)(2) to provide that each energy and water conservation for each RCW category is separate and severable from one another, and that if any energy or water conservation standard is stayed or determined to be invalid by a court of competent jurisdiction, the remaining standards shall continue in effect. This severability clause is intended to clearly express the Department's intent that should an energy or water conservation standard for any product class be stayed or invalidated, the other conservation standards shall continue in effect. In the event a court were to stay or invalidate one or more energy or water conservation standards for any product class as finalized, the Department would want the remaining energy conservation standards as finalized to remain in full force and legal effect.
The regulatory reviews conducted for this proposed rule are identical to those conducted for the direct final rule published elsewhere in this issue of the
The Regulatory Flexibility Act (5 U.S.C. 601
For manufacturers of RCWs, 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 the rule. (
EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(g)(2) and (9)(A)), and directs DOE to conduct future rulemakings to
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))
In light of the above and the requirements under 42 U.S.C. 6295(p)(4)(A)-(B), DOE is issuing this NOPR proposing energy conservation standards for RCWs. These standard levels were submitted jointly to DOE on September 25, 2023, by groups representing manufacturers, energy and environmental advocates, consumer groups, and a utility.
EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. 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. These products include RCWs, the subject of this document. (42 U.S.C. 6292(a)(7)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(g)(2) and (9)(A)), and directs DOE to conduct future rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(g)(4) and (9)(B))
DOE reviewed this proposed rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. 68 FR 7990. DOE conducted a market survey to identify potential small manufacturers of RCWs. DOE began its assessment by reviewing DOE's CCD,
DOE identified 22 OEMs that sell covered RCWs in the United States. Of the 22 OEMs identified, DOE determined that one company qualifies as a small business and is not foreign-owned and operated.
In support of the March 2023 NOPR, DOE reached out to the small business and invited participation in a voluntary interview. The small business did not respond to DOE's interview request. DOE also requested information about small businesses and potential impacts on small businesses while interviewing large manufacturers.
DOE is proposing TSL 2 in this NOPR. As stated in the previous section, DOE identified one OEM that qualifies as a small business. This small business manufactures one top-loading standard-size clothes washer model for residential use. DOE identified this manufacturer through the prior rulemaking analysis. 77 FR 32307. There is limited public information about the energy and water efficiency of this small business's RCW model. Furthermore, DOE's review of the product suggests that the manufacturer would likely need to make significant investments to redesign the product to meet this efficiency level. Therefore, DOE is unable to conclude that the proposed rule would not have a “significant impact on a substantial number of small entities.”
DOE is not aware of any rules or regulations that duplicate, overlap, or conflict with the proposed rule.
The discussion in the previous section analyzes impacts on small businesses that would result from DOE's proposed rule, represented by TSL 2. In reviewing alternatives to the proposed standards, DOE examined energy conservation standards set at lower efficiency levels. While TSL 1 would reduce the impacts on small business manufacturers, it would come at the expense of a reduction in energy and water savings. TSL 1 achieves 13 percent lower energy savings and 38
Based on the presented discussion, establishing standards at TSL 2 balances the benefits of the energy savings at TSL 2 with the potential burdens placed on RCW manufacturers, including small business manufacturers. Accordingly, DOE does not propose 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 direct 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.
The Secretary of Energy has approved publication of this notice of proposed rulemaking.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Reporting and recordkeeping requirements, Small businesses.
This document of the Department of Energy was signed on February 29, 2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
For the reasons set forth in the preamble, DOE proposes to amend part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below:
42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
(g)
(2) Clothes washers manufactured on or after March 1, 2028:
(i) Shall have an Energy Efficiency Ratio and a Water Efficiency Ratio no less than:
(ii) The provisions of this paragraph (g)(2) are separate and severable from one another. Should a court of competent jurisdiction hold any provision(s) of this section to be stayed or invalid, such action shall not affect any other provisions of this section.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend Very High Frequency Omnidirectional Range (VOR) Federal Airways V-233 and V-420 in the vicinity of Gaylord, MI. The amendments are due to the planned decommissioning of the VOR portion of the Gaylord, MI (GLR), VOR/Distance Measuring Equipment (VOR/DME) navigational aid (NAVAID). The Gaylord VOR is being decommissioned as part of the FAA's VOR Minimum Operational Network (MON) program.
Comments must be received on or before April 29, 2024.
Send comments identified by FAA Docket No. FAA-2024-0517 and Airspace Docket No. 23-AGL-41 using any of the following methods:
*
*
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FAA Order JO 7400.11H, 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 7400.11H, dated August 11, 2023, and effective September 15, 2023. 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 7400.11H 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 Gaylord, MI, VOR/DME in December 2024. The Gaylord VOR is 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 Gaylord, MI, VOR/DME is planned to be decommissioned, the DME portion of the NAVAID is being retained to support current and future NextGen PBN flight procedure requirements.
The VOR Federal airways affected by the Gaylord VOR decommissioning are V-233 and V-420. With the planned decommissioning of the Gaylord VOR, the remaining ground-based NAVAID coverage in the area is insufficient to enable the continuity of the affected airways. As such, the proposed modifications to the affected airways would result in both airways being shortened.
To address these proposed modifications, instrument flight rules (IFR) traffic could use adjacent VOR Federal Airways V-78, V-193, V-320, and V-609 or request and receive air traffic control (ATC) radar vectors to fly around or through the affected area. Additionally, IFR pilots operating aircraft equipped with Area Navigation (RNAV) capabilities could also use RNAV route T-265 or navigate point-to-point using the existing fixes that would remain in place to support continued operations though the affected area. Visual flight rules (VFR) pilots who elect to navigate via the affected VOR Federal airways could also take advantage of the adjacent air traffic service routes or ATC services listed previously.
The FAA is proposing an amendment to 14 CFR part 71 by amending VOR Federal Airways V-233 and V-420 due to the planned decommissioning of the VOR portion of the Gaylord, MI, VOR/DME. The proposed airway actions are described below.
The NAVAID radials listed in the V-233 description in the regulatory text of this notice of proposed rulemaking 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; to Roberts.
From Green Bay, WI; to Traverse City, MI.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend the Class E airspace at Covington, KY. The FAA is proposing this action as the result of an airspace review conducted due to the decommissioning of the Cincinnati very high frequency omnidirectional range (VOR) as part of the VOR Minimum Operating Network (MON) Program. The name and geographic coordinates of various airports would also be updated to coincide with the FAA's aeronautical database. This action will bring the
Comments must be received on or before April 29, 2024.
Send comments identified by FAA Docket No. FAA-2024-0543 and Airspace Docket No. 24-ASO-8 using any of the following methods:
*
*
*
*
FAA Order JO 7400.11H, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at
Jeffrey Claypool, Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5711.
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 Cincinnati Municipal Airport/Lunken Field, Cincinnati, OH, (contained within the Covington, KY, airspace legal description) to support 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 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 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 7400.11H, dated August 11, 2023, and effective September 15, 2023. 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 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
The FAA is proposing to amend 14 CFR part 71 by modifying the Class E airspace extending upward from 700 feet above the surface to within a 8.8-mile (decreased from a 10.5-mile) radius of Cincinnati Municipal Airport/Lunken Field, Cincinnati, OH; and within 2 miles each side of the 021° bearing from the Cincinnati Municipal Airport/Lunken Field extending from the 8.8-mile radius from the Cincinnati Municipal Airport/Lunken Field to 12.3 miles north of Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 062° bearing from the Cincinnati Municipal Airport/Lunken Field extending from the 8.8-mile radius of Cincinnati Municipal Airport/Lunken Field to 11 miles northeast of Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 201° bearing from Cincinnati Municipal Airport/Lunken Field extending from the 8.8-mile radius of Cincinnati Municipal Airport/Lunken Field to 11.7 miles south of Cincinnati Municipal Airport/Lunken Field; removing the Cincinnati NDB and associated extensions from the airspace legal description as they are no longer needed; removing the Cincinnati-Blue Ash Airport and associated airspace as the airport has closed and the airspace
The FAA is proposing this action as the result of an airspace review conducted due to the decommissioning of the Cincinnati VOR as part of the VOR MON Program and to support IFR operations.
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 10-mile radius of Cincinnati/Northern Kentucky International Airport; and within an 8.8-mile radius of Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 021° bearing from the Cincinnati Municipal Airport/Lunken Field extending from the 8.8-mile radius of the Cincinnati Municipal Airport/Lunken Field to 12.3 miles north of Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 062° bearing of the Cincinnati Municipal Airport/Lunken Field extending from the 8.8-mile radius of Cincinnati Municipal Airport/Lunken Field to 11 miles northeast of Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 201° bearing from the Cincinnati Municipal Airport/Lunken Field extending from the 8.8-mile radius of the Cincinnati Municipal Airport/Lunken Field to 11.7 miles south of Cincinnati Municipal Airport/Lunken Field; and within a 6.8-mile radius of Clermont County Airport.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes to amend the Class D and Class E airspace at Cincinnati, OH. The FAA is proposing this action as the result of an airspace review conducted as part of the decommissioning of the Cincinnati very high frequency omnidirectional range (VOR) as part of the VOR Minimum Operational Network (MON) Program. This action would also update the name of the airport to coincide with the FAA's aeronautical database. This action will bring the airspace into compliance with FAA orders and support instrument flight rule (IFR) procedures and operations.
Comments must be received on or before April 29, 2024.
Send comments identified by FAA Docket No. FAA-2024-0542 and Airspace Docket No. 24-AGL-8 using any of the following methods:
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*
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Jeffrey Claypool, Federal Aviation Administration, Operations Support Group, Central Service Center, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone (817) 222-5711.
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 D airspace and Class E surface airspace at Cincinnati Municipal Airport/Lunken Field, Cincinnati, OH, to support 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 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
Class D and E airspace is published in paragraphs 5000 and 6002 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 7400.11H, dated August 11, 2023, and effective September 15, 2023. 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
The FAA is proposing an amendment to 14 CFR part 71 by:
Modifying the Class D airspace within a 4.2-mile (increased from a 4.1-mile) radius of Cincinnati Municipal Airport/Lunken Field, Cincinnati, OH; and within 2 miles each side of the 024° bearing from the airport extending from the 4.2-mile radius to 5.9 miles northeast of the airport; and within 2 miles northwest and 1.7 miles southeast of the 064° bearing from the airport extending from the 4.2-mile radius to 5.3 miles northeast of the airport; and within 2.1 miles each side of the 204° bearing from the airport extending from the 4.2-mile radius to 6.2 miles southwest of the airport; and within 2 miles northwest and 1.7 miles southeast of the 244° bearing from the airport extending from the 4.2-mile radius to 5.2 miles southwest of the airport; updating the name of the airport (previously Cincinnati Municipal Airport Lunken Field) to coincide with the FAA's aeronautical database; and replacing the outdated terms “Notice to Airmen” and “Airport/Facility Directory” with “Notice to Air Missions” and “Chart Supplement”;
And modifying the Class E surface airspace to within a 4.2-mile (increased from a 4.1-mile) radius of Cincinnati Municipal Airport/Lunken Field, Cincinnati, OH; and within 2 miles each side of the 024° bearing from the airport extending from the 4.2-mile radius to 5.9 miles northeast of the airport; and within 2 miles northwest and 1.7 miles southeast of the 064° bearing from the airport extending from the 4.2-mile radius to 5.3 miles northeast of the airport; and within 2.1 miles each side of the 204° bearing from the airport extending from the 4.2-mile radius to 6.2 miles southwest of the airport; and within 2 miles northwest and 1.7 miles southeast of the 244° bearing from the airport extending from the 4.2-mile radius to 5.2 miles southwest of the airport; updating the name of the airport (previously Cincinnati Municipal Airport Lunken Field) to coincide with the FAA's aeronautical database; and replacing the outdated terms “Notice to Airmen” and “Airport/Facility Directory” with “Notice to Air Missions” and “Chart Supplement”.
This action is the result of an airspace review conducted as part of the decommissioning of the Cincinnati VOR as part of the VOR MON Program and to support IFR operations 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
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 the surface to and including 3,000 feet MSL within a 4.2-mile radius of the Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 024° bearing from the airport extending from the 4.2-mile radius to 5.9 miles northeast of the airport; and within 2 miles northwest and 1.7 miles southeast of the 064° bearing from the airport extending from the 4.2-mile radius to 5.3 miles northeast of the airport; and within 2.1 miles each side of the 204° bearing from the airport extending from the 4.2-mile radius to 6.2 miles southwest of the airport; and within 2 miles northwest and 1.7 miles southeast of the 244° bearing from the airport extending from the 4.2-mile radius to 5.2 miles southwest of the airport excluding that airspace within the Covington, KY, Class B airspace area. This Class D airspace area is effective during the specific dates and times established in advance by Notice to Missions. The effective dates and times will thereafter be continuously published in the Chart Supplement.
That airspace within a 4.2-mile radius of the Cincinnati Municipal Airport/Lunken Field; and within 2 miles each side of the 024° bearing from the airport extending from the 4.2-mile radius to 5.9 miles northeast of the airport; and within 2 miles northwest and 1.7 miles southeast of the 064° bearing from the airport extending from the 4.2-mile radius to 5.3 miles northeast of the airport; and within 2.1 miles each side of the 204° bearing from the airport extending from the 4.2-mile radius to 6.2 miles southwest of the airport; and within 2 miles northwest and 1.7 miles southeast of the 244° bearing from the airport extending from the 4.2-mile radius to 5.2 miles southwest of the airport excluding that airspace within the Covington, KY, Class B airspace area. This Class E airspace area is effective during the specific dates and times established in advance by Notice to Missions. The effective dates and times will thereafter be continuously published in the Chart Supplement.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
This action proposes amending Class D airspace extending upward from the surface for Simmons Army Air Field, Fort Liberty, NC, updating the geographic coordinates, and amending verbiage in the description.
Comments must be received on or before April 29, 2024.
Send comments identified by FAA Docket No. FAA-2024-0383 and Airspace Docket No. 24-ASO-02 using any of the following methods:
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FAA Order JO 7400.11H Airspace Designations and Reporting Points and subsequent amendments can be viewed online at
Justin T. Rhodes, Operations Support Group, Eastern Service Center, Federal Aviation Administration, 1701 Columbia Avenue, College Park, GA 30337; Telephone: (404) 305-5478.
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,
The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the proposal's overall regulatory, aeronautical, economic, environmental, and energy-related aspects. 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 once 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 and 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 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 Office (see
Class D airspace designations are published in Paragraph 5000 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, incorporated by reference in 14 CFR 71.1 annually. This document proposes to amend the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023, effective September 15, 2023. These updates will be published in the next FAA Order JO 7400.11 update. That order is publicly available as listed in the
FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.
The FAA proposes an amendment to 14 CFR part 71 to amend Class D airspace by excluding 1,400 feet MSL from the vertical limits (previously “including”), updating the airport's geographic coordinates, and replacing “Notice to Airmen” with “Notice to Air Mission” in the description.
Controlled airspace is necessary for the safety and management of instrument flight rules (IFR) operations in the area.
The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore, (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under Department of Transportation (DOT) Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
This proposal will be subject to an environmental analysis per FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” before any final regulatory action by the FAA.
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 the surface to but not including 1,400 feet MSL within a 3.9-mile radius of Simmons AAF, excluding the portion northwest of a line extending from lat. 35°11′47″ N, long. 78°55′36″ W; to lat. 35°06′16″ N, long. 79°00′31″ W, excluding the portion within the Fayetteville, NC, Class C airspace area. This Class D airspace area is effective during the specific dates and times established in advance by a Notice to Air Mission. The effective date and time will thereafter be continuously published in the Airport/Facility Directory.
Consumer Product Safety Commission.
Advance notice of proposed rulemaking.
The Consumer Product Safety Commission (CPSC or Commission) is considering developing a rule to address the risk of injury associated with electric bicycles (e-bikes). This advance notice of proposed rulemaking (ANPR) initiates a rulemaking proceeding under the Consumer Product Safety Act (CPSA) and the Federal Hazardous Substances Act (FHSA). We invite comments concerning the risk of injury associated with mechanical hazards of e-bikes, potential regulatory alternatives, the economic impacts of various approaches, existing voluntary standards, and plans to develop new standards to address these risks.
Comments must be received by May 14, 2024.
Submit comments, identified by Docket No. CPSC-2024-0008, by any of the following methods:
Lawrence Mella, Directorate for Engineering Sciences, U.S. Consumer Product Safety Commission, 5 Research Place, Rockville, MD 20850; telephone (301) 987-2537; fax (301) 869-0294; email
The purpose of this ANPR is to collect information related to potential regulatory requirements to address the risk of injury associated with mechanical hazards of e-bikes.
An e-bike is a bicycle equipped with an electric motor. E-bikes are sold and marketed for adults and children. CPSC is aware of an increasing trend of injuries and deaths from falls and collisions associated with e-bikes. CPSC estimates there were 53,100 emergency department (ED)-treated injuries from 2017 to 2022 associated with e-bikes.
Currently, CPSC has a mandatory standard for bicycles and low-speede-bikes under the FHSA at 16 CFR part 1512. ASTM also has voluntary standards for bicycles, but they are not specific to e-bikes. Existing international standards for e-bikes under the International Organization for Standardization (ISO) and European Standards (EN) only apply to a subset of e-bike products.
The Commission invites the public to review this ANPR and submit information and comments that would assist the Commission as it considers regulatory options to reduce the risk of injury associated with mechanical hazards of e-bikes.
CPSC regulates bicycles under the FHSA (15 U.S.C. 1261
Section 38(c) of the CPSA allows the Commission to promulgate new or revised requirements as necessary and appropriate for low-speed e-bikes by amending its current FHSA regulation. The Commission may also, under the FHSA, adopt separate requirements for children's e-bikes. 15 U.S.C. 1261(f)(1)(D), 1262(e). Section 3 of the FHSA specifies the procedure the Commission follows to issue FHSA regulations. First, the Commission may commence the rulemaking by issuing an
The Commission also has authority to regulate e-bikes under the CPSA as “consumer products.”
Sections 7 and 9 of the CPSA set out the procedure the Commission must follow to issue a consumer product safety standard under section 38. 15 U.S.C. 2056, 2058. As in a FHSA rulemaking, the Commission has the option of beginning with an ANPR that identifies the product and the nature of the risk of injury associated with the product, summarizes the regulatory alternatives considered by the Commission, and provides information about any relevant existing standards and a summary of the reasons the Commission believes they would not eliminate or adequately reduce the risk of injury.
An e-bike is a bicycle with an electric motor. An e-bike may be powered partially or fully by the motor. Normally, the bicycle is equipped with pedal assist, a throttle, or both. An e-bike with pedal assistance activates the electric motor while the rider is pedaling to provide more torque than the rider would normally create on their own. An e-bike with a throttle activates the electric motor when the rider depresses the throttle to propel the bike forward without relying on pedal assistance. Generally, the throttle is a thumb-operated device mounted on the handlebar. Similar to non-powered bicycles, e-bikes are generally sold and marketed for specific applications, such as use in a city (on sidewalks), for commuting, and for off-road use on bike paths, and trails. E-bikes currently must meet the requirements of 16 CFR part 1512 if they meet the definition of a “low-speed electric bicycle” in 15 U.S.C. 2085(b) and “bicycle” in 16 CFR 1512.2(a)(2).
As defined in part 1512.2(a)(2), a low-speed e-bike's motor is restricted to less than 750 watts (1 h.p.) and to a “maximum speed on a paved level surface, when powered solely by such a motor while ridden by an operator who weighs 170 pounds, is less than 20 mph.” However, this definition does not specify a limit on the speed for a low-speed e-bike when it is pedal-assisted. Other bicycles marketed as e-bikes have motors of 750 watts or more and can power the e-bike at speeds of 20 mph or more without pedal assistance. CPSC has the authority to regulate all these products as long as they are not “motor vehicles,” as defined at 49 U.S.C. 30102(a)(7) (
Some e-bikes are marketed and intended for use by children. These include electric balance bikes, which are a type of e-bike mostly marketed for younger children. Although an electric balance bike does not have pedals, the electric motor assists the rider with propulsion, which is accomplished by the rider pushing their feet against the ground instead of pedaling. Thesee-bikes are designed to help children learn balance and coordination.
The scope of this rulemaking is limited to e-bikes and does not include gas powered bicycles and non-powered bicycles, or battery powered ride-on toys subject to the mandatory Toy standard.
CPSC reviewed data from its report, “Micromobility Products-Related Deaths, Injuries, and Hazard Patterns: 2017—2022,”
Using the 2023 Micromobility Report, staff also identified 30 other incidents associated with e-bikes that were reported through the Consumer Product Safety Risk Management System (CPSRMS).
CPSC is aware of 100 fatalities associated with mechanical hazards involving e-bikes that occurred from 2017 through 2022, as shown below. These e-bike fatalities increased from zero deaths in 2017 to 41 deaths in 2022.
Of the total fatalities, only 16 incidents had helmet information. In 13 of these 16 incidents, the rider was not wearing a helmet, and in three of the 16 incidents, the rider was reported to be wearing a helmet. Staff's review of the 100 fatalities indicates that most involved collisions with motor vehicles, and some involved falls and control issues including collision with fixed objects or the curb. Others involved collision with pedestrians, which include incidents with e-bike rider deaths and pedestrian deaths. One fatality involved rider ejection and impact with the pavement.
The data on fatal and non-fatal incidents indicate that collisions and falls are the predominant hazards associated with e-bikes. Based on this data, CPSC preliminarily determines that areas of e-bike design that may contribute to a risk of injury due to collisions and falls include the following:
• conspicuity of e-bikes to pedestrians and operators of other vehicles (
• size and weight of the e-bike and rider (
• speed and acceleration of e-bikes (
• braking of e-bikes (
• bicycle component durability (
• structural integrity of e-bike frames, especially folding bikes (
• helmet performance (
CPSC codified its mandatory standard for bicycles, part 1512, in 1974 (39 FR 26100 (Jul. 16, 1974)), with amendments in 1978 (43 FR 60034 (Dec. 22, 1978)), 1980 (45 FR 82625 (Dec. 16, 1980)), 1981 (46 FR 3203 (Jan. 14, 1981)), 1995 (60 FR 62989 (Dec. 8, 1995)), 2003 (68 FR 7072 (Feb. 12, 2003)), (68 FR 52690 (Sept. 5, 2003)), and 2011 (76 FR 27882 (May 13, 2011)). Part 1512 includes mechanical requirements for bicycles and low-speed e-bikes. Therefore, low-speed e-bikes are currently required to meet the same mechanical requirements as non-electrical bicycles which include:
Part 1512 establishes the minimum performance requirements that all bicycles must meet to ensure an adequate braking stopping distance and to prevent product failures that may lead to a hazard such as a loss of control. As noted, part 1512 does not account for the impacts associated with the e-bikes solely powered by electric motors.
No U.S. voluntary standards have specific mechanical requirements applicable to e-bikes. ASTM standards include requirements for bicycle frames and forks based on usage of the bicycle (on roads, trails, off-road trails, etc.) but do not have specific requirements for e-bikes because the ATSM definition of bicycle is limited to those “solely
ASTM F2680 (2017),
The applicable international standard for e-bikes is the International Organization for Standardization (ISO)'s ISO/TS 4210-10:2020,
CPSC is also aware of two European standards (EN) titled EN 15194:2017+A1:2023,
Based on the increasing injuries and fatalities associated with e-bikes, and hazards associated with collision and falls, the Commission preliminarily assesses that the current mandatory and voluntary standards do not eliminate or adequately reduce the risk of injury identified or associated with e-bikes.
Because the requirements in the existing mandatory standard were developed for non-powered bicycles that are lighter in weight than e-bikes, they are not likely to adequately address hazards associated with e-bikes. The mandatory standard, moreover, only covers e-bikes with fully operable pedals and powered by electric motors less than 750 watts and whose maximum speed on a paved level surface, when powered solely by such a motor while ridden by an operator who weighs 170 pounds, is less than 20 mph.
Domestic voluntary standards do not apply to e-bikes or do not account for characteristics that are unique to e-bikes. As a result, domestic voluntary standards appear inadequate to address the mechanical hazards posed by e-bikes.
International standards do not cover e-bikes that can be exclusively propelled by an electric motor or e-bikes with a maximum speed over 15.5 mph. Therefore, international standards also appear inadequate to address the mechanical hazards posed by e-bikes.
The Commission is considering one or more of the following alternatives to address the risk of injury associated with e-bikes:
Under the FHSA, the Commission could amend part 1512 by specifying additional requirements that low-speed bicycles must meet. The FHSA also allows the Commission to regulate mechanical hazards associated with children's e-bikes as a “toy or other article intended for use by children.” 15 U.S.C. 1262(e)(1). Therefore, the Commission also could issue a rule specifically for children's e-bikes, including electric balance bikes, under section 3(e)(1) of the FHSA or revise part 1512 to specify requirements for children's e-bikes, including electric balance bikes.
Under the FHSA, the Commission must invite any person to submit to the Commission an existing standard or a portion of a standard as a proposed regulation under section 2(q)(1) or section 3(e) and (f) of the FHSA, or a statement of intention to modify or develop a voluntary standard to address the risk of injury together with a description of a plan to modify or develop the standard. 15 U.S.C. 1262(f)(5), (6). If the Commission determines that any standard submitted in response to this invitation would eliminate or adequately reduce the risk of injury if promulgated (in whole, in part, or in combination with any other standard submitted to the Commission) as a regulation under the FHSA, the Commission may publish the standard, in whole, in part, or in such combination and with nonmaterial modifications, as a proposed regulation. 15 U.S.C. 1262(g)(1).
Under sections 7 and 9 of the CPSA, the Commission could proceed with a rulemaking to establish product safety requirements for e-bikes to address the risk of injury associated with collision and fall hazards. 15 U.S.C. 2056(a). Such a standard could regulate higher speed e-bikes, including electric balance bikes, that are outside the definition of a “low-speed electric bicycle” in 15 U.S.C. 2085(b) and that are not motor vehicles under 49 U.S.C. 30102(a)(7). The Commission could also issue a product safety standard specifically for children's e-bikes, including children's electric balance bikes, as a separate set of requirements. For any mandatory rule, the Commission could issue a rule that focuses on performance requirements only, or both performance and labeling requirements and/or instructions to address collision and fall hazards associated with e-bikes.
The Commission could issue a rule under the FHSA or the CPSA or under both statutes. The Commission is interested in comments on the approaches described above, as well as any other suggestions to develop a
Alternatively, the Commission could continue to work to develop more effective voluntary standard requirements to address injuries associated with e-bikes. However, as stated in section V of this preamble, the Commission preliminarily determines that the existing standards do not adequately address hazards unique to e-bikes.
The Commission could take no regulatory action and instead continue to rely on corrective actions under the FHSA or the CPSA. For example, under section 15 of the FHSA, the Commission could continue to enforce its current FHSA low-speed e-bike regulation.
The Commission could also continue to rely on recalls, both voluntary and mandatory, to address hazards associated with e-bikes instead of promulgating a mandatory rule under the FHSA or section 15 of the CPSA. However, recalls are not likely to be as effective at reducing the risk of injury as a mandatory standard for several reasons. Recalls generally only apply to an individual manufacturer and product. Therefore, recalls are unlikely to address injuries that appear systematic, as they do for e-bikes. Product recalls occur only after consumers have purchased and used such products and have been exposed to the hazard to be remedied by the recall. Additionally, recalls can only address products that are already on the market and cannot prevent unsafe products from entering the market. To be effective, recalls also require consumer compliance.
Finally, the Commission could issue news releases and other informational materials warning consumers about the hazards associated with e-bikes. As with recalls, this alternative is not likely to be as effective in reducing the risk of injury as a mandatory standard.
This ANPR is the first step in a proceeding that could result in amended or new mandatory regulations to address mechanical hazards associated with e-bikes. For the purpose of these questions, e-bikes include electric balance bikes. The Commission requests comment on all aspects of this ANPR, and specifically requests comment regarding:
In accordance with section 9(a) of the CPSA and section 3(f) of the FHSA, we invite comments on:
1. The risk of injury identified by the Commission, the regulatory alternatives being considered, and other possible alternatives for addressing the risk.
2. Any existing standard or portion of a standard that could be issued as a proposed regulation.
3. A statement of intention to modify or develop a voluntary standard to address the risk of injury identified in this notice together with a description of a plan (including a schedule) to modify or develop the standard.
4. Which e-bikes should the Commission include or exclude from the rulemaking and why?
5. How broadly should the Commission define e-bikes (beyond low-speed e-bikes) to reflect recent developments in the product category? For example, we can include all e-bikes except for those that meet the definition of a motor vehicle in 49 U.S.C. 30102(a)(7).
6. What are some relevant factors we should consider in the definition of an e-bike (
7. What other definitions should the Commission consider? For example, currently there is an e-bike classification system adopted in some states and local jurisdictions. Is an existing or newly developed classification system for e-bikes appropriate for Commission regulations, and if so, how should CPSC regulations relate to the classification system?
8. Under the internationally recognized EN standard EPACs (
As e-bikes continue to grow in popularity, CPSC is refining its data collection and studies to analyze the incidents of injuries and fatalities associated with e-bikes. We invite you to submit comments and information concerning the following:
9. Studies, tests, or surveys performed to analyze e-bike usage, such as rider demographics, steering and handling, effects of braking and acceleration on control, frequency and duration of use, typical and maximum speeds, use terrains, use on wet surfaces, use in times of limited visibility, typical amount and weight of cargo, use with passengers, previous experience with bicycles, and use and efficacy of protective equipment or other protective technology that is integral to the e-bike.
10. Any studies or analyses of e-bike usage that would lead to riskier behavior in comparison to non-powered bikes,
11. The impact of the weight of an e-bike on its stability, including how it varies at different speeds and its effect on the potential risks of injury.
12. How does higher weight and speed of e-bike compared to a non-powered bicycle affect the potential for injury?
13. Studies or other available research efforts that contribute to the understanding of injury and mechanical hazard patterns (such as collisions, falls, rider behavior, control, speed, helmet usage, environment, etc.) and risks associated with e-bikes in the U.S. or in other countries where e-bikes are widely used.
14. What hazard patterns or stability concerns, if any, are particularly associated with three-wheeled e-bikes?
15. What are the developmental capabilities of children to understand and operate e-bikes, including electric balance bikes, and how does that relate to maximum speeds of the products?
16. What are the injury risks associated with electric balance bikes and how should they be addressed?
17. Studies or other available research or information on conspicuity enhancements available for e-bikes or bicycles and their effectiveness in collision avoidance.
18. What distinguishes an off-road e-bike versus an on-road e-bike?
19. Do consumers use off-road e-bikes, capable of speeds over 28 mph, on road?
20. E-bikes are currently required to meet the same mechanical requirements as non- electric bicycles. Are there aspects of e-bikes that require different regulatory requirements than those applicable to non-electric bicycles?
21. Do e-bikes, due to their heavier weight or other factors, need different
22. Do e-bikes need different frame or other component requirements than non-powered bicycles?
23. What different performance standards, if any, should be required for three-wheeled e- bikes?
24. What requirements, if any, should the Commission consider for conspicuity, such as lights or other visibility and audibility of e-bikes? If so, what factors should the Commission take into consideration?
25. Is it appropriate to have marking, labeling, instructional literature, and/or packaging requirements specific to e-bikes (especially for new riders)? If so, what are some important points that the Commission should include?
26. What should the Commission consider setting, if any, as minimum and/or maximum limits for acceleration?
27. What, if any, product weight requirements or limitations should the Commission consider for e-bikes?
28. What, if any, maximum and minimum width for e-bike tires should the Commission consider for e-bikes?
29. E-bikes are widely promoted and even subsidized by communities seeking to encourage adoption of sustainable forms of transportation. What performance requirements and warnings can help protect the safety of consumers, especially new riders (including seniors) and parents who are purchasing e-bikes for children?
30. Are there any performance requirements that should be implemented specifically for children's e-bikes such as speed, power, brakes, structural integrity, and conspicuity? If so, what should the age ranges be for those requirements?
31. CPSC is aware of ASTM work item, ASTM WK88946,
32. Should there be requirements such as: maximum speed; speed, weight, and throttle capabilities; pedal assist capabilities; or speed governors?
33. Other than the types of requirements noted above, what performance requirements should be considered to mitigate e-bike injuries and deaths?
34. What technologies exist to protect e-bike riders before, during, or after a collision—and how do those technologies affect the risks to riders?
35. Should there be maximum speed requirements for e-bikes intended for off-road use?
36. Should there be different protective gear recommendations for e-bikes that are applicable to both children and adults, such as helmets?
37. What other domestic standards, state, and local requirements apply to e-bikes and how should the Commission assess the adequacy of any such standards?
38. What other international standards govern e-bikes and how do those standards compare to current U.S. voluntary standards and statutory requirements?
39. What percentage or share of the market or how many products are solely human powered, low-speed e-bikes, versus higher speed e-bikes and children's e-bikes including electric balance bikes?
40. How prevalent are three-wheeled e-bikes as a percentage or share of the market?
41. Under the existing bicycle industry classification system for e-bikes, what is the breakdown of e-bikes sold (
42. What types of safety equipment are consumers purchasing with e-bikes?
43. How many additional manufacturer labor hours (if any) are required to assemble/install safety equipment (signal lights, taillights, headlights, reflectors)?
44. How much additional time (if any) is required to manufacture an e-bike as compared to a non-powered bike?
45. How many e-bike conversion kits are sold per year in the U.S.?
46. Are e-bikes with higher top speeds (over 28 mph) marketed for off-road use currently being used on public roads, streets, or highways?
47. What are the potential benefits of a rule that would require warnings or instructions specific to e-bikes?
48. What are the potential benefits of a rule that would establish additional performance requirements for low-speed e-bikes or new performance requirements for non-low speed e-bikes or specifically for children's e-bikes, including electric balance bikes?
49. What are the potential costs and benefits associated with a mandatory rule for e-bikes?
50. What is the potential impact on small entities of a rule based on the options presented above?
51. What is the typical difference in cost to produce solely human-powered bikes, low- speed e-bikes, higher speed e-bikes, and children's e-bikes?
52. What is the manufacturer's cost to produce various safety features, including research and development costs, and components?
Comments and other submissions should be submitted in accordance with the instructions provided above. All comments and other submissions must be received by May 14, 2024.
Environmental Protection Agency (EPA).
Proposed rule; extension of the comment period.
The Environmental Protection Agency (EPA) is extending the comment period for the proposed rulemaking entitled “Air Plan Approval; OR; Regional Haze Plan for the Second Implementation Period” that published in the
The comment period for the proposed rulemaking published February 23, 2024 (89 FR 13622), is extended. Comments must be received on or before April 24, 2024.
Submit your comments, identified by docket identification (ID) number EPA-R10-OAR-2023-0600, through the
Jeff Hunt, EPA Region 10, 1200 Sixth Avenue, Suite 155, Seattle, WA 98101, at (206) 553-0256 or
This document extends the public comment period established in the
This extension is in response to requests that the EPA received which asked for additional time to develop and submit comments on the proposed rulemaking. After considering several factors, the EPA believes it is appropriate to extend the comment period for 30 days to give stakeholders additional time to review the documents and prepare comments. As discussed in the
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule; extension of public comment period.
The Environmental Protection Agency (EPA) is extending the comment period for a proposed rule published February 22, 2024.
The comment period is extended to April 24, 2024.
Submit your comments, identified by Docket ID No. EPA-R05-OAR-2020-0055 at
Christos Panos, Attainment Planning and Maintenance Section, Air Programs Branch (AR18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 353-8328,
On February 22, 2024, EPA proposed to determine that its November 19, 2020, final action to remove the Air Nuisance Rule (ANR) from the Ohio State Implementation Plan using the Clean Air Act error correction provision was in error, and to correct that action by reinstating the ANR as part of the Ohio SIP. In response to a request in a public comment, EPA is extending the comment period for 30 days.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice of proposed rulemaking.
The Department of Health and Human Service (HHS) proposes to amend regulatory requirements that would be used by the Centers for Disease Control and Prevention's (CDC) National Institute for Occupational Safety and Health (NIOSH) to test and approve combination unit respirators. This rulemaking would establish this new class of respiratory protective device, combination unit respirators (CURs), by incorporating by reference the performance requirements established in the National Fire Protection Association (NFPA) voluntary consensus standard NFPA 1987, Standard on Combination Unit Respirator Systems for Tactical and Technical Operations.
Comments must be received by May 14, 2024. Comments on the information collection approval request sought under the Paperwork Reduction Act must be received by May 14, 2024.
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Jeffrey Peterson, NIOSH National Personal Protective Technology Laboratory (NPPTL), Pittsburgh, PA; (412) 386-6111 (this is not a toll-free number); email to
Interested persons or organizations are invited to participate in this rulemaking by submitting written views, opinions, recommendations, and data. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Any information in comments or supporting materials that is confidential or inappropriate for public disclosure
Pursuant to the Occupational Safety and Health (OSH) Act of 1970 (Pub. L. 91-596), the Organic Act of 1910 (Pub. L. 179), and the Federal Mine Safety and Health Act of 1977 (Pub. L. 91-173 (codified at 30 U.S.C. 842(h), 844, 957)), NIOSH is authorized to approve respiratory equipment used in mines and other workplaces for the protection of employees potentially exposed to hazardous breathing atmospheres. The Occupational Safety and Health Administration (OSHA) requires U.S. employers to supply NIOSH Approved®
The NIOSH Respirator Approval Program approves respiratory protective devices pursuant to the performance standards in 42 CFR part 84,
Regulations in 42 CFR part 84 do not currently allow for NIOSH approval of a single respirator unit for more than one respirator class where the user can select the appropriate level of protection required from within a single respirator system. With this rulemaking, HHS proposes to establish performance standards for NIOSH approval of CURs in a new part 84, subpart P, by incorporating by reference the performance requirements in Chapter 7 of NFPA 1987,
NIOSH has explored and discussed the need to develop a regulatory standard for NIOSH approval of combination unit respirators with manufacturers and other interested parties since at least 2006, while developing performance requirements for chemical, biological, radiological, and nuclear (CBRN) protections. The conceptual requirements for the CBRN CUR were presented to obtain initial comments from manufacturers and other interested parties during an October 12, 2006, public meeting.
NIOSH conducted a respirator manufacturers' meeting
In contrast, in 42 CFR 84.63(b), NIOSH classifies combination respirators “by the type of respirator in the combination which provides the least protection to the user.” So, for example, pursuant to § 84.63(b), a respirator that combines an air-purifying mode (APF=50) and an open-circuit self-contained mode (APF=10,000) will be classified by NIOSH as an air-purifying respirator, the least protective of the two modes. Thus, if OSHA requires that the hazards at a specific worksite necessitate respiratory protection with an APF of 10,000, then the employer cannot use the combined air-purifying/open-circuit SCBA
After the IOM published its workshop summary in June 2015, NIOSH determined there were no existing CUR performance standards that met the needs identified by the workshop participants. At that time, NIOSH considered the following alternative approaches to address those needs:
(1) develop the CUR performance standard and promulgate the standard into 42 CFR part 84;
(2) collaborate with a voluntary consensus standards development organization, such as NFPA, to develop the CUR performance standard and incorporate it into 42 CFR part 84 by reference; or
(3) develop the base respiratory protection requirements and collaborate with a standards development organization to develop additional unique requirements, such as communication and tactical equipment interoperability, to meet the needs of user groups for incorporation by reference into 42 CFR part 84.
NIOSH evaluated these options and considered both the formal request from a representative of the Federal Bureau of Investigation (FBI) and a subsequent Interagency Board endorsement letter of the FBI's request to the NFPA to develop CUR performance standards.
This rulemaking proposes a new 42 CFR part 84, subpart P to create a new respirator class, combination unit respirators, which are respirators capable of protecting wearers (a) in open-circuit SCBA-mode during either entry into or escape from immediately dangerous to life or health (IDLH) environments, and (b) in air-purifying or powered air-purifying mode during entry into non-IDLH environments and escape from non-IDLH or IDLH environments. The combination unit respirator allows the wearer to select the operating mode and thus change from one APF to another as necessary.
Providing a mechanism to allow manufacturers to obtain NIOSH approvals of respirators conforming to the proposed standard for the new CUR class in subpart P would benefit those workers and employers who encounter various types of hazardous exposures and currently rely on multiple types of NIOSH Approved respiratory protective devices in the course of their duties on OSHA-regulated worksites. The flexibility provided using one NIOSH Approved respirator that can perform multiple functions might also benefit employers by allowing them to purchase fewer respirators, which NIOSH expects will result in cost savings. This rulemaking would also benefit employers who are required by OSHA to provide workers with NIOSH Approved respirators but currently use CURs that do not have NIOSH approval; HHS assumes that, as a result of this rulemaking, employers will choose to purchase NIOSH Approved products, allowing them to come into compliance with OSHA rules. Moreover, the proposed new subpart P would bring the regulations in 42 CFR part 84 into alignment with the OSHA APF standard 29 CFR 1910.134(d)(3)(i)(A), discussed above, allowing employers to purchase CURs rated at more than one APF.
This rulemaking would benefit approval holders that currently produce combination unit respirators, and new CUR manufacturers that would enter the NIOSH Approved CUR market if such approval were to become available. By promulgating this rule, HHS would be removing a barrier that currently prevents CUR manufacturers from accessing the market demand for NIOSH Approved respirators. Adding a new subpart P to part 84 would allow manufacturers to apply for and obtain NIOSH approval of CURs capable of allowing the wearer to switch between operational modes, which can be identified by more than one APF.
This rulemaking also proposes the revision of an existing definition in 42 CFR 84.2 and the addition of two new terms to reflect NIOSH's ongoing and evolving relationship with business entities that produce and sell respirators. HHS proposes revising the existing definition of the term “applicant” to clarify the role and responsibilities of those parties who submit an application for NIOSH approval of a product's design, performance, configuration management, manufacture, quality, and support. A new definition of the term “approval holder” would be added to the existing definitions section. The terms “applicant” and “approval holder” would replace the term “manufacturers” throughout part 84, as appropriate, to reflect the fact that seeking and maintaining NIOSH approval includes more than the manufacturing of the respirator or respirator components. An approval holder has at least one respirator approval on the NIOSH Certified Equipment List (CEL), a directory of NIOSH Approved respirators, which would also be defined in § 84.2. The CEL is regularly updated as respirator approvals are added, made obsolete, or otherwise changed in status. The CEL is available in a searchable database at
The proposed rule would not require OSHA to make any changes to 29 CFR 1910.134, the OSHA respiratory protection requirements. The proposed rule is expected to benefit Federal law enforcement agencies and military branches whose members currently rely on CURs that are not NIOSH Approved respirators. The performance requirements proposed in this rulemaking are designed to protect workers relying on CURs for their survival in IDLH atmospheres better than combination respirators approved pursuant to 42 CFR 84.63(b) or CURs not approved to any performance standard.
With this rulemaking, HHS proposes to incorporate by reference the CUR performance requirements in Chapter 7 of NFPA 1987,
For the reasons discussed above, HHS proposes the following changes to 42 CFR part 84.
HHS proposes the addition of two new definitions to the existing Definitions section in 84.2: “approval holder” and “NIOSH Certified Equipment List (CEL).” An approval holder is an applicant who has at least one NIOSH Approved respirator on the NIOSH Certified Equipment List, which is the directory of NIOSH Approved respirators. Finally, HHS proposes a revision to the existing term “applicant,” to clarify that the applicant is the entity that maintains and demonstrates responsibility for, and control of, product design, performance, configuration management, manufacture, quality, and support. Throughout part 84, the words “manufacturer,” “manufacturers,” and “manufacturer's” would be replaced with variations of “applicant” and “approval holder,” as appropriate.
Existing § 84.63(b) allows the combination of two or more classes of respirators and requires the resulting combination respirator to meet the minimum requirements for each class of respirator in the combination. Each resulting combination respirator will be classified by the class of respirator in the combination that provides the least amount of protection to the wearer. Paragraph (b) would be revised to clarify that CURs approved under the proposed new subpart P would be excepted from this general rule.
In a new subpart P, a new § 84.400 would describe that CURs are intended to protect wearers using the CUR (a) in open-circuit SCBA-mode during either entry into or escape from immediately dangerous to life or health (IDLH) environments, and (b) in air-purifying or powered air-purifying mode during entry into non-IDLH environments and escape from non-IDLH or IDLH environments.
A new § 84.401(a) would incorporate by reference the performance requirements established in Chapter 7 of NFPA 1987,
A new § 84.402(a) would specify that CURs are required to meet the minimum construction requirements in subpart G of part 84. Paragraph (b) would specify that the prospective approval holder must concurrently submit the device to an organization accredited to ISO/IEC 17065,
In §§ 84.30, 84.50, 84.51, 84.52, 84.53, 84.60, 84.63, 84.64, 84.65, the text would be edited to point to the technical standards in subparts H through the proposed new subpart P.
HHS has examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), Executive Order 14094 entitled “Modernizing Regulatory Review” (April 6, 2023), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), and Executive Order 13132 on Federalism (August 4, 1999).
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). The Executive Order 14094 entitled “Modernizing Regulatory Review” (hereinafter, the Modernizing E.O.) amends section 3(f)(1) of Executive Order 12866 (Regulatory Planning and Review). The amended section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) having an annual effect on the economy of $200 million or more in any 1 year (adjusted every 3 years by the Administrator of OIRA for changes in gross domestic product), or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or tribal governments or communities; (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise legal or policy issues for which centralized review would meaningfully further the President's priorities or the principles set forth in this Executive order, as specifically authorized in a timely manner by the Administrator of OIRA in each case. A
This proposed rule has been determined not to be a “significant regulatory action” under section 3(f) of E.O. 12866. The rulemaking is intended to remove regulatory barriers to the manufacturing, labeling, and selling of new CUR designs with NIOSH approval that include both open-circuit self-contained breathing apparatus and either air-purifying or powered air-purifying respirator capabilities. This rulemaking would give applicants the option to seek NIOSH approval of CURs meeting the performance requirements in chapter 7 of NFPA 1987,
This rule would not impose any mandatory costs on the public and would benefit applicants who choose to develop a product under these new technical requirements and the employers who purchase CURs. HHS estimates the fees associated with CUR approvals, including applications, site qualifications, and testing fees, pursuant to 42 CFR part 84, subpart C—Fees and Fee Schedule B—Application-Based Fees in part 84, appendix B. Because CUR-specific testing fees must be added to Fee Schedule B by rulemaking,
CUR-specific testing fees would be charged under the New and Unspecified Tests category of Fee Schedule B, allowing the NIOSH Respirator Approval Program to recoup $500 per day plus the actual cost of non-NIOSH staff (typically medical staff and test subjects), which is roughly equivalent to the actual costs of those tests. The application plus NIOSH testing and evaluation fees are estimated to be $15,600 in total.
The costs associated with the CBRN chemical warfare agent (CWA) tests, which NIOSH requires to be conducted by the U.S. Army Combat Capabilities Development Command (DEVCOM), Chemical Biological Center (CBC), are estimated to cost $101,000. These fees are established by CBC.
Fees associated with the independent certification body NFPA 1987 certification will be assessed by the certification body utilized. HHS estimates that NFPA 1987 certification will cost $90,000 for initial testing and evaluation and $42,000 annually thereafter. Finally, HHS estimates that the application itself will take an average of 240 hours to complete, costing applicants approximately $11,374 per application (
In addition to the one-time cost of a new NIOSH approval, pursuant to Respirator Certification Fee Schedule A—Annual (Fixed) Fees, the annual NIOSH approval maintenance costs to maintain one approval are estimated to be $10,691.
In total, HHS estimates that the initial cost of a new CUR approval application submitted to NIOSH will be $217,974. HHS further estimates that the total cost of maintaining a NIOSH CUR approval will be $52,691.
HHS anticipates that the benefits of this rulemaking far outweigh the costs to applicants of obtaining NIOSH CUR approval. CURs without NIOSH approval currently cost from $7,500 to $12,000; HHS does not have information about the potential cost of NIOSH Approved CURs but expects CUR approval holders to recoup the full cost of the NIOSH approval and profit from the sale of CURs to end users.
Moreover, this rulemaking would open up a new market segment to approval holders, allowing them to sell NIOSH Approved CURs to employers who are only able to purchase NIOSH Approved respirators as well as those who currently use non-NIOSH Approved CUR but wish to use NIOSH Approved respirators. Such employers are likely to include State and local law enforcement agencies in states that have an OSHA-approved State Plan, Department of Defense contractors, and private businesses where workers encounter hazards in industrial settings.
HHS expects that employers who must supply workers on OSHA-regulated jobsites with more than one type of NIOSH Approved respirator to protect them from more than one type of inhalational hazard would see a cost savings when those respirators are replaced with one NIOSH Approved CUR. Employers may also save resources by reducing employee trainings on multiple types of respirators.
Finally, the performance requirements proposed in this rulemaking are designed to protect workers relying on CURs for their survival in IDLH atmospheres better than combination respirators approved pursuant to 42 CFR 84.63(b) or CURs that are not approved to any performance standard. CURs approved under this new subpart will
HHS encourages submission to the docket of any information or data that would inform our understanding of the impact of this rulemaking on regulated entities.
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601
The Paperwork Reduction Act (PRA), 44 U.S.C. 3501
Comments are invited on the following: (a) 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; (b) the accuracy of the Agency's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents. Written comments must be received within 60 days of the publication of this notice. The addition of additional paperwork requirements resulting from this proposed rule will increase the burden associated with the addition of a new 42 CFR part 84, subpart P.
Based on known manufacturers of combination unit respirators on the market, NIOSH estimates that up to 5 respirator manufacturers may submit approximately 15 applications for CUR approvals to the National Personal Protective Technology Laboratory from April 2024 to April 2025. Each application is expected to require an average of 240 hours to complete and maintain.
Accordingly, NIOSH expects 3,600 burden hours to be attributed to applications for CUR approvals under the new subpart P. NIOSH estimates an average hourly wage rate of $47.39 for industrial engineers.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1531
This proposed rule has been drafted and reviewed in accordance with Executive Order 12988 and will not unduly burden the Federal court system. This proposed rule has been
HHS has reviewed this proposed rule in accordance with Executive Order 13132 regarding federalism and has determined that it does not have “federalism implications.” The rule does not “have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”
In accordance with Executive Order 13045, HHS has evaluated the environmental health and safety effects of this proposed rule on children. HHS has determined that the proposed rule would have no environmental health and safety effect on children.
In accordance with Executive Order 13211, HHS has evaluated the effects of this proposed rule on energy supply, distribution, or use, and has determined that the proposed rule will not have a significant adverse effect.
Under Public Law 111-274 (October 13, 2010), executive Departments and Agencies are required to use plain language in documents that explain to the public how to comply with a requirement the Federal government administers or enforces. HHS has attempted to use plain language in issuing the notice of proposed rulemaking consistent with the Federal Plain Writing Act guidelines but notes that these standards are technical in nature.
Fees, Incorporation by reference, Labeling, Laboratories, Mine safety and health, Occupational safety and health, Personal protective equipment, Respirators.
For the reasons discussed in the preamble, the Department of Health and Human Services proposes to amend 42 CFR part 84 as follows:
29 U.S.C. 651
(a) Combination unit respirators including all completely assembled respirators are designed for use as respiratory protection during:
(1) Entry into or escape from atmospheres immediately dangerous to life or health, when active in the open-circuit self-contained operational mode, and
(2) Entry into atmospheres not immediately dangerous to life or health, or escape only from hazardous atmospheres containing adequate oxygen to support life when active in the air-purifying or powered air-purifying operational mode.
(b) A respirator that meets the minimum requirements for such respirators set forth in this subpart will be classified as a combination unit respirator.
(a) Combination unit respirators must meet those respiratory protection performance requirements established in NFPA 1987,
(1) CUR system performance requirements:
(2) CUR/open-circuit self-contained mode performance requirements:
(3) CUR/powered air-purifying mode performance requirements:
(4) CUR/air-purifying mode performance requirements:
(b) To the extent there is a conflict between the terms or provisions of NFPA 1987 and this part, the provisions of this part control.
(a) Each CUR must meet the minimum construction requirements set forth in subpart G of this part.
(b) Applications for NFPA 1987 certification must be submitted to a conformity assessment body accredited to ISO/IEC 17065,
Federal Communications Commission.
Proposed rule.
In this document, the Federal Communications Commission (FCC or Commission) adopted a Notice of Proposed Rulemaking that seeks comment on a proposed new framework for licensing space stations engaged in in-space servicing, assembly, and manufacturing (ISAM).
Comments are due on or before April 29, 2024. Reply comments are due on or before May 29, 2024.
You may submit comments, identified by IB Docket Nos. 22-271 and 22-272, by any of the following methods:
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• Filings can be sent by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street NE, Washington, DC 20554.
• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19. See FCC Announces Closure of FCC Headquarters Open Window and Change in Hand-Delivery Policy, Public Notice, DA 20-304 (March 19, 2020).
Jameyanne Fuller, Space Bureau, Satellite Programs and Policy Division, 202-418-0945,
This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM), in IB Docket Nos. 22-271 and 22-272; FCC 24-21, adopted February 15, 2024, and released February 16, 2024. The full text of this document is available at
The Commission will treat this proceeding as a “permit-but-disclose” proceeding in accordance with the Commission's
The Notice of Proposed Rulemaking contains proposed new or modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4)), the Commission seeks specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees.
The Providing Accountability Through Transparency Act, Public Law 118-9, requires each agency, in providing notice of a rulemaking, to post online a brief plain-language summary of the proposed rule. The required summary of the Notice of Proposed Rulemaking is available at
The Regulatory Flexibility Act of 1980, as amended (RFA), requires that an agency prepare a regulatory flexibility analysis for notice and comment rulemakings, unless the agency certifies that “the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities.” The Commission has prepared an Initial Regulatory Flexibility Analysis (IRFA) concerning the potential impact of the proposed rule and policy changes contained in the Notice of Proposed Rulemaking. The IRFA is set forth in Appendix B of the NPRM and a summary is included in the Procedural Matters section below. Written public comments are requested on the IRFA. Comments must be filed by the deadlines for comments on the Notice of Proposed Rulemaking indicated on the
1. In the Notice of Proposed Rulemaking (NPRM), the Commission seeks comment on several proposed changes to part 25 of the Commission's rules to create a new framework to license in-space servicing, assembly, and manufacturing, or “ISAM” space stations, thereby supporting the development of these novel space activities. Specifically, the NPRM proposes to include a new definition of “ISAM space station” in § 25.103 of the Commission's rules drawn from the definition in the ISAM National Strategy and proposes a new § 25.126 to the Commission's rules to aggregate requirements that all applicants for an ISAM space station license or market access grant must fulfill and to enumerate the exemptions from other portions of part 25 to which applicants would be entitled. It also seeks comments on whether other rule changes might be necessary to support the development of the ISAM industry. Additionally, it proposes to retain the same orbital debris mitigation requirements for ISAM operators as for other space station operators and proposes to review ISAM operators' requests for frequency use on a case-by-case basis.
2. The Commission continues its efforts to promote United States leadership in space by adopting the NPRM to propose a new framework for licensing space stations engaged in ISAM. Space capabilities are expanding, opening novel economic and scientific opportunities, and providing new tools for sustainable use of space. Effective and efficient use of radiofrequency communications will enable these new capabilities and the rules proposed are designed to facilitate and support their growth. The NPRM reflects the input of commenters from the Commission's Notice of Inquiry (NOI) on ISAM, 87 FR 56365 (September 14, 2022), which sought comment regarding where the industry is today, how the Commission can best support its sustainable development, and what tangible economic and societal benefits may result from these capabilities. Taking these comments into account, the Commission proposes to create a new framework to license ISAM space stations, thereby supporting the development of these novel space activities. As the ISAM industry continues to develop, the Commission envisions taking additional steps as needed to foster innovation and growth in this field.
3. ISAM refers to a set of capabilities used on-orbit, on the surface of space objects and celestial bodies, and in transit between these regimes. The “servicing” aspect of ISAM includes activities such as the in-space inspection, life extension, repair, refueling, or alteration of a spacecraft after its initial launch, which includes but is not limited to: visually acquire, rendezvous and/or proximity operations, docking, berthing, relocation, upgrading, repositioning, undocking, unberthing, release and departure, reuse, orbit transport and transfer, and timely debris collection and removal. These activities typically include the process of maneuvering close to and operating in the near vicinity of the “client” spacecraft, a set of activities often referred to as rendezvous and proximity operations (RPO). The term “servicing” is also used to describe transport of a spacecraft from one orbit to another, as well as debris collection and removal. “Assembly” refers to the construction of a space system using pre-manufactured components, and “manufacturing” is the transformation of raw or recycled
4. On August 5, 2022, the Commission adopted the ISAM NOI. It sought comment on spectrum needs and allocations; licensing processes in general and specifically for satellite servicing operations, assembly, manufacturing, and other activities; and international licensing considerations. Twenty-four comments were filed by ISAM operators, satellite operators, industry groups, and government agencies, ten parties filed reply comments, and a number of parties also submitted ex parte filings on the record.
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6. Topics related to ISAM capabilities have also been raised in other Commission rulemaking proceedings. In the ongoing rulemaking to update the orbital debris rules, Mitigation of Orbital Debris in the New Space Age, the Commission sought comment on a variety of rule changes, including, for example, whether it should update rules specifically to address RPO. The Commission ultimately adopted a requirement that space station applicants disclose whether a space station is capable of, or will be, performing proximity operations, noting that this disclosure would identify situations where such operations are planned and provide a vehicle for further review of those operations. At the time, the Commission noted the evolving and developing nature of RPO and accordingly found that adoption of more specific technical or operational requirements would be premature. The Commission also sought comment on the role of spacecraft retrieval, also referred to as active debris removal (ADR), as a debris mitigation strategy in certain circumstances and concluded that this was also an area where it would be premature to establish more detailed regulations.
7.
8. The NOI queried how the FCC could support ISAM activities, noting that the ISAM National Strategy calls for the U.S. domestic regulatory regime to be updated to facilitate ISAM activities. The Commission issues the NPRM in line with that call, while recognizing that the Commission, with over 50 years of expertise in regulating satellites, is one of several government agencies charged with regulation and oversight of commercial activities in space.
9. The Commission's authority under the Communications Act allows the licensing of ISAM space stations under its existing rules, including rules that consider public interest factors. The Commission expects to continue to rely on the expertise of its fellow agencies as appropriate and note that its regulations on these issues are evolving in tandem with other government efforts. The Commission also recognizes that the United States' regulatory regime for achieving compliance with its obligations under Article VI of the Outer Space Treaty contemplates multiple agencies authorizing and supervising the activities of non-governmental entities in space.
10.
11. The NOI sought information on the best approaches to licensing ISAM activities. As discussed in greater detail below, the Commission proposes to modify its rules to create a licensing framework specific to ISAM space stations within its part 25 rules for licensing commercial space stations. The Commission also proposes to apply its existing orbital debris mitigation requirements to ISAM space stations and to address the spectrum needs of ISAM operators on a case-by-case basis. At the same time, the Commission proposes to maintain its part 5 experimental licensing rules as an option for licensing ISAM space stations not providing commercial service.
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16. The Commission proposes to create a new § 25.126—Applications for ISAM Space Stations—to aggregate the requirements applicants for ISAM space stations must fulfill and enumerate the exemptions from the Commission's typical processes they are entitled to. The Commission believes creating a new rule section specific to ISAM space stations will make the process transparent for the industry, providing applicants for authorization for ISAM space stations one rule section that details the application process and clearly indicates the other rule sections with which applicants must comply. The Commission proposes that applicants that fit within its proposed definition of “ISAM space station,” detailed above, would be able to use the proposed framework in § 25.126. The Commission proposes that operators of ISAM space stations could apply for both U.S. authorizations and grants of U.S. market access using the proposed framework in this section. The Commission seeks comment on this general approach.
17. Specifically, the proposed new § 25.126 would require applicants to submit a comprehensive proposal for Commission evaluation on Form 312, Main Form, and Schedule S, as described in § 25.114(a) through (c), consistent with the Commission's regular part 25 licensing and small satellite and small spacecraft licensing requirements. The Commission proposes to allow ISAM space station operators to continue to apply under the small satellite and small spacecraft streamlined processes, provided they satisfy all the requirements of each respective process. The Commission proposes that ISAM space stations that do not meet the criteria for the small satellite or small spacecraft processes
18. The Commission recognizes that radiofrequency operations for ISAM space stations seem more capable of spectrum sharing than other commercial space stations it has authorized under its part 25 rules and generally require shorter durations of intensive communications operations. The Commission therefore proposes to exempt all applications for licenses for space stations that fit its proposed definition of ISAM space stations from processing round requirements for NGSO-like operations under § 25.157 and from first-come-first-served requirements for GSO-like operations under § 25.158, provided they certify that operations of the space station(s) will be compatible with existing operations in the authorized frequency bands and submit a narrative description to demonstrate spectrum sharing capabilities are technically possible, and that the operations will not materially constrain future space station entrants from using the authorized frequency band(s). These proposals and exemption criteria would be located in new § 25.126 and the corresponding §§ 25.157 and 25.158 would be updated to reflect these exemptions. The Commission tentatively concludes that this licensing framework will allow greater flexibility for ISAM operators looking to operate as a GSO or NGSO space station while protecting future and incumbent satellite operators from interference. The Commission also proposes to include a requirement in 25.126 for ISAM operators to provide ICFS file numbers or call signs for any FCC-related applications or grants or a list of International Telecommunications Union (ITU) filings and United Nations (UN) Registration information for any related space stations not licensed or granted market access by the United States, which the Commission explains in more detail below. The Commission notes that its proposal to exempt ISAM operators from its processing round and first-come-first-served queue, given relevant showings, does not modify its obligations to coordinate authorizations with federal operators when spectrum shared by federal and nonfederal users is requested. The Commission seeks comment on these proposals. It also seeks comment regarding whether other rule changes are necessary to effectuate the proposed approaches discussed above. Commenters should specify which rules and explain the basis for recommending additional revisions.
19.
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21. To facilitate review of whether a client space station must seek a modification, the Commission proposes to include a requirement in its new proposed § 25.126 for ISAM space station applicants to provide a list of FCC file numbers or call signs for all related space stations, including experimental applications and grants and other applications and grants under part 25. This requirement is similar to the requirement in the Commission's streamlined process for small satellites and small spacecraft, but the Commission proposes to expand what it considers to be “related” applications and grants in the context of ISAM applications. It proposes that related applications and grants would include not only space stations operated by the
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24. The NOI sought comment on orbital debris mitigation concerns specific to ISAM activities in general. Specifically, the Commission sought comment on how ISAM activities might not fit into its current orbital debris mitigation requirements, for example by storing fuel on-orbit rather than using or depleting fuel (refueling depots), or by creating debris as byproducts of servicing or manufacturing activities, and how the Commission might modify its current orbital debris mitigation requirements to account for the additional risks that ISAM operations may pose.
25. At this time, the Commission tentatively concludes to retain the same orbital debris mitigation requirements for ISAM operators as for other space station operators. As stated in the NOI, the Commission's orbital debris mitigation requirements apply to all space station operators, including operators of ISAM space stations. The Commission notes that its current orbital debris mitigation rules are performance based, in that they require demonstration of results rather than dictating specific methods operators must use to meet those results, and so the Commission proposes that it does not need to modify its rules for ISAM communications to accommodate requests in the record for performance-based orbital debris mitigation requirements for ISAM space stations. The Commission's orbital debris mitigation requirements are also based on the United States government's Orbital Debris Mitigation Standard Practices (ODMSP) developed by NASA. The Commission therefore does not propose to modify its orbital debris rules at this time or to require additional orbital debris mitigation showings for ISAM space stations in general. Rather the Commission proposes that ISAM operators will either comply with orbital debris requirements under the regular part 25 licensing process, or under the small satellite or small spacecraft processes, if they apply under those streamlined licensing processes. The Commission proposes to include a requirement that applicants for ISAM space stations submit the orbital debris mitigation information under the rules of their chosen application process in the proposed new § 25.126, as part of the proposal to clearly lay out the application process for ISAM operators in that section. The Commission also proposes to review any applications for ISAM space stations on a case-by-case basis, just as it does with other license applications, to ensure compliance with its orbital debris mitigation requirements. The Commission believes this approach will maximize operator flexibility and therefore allow ISAM technologies and capabilities to develop while allowing the Commission to ensure continued orbital safety for all operators. The Commission seeks comment on this proposed approach.
26. ISAM Activities that May Pose Additional Risks. The Commission notes that commenters suggest that some ISAM activities, such as refueling, life extension, and orbital transfer
27. The NOI asked a series of questions to gain information on the state of orbital debris remediation technologies and industry development, including whether and how the Commission should consider ADR as part of an applicant's orbital debris mitigation plan and what actions the Commission could take to promote growth and innovation for ADR. The Commission agrees with commenters that ISAM activities can play a role in orbital debris remediation and space sustainability. Aerospace asserts that some ADR technologies, such as tow truck, robotics, and RPO technologies, are at a high level of readiness and reliability, while other technologies, including for capture and stabilization of debris with high spin or tumble rates, are at a much lower level of technological readiness and reliability.
28. The Commission proposes that operators engaging in ADR and similar orbital debris remediation activities could seek authorization through the same process for ISAM space stations outlined in the NPRM, including requiring space stations conducting ADR to demonstrate compliance with the Commission's orbital debris rules. The Commission seeks comment on this proposal. In particular, the Commission seeks comment on whether it should impose additional requirements on applicants for ISAM space stations conducting debris remediation activities to mitigate potential additional risks from these activities.
29. In response to the NOI's queries on whether ADR should be factored into post-mission disposal requirements or otherwise be fostered by Commission action, commenters suggest the Commission make clear that ADR is permitted as a means to demonstrate compliance with the Commission's orbital debris rules and recommend that the Commission encourage all space station operators to include navigational aids and grappling fixtures to assist with potential ADR. The Commission agrees that acknowledging third-party services as an option for post-mission disposal will likely further its goals of promoting innovation and growth of ADR and will also likely provide additional flexibility to applicants when considering their end-of-life disposal options. To date, the Commission's rules do not prescribe any particular method of end-of-life disposal of NGSO space stations, and instead the Commission reviews an applicant's orbital debris mitigation plans for such disposals on a case-by-case basis. The Commission has previously stated that it did not intend to dismiss or foreclose direct retrieval as a method of end-of-life disposal and that disposal plans involving direct retrieval would be evaluated if direct retrieval were implemented in the future. As such, the Commission does not propose to modify its rules to list ADR explicitly as a post-mission disposal method. The Commission notes that the ODMSP stresses the importance of ensuring that orbital debris remediation activities do not risk creating debris greater than the debris the operation seeks to remediate, and the Commission therefore proposes that plans to use ADR for post-mission disposal will continue to be reviewed on a case-by-case basis, including review of the risk of generating debris greater than the debris the operation seeks to remediate and human casualty risk for remediated debris disposed of through atmospheric reentry, along with compliance with the Commission's other orbital debris mitigation rules. The Commission believes its proposal to review use of ADR for post-mission disposal on a case-by-case basis is in line with its proposal to review all ISAM space stations, including ISAM space stations conducting ADR activities, on a case-by-case basis and will allow maximum flexibility for operators, thereby fulfilling the Commission's goal of promoting growth in the industry. The Commission seeks comment on this approach.
30. Additionally, the Commission believes that Aerospace's suggestion that the Commission require ADR plans as a back-up for large constellations' post-mission disposal plans has merit for consideration. In cases of large constellations, as Aerospace points out, numerous defunct satellites could be left in orbit even while meeting the Commission's current post-mission disposal requirements. Given that the technology for ADR is still nascent and developing, however, the Commission does not propose to adopt rules on this issue at this time, but it expects to consider this possibility in the future.
31. The NOI asked specifically whether an operator bond associated with removal would be an appropriate mechanism for ensuring ADR. Commenters responding to the NOI present a range of views regarding potential bonds associated with post-mission disposal reliability, from support for the proposal, to requests for further study, to concerns that a bond would chill innovation and be less effective than strong orbital debris mitigation requirements. The Commission agrees that further consideration of this issue is warranted, but as it is also continuing to consider post-mission disposal bonds in general in its orbital debris proceeding, it defers this issue as related to ISAM and debris remediation to a later time when it can consider it more fully.
32. Finally, despite the suggestions of some commenters, the Commission defers proposals to modify regulatory and application fees to appropriate regulatory or application fee proceedings in the future. The Commission is required by the Communications Act to collect application fees and regulatory fees. The Communications Act provides specific exemptions from application fees and regulatory fees. Moreover, the Commission's authority to waive application fees or regulatory fees is limited to specific instances and the Commission has consistently rejected consideration of waiving such fees for classes of applicants or regulatees. As this proceeding progresses, the Commission will propose any relevant regulatory fee or application fee updates for ISAM space stations as part of future Commission's regulatory and application fee proceedings.
33. The Commission tentatively concludes that various communication activities in support of ISAM can potentially operate within several existing service allocations, and it proposes to review ISAM operators' requests for frequency use on a case-by-case basis, consistent with its process for reviewing requests for frequency use for small satellites and small spacecraft. The Commission seeks comment on these proposals.
34.
35. Numerous commenters suggest that the space operation service (defined in 47 CFR 2.1(c)), fits well with some aspects of ISAM operations, particularly TT&C needs, but several also note that the space operation bands are already encumbered by federal users and others assert that some communications needs for ISAM space stations may not fit in this service. Some suggest that space research service, fixed-satellite service (FSS), mobile-satellite service (MSS), inter-satellite service, or even Earth-exploration satellite service (EESS) allocations (all defined in § 2.1(c) of the Commission's rules), as well as experimental licensing and other flexible options could be construed to allow for certain ISAM operations. The Commission's rules define service allocations according to the ITU definitions, and the Commission relies on these definitions as it considers requests for frequency authorization as part of its licensing process. The Commission tentatively concludes that various ISAM operations could fit within numerous service allocation definitions. For example, the Commission need not read the definition of space research services, “a radiocommunications service in which spacecraft or other objects in space are used for scientific or technological research purposes,” to be fundamentally at odds with commercial satellite operations given that the plain language of the definition does not exclude commercially based scientific or technological research operations. Additionally, the Commission proposes that the space operation service, which is “concerned exclusively with the operation of spacecraft, in particular space tracking, space telemetry, and space telecommand,” need not be as narrowly construed as some commenters seem to suggest. For example, CONFERS states that the space operation service “is not meant for downlinking ISAM payload data.” However, the Commission tentatively concludes that at least some ISAM operations could fall within the scope of the space operation definition, especially if the data in question is related to “the operation of spacecraft.” At the same time, the Commission notes that certain service allocations, such as EESS which is focused on “[i]nformation relating to the characteristics of the Earth and its natural phenomena, including data relating to the state of the environment,” appear to be dedicated to operations that are not typically consistent with ISAM operations.
36. The Commission proposes not to limit service allocation designations that might be possible for ISAM operations so long as the requested operations can justifiably fit within the service allocation definition. As such, the Commission proposes to continue its current practice of assessing whether an applicant's proposed ISAM operations fall within the applicant's desired service allocation(s) on a case-by-case basis. This proposal is consistent with the Commission's considerations for small satellites, where the Commission recognized small satellite operators may engage in a variety of operations. Here, the Commission tentatively proposes to maintain as much flexibility as possible for ISAM operators to gain authorization for their operations so long as this does not interfere with other radiocommunications and justifiably fits within service allocation definitions. The Commission seeks comment on this proposal. The Commission also notes that current satellite services offer some flexibility of use and operation. For example, in certain cases, FSS operators are permitted to provide service to earth stations in motion (ESIM). Similarly, a single satellite constellation can be licensed to provide both FSS and MSS. Given the current state of ISAM development, and the variety of communications needs that ISAM operators may have, the Commission believes that continuing to work within available service allocations, with the modifications to the licensing process proposed in the NPRM, can address many of the frequency demands for ISAM in the near term. The Commission seeks comment on this approach.
37.
38.
39.
40.
41. The NOI sought comment on “any equity-related considerations and benefits (if any) that may be associated with the topics discussed” in the NOI. Aerospace provided several comments addressing digital equity and inclusion in the ISAM industry. Aerospace states, “[m]aintaining satellite connectivity that is both consistent and affordable is becoming more essential to remote regions that include tribal lands and rural areas, as well as urban centers of typically underserved populations disadvantaged by socioeconomic factors.” The Commission agrees that promoting growth of the ISAM industry could create a safer and more sustainable space environment, which will allow for more options for broadband service for unserved and underserved areas.
42. Aerospace suggests that to promote digital equity and inclusion in the ISAM industry, the Commission should encourage inclusive business practices through incentive programs, such as reduced or waived regulatory fees and application filing fees for federally recognized small disadvantaged ISAM businesses and reduced or waived fees for debris-mitigating ISAM activities. Aerospace notes that loss of satellite connectivity caused by debris or interference could mean a complete internet blackout for rural and other unserved and underserved areas which lack ground connectivity infrastructure, and therefore the Commission should work to incentivize ISAM activities which mitigate debris. Aerospace is correct to note the importance of satellite connectivity, particularly in unserved and underserved regions, and ISAM activities, particularly servicing capabilities and debris remediation, have the potential to strengthen these networks to better serve these populations. As discussed above, however, the Commission does not propose to reduce or eliminate fees for space stations that adopt ISAM-compatible technology because the Commission is required to collect application filing and regulatory fees by Congress, and the Commission lacks authority to waive fees for whole categories of payors or to assess fees on factors other than cost of processing filings or regulatory burden.
43. Aerospace also proposes specific regulations for the FCC to consider regarding spectrum which it states would benefit unserved and underrepresented populations. Specifically, Aerospace suggests that the “FCC could propose spectrum sharing schemes that pool spectrum for Small Disadvantaged Businesses developing or supporting ISAM technology dedicated to public interest efforts specific to underserved customers or for use by academia with underrepresented student populations.” The Commission seeks additional comment regarding this proposal. It recognizes the Small Business Administration has regulations and programs for small disadvantaged businesses in the federal contracting space. Specifically, how might the Commission categorize “small disadvantaged businesses” in this context? Are there other categories of businesses, organizations, or academic institutions that such a program would be appropriate for? More broadly, how would such a program work? What would the benefits and drawbacks be?
44. Finally, Aerospace suggests that the Commission consider regulatory changes to protect educational spectrum as a public good by requiring that educational spectrum licenses only be sold to other educational entities. Aerospace also recommends the Commission limit the number of leasing agreements for spectrum to prevent hording of spectrum that could be used for ISAM operations which will benefit unserved and underserved populations, as well as regulations preventing
45. ISAM is a nascent industry, and as such, the Commission is seeking additional comments on ways the Commission can continue to incentivize the growth of the ISAM industry through the proposals in the NPRM and beyond. Furthermore, as part of the Commission's continuing effort to advance digital equity for all, including people of color, people with disabilities, persons who live in rural or tribal areas, and others who are or have been historically underserved, marginalized, or adversely affected by persistent poverty or inequality, it continues to invite comment on any equity-related considerations raised by the proposals made in the NPRM. Specifically, the Commission continues to seek comment on how the topics discussed and any related proposals may promote or inhibit advances in diversity, equity, inclusion, and accessibility, as well as the scope of the Commission's relevant legal authority.
46. As required by the Regulatory Flexibility Act (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in the Notice of Proposed Rulemaking (NPRM). The Commission requests written public comments on the IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines provided on the first page of the NPRM. The Commission will send a copy of the NPRM, including the IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA).
47. The Commission advances the leadership role of the United States in space with a new framework for licensing space stations engaged in in-space servicing, assembly, and manufacturing, known as (ISAM), proposed in the NRPM. The NPRM reflects comments the Commission received in response to a Notice of Inquiry on ISAM (ISAM NOI), which requested comment on the current state of the industry, how the Commission can best support the sustainable development of the industry, and what tangible economic and societal benefits can result from the expansion of capabilities facilitating the sustainable use of space. The Commission seeks comment on several proposals relating to changes to the Commission's rules and policies for radiofrequency communication to foster the advancement of in-space servicing, assembly, and manufacturing (ISAM) operations. The Commission believes effective radiofrequency communications will enable expansion of capabilities for space use and has proposed rules designed to facilitate and support growth.
48. The licensing framework rules the Commission proposed in the NPRM would accommodate authorization under part 25 of the Commission's rules for commercial space stations engaged in ISAM operations. Adoption of the proposed changes would modify 47 CFR part 25 of the Commission's rules to make communication authorization for ISAM missions more accessible while promoting efficient use of spectrum. The ability of ISAM space station operators to apply under the existing small satellite and small spacecraft streamlined processes would be available to ISAM space station operators that meet the requisite requirements for the applicable process. Licensing under part 5 of the Commission's experimental licensing will also continue to be an option for licensing ISAM space stations that do not provide commercial service. The Commission's proposed approach in the NPRM to license ISAM space stations under its current rules, and to review ISAM applications on a case-by-case basis, will provide the industry with flexibility while ISAM capabilities develop, and will enable the Commission to continue developing a record on ISAM while gaining further experience licensing radiofrequency use for ISAM space stations.
49. The proposed action is authorized under sections 4(i), 301, 302(a), 303(e), 303(f), and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 301, 302(a), 303(e), 303(f), and 303(r).
50. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rules and policies, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.
51.
52.
53. The NPRM seeks public comment on proposed revisions to the Commission's rules governing satellite and earth station applications under 47 CFR part 25. Specifically, the NPRM proposes and seeks comment on several rule changes that will affect ISAM communications authorization procedures, reporting, recordkeeping, and other compliance requirements for space station operators. The Commission believes the proposed changes would decrease the burden in various regards for small entities that plan to launch and operate ISAM space stations.
54. The NPRM proposes to add a new section to the Commission's rules, § 25.126 Application for ISAM Space Stations, which clarifies application requirements for ISAM space stations in a single section. These proposals include documentation requirements largely consistent with those already established for an applicant under part 25 of the Commission's rules. In proposed § 25.126(a), applicants that meet the proposed definition of “ISAM space station” are directed to seek authorization and submit the requisite application information and materials either through the Commission's regular part 25 process or through the streamlined processes for small satellites and small spacecraft. As such, ISAM space station license applicants, including small entities, that also meet the requirements to seek authorization under the Commission's current streamlined processes for small satellites or small spacecraft will be able to submit the information and certification required in § 25.122 or § 25.123 rather than the regular part 25 authorization process.
55. In the new § 25.126(b), the Commission proposes to exempt small entities and other operators that meet the definition of ISAM space stations from non-geostationary orbit (NGSO) processing rounds and/or the first-come-first-served queue for geostationary orbit (GSO) operators, provided the applicant certifies that the operations of the space station(s) will be compatible with existing operations in the authorized frequency band(s), and submits a narrative to demonstrate spectrum sharing capabilities are technically possible, and that the operations will not materially constrain future space station entrants from using the authorized frequency band(s). While the exemption contains a certification and narrative submission requirement, the proposal is designed to provide more flexibility to small and other operators who may want to operate as a GSO or NGSO space station, while simultaneously providing interference protection for incumbent and future satellite operators. The proposed rule would also reduce the procedural requirements for small entities and other applicants.
56. Pursuant to proposed § 25.126(c), ISAM space station license applicants, including small entities, would need to provide the International Communications Filing System (ICFS) file number for any applications or Commission grants related to proposed operations (
57. As a mechanism for fostering the growth of the burgeoning ISAM industry the licensing framework proposal includes a one-year grace period for surety bonds for small and other ISM applicants, just as the Commission has done for operators applying through the small satellite and small spacecraft rules. The Commission seeks comment on whether any of the burdens associated with complying with the filing, recordkeeping, and reporting requirements in its proposed licensing framework can be further minimized for small entities. Due to the proposed approach to license ISAM space stations under the Commission's current rules including allowing applicants to seek authorization under the Commission's current streamlined processes for small satellites or small spacecraft, the Commission does not expect that small entities will need to hire professionals to comply with any of the requirements for ISAM space station authorization. With regard to the compliance costs for small entities, at this time the Commission cannot quantify the compliance costs for small entities. The Commission therefore expects the information it received in comments to include cost and benefit analysis data which should help the Commission assess compliance costs. Industry input should also allow the Commission to identify and evaluate additional matters, and burdens relevant to small entities that may result from the proposals and inquiries it makes in this proceeding.
58. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rules for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities.”
59. The Commission's consideration of rule revisions to reflect changes and advances in the commercial space industry includes proposals in the licensing framework that would assist in reducing the economic impact for small entities such as exempting ISAM applicants from the surety bond requirement for one year after an ISAM license is granted, and not subjecting applications for ISAM space stations to
60. Small entities and other operators meeting the proposed definition of an ISAM space station would be required to include some additional information with their application by providing the ICFS file numbers for related applications or grants of authority, if this proposed rule is adopted. This requirement may ultimately lower the impact on small entities and other operators however, since providing the file numbers up front could lower the need for, and costs associated with additional follow-up and review at a later stage of the application process. Similarly, the Commission believes that the proposed requirement for ISAM applicants to provide relevant international filings for related space stations not licensed or granted market access by the United States while creating some additional steps on the front end, will ultimately lead to a smoother review process for small entities and other applicants who may be servicing or partnering with foreign-licensed space stations as part of their operations.
61. Although the Commission ultimately proposed to continue the use of part 5 and 25 rules for the ISAM space station operation licensing framework, it considered various alternatives for the framework proposal. The Commission assessed for example the use of different licensing requirements for different types of ISAM activities. Rather than proposing to adopt different regulatory requirements, the Commission chose to propose a broad licensing framework for space stations that could be applicable to all activities that fall within the proposed definition of ISAM. The proposed licensing framework provides small entities and other ISAM space station applicants with several options to use to apply for authorization. The option available for small entities meeting the process requirements to utilize the Commission's existing streamlined processes for small satellites and small spacecraft as described in the NPRM should reduce the impact for these applicants because of the reduced burden of the streamlined processes. Small entities seeking Commission authorization as ISAM space station operators may already have experience, and familiarity with the existing processes, and have cost-effective and efficient internal procedures in place to execute the streamlined processes. To the extent a small entity does not meet the requirements for the streamlined processes for small satellites and small spacecraft and seeks authorization through the regular part 25 process, the proposed exemptions and reduced regulatory burdens discussed above will result in a less arduous and costly approach than would be available in the absence of the new section and other proposed rule changes. Small entities may also benefit from the continuation of the part 5 process as a means of authorization since several ISAM space stations have secured experimental licenses using this process. Similarly, the part 5 process may be of assistance to small entity ISAM applicants with an interest in market trials.
62. In response to the ISAM NOI, comments were filed involving spectrum regulation impacting small disadvantaged businesses. The Commission considered these comments which suggest the Commission propose spectrum sharing arrangements to pool spectrum impacting small disadvantaged businesses that develop, or support ISAM technology targeting underserved customers, or academic institutions with underrepresented student populations, and in the NPRM the Commission requested additional comment on this proposal, including how such arrangements would work, and the benefits and drawbacks of such arrangements. The Commission expects to consider this, and other issues discussed herein, as well as the economic impact on, and alternatives for small entities, based on its review of any comments filed in response to the NPRM and the IRFA.
63. None.
64. Accordingly,
65.
Administrative practice and procedure, Earth stations, Satellites
For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR part 25 as follows:
47 U.S.C. 154, 301, 302, 303, 307, 309, 310, 319, 332, 605, and 721, unless otherwise noted.
(a) This section shall only apply to applicants for ISAM space stations as defined in § 25.103. Applicants seeking authorization for ISAM space stations must submit a comprehensive proposal for Commission evaluation on FCC Form 312, Main Form and Schedule S, as described in § 25.114(a) through (c), together with the information required in § 25.114(d)(14) or, if the applicant is seeking authorization under the streamlined processes for small satellites or small spacecraft, the information required in § 25.122(c) and (d) or § 25.123(b) and (c).
(b) Applicants for ISAM space stations will not be placed in a processing round for NGSO-like operations under § 25.157 or placed in a queue for GSO-like operations under § 25.158, provided:
(1) The applicant certifies that operations of the space station(s) will be compatible with existing operations in the authorized frequency band(s) and will not materially constrain future space station entrants from using the authorized frequency band(s); and
(2) The applicant submits a narrative description of means by which requested spectrum could be shared with both current and future operators, (
(c) Applicants for ISAM space stations must also provide the following:
(1) A list of the FCC file numbers or call signs for any applications or Commission grants related to the proposed operations (
(2) A list of the International Telecommunications Union filings and United Nations Registration information for any space stations not licensed or granted market access by the United States that are related to the proposed operations, including but not limited to client space stations, space stations that have become debris the applicant seeks to remediate, and other space stations the applicant plans to interact with or collaborate with as part of its operations.
(3) For all related space stations included under paragraph (c)(2) of this section, a narrative description of the regulatory requirements to which these related space stations are subject and the status of licenses of these related space stations.
(b) Any request pursuant to paragraph (a) of this section must be filed electronically through the International Communications Filing System and must include an exhibit providing legal and technical information for the non-U.S.-licensed space station of the kind that §§ 25.114, 25.122, 25.123 or § 25.126 would require in a license application for that space station, including but not limited to, information required to complete Schedule S. An applicant may satisfy this requirement by cross-referencing a pending application containing the requisite information or by citing a prior grant of authority to communicate via the space station in question in the same frequency bands to provide the same type of service.
(i) For consideration of license applications filed pursuant to the procedures described in §§ 25.122, 25.123, or § 25.126 the application will be processed and granted in accordance with §§ 25.150 through 25.156, taking into consideration the information provided by the applicant under §§ 25.122(d), 25.123(c), or § 25.126(b) but without a processing round as described in this section and without a queue as described in § 25.158.
(a) * * *
(2) The procedures prescribed in this section do not apply to an application for authority to launch and operate an ISAM space station that meets the relevant criteria in § 25.126(b). The procedures prescribed in this section also do not apply to an application for authority to launch and operate a replacement space station that meets the relevant criteria in § 25.165(e)(1) and (e)(2) and that will be launched before the space station to be replaced is retired from service or reasonable time after the loss of a space station during launch or due to premature failure in orbit.
(a) For all space station licenses issued after September 20, 2004, other than licenses for SDARS space stations, space stations licensed in accordance with §§ 25.122, 25.123, or § 25.126, and replacement space stations as defined in paragraph (e) of this section, the licensee must post a bond within 30 days of the grant of its license. Space stations licensed in accordance with §§ 25.122, 25.123, or § 25.126 must post a bond within one year plus 30 days of the grant of the license. Failure to post a bond will render the license null and void automatically.
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 April 15, 2024 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.
Forest Service, Agriculture (USDA).
Notice of rate redeterminations and contract extensions.
The Chief of the Forest Service, Department of Agriculture, has determined that it is in the substantial overriding public interest (SOPI) to redetermine pulpwood rates and extend up to two years certain National Forest System timber sales and sale of property stewardship contracts. This finding applies to timber sale and sale of property stewardship contracts that were awarded before March 13, 2024, and, upon award, to contracts with a bid opening prior to March 13, 2024, subject to specified exceptions. Contracts with 20 percent or more of the included product listed as pulpwood with required removal will qualify for a pulpwood rate redetermination and may qualify for an extension under this SOPI finding. The SOPI determination is due to a combination of factors impacting the national economy and the pulp, paper, and chips markets. The intended effect of pulpwood rate redeterminations and extensions of certain timber and sale of property contracts is to allow timber purchasers and contractors time to navigate through the market conditions; to minimize contract defaults, mill closures, and bankruptcies; to sustain employment opportunities, and to minimize the
The SOPI determination was made on March 8, 2024, by the Chief of the Forest Service, Department of Agriculture.
Kraig Kidwell, Contracts and Appraisals Group Lead, at 541-961-2614 or by email at
The Forest Service sells timber and forest products from National Forest System lands to individuals and companies pursuant to the National Forest Management Act of 1976, 16 U.S.C. 472a (NFMA); the Stewardship End Result Contracting Projects Act, 16 U.S.C. 6591c; and implementing regulations in 36 CFR part 223. Each sale is formalized by execution of a contract for the sale of property between the timber purchaser or stewardship contractor and the Forest Service. The contract sets forth the terms of the sale including such matters as the estimated volume of timber to be removed, the period for removal, price to be paid to the Government, and road construction and logging requirements. The average sale of property contract period is approximately 3 to 4 years, although some contracts have terms up to 10 years. The contract term is established by the Forest Service based on the estimated time an average prudent timber contractor would need to mobilize and complete the timber harvest under the conditions of the contract. Paragraph 14(c) of NFMA (16 U.S.C. 472a(c)) provides that the Secretary of Agriculture shall not extend any timber sale contract period with an original term of 2 years or more unless the Secretary finds that the purchaser has diligently performed in accordance with an approved plan of operations, or that the “substantial overriding public interest” justifies the extension. This authority is delegated to the Chief of the Forest Service through Forest Service Manuals 2404.11 and 2453.17, referencing 36 CFR 223.32, and 36 CFR 223.31.
When members of the timber industry must decide whether to harvest timber during severely depressed markets and times of high inflation, or risk defaulting contracts, such decisions can and have led to bankruptcies, loss of infrastructure, and loss of jobs. This adversely affects stability in rural communities and the future management of National Forests as important opportunities and outlets for material disposal are lost. Providing additional contract time during significant market downturns allows timber purchasers additional flexibility to navigate the crisis and sustain long-term business viability.
On December 7, 1990, the Forest Service published a final rule (55 FR 50643) establishing procedures in 36 CFR 223.52 for extending contract termination dates in response to adverse conditions in timber markets. These procedures, known as Market Related Contract Term Additions (MRCTA), authorize extensions of timber contracts when qualifying market conditions are met. Subsequent amendments have provided that the total contract term may be extended up to 10 years as the result of MRCTA when specified criteria are met. When the MRCTA procedures were established, experience indicated that the type and magnitude of lumber market declines that would trigger market related contract term additions generally coincide with low numbers of housing starts and substantial economic dislocation in the wood products industry. MRCTA procedures were adopted by the Forest Service to avert contract defaults, mill closures, and associated impacts to dependent communities when there is a drastic decline in wood product prices (36 CFR 223.52).
In promulgating the MRCTA rule, the Department determined that a drastic reduction in wood product prices can result in a substantial overriding public interest sufficient to justify a contract term extension for existing contracts, as authorized by NFMA (16 U.S.C. 472a(c)) and existing regulations at 36 CFR 223.115(b). Most Forest Service timber sale contracts over 1-year in length include MRCTA procedures. Salvage sales and sales of products not covered in a Bureau of Labor Statistics producer price index (PPI) used to determine when MRCTA triggers are examples of contracts that do not include a MRCTA provision.
The U.S. pulp and paper industry accounts for upwards of 30 percent of the global pulp and paper production (
During the same period, the PCU3211133211135 producer price index (PPI) used to value pulp and paper has continued to trend upwards with only a few significant drops in the market that initiated market-related contract term additions or emergency rate redeterminations on Forest Service contracts, most recently during the 2009-2013 period. See
The three Bureau of Labor Statistics producer price indices the Forest Service currently uses to gauge most market conditions include Hardwood Lumber 0812, Softwood Lumber 0811,
As one measure of the overall timber and forest products market, beginning in the fourth quarter of 2021, the Softwood Lumber producer price index declined enough for applicable contracts to qualify for relief under Market Related Contract Term Addition (MRCTA) provisions. This trend has continued, with contracts based in the Softwood Lumber PPI qualifying for MRCTA in 9 of the last 12 consecutive quarters. In addition, contracts based in the 0811 Softwood Lumber PPI and awarded in 19 of the previous 40 months have triggered for emergency rate redeterminations, with many contracts triggering more than once. A purchaser may apply for an emergency rate redetermination if the producer price index identified in the contract has declined by 25 percent since the award date or last rate redetermination.
A similar downward trend has occurred in the Hardwood Lumber PPI beginning in the second quarter of 2018, but contracts did not begin to qualify for MRCTA until September of 2022. Since then, the Hardwood Lumber PPI has qualified for MRCTA in six consecutive quarters. In addition to the MRCTA, the Hardwood Lumber PPI met the criteria for emergency rate redeterminations for nine consecutive months in late 2021 into 2022. The hardwood market has stabilized somewhat since and not triggered additional emergency rate redeterminations, although contracts are still qualifying for the MRCTA through the most recent calendar quarter.
The last qualifying quarter for MRCTA with the PCU3211133211135 producer price index was 2013 and the last qualifying month for an emergency rate redetermination was in 2012. Due to consistent reduction in domestic paper usage and an increase in recycling, pulp and paper producers appear to be “right sizing” with mill closures and output reductions to keep the market resilient. The recent mill closures, and delivery quotas due to the subsequent raw material supply surplus, appears to reflect the continuous decline in pulp and paper consumption over the past 20 plus years and accelerated by inflationary pressures. Paper mills that also have historically used large quantities of new pulp fiber are now sourcing more from cheaper recycled material and very low-cost mill residuals. As noted, the gradual downsizing of the industry combined with post-pandemic increases in packaging and shipping paper has helped maintain the producer price index and finished goods markets while reducing raw material intake. This SOPI will provide a rate redetermination to offset the post-pandemic inflation costs, provide time for qualifying purchasers and contractors whose operations are disrupted by mill closures and delivery quotas, and allow time for raw material supplies to stabilize.
Pursuant to this SOPI, and as discussed herein, contracts with 20 percent or more of the Included Timber in A(T)2 identified as “pulpwood” at award or included through modification or agreement and appraised with product codes 02, 08, and 14, will qualify for pulpwood rate redetermination and may qualify for an extension under this SOPI finding. Extensions will be granted upon written request of the contract holder, except under the following conditions: (1) the contract holder's request includes timber and forest products in urgent need of removal due to forest health conditions or to mitigate a significant wildfire threat to a community, municipal watershed, or other critical public resource, or (2) included timber is designated by diameter and a delay in harvesting may change the treatment required under the contract because of trees growing into or outside of the specified diameter range(s). Contracts that are in breach will not qualify for relief until such breach is remedied. The percentage of included product and percentage of the contract completion is determined by the Forest Service as of the date the written request is received by the Contracting Officer. Relief will be provided to qualifying contracts in the manner described below.
Contracts that have received Diligent Performance Extensions in the previous 12 months will have the extension time granted under this SOPI, if any, reduced by the length of time granted for the Diligent Performance Extension. Integrated Resource Timber Contracts may require modification to mandatory stewardship projects if the rate redetermination reduces current contract value below that needed to pay for the projects. If the rate redetermination results in a deficit appraisal on the pulpwood product, the
The Government benefits if timber contract defaults, mill closures, and bankruptcies can be avoided by granting rate redeterminations and extensions. The forest products industry is critical to addressing the wildfire crisis and meeting forest management and climate change objectives nationally, while supporting hundreds of thousands of meaningful jobs throughout the country. Having numerous economically viable timber purchasers increases competition for National Forest System timber contracts, results in higher prices paid for such timber, and allows the Forest Service to provide a continuous supply of timber to the public in accordance with the Organic Administration Act. In addition, by extending contracts and avoiding defaults, closures, and bankruptcies, the Government avoids the difficult, lengthy, expensive, and sometimes impossible process of collecting default damages.
By preventing defaults, better utilization of various forest resources (consistent with the provisions of the Multiple-Use Sustained-Yield Act of 1960) will result if contracts can be extended beyond 10 years because of this finding. Therefore, pursuant to 16 U.S.C. 472a(c), and subject to specific conditions and exceptions, I have determined that it is in the substantial overriding public interest to redetermine pulpwood rates and extend, up to two years, certain National Forest System timber sale and sale of property stewardship contracts that were awarded before March 13, 2024, or had a bid opening date prior to March 13, 2024, but have not yet been awarded.
Total contract length may exceed 10 years because of an extension under this SOPI determination. Downpayment amounts will be recalculated and any periodic payment due dates that have not been reached, as of the date the Contracting Officer receives a written request for a SOPI extension, shall be adjusted one day for each day of additional contract time granted.
To receive an extension and periodic payment deferral pursuant to this SOPI, purchasers must make a written request and agree to release the Forest Service from all claims and liability during the extension period if a contract extended pursuant to this finding is suspended, modified, or terminated in the future. The Forest Service shall continue to monitor market conditions to determine if additional relief measures may be needed in the future.
Rural Utilities Service, USDA.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, this notice announces the Rural Utilities Service's (RUS or Agency), an agency within the United States Department of Agriculture, Rural Development, intention to request an extension to a currently approved information collection package for the High Energy Costs Grants Rural Communities Program (HECG). In accordance with the Paperwork Reduction Act of 1995, the Agency invites comments on this information collection for which it intends to request approval from the Office of Management and Budget (OMB).
Comments on this notice must be received by May 14, 2024 to be assured of consideration.
Pamela Bennett, Rural Development Innovation Center—Regulations Management Division, USDA, 1400 Independence Avenue SW, STOP 1522, South Building, Washington, DC 20250-1522. Telephone: (202) 720-9639. Email
The OMB regulation (5 CFR part 1320) implementing provisions of the Paperwork Reduction Act of 1995 (Pub. L. 104-13) requires that interested members of the public and affected agencies have an opportunity to comment on information collection and recordkeeping activities (see 5 CFR 1320.8(d)). This notice identifies an information collection that RUS is submitting to OMB for extension of an existing collection.
Comments may be sent by the Federal eRulemaking Portal: Go to
A Federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person 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. Data furnished by the applicants will be used to determine eligibility for program benefits. Furnishing the data is voluntary; however, failure to provide data could result in program benefits being withheld or denied.
Copies of this information collection can be obtained from Pamela Bennett, Rural Development Innovation Center—Regulations Management Division, USDA, 1400 Independence Avenue SW, South Building, Washington, DC 20250-1522. Telephone: (202) 720-9639. Email:
All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
Data will be collected using one of two modes. The first mode is a web instrument (Centurion) survey that contains the screener and topical instruments. The web instrument first will take the respondent through the screener questions. If the household screens into the study, the respondent will be taken directly into one of the three age-based topical sets of questions. The second mode is a mailout/mailback of a self-administered paper-and-pencil interviewing (PAPI) screener instrument followed by a separate mailout/mailback of a PAPI age-based topical instrument.
The National Survey of Children's Health (NSCH) is a large-scale (sample size is approximately 375,000 addresses) national survey with approximately 292,500 addresses included in the base production survey and approximately 82,500 addresses included as part of fourteen separate state-based or region-based oversamples. As in prior cycles of the NSCH, there remain two key, non-experimental design elements. The first non-experimental design element is the use of an unconditional incentive ($5) in the initial screener and topical invitations. For the initial screener invitation, 90% of sampled addresses receive the cash incentive; the remaining 10% (the control) do not receive an incentive. This approach is used to consistently monitor the effectiveness of the cash incentive each cycle. The second non-experimental design element is a data collection procedure based on the block group-level paper-only response probability used to identify households (30% of the sample) that would be more likely to respond by paper and send them a paper questionnaire in the initial mailing and every nonresponse follow-up mailing.
The 2024 NSCH will also include a targeted secondary unconditional incentive test to encourage response from a subset of the sample that started the web questionnaire but did not finish. Prior cycles of the survey have included a $5 unconditional cash incentive with both the initial screener mailing as well as the initial paper topical mailing as outlined in the paragraph above. The incentive has proven to be a cost-effective intervention for increasing survey response and reducing nonresponse bias.
This information collection request may be viewed at
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
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
In years ending with 2 and 7 this collection is conducted as a part of the Census of Governments. There is no difference in content collected between a Census of Governments year and non-Census year. The only difference is that in non-Census years, we only collect from a sample of the universe of State and local governments, whereas during a Census of Governments year the entire universe is collected. The upcoming three years of this clearance extension will cover the collections for fiscal years of 2023, 2024, and 2025, all of which are non-Census years.
The data are released as part of the State and Local Government Finance and Public Employment & Payroll statistical series. The collections also produce individual data products that focus on State governments, local governments, and public pensions in greater detail than the combined financial and employment series as a by-product of their collections for the combined data series. The Census Bureau provides these data to the Bureau of Economic Analysis to develop the public sector components of the National Income and Product Accounts and for constructing the functional payrolls in the public sector of the Gross Domestic Product, payroll being the single largest component of current operations. The Census Bureau also provides these data to the Federal Reserve Board for use in the Flow of Funds Accounts. Other Federal agencies that make use of the data include the Council of Economic Advisers, the Agency for Healthcare Research and Quality, the Government Accountability Office, and the Department of Justice. State and local governments and related organizations, public policy groups, public interest groups, private research organizations, and private sector businesses also use these data.
This information collection request may be viewed at
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
The Dallas/Fort Worth International Airport Board, grantee of FTZ 39, submitted a notification of proposed production activity to the FTZ Board (the Board) on behalf of Trina Solar US Manufacturing Module 1 LLC for its facility in Wilmer, Texas under FTZ 39. The notification conforming to the requirements of the Board's regulations (15 CFR 400.22) was received on March 12, 2024.
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
The proposed finished products are solar panels (duty-free).
The proposed foreign-status materials and components include: aluminum frames; ethylene vinyl acetate (EVA); junction boxes for voltages not exceeding 1000 volts; junction boxes for voltages exceeding 1000 volts; silica gel; assembled solar cells; unassembeled solar cells; soldiering tape; and tempered glass (duty rate ranges from duty-free to 5%). The request indicates that certain components are subject to an antidumping/countervailing duty (AD/CVD) order/investigation if imported from certain countries. The Board's regulations (15 CFR 400.14(e)) require that merchandise subject to AD/CVD orders, or items which would be otherwise subject to suspension of liquidation under AD/CVD procedures if they entered U.S. customs territory, be admitted to the zone in privileged foreign (PF) status (19 CFR 146.41). The request also indicates that certain components are subject to duties under section 201 of the Trade Act of 1974 (section 201), or section 301 of the Trade Act of 1974 (section 301), depending on the country of origin. The applicable section 201 and section 301 decisions require subject merchandise to be admitted to FTZs in PF status.
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 Kolade Osho at
On November 13, 2023, KMP USA LLC submitted a notification of proposed production activity to the FTZ Board for its facility within Subzone 32E, in Doral, Florida.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
On November 13, 2023, KMP USA LLC submitted a notification of proposed production activity to the FTZ Board for its facility within FTZ 84, in Katy, Texas.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
In notice document 2024-05086, beginning on page 17387, in the issue of Monday, March 11, 2024, in footnote eighteen, appearing at the bottom of page 17389, “Metaa´licas” is corrected to read, “Metálicas”.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The U.S. Department of Commerce (Commerce) preliminarily determines that countervailable subsidies are being provided to certain producers and exporters of aluminum extrusions from Mexico. The period of investigation is January 1, 2022, through December 31, 2022. Interested parties are invited to comment on this preliminary determination.
Applicable March 15, 2024.
Thomas Schauer or Christopher Williams, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0410 or (202) 482-5166, respectively.
This preliminary determination is made in accordance with section 703(b)
For a complete description of the events that followed the initiation of this investigation, see the Preliminary Decision Memorandum.
The products covered by this investigation are aluminum extrusions from Mexico. For a complete description of the scope of this investigation, see Appendix I.
In accordance with the
Additionally, Commerce preliminary determines that the scope language in paragraph eight of the scope as it appeared in the
Finally, as noted above, in comments dated February 20, 2024, the petitioners proposed several substantive modifications to the scope of this investigation, as well as the scope in the companion antidumping duty (AD) and CVD investigations.
(1) define the term “part or subassemblies” as:
A part or subassembly is a product that is designed to be attached to other components to eventually form a completed product or is a product that is designed for the sole purpose of becoming part of a larger whole.
(2) add the following three-part test to determine whether products containing multiple subassemblies are excluded from the scope:
The scope also excludes merchandise containing multiple subassemblies of a larger whole with non-extruded aluminum components beyond fasteners. A covered subassembly, including any product expressly identified as subject merchandise in this scope, can only be excluded if it is fully and permanently assembled with at least one other different subassembly, and where (1) at least one of the subassemblies, if entered individually, would not itself be subject to the scope; (2) the non-extruded aluminum portion (excluding any fasteners) collectively accounts for more than 50 percent of the actual weight of the combined multiple subassemblies; and (3) the non-extruded aluminum portion (excluding any fasteners) collectively accounts for more than 50 percent of the number of pieces of the combined multiple subassemblies; and
(3) modify the definition of “assembled merchandise” to add the term “fully and permanently assembled”; to add the word “whole”; to add the phrase “with the exception of consumable parts or material or interchangeable media or tooling”; to remove the phrase “product or system”; and to remove the phrase “regardless of whether the additional parts or materials are interchangeable.” This paragraph now reads:
The scope excludes fully and permanently assembled merchandise containing non-extruded aluminum components beyond fasteners that is not a part or subassembly of a larger whole and that is used as imported, without undergoing after importation any processing, fabrication, finishing, or assembly or the addition of parts or material (with the exception of consumable parts or material or interchangeable media or tooling).
Given that these proposed modifications are complex and the petitioners requested them close in time to the CVD preliminary determination, Commerce has had insufficient time to evaluate them fully. We intend to request that the petitioners clarify certain aspects of the revised language after the issuance of this preliminary determination, and also to allow all interested parties the opportunity to comment on the proposed revisions and any clarifications provided by the
We also intend to issue our preliminary decision regarding the remaining scope comments received from interested parties in response to the comment period set forth in the
We intend to incorporate the scope decisions from the AD investigations into the scope of the final CVD determination for this investigation, after considering any relevant comments submitted in scope case and rebuttal briefs.
Commerce is conducting this investigation in accordance with section 701 of the Act. For each of the subsidy programs found to be countervailable, Commerce preliminarily determines that there is a subsidy,
In accordance with section 705(a)(1) of the Act and 19 CFR 351.210(b)(4), Commerce is aligning the final CVD determination in this investigation with the final determination in the concurrent less-than-fair value (LTFV) investigation of aluminum extrusions from Mexico based on a request made by the petitioners.
Sections 703(d) and 705(c)(5)(A) of the Act provide that in the preliminary determination, Commerce shall determine an estimated all-others rate for companies not individually examined. This rate shall be an amount equal to the weighted average of the estimated subsidy rates established for those companies individually examined, excluding any rates that are zero,
In this investigation, Commerce preliminarily calculated individual estimated countervailable subsidy rates for Aluminio de Baja California S.A. de C.V. (ABC) and Aluminio Texcoco S.A. de C.V. (ALUTEX). The individually calculated rate for ABC is above
Three potential producers and/or exporters of aluminum extrusions from Mexico received but did not respond to Commerce's quantity and value (Q&V) questionnaire.
We further preliminarily determine that an adverse inference is warranted, pursuant to section 776(b) of the Act. By failing to submit responses to Commerce's Q&V questionnaire, the three companies did not cooperate to the best of their ability in this investigation. Accordingly, we preliminarily find that an adverse inference is warranted to ensure that the three companies will not obtain a more favorable result than had they fully complied with our request for information. For more information on the application of adverse facts available to the non-responsive companies,
Commerce preliminarily determines that the following estimated countervailable subsidy rates
Commerce intends to disclose its calculations and analysis performed to interested parties in this preliminary determination within five days of its public announcement, or if there is no public announcement, within five days after the date of publication of this notice in accordance with 19 CFR 351.224(b).
In accordance with section 703(d)(1)(B) and (d)(2) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of entries of subject merchandise as described in the scope of the investigation entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the
As provided in section 782(i)(1) of the Act, Commerce intends to verify the information relied upon in making its final determination.
All interested parties will have the opportunity to submit scope case and rebuttal briefs related to the preliminary scope decisions made in this investigation. The deadlines to submit scope case and rebuttal briefs will be provided at a later time. For all scope case and rebuttal briefs, parties must file identical documents simultaneously on the records of the ongoing companion AD and CVD investigations. No new factual information or business proprietary information may be included in either scope case or rebuttal briefs.
Case briefs or other written comments on non-scope issues may be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which the last verification report is issued in this investigation. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.
As provided under 19 CFR 351.309(c)(2) and (d)(2), in prior proceedings we have encouraged interested parties to provide an executive summary of their brief that should be limited to five pages total, including footnotes. In this investigation, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce within 30 days after the date of publication of this notice in the
In accordance with section 703(f) of the Act, Commerce will notify the U.S. International Trade Commission (ITC) of its preliminary determination. If the final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of aluminum extrusions from Mexico are materially injuring, or threaten material injury to, the U.S. industry.
This determination is issued and published in accordance with sections 703(f) and 777(i)(1) of the Act, and 19 CFR 351.205(c).
Appendix I—Scope of the Investigation
The merchandise subject to this investigation is aluminum extrusions, regardless of form, finishing, or fabrication, whether assembled with other parts or unassembled, whether coated, painted, anodized, or thermally improved. Aluminum extrusions are shapes and forms, produced by an extrusion process, made from aluminum alloys having metallic elements corresponding to the alloy series designations published by the Aluminum Association commencing with the numbers 1, 3, and 6 (or proprietary equivalents or other certifying body equivalents). Specifically, subject aluminum extrusions made from an aluminum alloy with an Aluminum Association series designation commencing with the number 1 contain not less than 99 percent aluminum by weight. Subject aluminum extrusions made from an aluminum alloy with an Aluminum Association series designation commencing with the number 3 contain manganese as the major alloying element, with manganese accounting for not more than 3.0 percent of total materials by weight. Subject aluminum extrusions made from an aluminum alloy with an Aluminum Association series designation commencing with the number 6 contain magnesium and silicon as the major alloying elements, with magnesium accounting for at least 0.1 percent but not more than 2.0 percent of total materials by weight, and silicon accounting for at least 0.1 percent but not more than 3.0 percent of total materials by weight. The scope also includes merchandise made from an aluminum alloy with an Aluminum Association series designation commencing with the number 5 (or proprietary equivalents or other certifying body equivalents) that have a magnesium content accounting for up to but not more than 2.0 percent of total materials by weight.
The country of origin of the aluminum extrusion is determined by where the metal is extruded (
Aluminum extrusions are produced and imported in a wide variety of shapes and forms, including, but not limited to, hollow profiles, other solid profiles, pipes, tubes, bars, and rods. Aluminum extrusions that are drawn subsequent to extrusion (drawn aluminum) are also included in the scope.
Subject aluminum extrusions are produced and imported with a variety of coatings and surface treatments, and types of fabrication. The types of coatings and treatments applied to aluminum extrusions include, but are not limited to, extrusions that are mill finished (
The types of products that meet the definition of subject merchandise include but are not limited to, vehicle roof rails and sun/moon roof framing, solar panel racking rails and framing, tradeshow display fixtures and framing, parts for tents or clear span structures, fence posts, drapery rails or rods, electrical conduits, door thresholds, flooring trim, electric vehicle battery trays, heat sinks, signage or advertising poles, picture frames, telescoping poles, or cleaning system components.
Aluminum extrusions may be heat sinks, which are fabricated aluminum extrusions that dissipate heat away from a heat source and may serve other functions, such as structural functions. Heat sinks come in a variety of sizes and shapes, including but not limited to a flat electronic heat sink, which is a solid aluminum extrusion with at least one flat side used to mount electronic or mechanical devices; a heat sink that is a housing for electronic controls or motors; lighting heat sinks, which dissipate heat away from LED devices; and process and exchange heat sinks, which are tube extrusions with fins or plates used to hold radiator tubing. Heat sinks are included in the scope, regardless of whether the design and production of the heat sinks are organized around meeting specified thermal performance requirements and regardless of whether they have been tested to comply with such requirements. For purposes of the investigation on aluminum extrusions from the People's Republic of China, only heat sinks designed and produced around meeting specified thermal performance requirements and tested to comply with such requirements are included in the scope.
Merchandise that is comprised solely of aluminum extrusions or aluminum extrusions and fasteners, whether assembled at the time of importation or unassembled, is covered by the scope in its entirety.
The scope also covers aluminum extrusions that are imported with non-extruded aluminum components beyond fasteners, whether assembled at the time of importation or unassembled, that are a part or subassembly of a larger product or system. Only the aluminum extrusion portion of the merchandise described in this paragraph, whether assembled or unassembled, is subject to duties. Examples of merchandise that is a part or subassembly of a larger product or system include, but are not limited to, window parts or subassemblies; door unit parts or subassemblies; shower and bath system parts or subassemblies; solar panel mounting systems; fenestration system parts or subassemblies, such as curtain wall and window wall units and parts or subassemblies of storefronts; furniture parts or subassemblies; appliance parts or subassemblies, such as fin evaporator coils and systems for refrigerators; railing or deck system parts or subassemblies; fence system parts or subassemblies; motor vehicle parts or subassemblies, such as bumpers for motor vehicles; trailer parts or subassemblies, such as side walls, flooring, and roofings; electric vehicle charging station parts or subassemblies; or signage or advertising system parts or subassemblies. Parts or subassemblies described by this paragraph that are subject to duties in their entirety pursuant to existing antidumping and countervailing duty orders are excluded from the scope of this investigation. Any part or subassembly that otherwise meets the requirements of this scope and that is not covered by other antidumping and/or countervailing duty orders remains subject to the scope of the investigation.
The scope excludes assembled merchandise containing non-extruded aluminum components beyond fasteners that is not a part or subassembly of a larger product or system and that is used as imported, without undergoing after importation any processing, fabrication, finishing, or assembly or the addition of parts or material, regardless of whether the additional parts or material are interchangeable.
The scope also excludes merchandise containing non-extruded aluminum components beyond fasteners that is not apart or subassembly of a larger product or system that enters unassembled as a packaged combination of parts to be assembled as is for its intended use, without undergoing after importation any processing, fabrication, or finishing or the addition of parts or material, regardless of whether the additional parts or material are interchangeable. To be excluded under this paragraph, the merchandise must be sold and enter as a discrete kit on one Customs entry form.
Examples of such excluded assembled and unassembled merchandise include windows with glass, door units with door panel and glass, motor vehicles, trailers, furniture, appliances, and solar panels and solar modules.
The scope also includes aluminum extrusions that have been further processed in a third country, including, but not limited to, the finishing and fabrication processes described above, assembly, whether with other aluminum extrusion components or with non-aluminum extrusion components, or any other processing that would not otherwise remove the merchandise from the scope if performed in the country of manufacture of the in-scope product. Third country processing; finishing; and/or fabrication, including those processes described in the scope, does not alter the country of origin of the subject aluminum extrusions.
The following aluminum extrusion products are excluded: aluminum extrusions made from an aluminum alloy with an Aluminum Association series designations commencing with the number 2 (or proprietary equivalents or other certifying body equivalents) and containing in excess of 1.5 percent copper by weight; aluminum extrusions made from an aluminum alloy with an Aluminum Association series designation commencing with the number 5 (or proprietary equivalents or other certifying body equivalents) and containing in excess of 2.0 percent magnesium by weight; and aluminum extrusions made from an aluminum alloy with an Aluminum Association series designation commencing with the number 7 (or proprietary equivalents or other certifying body equivalents) and containing in excess of 2.0 percent zinc by weight.
The scope also excludes aluminum alloy sheet or plates produced by means other than the extrusion process, such as aluminum products produced by a method of continuous casting or rolling. Cast aluminum products are also excluded. The scope also excludes unwrought aluminum in any form.
The scope also excludes collapsible tubular containers composed of metallic elements corresponding to alloy code 1080A as designated by the Aluminum Association (not including proprietary equivalents or other certifying body equivalents) where the tubular container (excluding the nozzle) meets each of the following dimensional characteristics: (1) length of 37 millimeters (mm) or 62 mm; (2) outer diameter of 11.0 mm or 12.7 mm; and (3) wall thickness not exceeding 0.13 mm.
Also excluded from the scope are extruded drawn solid profiles made from an aluminum alloy with the Aluminum Association series designation commencing with the number 1, 3, or 6 (or proprietary equivalents or other certifying body equivalents), including variants on individual alloying elements not to circumvent the other Aluminum Association series designations, which meet each of the following characteristics: (1) solid cross sectional area greater than 62.4 mm2 and less than 906 mm2, (2) minimum electrical conductivity of 58% of the international annealed copper standard (IACS) or maximum resistivity of 2.97 μ
Also excluded from the scope are extruded tubing and drawn over a ID plug and through a OD die made from an aluminum alloy with the Aluminum Association series designation commencing with the number 3, 5, or 6 (or proprietary equivalents or other certifying body equivalents), including variants on individual alloying elements not to circumvent the other Aluminum Association series designations, which meet each of the following characteristics: (1) an outside mean diameter no greater than 30 mm with a tolerance less than or equal to +/−0.10 mm, (2) uniform wall thickness no greater than 2.7 mm with wall tolerances less than or equal to +/−0.1 mm, (3) may be coated with materials, including zinc, such that the coating material weight is no less than 3 g/m2 and no greater than 30 g/m2, and (4) packaged in continuous coils, straight lengths, bent or formed.
Also excluded from the scope of the investigation is certain rectangular wire, imported in bulk rolls or precut strips and produced from continuously cast rolled aluminum wire rod, which is subsequently extruded to dimension to form rectangular wire with or without rounded edges. The product is made from aluminum alloy grade 1070 or 1370 (not including proprietary equivalents or other certifying body equivalents), with no recycled metal content allowed. The dimensions of the wire are 2.95 mm to 6.05 mm in width, and 0.65 mm to 1.25 mm in thickness. Imports of rectangular wire are provided for under Harmonized Tariff Schedule of the United States (HTSUS) subheadings 7605.19.0000, 7604.10.5000, or 7616.99.5190.
Also excluded from the scope of the antidumping and countervailing duty investigations on aluminum extrusions from the People's Republic of China are all products covered by the scope of the antidumping and countervailing duty orders on Aluminum Extrusions from the People's Republic of China.
Imports of the subject merchandise are primarily provided for under the following categories of the HTSUS: 7604.10.1000; 7604.10.3000; 7604.10.5000; 7604.21.0010; 7604.21.0090; 7604.29.1010; 7604.29.1090; 7604.29.3060; 7604.29.3090; 7604.29.5050; 7604.29.5090; 7608.10.0030; 7608.10.0090; 7608.20.0030; 7608.20.0090; 7609.00.0000; 7610.10.0010; 7610.10.0020; 7610.10.0030; 7610.90.0040; and 7610.90.0080.
Imports of the subject merchandise, including subject merchandise entered as parts of other products, may also be classifiable under the following additional HTSUS categories, as well as other HTSUS categories: 6603.90.8100; 7606.12.3091; 7606.12.3096; 7615.10.2015; 7615.10.2025; 7615.10.3015; 7615.10.3025; 7615.10.5020; 7615.10.5040; 7615.10.7125; 7615.10.7130; 7615.10.7155; 7615.10.7180; 7615.10.9100; 7615.20.0000; 7616.10.9090; 7616.99.1000; 7616.99.5130; 7616.99.5140; 7616.99.5190; 8302.10.3000; 8302.10.6030; 8302.10.6060; 8302.10.6090; 8302.20.0000; 8302.30.3010; 8302.30.3060; 8302.41.3000; 8302.41.6015; 8302.41.6045; 8302.41.6050; 8302.41.6080; 8302.42.3010; 8302.42.3015; 8302.42.3065; 8302.49.6035; 8302.49.6045; 8302.49.6055; 8302.49.6085; 8302.50.0000; 8302.60.3000; 8302.60.9000; 8305.10.0050; 8306.30.0000; 8414.59.6590; 8415.90.8045; 8418.99.8005; 8418.99.8050; 8418.99.8060; 8419.50.5000; 8419.90.1000; 8422.90.0640; 8424.90.9080; 8473.30.2000; 8473.30.5100; 8479.89.9599; 8479.90.8500; 8479.90.9596; 8481.90.9060; 8481.90.9085; 8486.90.0000; 8487.90.0080; 8503.00.9520; 8508.70.0000; 8513.90.2000; 8515.90.2000; 8516.90.5000; 8516.90.8050; 8517.71.0000; 8517.79.0000; 8529.90.7300; 8529.90.9760; 8536.90.8585; 8538.10.0000; 8541.90.0000; 8543.90.8885; 8547.90.0020; 8547.90.0030; 8708.10.3050; 8708.29.5160; 8708.80.6590; 8708.99.6890; 8807.30.0060; 9031.90.9195; 9401.99.9081; 9403.99.1040; 9403.99.9010; 9403.99.9015; 9403.99.9020; 9403.99.9040; 9403.99.9045; 9405.99.4020; 9506.11.4080; 9506.51.4000; 9506.51.6000; 9506.59.4040; 9506.70.2090; 9506.91.0010; 9506.91.0020; 9506.91.0030; 9506.99.0510; 9506.99.0520; 9506.99.0530; 9506.99.1500; 9506.99.2000; 9506.99.2580; 9506.99.2800; 9506.99.5500; 9506.99.6080; 9507.30.2000; 9507.30.4000; 9507.30.6000; 9507.30.8000; 9507.90.6000; 9547.90.0040; and 9603.90.8050.
While HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; issuance of letter of authorization.
In accordance with the Marine Mammal Protection Act (MMPA), as amended, its implementing regulations, and NMFS' MMPA Regulations for Taking Marine Mammals Incidental to Geophysical Surveys Related to Oil and Gas Activities in the Gulf of Mexico, notification is hereby given that a Letter of Authorization (LOA) has been issued to bp Exploration and Production Inc. (bp) for the take of marine mammals incidental to geophysical survey activity in the Gulf of Mexico (GOM).
The LOA is effective from April 1, 2024 through December 31, 2024.
The LOA, LOA request, and supporting documentation are available online at:
Jenna Harlacher, Office of Protected Resources, NMFS, (301) 427-8401.
Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361
An authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s), will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant), and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such takings are set forth. NMFS has defined “negligible impact” in 50 CFR 216.103 as an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as: any act of pursuit, torment, or annoyance which: (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).
On January 19, 2021, we issued a final rule with regulations to govern the unintentional taking of marine mammals incidental to geophysical survey activities conducted by oil and gas industry operators, and those persons authorized to conduct activities on their behalf (collectively “industry operators”), in U.S. waters of the GOM over the course of 5 years (86 FR 5322, January 19, 2021). The rule was based on our findings that the total taking from the specified activities over the 5-year period will have a negligible impact on the affected species or stock(s) of marine mammals and will not have an unmitigable adverse impact on the availability of those species or stocks for subsistence uses. The rule became effective on April 19, 2021.
Our regulations at 50 CFR 217.180
Bp plans to conduct a three-dimensional (3D) ocean bottom node (OBN) and distributed acoustic sensing (DAS) survey, a source test of the Gemini 8000 (Gemini source test), and a Seismic Apparition (SA) source test in the Thunder Horse protraction area. Approximate water depths of the survey area range from 1,450 to 2,350 meters (m). See section 1.1 of the LOA application for a map of the area.
Bp anticipates using two source vessels, each towing conventional airgun sources consisting of 32 elements, with a total volume of 5,110 cubic inches (in
The Gemini source was not included in the acoustic exposure modeling developed in support of the rule. However, our rule anticipated the possibility of new and unusual technologies (NUT) and determined they would be evaluated on a case-by case basis (86 FR 5322, 5442, January 19, 2021). This source was previously evaluated as a NUT in 2020 (prior to issuance of the 2021 final rule) pursuant to the requirements of NMFS' 2020 Biological Opinion on BOEM's Gulf of Mexico oil and gas program as well as the issuance of the rule. An associated report produced by Jasco Applied Sciences (Grooms
The Gemini source operates on the same basic principles as a traditional airgun source in that it uses compressed air to create a bubble in the water column which then goes through a series of collapses and expansions creating primarily low-frequency sounds. However, the Gemini source consists of one physical element with two large chambers of 4,000 in
The modeled distances described in the aforementioned Jasco report show expected per-pulse sound pressure level threshold distances to the 160-dB level of 4.29 kilometers (km). When frequency-weighted,
These factors lead to a conclusion that take by Level B harassment associated with use of the Gemini source would be less than would occur for a similar survey instead using the modeled airgun array as a sound source. Based on the foregoing, we have determined there will be no effects of a magnitude or intensity different from those evaluated in support of the rule. Moreover, use of modeling results relating to use of the 72 element, 8,000 in
The SA source test option is considered an operational variation rather than a source variation, and would utilize traditional airgun source equipment. The test involves “source densification,” in which a greater number of pulses are produced per square kilometer, compared to the OBN/DAS survey. Each source vessel would tow six airgun strings firing within a 120 ms time window, but not simultaneously. On average, the OBN/DAS seismic survey source will be operated such that 400 pulses are produced per square kilometer whereas for the SA test, approximately 900 pulses are produced per square kilometer. This would increase the number of pulses created per day compared to the OBN/DAS survey. Because the sources and/or subarrays are not firing simultaneously, per-pulse output would not be of concern relative to the modeled proxy source. Regarding total pulses, the modeled coil survey configuration selected for use here (see below) had the highest number of simulated pulses of all modeled survey configurations (Zeddies et al., 2015). The SA source test is anticipated to produce a total of 101,558 pulses for the full, 9-day duration of the test (approximately 11,000 pulses per day), and in comparison the coil survey included 120,000 pulses over a 7-day simulation (approximately 17,000 pulses per day). Note also that each pulse during the SA test would be from one subarray or string, each of which is approximately 1,700 in
Consistent with the preamble to the final rule, the survey effort proposed by bp in its LOA request was used to develop LOA-specific take estimates based on the acoustic exposure modeling results described in the preamble (86 FR 5398, January 19, 2021). In order to generate the appropriate take numbers for authorization, the following information was considered: (1) survey type; (2) location (by modeling zone
No 3D OBN or DAS surveys were included in the modeled survey types, and use of existing proxies (
The planned 3D OBN and DAS surveys will use the same seismic source and are thus conducted at the same time. This will involve two source vessels. The coil survey pattern was assumed to cover approximately 144 kilometers squared (km
The survey will include 69 days of sound source operation (60 days of traditional airgun array surveys and 9 days of testing). The survey plan includes 34 days within Zone 5 and 35 days within Zone 7. The seasonal distribution of survey days is not known in advance. Therefore, the take estimates for each species are based on the season that produces the greater value.
For some species, take estimates based solely on the modeling yielded results that are not realistically likely to occur when considered in light of other relevant information available during the rulemaking process regarding marine mammal occurrence in the GOM. The approach used in the acoustic exposure modeling, in which seven modeling zones were defined over the U.S. GOM, necessarily averages fine-scale information about marine mammal distribution over the large area of each modeling zone. This can result in unrealistic projections regarding the likelihood of encountering particularly rare species and/or species not expected to occur outside particular habitats. Thus, although the modeling conducted for the rule is a natural starting point for estimating take, our rule acknowledged that other information could be considered (
NMFS' final rule described a “core habitat area” for Rice's whales (formerly
Although Rice's whales may occur outside of the core habitat area, we expect that any such occurrence would be limited to the narrow band of suitable habitat described above (
Killer whales are the most rarely encountered species in the GOM, typically in deep waters of the central GOM (Roberts
NOAA surveys in the GOM from 1992 to 2009 reported only 16 sightings of killer whales, with an additional 3 encounters during more recent survey effort from 2017 to 2018 (Waring
The rarity of encounter during seismic surveys is not likely to be the product of high bias on the probability of detection. Unlike certain cryptic species with high detection bias, such as
In summary, killer whales are the most rarely encountered species in the GOM and typically occur only in particularly deep water. This survey would take place in deep waters that would overlap with depths in which killer whales typically occur. While this information is reflected through the density model informing the acoustic exposure modeling results, there is relatively high uncertainty associated with the model for this species, and the acoustic exposure modeling applies mean distribution data over areas where the species is in fact less likely to occur. In addition, as noted above in relation to the general take estimation methodology, the assumed proxy source (72-element, 8,000-in
In past authorizations, NMFS has often addressed situations involving the low likelihood of encountering a rare species such as killer whales in the GOM through authorization of take of a single group of average size (
Based on the results of our analysis, NMFS has determined that the level of taking authorized through the LOA is consistent with the findings made for the total taking allowable under the regulations for the affected species or stocks of marine mammals. See table 1 in this notice and table 9 of the rule (86 FR 5322, January 19, 2021).
Under the GOM rule, NMFS may not authorize incidental take of marine mammals in an LOA if it will exceed “small numbers.” In short, when an acceptable estimate of the individual marine mammals taken is available, if the estimated number of individual animals taken is up to, but not greater than, one-third of the best available abundance estimate, NMFS will determine that the numbers of marine mammals taken of a species or stock are small. For more information please see
The take numbers for authorization are determined as described above in the Summary of Request and Analysis section. Subsequently, the total incidents of harassment for each species are multiplied by scalar ratios to produce a derived product that better reflects the number of individuals likely to be taken within a survey (as compared to the total number of instances of take), accounting for the likelihood that some individual marine mammals may be taken on more than 1 day (see 86 FR 5404, January 19, 2021). The output of this scaling, where appropriate, is incorporated into adjusted total take estimates that are the basis for NMFS' small numbers determinations, as depicted in table 1.
This product is used by NMFS in making the necessary small numbers determinations through comparison with the best available abundance estimates (see discussion at 86 FR 5322, January 19, 2021; 86 FR 5391, January 19, 2021). For this comparison, NMFS' approach is to use the maximum theoretical population, determined through review of current stock assessment reports (SAR;
Based on the analysis contained herein of bp's proposed survey activity described in its LOA application and the anticipated take of marine mammals, NMFS finds that small numbers of marine mammals will be taken relative to the affected species or stock sizes (
NMFS has determined that the level of taking for this LOA request is consistent with the findings made for the total taking allowable under the incidental take regulations and that the amount of take authorized under the LOA is of no more than small numbers. Accordingly, we have issued an LOA to bp authorizing the take of marine mammals incidental to its geophysical survey activity, as described above.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Pacific Fishery Management Council's (Pacific Council) Ecosystem Advisory Subpanel (EAS) will hold an online meeting, which is open to the public.
The online meeting will be held Thursday, April 4, 2024, from 1 p.m. to 3 p.m., Pacific Time.
This meeting will be held online. Specific meeting information, including directions on how to join the meeting and system requirements will be provided in the meeting announcement on the Pacific Council's website (see
Kit Dahl, Staff Officer, Pacific Council; telephone: (503) 820-2422.
The purpose of this online meeting is for the EAS to discuss and draft the contents of a report with its recommendations for the Council Operations and Priorities agenda item that the Pacific Council will discuss at its April 2024 meeting.
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt (
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Pacific Fishery Management Council's (Pacific Council) Highly Migratory Species Advisory Subpanel (HMSAS) will hold an online meeting, which is open to the public.
The online meeting will be held Tuesday, April 2, 2024, from 9 a.m. to 11 a.m., Pacific Time.
This meeting will be held online. Specific meeting information, including directions on how to join the meeting and system requirements will be provided in the meeting announcement on the Pacific Council's website (see
Kit Dahl, Staff Officer, Pacific Council; telephone: (503) 820-2422.
The purpose of this online meeting is for the HMSAS to discuss and draft the contents of a report with its recommendations for the Council Operations and Priorities agenda item that the Pacific Council will discuss at its April 2024 meeting.
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt (
The Department of Commerce will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, on or after the date of publication of this notice. We invite the general public and other Federal agencies to comment on proposed, and continuing information collections, which helps us assess the impact of our information collection requirements and minimize the public's reporting burden. Public comments were previously requested via the
Under the Bipartisan Infrastructure Law, the NWS SBES Program was
The primary driver for this project comes from the direction of NOAA leadership to develop a social behavioral infrastructure with data that supports the NWS in providing equitable service delivery for all of its products and services. Based on
Semi-structured interviews will be utilized to collect information from state and local government leaders, as well as FCBO leaders. A survey will be provided to residents of both communities, along with an in-person intercept survey provided to residents of Greenbrier County based on interviews with the FCBO leaders.
The SNA maps derived from the data collected will be utilized by the following NWS offices:
• Community Engagement Program to support outreach and engagement activities with specific groups and the organizations that serve these populations.
• The Decision Support Integration Branch of the Analyze, Forecast, and Support Office to help them identify and recruit organizations, businesses, and individuals who may be well poised to become Weather-Ready Ambassadors.
The raw data collected will be used by:
• The Social, Behavioral, and Economic Sciences (SBES) Program in the Office of Science and Technology Integration in developing an Agent Based Model (ABM) that can demonstrate, describe, and potentially anticipate evacuation and mobility behaviors within a prescribed system for inland flooding events. If possible, the application of an ABM will support the development of mitigation efforts that stakeholders can test to understand how the actions of specific agents within a system could possibly alter outcomes of flooding events for a community.
This information collection request may be viewed at
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
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
The Pacific Fishery Management Council's (Pacific Council) Highly Migratory Species Management Team (HMSMT) will hold an online meeting, which is open to the public.
The online meeting will be held Thursday, April 4, 2024, from 10 a.m. to 12 p.m., Pacific Time.
This meeting will be held online. Specific meeting information, including directions on how to join the meeting and system requirements will be provided in the meeting announcement on the Pacific Council's website (see
Kit Dahl, Staff Officer, Pacific Council; telephone: (503) 820-2422.
The purpose of this online meeting is for the
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt (
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application.
Notice is hereby given that Lars Bejder, Ph.D., University of Hawaii at Manoa, 46-007 Lilipuna Road, Kaneohe, Hawaii 96744, has applied in due form for a permit to conduct research on cetaceans.
Written comments must be received on or before April 15, 2024.
The application and related documents are available for review by selecting “Records Open for Public Comment” from the “Features” box on the Applications and Permits for Protected Species home page,
Written comments on this application should be submitted via email to
Those individuals requesting a public hearing should submit a written request via email to
Shasta McClenahan, Ph.D., or Erin Markin, Ph.D., (301) 427-8401.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
The applicant requests a 5-year research permit to study cetaceans including fundamental biology, ecology, habitat use, social structure, behavior, energetics, and impacts of human activities. Up to 31 species of marine mammals may be targeted including the following ESA-listed species: blue (
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Concurrent with the publication of this notice in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application.
Notice is hereby given that Joshua Schiffman, M.D., University of Utah, 2000 Circle Of Hope Drive, Salt Lake City, UT 84112, has applied in due form for a permit to import marine mammal parts for scientific research.
Written comments must be received on or before April 15, 2024.
The application and related documents are available for review by selecting “Records Open for Public Comment” from the “Features” box on the Applications and Permits for Protected Species home page,
Written comments on this application should be submitted via email to
Those individuals requesting a public hearing should submit a written request via email to
Shasta McClenahan, Ph.D., or Malcolm Mohead, (301) 427-8401.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (16
The applicant proposes to import and receive biological samples from up to 100 cetaceans and 100 pinnipeds, excluding walrus, annually to study the mechanisms of cancer resistance in marine mammals. The requested duration of the permit is 5 years.
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Concurrent with the publication of this notice in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The Mid-Atlantic Fishery Management Council will hold a public webinar to collect input on the Summer Flounder Commercial Mesh Size Exemptions Framework/Addendum.
The meeting will be held on Tuesday, April 2, 2024, from 2 p.m. until 4 p.m. EDT. For agenda details, see
The meeting will be held via webinar. Connection information will be posted prior to the meeting at
Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.
The Mid-Atlantic Fishery Management Council (Council) will host a webinar to collect public input on draft alternatives for a framework action/addendum to consider revisions to two exemptions to the summer flounder commercial minimum mesh size requirements, including: (1) the Small Mesh Exemption Program (SMEP), and (2) the flynet exemption. This action was initiated in response to a Fall 2023 review of summer flounder commercial mesh regulations, and is being developed jointly with the Atlantic States Marine Fisheries Commission's Summer Flounder, Scup, and Black Sea Bass Board (Board).
Under the SMEP vessels landing more than 200 pounds of summer flounder east of longitude 72°30.0′ W, from November 1 through April 30, and using mesh smaller than 5.5-inch diamond or 6.0-inch square are required to obtain a SMEP permit from NMFS. Based on suggestions made by fishing industry representatives during the Fall 2023 review of this exemption, the Council and Board are considering modifications to the exempted area associated with this exemption.
The Council and Board are also considering modifications to the regulatory definition of a flynet as it relates to the flynet exemption to the summer flounder commercial minimum mesh size. Under the flynet exemption, vessels fishing with a two-seam otter trawl flynet with a specific mesh configuration are also exempt from the minimum mesh size requirements. The definition of an exempted flynet is being reconsidered in light of changes in the use and configuration of commercial trawl gear since this exemption was put in place in the 1990s.
The overarching aim of these considerations is to modernize these requirements, taking into account current fishing industry gear usage and practices. The Council seeks to provide additional flexibility to fishery participants while ensuring continued adherence to the conservation objectives outlined in the Fishery Management Plan.
The primary target audience for this webinar includes: (a) any commercial industry participant using trawl gear to fish for summer flounder, (b) commercial fishing industry participants utilizing either of the summer flounder mesh size exemptions while targeting any species, (c) any stakeholder with knowledge of these gear types and their use, and (d) any member of the public who wishes to provide comments or recommendations on these regulations. Additional information including background documents, can be found on the Council's website at:
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to Shelley Spedden, (302) 526-5251, at least 5 days prior to the meeting date.
United States Patent and Trademark Office, Department of Commerce.
Request for comments.
American innovation is a cornerstone of our strong, vibrant economy, with robust development of emerging and early-stage innovation spurring entrepreneurship and other economic activity. Intellectual property (IP) forms the bridge that moves innovation to impact for the benefit of society. The United States Patent and Trademark Office (USPTO, or the Agency) is committed to supporting translation of innovations to the marketplace through commercialization and is seeking public comment on how the agency can build on current initiatives to advance this commitment. The USPTO, with support from the National Oceanic and Atmospheric Administration (NOAA), the National Institute of Standards and Technology (NIST), and the National Science Foundation (NSF), seeks input on new
To ensure consideration, written comments must be received by May 14, 2024. Please note that comments submitted after May 14, 2024 will not be considered.
You may submit written comments as follows. For reasons of government efficiency, comments must be submitted through the Federal eRulemaking Portal at
Visit the Federal eRulemaking Portal for additional instructions on providing comments via the portal. If electronic submission of comments is not feasible due to a lack of access to a computer and/or the internet, please contact the USPTO using the contact information below for special instructions regarding how to submit comments by mail or by hand delivery.
Parikha Mehta, USPTO, Office of the Under Secretary, at 571-272-3248 or
Intellectual property rights create a critical engine that powers our economy and supports our nation as a global leader in innovation and entrepreneurship. For example, patents drive our nation's technological progress and achievement by incentivizing and protecting new ideas, encouraging investment in creative problem solving, and promoting knowledge sharing to inspire others to engage in follow on innovation. When brought to the market through commercialization, patented products save lives, improve our standard of living, and address some of the pressing issues to solve global challenges.
Through this request for comment, the USPTO seeks input on what more the Agency can do to accelerate and incentivize commercialization of innovation. The USPTO also invites specific input on what the Agency can do to accelerate and incentivize the commercialization of green, critical, and emerging technologies. We seek to better understand how the USPTO might build on and expand our current initiatives in this space, detailed below, through direct agency work, through collaboration with other agencies or institutions such as NOAA, NIST, and NSF, as the principal advisor to the President and the Administration on IP through the Secretary of Commerce, and as a technical advisor to Congress on IP. While the USPTO is proud of our recent initiatives to ensure robustness and reliability of IP, as well as the role the agency is playing in the current dialogue on Bayh-Dole rights, pandemic preparedness, and Trade-Related aspects of Intellectual Property Rights waivers, those topics are beyond the scope of this request for comment. Here, we specifically focus on opportunities for positive public impact by bringing innovation to market through commercialization, for example via the licensing of IP rights. Public comments on this notice will be used to evaluate possibilities for amplifying the impact of our current work, and to explore new ways to support the transfer of innovation to the marketplace.
As used here, “technology transfer,” “tech transfer,” and “commercialization” interchangeably refer to the cycle of bringing new technologies to the public through the marketplace, which is often made possible by the licensing of IP rights such as patents.
Bringing innovation to the marketplace through commercialization serves the greater good by creating jobs, improving economic prosperity, and solving world problems. IP rights such as patents play a key role in our economy, creating a mutually beneficial risk-tolerance paradigm for both patent holders and commercialization partners. Patents allow innovators to retain ownership and integrity of their technology while also incentivizing partners to provide the critical resources and support needed to bring that new technology to market through licensing. The societal benefits of this IP rights commercialization paradigm are directly evident in the success of the U.S. economy. For example, in 2019, the U.S. industries that relied most heavily on intellectual property (“IP-intensive” industries) accounted for $7.8 trillion in gross domestic product or 41% of domestic economic activity and account for 63 million jobs, or 44% of all U.S. jobs.
Without IP commercialization, we might not have internet search algorithms, the artificial lung, or life-saving COVID-19 therapies. By continuing to build a strong IP system that encourages the transfer of technological advances to the marketplace, we can foster the emerging technologies of the future, such as those that will mitigate the effects of climate change or prepare us for future global health challenges. We also recognize the importance of balancing IP commercialization and innovation with work to increase competition and prevent unnecessary barriers for new entrants into the market.
The following examples of current initiatives illustrate our existing efforts in the tech transfer space, as a reference point for considering ways we might expand or add to this work for greater impact.
The USPTO continues to prioritize the development of ecosystems that can unlock IP to create jobs and solutions by translating that IP to the market across sectors, including key technology areas such as healthcare, manufacturing, and climate resilience. The USPTO has built tech transfer into its 2022-2026 strategic plan, making it one of the five overarching goals driving the USPTO's work to “bring innovation to impact for the public good”.
We are expanding our efforts to help those pursuing IP protection identify available funding sources—public and private—to bring their innovations to impact for the public good. To further promote U.S. competitiveness and economic growth, we are partnering with other government agencies to provide IP education for federally funded innovators, and to strategize and explore the commercialization of innovation for job creation. We are advocating for policies that support the creation, protection, and enforcement of IP rights, domestically and abroad. As a leader in the global IP ecosystem, the USPTO is providing expertise to IP stakeholders to facilitate best practices.
The USPTO is working closely with colleges and universities, including Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs), as well as professionals and organizations focused on tech transfer, to explore ways in which the USPTO can collaborate with other agencies and with the private sector to improve and enhance the conversion of IP developed through research into impactful real-world solutions.
The USPTO recognizes the need for tools that help connect IP rights owners with funders, so that IP can be realized in the marketplace. For example, during the recent pandemic, we launched an IP marketplace platform that connects the owners of COVID-19 related technologies with funders seeking to commercialize those types of solutions. The Patents 4 Partnerships platform is a voluntary listing of patents and patent application publications indicated as “available for licensing” on external public websites or in the USPTO Official Gazette Notices. It also includes links to sources that include the licensing information.
The USPTO recognizes that it will take joint efforts across the entire innovation and commercialization ecosystem to optimally facilitate getting great ideas to impact. For that reason, the USPTO has been working across the U.S. government and with the private sector and universities—including through the USPTO's work with other agencies such as NOAA, NIST, and NSF, through its Council for Inclusive Innovation (CI
NIST plays a critical role in the facilitation of federal technology transfer by analyzing, planning, coordinating, reporting, and exercising general oversight of technology transfer responsibilities under section 5 of the Federal Technology Transfer Act of 1986 (15 U.S.C. 3710(g)) and Executive Order (E.O.) 12591 of April 10, 1987. NIST co-chairs the National Science and Technology Council's Lab-to-Market Subcommittee, which establishes goals, measures performance, streamlines administrative processes and facilitates local and regional partnerships to help foster a healthier environment for R&D commercialization. NIST also convenes the Interagency Working Group for Technology Transfer to identify and disseminate creative approaches to technology transfer from Federal laboratories, advises and assists on federal technology transfer studies, and identifies and coordinates responses to technology transfer policy issues through an interagency task force. NIST also acts as the host agency for the Federal Laboratory Consortium (FLC). The FLC is the nationwide network of federal laboratories that fosters commercialization, best practice strategies, and opportunities for accelerating federal technologies out of the labs and into the marketplace.
In addition to its focus on tech transfer in general, the USPTO also recognizes the more specific and immediate need to accelerate the transfer of green technology and climate innovations to the marketplace. In January 2022, the National Oceanic and Atmospheric Administration (NOAA), a sister bureau within the Department of Commerce, reported that 2021 was the fourth warmest year on record for the United States, with 20 separate climate- and weather-related disasters costing over $1 billion each in the United States alone.
That is why, under the Biden Administration, the USPTO has been focused on initiatives to incentivize the advancement and commercialization of climate innovations. In June 2022, the USPTO launched the Climate Change Mitigation Pilot Program,
The USPTO has also worked with innovators in the green tech space to promote the use of intellectual property to protect and commercialize innovations on major tech platforms in the U.S. and abroad.
To bring more green tech and climate innovation to impact, the USPTO is also engaging in several collaborative partnerships. In July 2022, the USPTO became a technology partner to the global green-technology platform of the World Intellectual Property
The USPTO is also collaborating across government, including with the Department of Energy, the NSF, and NOAA to jointly promote the commercialization of green technologies. The USPTO engaged in a detail exchange program
Internationally, the USPTO hosted and led the 2023 annual meeting of the largest IP offices in the world—the European Patent Office, the Japan Patent Office, the Korean Intellectual Property Office, and the China National Intellectual Property Administration (collectively with USPTO referred to as the IP5)—along with WIPO, which focused on sustainability and green tech along with finding ways to work across the offices to bring more green tech innovations to market. The USPTO recently hosted a sustainable innovation dialogue
To memorialize the IP5 offices' commitment to sustainability, the offices adopted a new vision statement: “Building a sustainable future by fostering innovation and economic growth through an inclusive and accessible patent system. Promoting patent protection through harmonization of practices and procedures, high‐quality and timely search and examination results, worksharing and access to patent information, and achieving an efficient, cost‐effective and user‐friendly international patent landscape.”
The White House issued an updated list of critical and emerging technologies in February 2022. The list includes “a subset of advanced technologies that are potentially significant to the U.S. national security. The 2021 Interim National Security Strategic Guidance defines three national security objectives: protect the security of the American people, expand economic prosperity and opportunity, and realize and defend democratic values.” The list includes everything from AI to quantum information technologies to semiconductors and microelectronics.
The USPTO has been actively involved with the Biden Administration on policies related to critical and emerging technologies, including artificial intelligence
Under the Biden Administration, the USPTO additionally launched its first artificial intelligence (AI) and emerging technology (ET) partnership, an ongoing cooperative effort between the USPTO and the AI/ET community, including academia, independent inventors, small businesses, industry, other government agencies, nonprofits, and civil society. Through the AI/ET Partnership, the USPTO engages the AI/ET community on USPTO AI/ET efforts, such as using AI and ET to enhance the quality and efficiency of patent and trademark examination. The USPTO's Office of the Chief Economist has also published reports on AI diffusion, and the Agency is actively collaborating with other agencies on AI-related issues.
The USPTO requests comment from all interested parties, including innovators, patent holders, patent applicants, patent licensees, academic personnel (faculty, researchers, administrators), entrepreneurs, consumers of patented products, public interest groups, and other parties interested in and engaged in innovation, research, development, licensing, or commercialization of technology. Responses may address direct agency work, USPTO collaboration with other agencies or institutions such as NOAA, NIST, or NSF, USPTO's role as a
Respondents may address any (or none) of the following questions. When possible, respondents should identify which question(s) relate to their comments. Respondents may organize their submissions in any manner.
In particular, the USPTO seeks the following information:
1. Please identify the biggest challenges to, and opportunities for, commercialization of innovation through use of the intellectual property system. Please identify what concrete measures the USPTO can take to help.
2. Are there any IP-related challenges or opportunities that are specific to commercializing green technology and climate technologies? Please identify what concrete measures the USPTO can take to help.
3. Are there any IP-related challenges or opportunities that are specific to commercializing critical and emerging technologies? Please identify what concrete measures the USPTO can take to help.
4. Please identify any changes to IP policies and practices that may help streamline or accelerate commercialization of IP in general.
5. Please identify any changes to IP policies and practices that may help streamline or accelerate commercialization of green technology and climate technologies.
6. Please identify any changes to IP policies and practices that may help streamline or accelerate commercialization of critical and emerging technologies.
7. Please identify any IP-related challenges that interested parties face when licensing or acquiring technologies and identify any changes in the law, policies or practices which could help alleviate these challenges.
8. Please identify challenges that interested parties face when attempting to identify potential licensees, and when licensing intellectual property. Please identify any changes in the law, policies or practices that could help alleviate these challenges.
9. Please provide any feedback on the USPTO's Patents 4 Partnerships
10. Please provide any feedback on the WIPO GREEN
11. Please identify opportunities for the USPTO to minimize any current challenges related to commercialization for certain persons, technologies, industries, or companies. If available, please provide supporting data that illustrates the impact of these challenges on those select groups.
12. Please identify opportunities for the USPTO to help underrepresented groups, individual inventors, and small and medium-sized enterprises to gain enhanced awareness of and access to resources for commercializing their innovations and suggest ways to overcome existing challenges that undermine the realization of this goal.
13. Please identify opportunities for the USPTO to expand research commercialization opportunities through IP rights for MSIs, and HBCUs, including any data or information related to the development of research commercialization at these institutions.
14. Please identify any role that the USPTO can play in incentivizing innovations in commercially viable technologies.
15. Are there any laws or practices in other countries that are effective in bringing IP to market? If so, please identify, explain, and indicate how they can be adapted to be applied within the framework of the U.S. patent law, or explain what new legislation would be needed.
Committee for Purchase From People Who Are Blind or Severely Disabled.
Deletions from the Procurement List.
This action delete product(s) and service(s) to the Procurement List that were furnished by nonprofit agencies employing persons who are blind or have other severe disabilities.
Committee for Purchase From People Who Are Blind or Severely Disabled, 355 E Street SW, Suite 325, Washington, DC 20024.
Michael R. Jurkowski, Telephone: (703) 785-6404, or email
On 2/9/2024, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed deletions from the Procurement List. This notice is published pursuant to 41 U.S.C. 8503 (a)(2) and 41 CFR 51-2.3.
After consideration of the relevant matter presented, the Committee has determined that the product(s) and service(s) listed below are no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in additional reporting, recordkeeping or other compliance requirements for small entities.
2. The action may result in authorizing small entities to furnish the product(s) and service(s) to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the product(s) and service(s) deleted from the Procurement List.
Accordingly, the following product(s) and service(s) are deleted from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed additions to and deletions from the Procurement List.
The Committee is proposing to add product(s) to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and deletes product(s) previously furnished by such agencies.
Comments must be received on or before: April 14, 2024.
Committee for Purchase From People Who Are Blind or Severely Disabled, 355 E Street SW, Suite 325, Washington, DC 20024.
For further information or to submit comments contact: Michael R. Jurkowski, Telephone: (703) 785-6404, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
If the Committee approves the proposed additions, the entities of the Federal Government identified in this notice will be required to procure the product(s) listed below from nonprofit agencies employing persons who are blind or have other severe disabilities.
The following product(s) are proposed for addition to the Procurement List for production by the nonprofit agencies listed:
The following product(s) are proposed for deletion from the Procurement List:
Corporation for National and Community Service.
Notice of information collection; request for comment.
In accordance with the Paperwork Reduction Act of 1995, the Corporation for National and Community Service (operating as AmeriCorps) is proposing a new information collection.
Written comments must be submitted to the individual and office listed in the
You may submit comments, identified by the title of the information collection activity, by any of the following methods:
(1) Electronically through
(2) By mail sent to AmeriCorps, Attention: Kelsey Gerber, 250 E Street SW, Washington, DC 20525.
(3) By hand delivery or courier to the AmeriCorps mailroom at the mail address in paragraph (2) above between 9 a.m. and 4 p.m. Eastern Time, Monday through Friday, except Federal holidays.
Comments submitted in response to this notice may be made available to the public through
Kelsey Gerber, 202-967-5659, or by email at
Comments submitted in response to this notice will be summarized and included in the request for OMB approval. AmeriCorps invites comments on (a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources people spend to generate, maintain, retain, disclose, or provide information to or for a Federal agency. Burden includes the time needed to review instructions; to develop, acquire, install, and utilize technology and systems to collect, validate, verify, process, maintain, disclose, and provide information; to train personnel and to be able to respond to a collection of information, search data sources, complete and review the collection of information; and transmit or otherwise disclose the information. All written comments will be available for public inspection on
Department of the Army, Department of Defense (DoD).
Notice of open meeting.
The Department of the Army is publishing this notice to announce the following Federal advisory committee meeting of the Board of Visitors for the U.S. Army Command and General Staff College (CGSC), Fort Leavenworth, KS. This meeting is open to the public.
The Board of Visitors will meet from 8:30 a.m. to 4:30 p.m. on Monday, April 22, 2024, and Tuesday, April 23, 2024. The Board of Visitors will meet from 8:30 a.m. to 11 a.m. on Wednesday, April 24, 2024.
Ike Skelton Combined Arms Research Library, 250 Gibbon Ave., Fort Leavenworth, KS 66027.
Dr. Dale Spurlin, Alternate Designated Federal Officer for the Committee, by email at
The committee meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), 41 CFR 102-3.140(c), and 41 CFR 102-3.150.
Under Secretary of Defense for Research and Engineering (USD(R&E)), Department of Defense (DoD).
This notice provides new authorities to all Science and Technology Reinvention Laboratory (STRL) personnel demonstration (demo) projects.
STRLs may implement innovative approaches to attract and retain exceptional talent who are participating in Demo projects. The flexibilities described herein allow the STRLs to better manage their workforce by authorizing flexible extended temporary promotion and temporary reassignment for supervisory and team leader positions; a recruitment incentive in the form of time-off awards (time off from duty without loss of pay or charge to leave); retention counter-offers for high performing employees in scientific, technical or administrative positions; and certain awards management authorities for STRL directors. The flexibilities and procedures described herein are in addition to and do not supersede or cancel flexibilities described in previously published STRL FRNs.
This proposal may not be implemented until a 30-day comment period is provided, comments addressed, and a final
You may submit comments, identified by docket number and title, by any of the following methods:
Department of Defense:
• Office of the Under Secretary of Defense (Research and Engineering), Defense Research Enterprise Office: Dr. James Petro, 571-286-6265,
Department of the Air Force:
• Air Force Research Laboratory: Ms. Rosalyn Jones-Byrd, 937-656-9747,
• Joint Warfare Analysis Center: Ms. Amy Balmaz, 540-653-8598,
Department of the Army:
• Army Futures Command: Ms. Marlowe Richmond, 512-726-4397,
• Army Research Institute for the Behavioral and Social Sciences: Dr. Scott Shadrick, 254-288-3800,
• Combat Capabilities Development Command Armaments Center: Mr. Mike Nicotra, 973-724-7764,
• Combat Capabilities Development Command Army Research Laboratory: Mr. Christopher Tahaney, 410-278-9069,
• Combat Capabilities Development Command Aviation and Missile Center: Ms. Nancy Salmon, 256-876-9647,
• Combat Capabilities Development Command Chemical Biological Center: Ms. Patricia Milwicz, 410-417-2343,
• Combat Capabilities Development Command Command, Control,
• Combat Capabilities Development Command Ground Vehicle Systems Center: Ms. Jennifer Davis, 586-306-4166,
• Combat Capabilities Development Command Soldier Center: Ms. Joelle Montecalvo, 508-206-3421,
• Engineer Research and Development Center: Dr. Lucy Priddy, 601-415-7845,
• Medical Research and Development Command: Ms. Linda Krout, 301-619-7276,
• Technical Center, Space and Missile Defense Command: Dr. Chad Marshall, 256-955-5697,
Department of the Navy:
• Naval Air Warfare Center, Weapons Division and Aircraft Division: Mr. Richard Cracraft, 760-939-8115,
• Naval Facilities Engineering Command Engineering and Expeditionary Warfare Center: Ms. Lori Leigh, 805-901-5917,
• Naval Information Warfare Centers:
○ Naval Information Warfare Center Atlantic: Mr. Michael Gagnon, 843-218-3871,
○ Naval Information Warfare Center Pacific: Ms. Angela Hanson, 619-553-0833,
• Naval Medical Research Center: Dr. Jill Phan, 301-319-7645,
• Naval Research Laboratory: Ms. Ginger Kisamore, 202-731-8100,
• Naval Sea Systems Command Warfare Centers: Ms. Diane Brown, 215-897-1619,
• Office of Naval Research: Ms. Margaret J. Mitchell, 703-588-2364,
Marine Corps:
• Marine Corps Tactical Systems Support Activity: Lissa Henriksen, 760-587-6893,
Through the USD(R&E), the Secretary exercises the authorities granted to the Office of Personnel Management (OPM) under 5 United States Code (U.S.C.) 4703 to conduct personnel demonstration projects at DoD laboratories designated as STRLs. All STRLs authorized pursuant to 10 U.S.C. 4121 may use the provisions described in this FRN for employees participating in the Demo Project. STRLs implementing these flexibilities must have an approved personnel demonstration project plan published in an FRN and must fulfill any collective bargaining obligations. Each STRL will establish internal operating procedures (IOPs) as appropriate.
The 22 current STRLs are:
• Air Force Research Laboratory
• Joint Warfare Analysis Center
• Army Futures Command
• Army Research Institute for the Behavioral and Social Sciences
• Combat Capabilities Development Command Armaments Center
• Combat Capabilities Development Command Army Research Laboratory
• Combat Capabilities Development Command Aviation and Missile Center
• Combat Capabilities Development Command Chemical Biological Center
• Combat Capabilities Development Command Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance Center
• Combat Capabilities Development Command Ground Vehicle Systems Center
• Combat Capabilities Development Command Soldier Center
• Engineer Research and Development Center
• Medical Research and Development Command
• Technical Center, US Army Space and Missile Defense Command
• Naval Air Systems Command Warfare Centers
• Naval Facilities Engineering Command Engineering and Expeditionary Warfare Center
• Naval Information Warfare Centers, Atlantic and Pacific
• Naval Medical Research Center
• Naval Research Laboratory
• Naval Sea Systems Command Warfare Centers
• Office of Naval Research
• Marine Corps Tactical Systems Support Activity
This FRN provides new personnel management flexibilities designed to enable the STRL Directors to be more agile and competitive in attracting, hiring, and retaining world-class candidates in science, technology, engineering and mathematics (STEM) career fields and in career fields that directly support the STRL mission. Specifically, this notice provides a new approach to assigning employees to supervisory and team leader positions within the STRL Demo project by authorizing a time-limited, renewable temporary promotion and a renewable temporary reassignment authority; time-off awards as a recruitment incentive for employees to accept positions in the Demo project; retention counter-offers for high performing employees in scientific, technical or administrative positions within the STRL Demo project; and awards management authority for STRL Directors.
The authority to offer time-limited supervisory and team leader positions to employees participating in the Demo project will enable STRL Directors to better manage their workforce by (1) taking individual career preferences into consideration; (2) increasing efforts in succession planning; (3) allowing for periodic assessments of the supervisory talent pool; (4) allowing for better utilization of supervisory and leadership skills and experience; (5) enhancing organizational planning; and (6) synchronizing timelines for supervisory and leadership continuity. Additionally, it provides greater flexibilities to employees by increasing flexibility in individual development and providing more pathways to developmental assignments to broaden and deepen their experiential base.
The authority to provide time-off awards as a recruitment incentive to employees participating in the Demo project enables the STRLs to better compete with industry where time-off is often part of recruitment packages. Such an incentive may be especially attractive to candidates from outside of government who value time off and typically would not accumulate a significant balance of paid leave for some time.
The authority to provide retention counteroffers to high performing employees participating in the Demo project in any career field, who have critical skills and present evidence of alternative employment opportunities with higher compensation, will enable the STRLs to continue to meet mission requirements by retaining key employees.
The authority for STRL Directors to manage award funding for employees participating in the Demo project, consistent with the STRL's budget, will enable STRLs to fully utilize their contribution- or performance-based pay systems by providing timely award funding for pay pools which are often administered on different cycles than
Waivers and adaptations of certain title 5, U.S.C. and title 5, Code of Federal Regulations (CFR) provisions are required only to the extent that these statutory and regulatory provisions limit or are inconsistent with the actions authorized under an approved STRL demonstration project. Appendix A lists waivers needed to enact authorities described in this FRN. Nothing in this plan is intended to preclude STRLs from adopting or incorporating any law or regulation enacted, adopted, or amended after the effective date of this FRN.
Despite the authorities already available to STRLs, some laboratories still have difficulty recruiting and retaining supervisors or team leaders within the organization. STRLs need the ability to shape the mix of skills and expertise in order to position the most qualified personnel in a given position to meet new research and development missions. The problem with the traditional system is that it does not support flexibility in organizational and succession planning. Time-limited supervisory and team leader positions will enable management to periodically evaluate these positions, taking into consideration mission needs, as well as employee career development, and organizational succession planning. It will also offer experiential opportunities for employees interested in becoming supervisors and team leaders. This dynamic will support individual development, organizational planning, synchronizing timelines for supervisory/leadership continuity, and calibrating career expectations vs. mission needs. Similar to the Flexible Extended Temporary Promotion Authority for ST and SSTM positions documented in the Air Force Research Laboratory FRN, 82 FR 38896, STRLs need the flexibility to offer temporary promotions and temporary reassignments not to exceed 5 years, with the ability to extend in not longer than 5-year increments, for all supervisory and team leader positions.
STRLs need numerous flexible tools to use in their battle for talent. Current recruitment incentives involve monetary payments only and offer no means to provide additional paid time off from duty as a recruitment incentive. Providing a time-off award, instead of or in addition to other incentives, will enable STRLs to better compete for critical talent.
Retaining critical talent is also a priority for STRLs. The retention incentive available under 5 CFR part 575 subpart C is limited to 25% of an employee's basic pay and requires documented analysis of employment trends and labor market factors; quality and availability of potential sources of employees; the success of recent efforts to recruit candidates; retention of similar employees; and other factors. This monetary limit and time-consuming process prevents STRLs from effectively countering recruitment offers from the private sector. Similar to the retention counteroffer for employees with critical scientific or technical skills documented in the Technical Center of the U.S. Army Space and Missile Defense Command (USASMDC) FRN, 84 FR 49255, this retention counteroffer for all STRL employees participating in the Demo project, regardless of career field, will allow the STRLs to retain critical talent by quickly approving an increase to basic pay and/or an incentive up to 50% of an employee's basic pay in circumstances where employees with critical skills receive an offer of employment with higher compensation.
Finally, the timing of DoD awards guidance is generally consistent with the Defense Performance Management and Appraisal Program which uses an assessment cycle that ends in the March/April timeframe. Because STRL performance and contribution-based systems often use different assessment cycles and issue special act and notable achievement awards during the first quarter of the fiscal year, independent authority to issue awards will promote greater efficiency in the administration of STRL Demo projects.
All DoD laboratories designated as STRLs pursuant to 10 U.S.C. 4121(b), as well as any additional laboratories designated as STRLs by the Secretary of Defense (SECDEF), through the USD(R&E), with approved personnel demonstration project plans published in FRNs may use the provisions described in this FRN. Absent another statutory authority to provide these flexibilities, the provisions do not apply to employees who are not candidates for or incumbents of positions participating in the Demo projects authorized by 10 U.S.C. 4121, to include prevailing rate employees (as defined by 5 U.S.C. 5342(a)(2)) and senior executives (as defined by section 3132(a)(3) of such title). STRLs implementing these flexibilities must first fulfill any collective bargaining obligations.
An STRL Director may approve flexible temporary promotions or reassignments to supervisory and team leader positions for not more than five years, with the ability to extend without limit in not more than five-year increments for candidates who are current Federal employees participating in the Demo project. The candidates must meet the OPM Qualification Standard for the position. The initial flexible temporary promotion must be made using competitive procedures. Prior to extending a temporary promotion or reassignment or making the action permanent, management will make a determination based on mission needs, employee career development, and organizational succession planning on whether the employee should continue in the position on a temporary or permanent basis. If not extended on a temporary basis or made permanent, the employee will return to the position held prior to the temporary assignment or to a position within the STRL comparable in duties and pay band to the position held before the assignment. Upon termination of the temporary promotion or reassignment, pay will be set in accordance with the STRL's applicable pay setting rules and internal operating procedures. To be converted to a permanent supervisory or team leader position, the employee must: (1) have been notified in writing at the time of the initial action of the possibility of the temporary assignment being made permanent at a later date; (2) served a minimum of one year of continuous service in the temporary position; and (3) have at least a successful or equivalent performance rating in any applicable supervisory/leadership performance element. STRLs will document their plans and processes in IOPs.
An STRL Director may provide a newly hired or newly converted participant in the Demo project up to 80 hours of time-off from duty, without loss of pay or charge to leave, as a recruitment incentive, to be used within one year. This recruitment incentive will be processed in the same manner as a time-off award available under the authority in 5 U.S.C. chapter 45, but it is not provided pursuant to that authority and is not subject to otherwise
STRL Directors may offer a retention counteroffer to high performing employees participating in the Demo project, with critical scientific, technical or administrative skills, in any career field, who present credible evidence of an alternative employment opportunity with higher compensation. Such employees may be provided increased basic pay (up to the top of the pay band/cap within a pay band) and/or a one-time cash payment that does not exceed 50 percent of one year of base pay. Retention counteroffers, either in the form of a base pay increase and/or a lump sum payment, count toward the Executive Level I aggregate limitation on pay consistent with 5 U.S.C. 5307 and 5 CFR part 530, subpart B. STRLs may require a service agreement when offering this retention counteroffer. Further details will be published in STRL IOPs.
STRL compensation strategies develop and foster a culture of recognition. Strategic use of awards and recognition throughout the year adds value to the STRLs and supports retention of high performing/contributing employees. STRL Directors manage the workforce strength, structure, positions, and compensation without regard to any limitation on appointments, positions, or funding in a manner consistent with the budget available. STRL Directors will execute contribution/performance-based payouts, awards and bonuses, and non-ratings-based awards and bonuses for the Demo workforce consistent with Demo project plans and available funds budgeted for that purpose. Unless directed or authorized by the USD(R&E), in coordination with the Under Secretary of Defense for Personnel and Readiness, DoD Components will not impose additional management limitations on the payments of contribution/performance-based payouts, awards and bonuses, and non-ratings based awards and bonuses.
Procedures for evaluating these authorities will be incorporated into the STRL demonstration project evaluation processes conducted by the STRLs, OUSD(R&E), or Component headquarters, as appropriate.
STRLs will track and provide information and data on the use of these authorities when requested by the Component headquarters or OUSD(R&E).
U.S. Department of Energy.
Notice of a modified system of records.
As required by the Privacy Act of 1974 and the Office of Management and Budget (OMB) Circulars A-108 and A-130, the Department of Energy (DOE or the Department) is publishing notice of a modification to an existing Privacy Act System of Records. DOE proposes to amend System of Records DOE-7 Whistleblower Investigation, Hearings, and Appeals Records. This System of Records Notice (SORN) is being modified to align with new formatting requirements, published by OMB, and to ensure appropriate Privacy Act coverage of business processes and Privacy Act information. While there are no substantive changes to the “Categories of Individuals” or “Categories of Records” sections covered by this SORN, substantive changes have been made to the “System Locations,” “Routine Uses,” and “Administrative, Technical and Physical Safeguards” sections to provide greater transparency. Changes to “Routine Uses” include new provisions related to responding to breaches of information held under a Privacy Act SORN as required by OMB's Memorandum M-17-12, “Preparing for and Responding to a Breach of
This modified SORN will become applicable following the end of the public comment period on April 15, 2024 unless comments are received that result in a contrary determination.
Written comments should be sent to the DOE Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10102, 735 17th Street NW, Washington, DC 20503 and to Ken Hunt, Chief Privacy Officer, U.S. Department of Energy, 1000 Independence Avenue SW, Rm 8H-085, Washington, DC 20585 or by facsimile at (202) 586-8151 or by email at
Ken Hunt, Chief Privacy Officer, U.S. Department of Energy, 1000 Independence Avenue SW, Rm 8H-085, Washington, DC 20585 or by facsimile at (202) 586-8151, by email at
On January 9, 2009, DOE published a Compilation of its Privacy Act Systems of Records, which included System of Records DOE-7 Whistleblower Investigation, Hearings, and Appeals Records. This notice deletes a previous routine use concerning efforts responding to a suspected or confirmed loss of confidentiality of information as it appears in DOE's compilation of its Privacy Act systems of records (January 9, 2009) and replaces it with one to assist DOE with responding to a suspected or confirmed breach of its records of PII, modeled with language from OMB's Memorandum M-17-12, “Preparing for and Responding to a Breach of Personally Identifiable Information” (January 3, 2017). Further, this notice adds one new routine use to ensure that DOE may assist another agency or entity in responding to the other agency's or entity's confirmed or suspected breach of PII, as appropriate, in alignment with OMB's Memorandum M-17-12. Additionally, in the seventh routine use, “Hearing Officers” has been changed to “Administrative Judges,” pursuant to recent title changes. The URL for this routine has also been updated. In the “Categories of Individuals” section, the citation for the National Defense Authorization Act for FY 2000 has been revised from “42 U.S.C. 7239” to “50 U.S.C. 2702.” An administrative change required by the FOIA Improvement Act of 2016 extends the length of time a requestor is permitted to file an appeal under the Privacy Act from 30 to 90 days. Both the “System Locations” and “Administrative, Technical and Physical Safeguards” sections have been modified to reflect the Department's usage of cloud-based services for records storage. Language throughout the SORN has been updated to align with applicable Federal privacy laws, policies, procedures, and best practices.
DOE-7 Whistleblower Investigation, Hearings, and Appeals Records.
Unclassified and classified.
Systems leveraging this SORN may exist in multiple locations. All systems storing records in a cloud-based server are required to use government-approved cloud services and follow National Institute of Standards and Technology (NIST) security and privacy standards for access and data retention. Records maintained in a government-approved cloud server are accessed through secure data centers in the continental United States.
U.S. Department of Energy, Office of Hearings and Appeals, 1000 Independence Avenue SW, Washington, DC 20585-1615.
Headquarters: U.S. Department of Energy, Office of Hearings and Appeals, 1000 Independence Avenue SW, Washington, DC 20585-1615.
42 U.S.C. 7101
Records in this system are maintained and used by the DOE to document and resolve complaints made by current and former employees, contractors, and subcontractors of DOE (including National Nuclear Security Administration (NNSA) contractors and subcontractors), who allege retaliation by their employer for disclosure of information concerning danger to public or worker health or safety, substantial violations of law, or gross mismanagement; for participation in Congressional proceedings; or for refusal to participate in dangerous activities.
Current and former employees of DOE, contractors, and subcontractors (including NNSA contractors and subcontractors), whose complaints are received at the Office of Hearings and Appeals pursuant to 10 CFR part 708, and pursuant to Section 3164 of the National Defense Authorization Act for FY 2000, Public Law 106-65, codified at 50 U.S.C. 2702.
Whistleblower reprisal complaints; names, Social Security numbers, case numbers, work and home addresses and telephone numbers, job titles, series, grade or pay levels; organization information; supervisors' names and telephone numbers; copies of employee records such as personnel actions, performance appraisals, pay and leave records, and security clearance documents; management reports; witness statements; affidavits; checklists; notes; reports of investigation; and relevant correspondence.
The complainant; individuals and organizations that have pertinent knowledge about the subject of the complaint; those authorized by the complainant to furnish information; confidential informants; and Congressional offices.
1. A record from this system may be disclosed to any source from which additional information is requested when necessary to obtain information relevant to the processing of a whistleblower complaint by the Office of Hearings and Appeals. The source will be provided such information from the System of Records only to the extent necessary to identify the individual, inform the source of the purpose(s) of the request, and to identify the type of information requested, as appropriate to the necessary information to process the complaint.
2. A record from this system may be disclosed as a routine use to the appropriate local, Tribal, state, or Federal agency when records, alone or in conjunction with other information, indicate a violation or potential violation of law whether civil, criminal, or regulatory in nature, and whether arising by general statute or particular program pursuant thereto.
3. A record from this system may be disclosed as a routine use for the
4. A record from this system may be disclosed as a routine use in court or administrative proceedings to the tribunals, counsel, other parties, witnesses, and the public (in publicly available pleadings, filings, or discussion in open court) when such disclosure: (1) is relevant to, and necessary for, the proceeding; (2) is compatible with the purpose for which the Department collected the records; and (3) the proceedings involve:
a. The Department, its predecessor agencies, current or former contractor of the Department, or other United States Government agencies and their components, or
b. A current or former employee of the Department and its predecessor agencies, current or former contractors of the Department, or other United States Government agencies and their components, who is acting in an official capacity or in any individual capacity where the Department or other United States Government agency has agreed to represent the employee.
5. A record from this system may be disclosed as a routine use to DOE contractors in performance of their contracts, and their officers and employees who have a need for the record in the performance of their duties. Those provided information under this routine use are subject to the same limitations applicable to Department officers and employees under the Privacy Act.
6. A record from this system may be disclosed as a routine use to a member of Congress submitting a request involving a constituent when the constituent has requested assistance from the member concerning the subject matter of the record. The member of Congress must provide a copy of the constituent's signed request for assistance.
7. Decisions, opinions, reports of investigation, orders, and other determinations signed by investigators, Administrative Judges or the Director of the Office of Hearings and Appeals that are records contained in this System of Records may be published for the general public, for precedential or educational purposes, in paper format and electronically on the Office of Hearings and Appeals' website, the current address of which is
8. A record from this system may be disclosed as a routine use to appropriate agencies, entities, and persons when (1) the Department suspects or has confirmed that there has been a breach of the System of Records; (2) the Department has determined that as a result of the suspected or confirmed breach there is a risk of harm to individuals, DOE (including its information systems, programs, and operations), the Federal Government, or national security; and (3) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed breach or to prevent, minimize, or remedy such harm.
9. A record from this system may be disclosed as a routine use to another Federal agency or Federal entity, when the Department determines that information from this System of Records is reasonably necessary to assist the recipient agency or entity in (1) responding to a suspected or confirmed breach or (2) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the Federal Government, or national security, resulting from a suspected or confirmed breach.
Records may be stored as paper records or electronic media.
Records are retrieved by complainant's name or other personal identifier or case number.
Retention and disposition of these records are unscheduled. This requires the records to be retained as permanent until the National Archives and Records Administration approves the draft schedule, which will require the records to be retained 7 years.
Electronic records may be secured and maintained on a cloud-based software server and operating system that resides in Federal Risk and Authorization Management Program (FedRAMP) and Federal Information Security Modernization Act (FISMA) hosting environment. Data located in the cloud-based server is firewalled and encrypted at rest and in transit. The security mechanisms for handling data at rest and in transit are in accordance with DOE encryption standards. Records are protected from unauthorized access through the following appropriate safeguards:
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•
•
The Department follows the procedures outlined in 10 CFR 1008.4. Valid identification of the individual making the request is required before information will be processed, given, access granted, or a correction considered, to ensure that information is processed, given, corrected, or records disclosed or corrected only at the request of the proper person.
Any individual may submit a request to the System Manager and request a copy of any records relating to them. In accordance with 10 CFR 1008.11, any individual may appeal the denial of a request made by him or her for information about or for access to or correction or amendment of records. An appeal shall be filed within 90 calendar days after receipt of the denial. When an appeal is filed by mail, the postmark is conclusive as to timeliness. The appeal shall be in writing and must be signed by the individual. The words “PRIVACY ACT APPEAL” should appear in capital letters on the envelope and the letter. Appeals of denials relating to records maintained in government-wide System of Records reported by Office of Personnel Management (OPM), shall be filed, as appropriate, with the Assistant Director for Agency Compliance and Evaluation, OPM, 1900 E Street NW, Washington, DC 20415. All other appeals relating to DOE records shall be directed to the Director, Office of Hearings and Appeals (OHA), 1000 Independence Avenue SW, Washington, DC 20585.
In accordance with the DOE regulation implementing the Privacy Act, 10 CFR part 1008, a request by an individual to determine if a System of Records contains information about themselves should be directed to the U.S. Department of Energy, Headquarters, Privacy Act Officer. The request should include the requester's complete name and the time period for which records are sought.
The system is exempt under subsections 552a(k)(1), (2) and (5) of the Privacy Act to the extent that information within the system meets the criteria of those subsections of the Act. Such information has been exempted from the provisions of subsections (c)(3); 5 U.S.C. 552a(d) and (e)(1) of the Act; see the DOE Privacy Act regulation at 10 CFR part 1008.
This SORN was last published in the
This document of the Department of Energy was signed on January 22, 2024, by Ann Dunkin, Senior Agency Official for Privacy, 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
Department of Energy.
Notice of open meeting.
This notice announces an open meeting of the Secretary of Energy Advisory Board (SEAB). This meeting will be held virtually for members of the public, and both virtually and in-person for SEAB members. The Federal Advisory Committee Act requires that public notice of these meetings be announced in the
Tuesday, April 9, 2024; 12:30 p.m. to 3:30 p.m. EDT
This meeting is open to the public virtually via Zoom. SEAB members only will participate in-person at Brookhaven National Laboratory, 98 Rochester Street, Upton, NY 11973. Registration is required by registering at the SEAB April 9 meeting page at:
David Borak, Designated Federal Officer; U.S. Department of Energy, 1000 Independence Avenue SW, Washington, DC 20585; Telephone: (202) 586-5216 or Email:
Individuals and representatives of organizations who would like to offer comments and suggestions may do so during the meeting. Approximately 15 minutes will be reserved for public comments. Time allotted per speaker will depend on the number who wish to speak but will not exceed three minutes. The Designated Federal Officer is empowered to conduct the meeting in a fashion that will facilitate the orderly conduct of business. Those wishing to speak should register to do so via email,
Those not able to attend the meeting or who have insufficient time to address the committee are invited to send a written statement to David Borak, U.S. Department of Energy, 1000 Independence Avenue SW, Washington, DC 20585, or email to:
Office of Environmental Management, Department of Energy.
Notice of open meeting.
This notice announces an in-person/virtual hybrid meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Nevada. The Federal Advisory Committee Act requires that public notice of this meeting be announced in the
Wednesday, April 17, 2024; 4:00 p.m.-7:45 p.m. PDT.
The opportunity for public comment is at 4:10 p.m. PDT.
This time is subject to change; please contact the Nevada Site Specific Advisory Board (NSSAB) Administrator (below) for confirmation of time prior to the meeting.
This meeting will be open to the public in-person at the Beatty Community Center (address below) or virtually via Microsoft Teams. To attend virtually, please contact Barbara Ulmer, NSSAB Administrator, by email
Beatty Community Center, 100 A South Avenue, Beatty, Nevada 89003.
Barbara Ulmer, NSSAB Administrator, by phone: (702) 523-0894 or email:
U.S. Department of Energy.
Notice of a modified system of records.
As required by the Privacy Act of 1974 and the Office of Management and Budget (OMB) Circulars A-108 and A-130, the Department of Energy (DOE or the Department) is publishing notice of a modification to an existing Privacy Act System of Records. DOE proposes to amend System of Records DOE-23 Property Accountability System. This System of Records Notice (SORN) is being modified to align with new formatting requirements, published by the Office of Management and Budget, and to ensure appropriate Privacy Act coverage of business processes and Privacy Act information. While there are no substantive changes to the “Categories of Individuals” or “Categories of Records” sections covered by this SORN, substantive changes have been made to the “System Locations,” “Routine Uses,” and “Administrative, Technical and Physical Safeguards” sections to provide greater transparency. Changes to “Routine Uses” include new provisions related to responding to breaches of information held under a Privacy Act SORN as required by OMB's Memorandum M-17-12, “Preparing for and Responding to a Breach of Personally Identifiable Information” (January 3, 2017). Language throughout the SORN has been updated to align with applicable Federal privacy laws, policies, procedures, and best practices.
This modified SORN will become applicable following the end of the public comment period on April 15, 2024 unless comments are received that result in a contrary determination.
Written comments should be sent to the DOE Desk Officer, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10102, 735 17th Street NW, Washington, DC 20503 and to Ken Hunt, Chief Privacy Officer, U.S. Department of Energy, 1000 Independence Avenue SW, Rm 8H-085, Washington, DC 20585 or by facsimile at (202) 586-8151 or by email at
Ken Hunt, Chief Privacy Officer, U.S. Department of Energy, 1000 Independence Avenue SW, Rm 8H-085, Washington, DC 20585, by facsimile at (202) 586-8151, by email at
On January 9, 2009, DOE published a Compilation of its Privacy Act systems of records, which included System of Records DOE-23 Property Accountability System. This notice
Additionally, the routine use formerly numbered six has been determined to be duplicative and therefore has been deleted. This routine use is covered by that which is currently numbered five. From the “Categories of Records in the System” section, the following elements have been removed: operation number, high risk field, disposal code, the name and employee identification and position numbers of employees' assigned equipment, account numbers, and user activity on device. To this section, “name and phone number of individual to whom equipment is issued” and “name of the Accountable Property Representative” have been added to reflect current processes. To “Categories of Individuals,” the qualifiers “current and former” and “employees and contractors” have been added to qualify “DOE employees.” The “Purpose(s) of the System” section now includes the following: “(f) enable security-related functions in the event that government property is misused, lost, or stolen.” An administrative change required by the FOIA Improvement Act of 2016 extends the length of time a requestor is permitted to file an appeal under the Privacy Act from 30 to 90 days. Both the “System Locations” and “Administrative, Technical and Physical Safeguards” sections have been modified to reflect the Department's usage of cloud-based services for records storage. Language throughout the SORN has been updated to align with applicable Federal privacy laws, policies, procedures, and best practices.
DOE-23 Property Accountability System.
Unclassified.
Systems leveraging this SORN may exist in multiple locations. All systems storing records in a cloud-based server are required to use government-approved cloud services and follow National Institute of Standards and Technology (NIST) security and privacy standards for access and data retention. Records maintained in a government-approved cloud server are accessed through secure data centers in the continental United States.
U.S. Department of Energy, Headquarters, 1000 Independence Avenue SW, Washington, DC 20585.
U.S. Department of Energy, Office of River Protection, P.O. Box 450, Richland, WA 99352.
U.S. Department of Energy, Richland Operations Office, P.O. Box 550, Richland, WA 99352.
U.S. Department of Energy, Southwestern Power Administration, One West Third Street, Suite 1500, Tulsa, OK 74103.
42 U.S.C. 7101
Records in this system are maintained and used by DOE (a) to provide inventories to satisfy other Federal Procurement Management Regulation requirements; (b) to maintain a record of location of emergency equipment; (c) to control equipment assignments, including but not limited to those authorized under union contracts; (d) to provide management information necessary for the budgeting and allocation of equipment; (e) to provide evidence of assignment, location, use, and value in the event that government property is misused, lost or stolen; and (f) enable security-related functions in the event that government property is misused, lost, or stolen.
Current and former DOE employees and contractors, including National Nuclear Security Administration (NNSA) employees, and contractor employees, authorized to be custodians of controlled DOE equipment.
Item description, date of purchase, acquire date, purchase price, purchase order number, vendor and manufacturer, model/serial/license number, property tag identification, status/date, condition of property, name and phone number of individual to whom equipment is issued, name of the Accountable Property Representative, organization, organization code, and location.
Information in this system comes from the Payroll/Personnel system application, various internal forms, accountable property representatives and employees, data processing personnel, supply officers, and information from use of government property.
1. A record from this system may be disclosed as a routine use to any law enforcement agency as needed to provide evidence of assignment, location, and value in the event that government property is stolen.
2. A record from this system may be disclosed as a routine use to the appropriate local, Tribal, State, or Federal agency when records, alone or in conjunction with other information, indicate a violation or potential violation of law whether civil, criminal, or regulatory in nature, and whether arising by general statute or particular program pursuant thereto.
3. A record from this system may be disclosed as a routine use for the purpose of an investigation, settlement of claims, or the preparation and conduct of litigation to (1) persons representing the Department in the investigation, settlement or litigation, and to individuals assisting in such representation; (2) others involved in
4. A record from this system may be disclosed as a routine use in court or administrative proceedings to the tribunals, counsel, other parties, witnesses, and the public (in publicly available pleadings, filings, or discussion in open court) when such disclosure: (1) is relevant to, and necessary for, the proceeding; (2) is compatible with the purpose for which the Department collected the records; and (3) the proceedings involve:
a. The Department, its predecessor agencies, current or former contractors of the Department, or other United States Government agencies and their components, or
b. A current or former employee of the Department and its predecessor agencies, current or former contractors of the Department, or other United States Government agencies and their components, who is acting in an official capacity or in any individual capacity where the Department or other United States Government agency has agreed to represent the employee.
5. A record from this system may be disclosed as a routine use to a Federal, State, Tribal, or local agency to facilitate the requesting agency's decision concerning the hiring or retention of an employee, the issuance of a security clearance, the reporting of an investigation of an employee, the letting of a contract, or the issuance of a license, grant, or other benefit, to the extent that the information is relevant and necessary to the requesting agency's decision on the matter. The Department must deem such disclosure to be compatible with the purpose for which the Department collected the information.
6. A record from this system may be disclosed as a routine use to DOE contractors in performance of their contracts, and their officers and employees who have a need for the record in the performance of their duties. Those provided information under this routine use are subject to the same limitations applicable to DOE officers and employees under the Privacy Act.
7. A record from this system may be disclosed as a routine use to a member of Congress submitting a request involving a constituent when the constituent has requested assistance from the member concerning the subject matter of the record. The member of Congress must provide a copy of the constituent's signed request for assistance.
8. A record from this system may be disclosed as a routine use to appropriate agencies, entities, and persons when (1) the Department suspects or has confirmed that there has been a breach of the System of Records; (2) the Department has determined that as a result of the suspected or confirmed breach there is a risk of harm to individuals, DOE (including its information systems, programs, and operations), the Federal Government, or national security; and (3) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Department's efforts to respond to the suspected or confirmed breach or to prevent, minimize, or remedy such harm.
9. A record from this system may be disclosed as a routine use to another Federal agency or Federal entity, when the Department determines that information from this System of Records is reasonably necessary to assist the recipient agency or entity in (1) responding to a suspected or confirmed breach or (2) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the Federal Government, or national security, resulting from a suspected or confirmed breach.
Records may be stored as paper records, microfilm, or electronic media.
Records are retrieved by tag number, license number, custodian name, employee identification number, position number, accounting information, catalog number, contract number, make, model, security logon identification, serial number, or storage location.
Retention and disposition of these records are unscheduled. This requires the records to be retained as permanent until the National Archives and Records Administration approves the draft schedule, which will require the records to be retained for 10 years.
Electronic records may be secured and maintained on a cloud-based software server and operating system that resides in Federal Risk and Authorization Management Program (FedRAMP) and Federal Information Security Modernization Act (FISMA) hosting environment. Data located in the cloud-based server is firewalled and encrypted at rest and in transit. The security mechanisms for handling data at rest and in transit are in accordance with DOE encryption standards. Records are protected from unauthorized access through the following appropriate safeguards:
•
•
•
The Department follows the procedures outlined in 10 CFR 1008.4. Valid identification of the individual making the request is required before information will be processed, given, access granted, or a correction considered, to ensure that information is processed, given, corrected, or records disclosed or corrected only at the request of the proper person.
Any individual may submit a request to the System Manager and request a copy of any records relating to them. In accordance with 10 CFR 1008.11, any individual may appeal the denial of a request made by him or her for information about or for access to or correction or amendment of records. An appeal shall be filed within 90 calendar days after receipt of the denial. When an appeal is filed by mail, the postmark is conclusive as to timeliness. The appeal shall be in writing and must be signed by the individual. The words “PRIVACY ACT APPEAL” should appear in capital letters on the envelope and the letter. Appeals relating to DOE records shall be directed to the Director, Office of Hearings and Appeals (OHA), 1000 Independence Avenue SW, Washington, DC 20585.
In accordance with the DOE regulation implementing the Privacy Act, 10 CFR part 1008, a request by an individual to determine if a System of Records contains information about themselves should be directed to the U.S. Department of Energy, Headquarters, Privacy Act Officer. The request should include the requester's complete name and the time period for which records are sought.
None.
This SORN was last published in the
This document of the Department of Energy was signed on January 31, 2024, by Ann Dunkin, Senior Agency Official for Privacy, 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
U.S. Department of Energy.
Notice of request for comments.
The Department of Energy (DOE) invites public comment on a proposed collection of information that DOE is developing for submission to the Office of Management and Budget (OMB) pursuant to the Paperwork Reduction Act of 1995.
Comments regarding this proposed information collection must be received on or before April 15, 2024. 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, please advise the DOE Desk Officer at OMB of your intention to make a submission as soon as possible. The Desk Officer may be telephoned at 202-881-8585.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Mr. Chris Early, U.S. Department of Energy, Building Technologies Program, Mail Stop EE-5B, Forrestal Building, 1000 Independence Avenue SW, Washington, DC 20585-0121, or by email at
This information collection request contains: (1)
This document of the Department of Energy was signed on March 8, 2024, by Amanda Mahoney, Director, Building Technologies 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
Office of Environmental Management, Department of Energy.
Notice of open meeting.
This notice announces an in-person/virtual hybrid meeting of the Environmental Management Site-Specific Advisory Board (EM SSAB), Oak Ridge. The Federal Advisory Committee Act requires that public notice of this meeting be announced in the
Wednesday, April 10, 2024; 6:00 p.m.-8:00 p.m. EDT.
This hybrid meeting will be in-person at the Department of Energy (DOE) Information Center (address below) and virtually via Zoom. To attend virtually or to register for in-person attendance, please send an email to:
DOE Information Center, Office of Science and Technical Information, 1 Science.gov Way, Oak Ridge, Tennessee 37831.
Melyssa P. Noe, Deputy Designated Federal Officer, U.S. Department of Energy, Oak Ridge Office of Environmental Management (OREM), P.O. Box 2001, EM-942, Oak Ridge, TN 37831; Phone (865) 241-3315; or E-Mail:
Take notice that on March 1, 2024, Southern Star Central Gas Pipeline, Inc. (Southern Star), 4700 State Route 56, Owensboro, Kentucky 42301, filed an application under sections 7(b) of the Natural Gas Act (NGA), and Part 157 of the Commission's regulations requesting authorization to abandon by sale to Spire Missouri, Inc., 453 domestic meters in the State of Missouri. Southern Star states that there will be no change to its certificated capacity as a result of this project, and that the project will have no impact on any firm shippers, all as more fully set forth in the application which is on file with the Commission and open for public inspection.
In addition to publishing the full text of this document in the
Any questions regarding the proposed project should be directed to Will Wathen, Director, Rates, Regulatory & Strategic Planning, 4700 State Route 56, Owensboro, KY 42301, by telephone at (270) 925-1969, or by email at
Pursuant to section 157.9 of the Commission's Rules of Practice and Procedure,
There are three ways to become involved in the Commission's review of this project: you can file comments on the project, you can protest the filing, and you can file a motion to intervene in the proceeding. There is no fee or cost for filing comments or intervening. The deadline for filing a motion to intervene is 5:00 p.m. Eastern Time on April 1, 2024. How to file protests, motions to intervene, and comments is explained below.
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
Any person wishing to comment on the project may do so. Comments may include statements of support or objections, to the project as a whole or specific aspects of the project. The more specific your comments, the more useful they will be.
Pursuant to sections 157.10(a)(4)
To ensure that your comments or protests are timely and properly recorded, please submit your comments on or before April 1, 2024.
There are three methods you can use to submit your comments or protests to the Commission. In all instances, please reference the Project docket number CP24-77-000 in your submission.
(1) You may file your comments electronically by using the eComment feature, which is located on the Commission's website at
(2) You may file your comments or protests electronically by using the eFiling feature, which is located on the Commission's website (
(3) You can file a paper copy of your comments or protests by mailing them to the following address below. Your written comments must reference the Project docket number (CP24-77-000).
The Commission encourages electronic filing of comments (options 1 and 2 above) and has eFiling staff available to assist you at (202) 502-8258 or
Persons who comment on the environmental review of this project will be placed on the Commission's environmental mailing list, and will receive notification when the environmental documents (EA or EIS) are issued for this project and will be notified of meetings associated with the Commission's environmental review process.
The Commission considers all comments received about the project in determining the appropriate action to be taken. However, the filing of a comment alone will not serve to make the filer a party to the proceeding. To become a party, you must intervene in the proceeding. For instructions on how to intervene, see below.
Any person, which includes individuals, organizations, businesses, municipalities, and other entities,
To intervene, you must submit a motion to intervene to the Commission in accordance with Rule 214 of the Commission's Rules of Practice and Procedure
There are two ways to submit your motion to intervene. In both instances, please reference the Project docket number CP24-77-000 in your submission.
(1) You may file your motion to intervene by using the Commission's eFiling feature, which is located on the
(2) You can file a paper copy of your motion to intervene, along with three copies, by mailing the documents to the address below. Your motion to intervene must reference the Project docket number CP24-77-000.
The Commission encourages electronic filing of motions to intervene (option 1 above) and has eFiling staff available to assist you at (202) 502-8258 or
Protests and motions to intervene must be served on the applicant either by mail or email at: Will Wathen, Director, Rates, Regulatory & Strategic Planning, 4700 State Route 56, Owensboro, KY 42301, or by email at
All timely, unopposed
Throughout the proceeding, additional information about the project will be available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC website at
In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. For more information and to register, go to
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) 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:
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
In notice document 2024-05013, appearing on page 17453, in the issue of Monday, March 11, 2024, in first column, in the
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following Complaints and Compliance filings in EL Dockets:
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following electric reliability filings:
The filings are accessible in the Commission's eLibrary system (
Any person desiring to intervene, to protest, or to answer a complaint in any of the above proceedings must file in accordance with Rules 211, 214, or 206 of the Commission's Regulations (18 CFR 385.211, 385.214, or 385.206) 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:
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
In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission) regulations, 18 CFR part 380, the Office of Energy Projects has reviewed the application for a new license to continue to operate and maintain the Winooski 8 Hydroelectric Project. The project is located on the Winooski River in Washington County, Vermont. The project does not occupy federal land. Commission staff has prepared an Environmental Assessment (EA) for the project.
The EA contains the staff's analysis of the potential environmental impacts of the project and concludes that licensing the project, with appropriate environmental protective measures, would not constitute a major federal action that would significantly affect the quality of the human environment.
The Commission provides all interested persons with an opportunity to view and/or print the EA via the
You may also register online at
Any comments should be filed within 30 days from the date of this notice.
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
The Commission strongly encourages electronic filing. Please file comments using the Commission's eFiling system at
For further information, contact Ingrid Brofman at (202) 502-8347 or by email at
In notice document 2024-05125, beginning on page 17460, in the issue of Monday, March 11, 2024, in third column, in the
The National Marine Fisheries Service (NMFS) has adopted the Bureau of Ocean Energy Management's Final EIS No. 20230128 filed 09/25/2023 with the Environmental Protection Agency. The NMFS was a cooperating agency on this project. Therefore, republication of the document is not necessary under Section 1506.3(b)(2) of the CEQ regulations.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA or “Agency”) is announcing the availability of and soliciting public comment on the 2024 draft risk evaluation for formaldehyde prepared under the Toxic Substances Control Act (TSCA). The draft risk
The Designated Federal Official (DFO) is Tamue Gibson, Mission Support Division (7602M), Office of Program Support, Office of Chemical Safety and Pollution Prevention, Environmental Protection Agency; telephone number: (202) 564-7642 or SACC main office number: (202) 564-8450; email address:
EPA is announcing the availability of and soliciting public comment on the 2024 draft risk evaluation for formaldehyde. EPA is also announcing a 4-day virtual peer review public meeting on May 20-23, 2024, for the SACC to consider and review the draft risk evaluation document. A virtual preparatory public meeting will be held on May 7, 2024, for the SACC and the public to consider and ask questions regarding the scope and clarity of the draft charge questions. EPA will be soliciting comments from the SACC on the Office of Pollution Prevention and Toxics (OPPT) and Office of Pesticide Programs (OPP) joint hazard assessments for human and ecological health; and the OPPT exposure and risk characterizations. This SACC peer review is in addition to prior external peer reviews by the National Academies of Science, Engineering, and Medicine (NASEM), the EPA's Human Studies Review Board (HSRB) and SACC peer reviews of scientific approaches used in previous TSCA risk evaluations. These previous peer reviews have informed the 2024 draft risk evaluation for formaldehyde.
This document provides instructions for accessing the materials, submitting written comments, and registering to provide oral comments and attend the public meetings.
EPA established the SACC in 2016 in accordance with the TSCA, 15 U.S.C. 2625(o), to provide independent advice and expert consultation, at the request of the Administrator, with respect to the scientific and technical aspects of issues relating to the implementation of TSCA. The SACC operates in accordance with the Federal Advisory Committee Act (FACA), 5 U.S.C. 10, and supports activities under the TSCA, 15 U.S.C. 2601
This action is directed to the public in general and may be of particular interest to those involved in the manufacture, processing, distribution, and disposal of the subject chemical substance, and/or those interested in the assessment of risks involving chemical substances and mixtures regulated under TSCA.
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The SACC provides independent scientific advice and recommendations to the EPA on the scientific and technical aspects of risk assessments, methodologies, and pollution prevention measures and approaches for chemicals regulated under TSCA. The SACC is comprised of experts in toxicology; environmental risk assessment; exposure assessment; and related sciences (
TSCA requires EPA to conduct risk evaluations on high priority chemical substances to determine whether a chemical substance presents an unreasonable risk to human health or the environment under the chemical's conditions of use. EPA must also determine whether a chemical substance presents unreasonable risk to potentially exposed or susceptible subpopulations deemed relevant by the Administrator. As part of this process, EPA integrates hazard and exposure assessments using the best available science and reasonably available information to assure decisions are based on the weight of the scientific evidence. For more information about the three stages of EPA's process for ensuring the safety of existing chemicals (
EPA is planning this SACC peer review of the Agency's draft evaluation of the risks from formaldehyde to inform risk management decisions under TSCA. OPPT collaborated with OPP to develop hazard assessments for human and ecological health. EPA expects to ask the SACC to consider and review these joint hazard assessments in addition to the OPPT exposure and risk characterizations. This SACC peer review is in addition to prior external peer reviews by the National Academies of Science, Engineering, and Medicine (NASEM), the EPA's Human Studies Review Board (HSRB) and SACC peer reviews of scientific approaches used in previous TSCA risk evaluations. The Agency is leveraging these peer reviews to support further development of the risk evaluation of formaldehyde. The TSCA risk evaluation of formaldehyde is comprised of several modules (
Recommendations from the formaldehyde SACC review and public comments will be considered in the development of the final TSCA risk evaluation for formaldehyde and may inform other EPA efforts related to the assessment and regulation of formaldehyde. The Agency will be seeking SACC review of its data analyses and methodologies relevant to human health hazard and exposure analyses that have not been previously peer reviewed. For additional information, please see the
The 2024 draft risk evaluation for formaldehyde and related documents, including background documents, related supporting materials, and draft charge questions, are available in the docket. As additional background materials become available, EPA will include those additional background documents (
After the public meeting, the SACC will prepare the meeting minutes and final report document summarizing its recommendations to the EPA, which will also be available in the docket and through the SACC website.
To ensure proper receipt of comments, it is imperative that you identify docket ID No. EPA-HQ-OPPT-2023-0613 in the subject line on the first page of your comments and follow the instructions in Unit I.D. and in this unit.
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Environmental Protection Agency (EPA).
Notice.
EPA has authorized its contractor ICF Inc of 9300 Lee Highway Fairfax, VA 22031, and its subcontractors to access information which has been submitted to EPA under all sections of the Toxic Substances Control Act (TSCA). Some of the information may be claimed or determined to be Confidential Business Information (CBI).
Access to the confidential data will occur after March 15, 2024.
Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2003-0004, through the
This action is directed to the public in general. This action may, however, be of interest to all who manufacture, process, or distribute industrial chemicals. Because other entities may also be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPPT-2003-0004, is available at
Under contract number 68HERC23D0007, ICF Inc., and its subcontractors will provide support for Chemical Screening, Review, and Evaluation of New, Existing, and Safer Choice Chemical Substances in accordance with the Performance Work Statement which are vital to Agency personnel to make informed decisions on environmental issues and other information that maybe claimed as TSCA CBI in accordance with the TSCA Security Manual.
In accordance with 40 CFR 2.306(j), EPA has determined that under EPA contract number 68HERC23D0007, ICF Inc., and its subcontractors will require access to CBI submitted under all Sections of TSCA to perform successfully the duties specified under the contract. ICF Inc. and its subcontractors: Personnel will be given access to information claimed or determined to be CBI information submitted to EPA under all sections of TSCA.
EPA is issuing this notice to inform all submitters of information under all sections of TSCA that EPA will provide the herein identified contractor and its subcontractors with access to the CBI materials on a need-to-know basis only. All access to TSCA CBI under this contract, in accordance with EPA's
• ATL International, Inc.; 555 Quince Orchard Rd., Suite 500, Gaithersburg, MD 20878-1461.
• Colehour & Cohen, Inc.; 1011 Western Ave., Suite 702, Seattle, WA 98104.
• Sacoby Wilson, Ph.D.; MS Maryland Institute for Applied Environmental Health, School of Public Health, University of Maryland-College Park.
• Integrated Laboratory Systems, an Inotiv Company; P.O. Box 13501, Research Triangle Park, NC 27709.
• Innovate! Inc.; 6189 Cobbs Rd., Alexandria, VA 22310.
• Neptune and Company, Inc.; 1435 Garrison St., Suite 201, Lakewood, CO 80215.
• Pradeep Rajan, LLC; 2006 Camden Ln., Chapel Hill, NC 27516.
• Sagenita Limited, Harston Mill Royston Rd., Harston Cambridge, UK CB22 7GG.
• SC&A, Inc.; 2200 Wilson Blvd., Suite 300, Arlington, VA 22201.
• Sixth Sense Safety Solutions; 1365 Bertram St., Rogers City, Michigan 49779-1101.
Access to TSCA data, including CBI, will continue until November 30, 2027. If the contract is extended, this access will also continue for the duration of the extended contract without further notice.
The personnel of the contractor and subcontractors will be required to sign nondisclosure agreements and will be briefed on specific security procedures for TSCA CBI.
Environmental Protection Agency (EPA).
Notice.
On May 4, 2023 and November 6, 2023, EPA issued final cancellation orders terminating food uses for three products, which were voluntarily requested by Adama and accepted by the Agency, pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). The Agency is issuing this notice to amend the existing stocks provisions in the May 4, and November 6, 2023 orders, for the products listed in this document.
The docket for this action, identified under docket identification (ID) number EPA-HQ-OPP-2022-0223, is available online at
Patricia Biggio, Pesticide Re-Evaluation Division (7508M), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 566-0700; email address:
This action is directed to the public in general and may be of interest to a wide range of stakeholders including environmental, human health, and agricultural advocates; the chemical industry; pesticide users; and members of the public interested in the sale, distribution, or use of pesticides. Since others also may be interested, the Agency has not attempted to describe all the specific entities that may be affected by this action.
In its May 4, 2023 Cancellation Order for Certain Chlorpyrifos Registrations and Uses, EPA granted Adama's request to terminate food uses and the tobacco use on its three chlorpyrifos products. 88 FR 28541. That order noted that all chlorpyrifos tolerances had been revoked, and thus all use on food, sale, and distribution of existing stocks for the products identified in that order were inconsistent with the purposes of FIFRA, with the following exceptions. Use was permitted for non-food uses consistent with labeling, and existing stocks were permitted to be sold and distributed for export, proper disposal, or in accordance with return agreements approved by EPA.
In addition, on November 6, 2023, EPA granted Adama's request to terminate the food processing and food manufacturing site uses on those same three chlorpyrifos products.
Subsequent to the issuance of the May 4, 2023 and November 6, 2023 cancellation orders, the U.S. Court of Appeals for the Eighth Circuit vacated EPA's rule revoking all tolerances. (
Because the reinstatement of the chlorpyrifos tolerances means that chlorpyrifos products can be used in accordance with their labeling without concern for adulterated food, EPA is amending the cancellation orders to update the existing stocks language for the following Adama products:
• Pyrinex Chlorpyrifos Insecticide (EPA Reg. No. 11678-58).
• Chlorpyrifos 4E AG (alternate brand name Quali-Pro Chlorpyrifos 4E) (EPA Reg. No. 66222-19).
• Vulcan (EPA Reg. No. 66222-223).
The registrant for all three of the listed products is Adama US, and its address is 3120 Highwoods Boulevard, Suite 100, Raleigh, NC 27604.
Existing stocks for the products identified in this document are those stocks of registered pesticide products that are currently in the United States and that were packaged, labeled, and released for shipment prior to May 4, 2023 (for termination of food uses and tobacco use) and prior to November 6, 2023 (for termination of food processing and food manufacturing uses).
At this time, EPA is amending the existing stocks provisions in the May 4 and November 6 cancellation orders as follows:
• Sale and distribution of existing stocks of Pyrinex Chlorpyrifos Insecticide (EPA Reg. No. 11678-58) is permitted until June 30, 2024.
• Sale and distribution of existing stocks of Chlorpyrifos 4E AG and Quali-Pro Chlorpyrifos 4E (EPA Reg. No. 66222-19) and Vulcan (EPA Reg. Nos. 66222-233) is permitted until April 30, 2025.
• Use of existing stocks of Chlorpyrifos 4E AG, Quali-Pro Chlorpyrifos 4E, and Vulcan on food, food processing sites, and food manufacturing sites must be consistent with the product labeling. Such use is permitted until June 30, 2025. Use of existing stocks Chlorpyrifos 4E AG, Quali-Pro Chlorpyrifos 4E, and Vulcan for non-food purposes is permitted until existing stocks are exhausted, as long as such use is in accordance with the labeling.
After these dates, all respective sale, distribution, and use of existing stocks is prohibited, except for sale and distribution for export consistent with FIFRA section 17 (7 U.S.C. 136o) and for proper disposal.
Environmental Protection Agency (EPA).
Notice; correction.
In the
The comment period established in the
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2017-0751, is available online at
Melanie Biscoe, Pesticide Re-Evaluation Division (7508P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 566-0701; email address:
Pursuant to 40 CFR 155.58, EPA issued a notice in the
Subsequent to the publication of that notice, EPA identified that it incorrectly
Background on the registration review program is provided at:
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 April 15, 2024.
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.”
Federal Trade Commission.
Announcement of Petition; Request for Comment.
XCL Resources Holdings, LLC (“XCL”) has petitioned the Federal Trade Commission (“FTC” or “Commission”) for approval of its acquisition of Altamont Energy, LLC (“Altamont”), an oil and gas operator in the Uinta Basin, pursuant to the agreement reached with the FTC in the EnCap/EP Energy matter.
Comments must be received on or before April 15, 2024.
Interested parties may file comments online or on paper, by following the instructions in the Request for Comment part of the
Kenneth Libby (202-326-2694), Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
Pursuant to FTC Rule 2.41(f), 16 CFR 2.41(f), notice is hereby given that the public [redacted] version of the above-captioned petition has been filed with the Secretary of the Commission and is being placed on the public record for a period of thirty (30) days. After the period for public comments has expired, the Commission shall determine whether to approve the petition. In making its determination, the Commission will consider, among other information, all timely and responsive comments submitted in connection with this document.
The text of the public [redacted] version of the petition is provided below. An electronic copy of the text of the public [redacted] version of the petition can be obtained from the FTC website at this web address:
You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before April 15, 2024. Write “XCL/Altamont Petition for Prior Approval; Docket No. C-4760” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the
Because of the agency's heightened security screening, postal mail addressed to the Commission will be subject to delay. We strongly encourage you to submit your comments online through the
If you prefer to file your comment on paper, write “XCL/Altamont Petition for Prior Approval; Docket No. C-4760” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Mail Stop H-144 (Annex P), Washington, DC 20580.
Because your comment will be placed on the publicly accessible website at
Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled “Confidential,” and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record.
Visit the FTC website at
XCL Resources Holdings, LLC (“XCL”) plans to acquire Altamont Energy, LLC (“Altamont” and, together with XCL, the “Parties”), an oil and gas operator in the Uinta Basin. XCL seeks prior approval from the Federal Trade Commission (the “FTC” or the “Commission”) to complete this proposed transaction pursuant to the agreement reached with the FTC in the EnCap/EP Energy matter.
The Proposed Transaction will not increase the capacity or share of XCL in any relevant market in any appreciable way; nor will it alter in any negative way the competitive landscape for supply of waxy crude oil to Salt Lake City refiners (or to any other refiner). It will provide Altamont, a small operator [REDACTED], the access to capital it needs. The transaction will allow the combined entity to increase production, execute drilling of new wells at a lower cost, and allow for other cost-lowering enhancements, ultimately offering more production at competitive prices downstream to buyers in and out of Salt Lake City.
Pursuant to Section 2.41(f) of the FTC Rules of Practice and Procedure
As part of the Order, the Commission required that EnCap Investments L.P., EnCap Energy Capital Fund XI, L.P., Verdun Oil Company II LLC and XCL (collectively, “EnCap”) obtain prior approval before acquiring any other producer of waxy crude oil with an output of over 2,000 barrels per day in any of the following Utah counties: Duchesne, Uintah, Utah, Grand, Emery, Carbon and Wasatch.
On August 24, 2023, XCL signed a non-disclosure agreement with Altamont in contemplation of the Proposed Transaction. XCL subsequently began due diligence and negotiation of initial terms. On October 31, 2023, XCL and Altamont signed a deal term sheet and entered into an exclusivity agreement. XCL notified the FTC of the Proposed Transaction on November 5, 2023. On January 16, 2024, XCL and Altamont executed a Purchase and Sale Agreement in contemplation of the Proposed Transaction, which [REDACTED] makes closing conditional on obtaining approval from the Commission.
Given that Altamont is a waxy crude oil producer in the Uinta Basin with an output of approximately [REDACTED] barrels per day, the Proposed Transaction is subject to the requirement for prior approval under the Order; and XCL hereby seeks such approval prior to closing the Proposed Transaction. As outlined
XCL is a privately held, Houston-based independent oil and gas company focused on the acquisition and development of liquids-rich basins in the United States. XCL owns and operates approximately 135 horizontal wells across approximately 45,900 net acres in Duchesne and Uintah Counties, Utah, where it extracts black and yellow waxy crude oil and natural gas. XCL's low-cost, efficient operations strategy focuses on the development of horizontal wells and pioneering new production methods in the Uinta Basin. The company has three active rigs and is drilling 70 new wells per year on average in the Uinta Basin. A majority of XCL's production is exported to refiners on the U.S. Gulf Coast, due to supply saturation in Salt Lake City. See infra, Section IV(A).
XCL became a subsidiary of EnCap Investments L.P. (“EnCap Investments”) in 2018, and EnCap Investments has provided the majority of the financial backing for XCL's projects and investments to date. EnCap Investments is a private equity firm specializing in investments in the energy industry, particularly oil and gas.
Altamont is a small operator with no active rigs and no material growth plans it can achieve without access to capital [REDACTED]. Altamont produces [REDACTED] barrels of waxy crude oil per day on average, and nearly all of that is purchased by Salt Lake City refiners. [REDACTED].
In 2018, Altamont acquired oil and gas assets from LINN Energy, Inc., an oil and gas exploration and production company. Altamont focused its operations in and around the Wasatch and Green River stacked formations in the Uinta Basin. Altamont completed drilling operations for four vertical wells in 2018 and 2019.
In 2021, Altamont [REDACTED] to drill eight horizontal wells. Those wells were begun in 2022 completed in 2023, with five wells beginning production in March and three wells beginning production in June, [REDACTED].
Altamont hired Houlihan Lokey as its investment banker and began marketing itself for a sale in August 2023. Altamont and its bankers reached out to over 300 parties in search of potential bidders. [REDACTED].
With the acquisition of Altamont, XCL expects to realize substantial economic efficiencies in the development and production of oil in the Uinta Basin. XCL projects that the Proposed Transaction will not have any significant impact on its own growth or investment plans, but it will enable XCL to apply capital and its superior operating capabilities to Altamont properties, further XCL's cost-reduction objectives, and ultimately bring more product at competitive prices to its customers.
As the owner of acreage adjacent to Altamont's and an efficient, low-cost operator, XCL is uniquely positioned to generate numerous efficiencies from combining the contiguous acreage. For example, XCL will be able to lower operating costs by combining its water and gas infrastructure with Altamont's. Additionally, XCL will be able to optimize development plans to limit downtime in drilling and completion operations on the contiguous acreage. Reduced operating costs will enhance economic viability (
For Altamont specifically, the Proposed Transaction will provide an opportunity to generate value for their assets [REDACTED]. XCL plans to change this with the goal of tripling Altamont's production. [REDACTED].
Since the FTC investigated the EPE Transaction, the competitive landscape in the Uinta Basin, including its supply into the Salt Lake City refiners, has changed significantly.
Critically for purposes of the FTC's concern in 2021, the increase in waxy crude oil production in the Uinta Basin has saturated supply to the Salt Lake City refiners. Current production levels dramatically exceed the capacity of the refiners, and Uinta Basin producers are selling a growing portion (in XCL's case, a majority) of their output outside the Salt Lake City area (primarily to the U.S. Gulf Coast). The Salt Lake City's refiners' demand for waxy crude oil remains capped at approximately 90,000 barrels per day,
In the Complaint, the Commission expressed concern that increased concentration in the Uinta Basin would result in higher prices and decreased supply to the Salt Lake City refiners.
The Salt Lake City refiners also charge high prices for their finished product—higher than in most of the United States—and realize the highest profits in the nation as compared to refiners in other locations. Finished product prices in Salt Lake City are independent of the sales price of waxy crude oil.
As described above, the production of waxy crude oil in the Uinta Basin has grown (well beyond the demand of Salt Lake City refiners) and continues to grow, creating opportunities for entry and growth. In the last 24 months, at least four new oil producers, Scout Energy Partners, Wasatch Energy Management Operating (“WEM Operating”),
The below chart shows the number of new horizontal wells that have been drilled by year since 2020 per producer, with a notable increase for most producers in 2023.
The emergence of at least four new entrants in the last 24 months, combined with formerly small producers increasing their shares, indicates that competition is robust in the region.
As outlined
The Parties also expect the Proposed Transaction to have a limited effect, if any, on the supply of waxy crude oil to the Salt Lake City refiners. As outlined
XCL estimates that the HHI index in the market for the supply of waxy crude oil to Salt Lake City refiners is currently 1,549 (pre-Proposed Transaction) and would increase to 1,647 (post-Proposed Transaction), for an HHI delta of 98 points.
Neither
The Proposed Transaction will have no negative competitive effect on any relevant market. Since the Commission issued the Order, the competitive landscape has shifted in favor of Salt Lake City refiners, due to the increase in local output from existing suppliers (XCL and others) and the entry of new waxy crude oil producers; while the emergence of these producers shows that barriers to entry have weakened. Given the ample choice Salt Lake City refiners have, the small increase in capacity and output XCL would receive from the Altamont assets would have
The Potential Transaction will, however, result in pro-competitive effects, allowing XCL to lower costs, grow production, and optimize its processes to deliver high-quality, competitively priced products to the downstream markets in Salt Lake City, the Gulf Coast, and elsewhere. XCL has demonstrated its desire and ability to significantly grow production on its existing position for the benefit of customers (and consumers) in all regions, and it is uniquely positioned to employ the same strategy on Altamont.
This petition, including its related documents, contains certain confidential and competitively sensitive business information relating to XCL, Altamont and the Proposed Transaction. Disclosure of such confidential information may prejudice XCL and Altamont, and cause harm to the ongoing competitiveness of both companies. Pursuant to Sections 2.41(f)(4) and 4.9(c) of the FTC's Rules of Practice and Procedure,
A full color version of this chart is included as a Supporting Document in the docket for this matter on
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of the draft guidance entitled “Evaluation of Thermal Effects of Medical Devices That Produce Tissue Heating and/or Cooling.” FDA is issuing this draft guidance document to describe relevant information that should be provided in premarket submissions to support the evaluation of thermal effects of medical devices that produce local, regional, and/or systemic changes in tissue temperature (
Submit either electronic or written comments on the draft guidance by May 14, 2024 to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance.
You may submit comments on any guidance at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
An electronic copy of the guidance document is available for download from the internet. See the
Devashish Shrivastava, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 4628, Silver Spring, MD 20993-0002, 301-796-5459.
When a change in tissue temperature occurs because of device heating and/or cooling, there is a potential for adverse health effects, such as tissue damage or a negative impact on physiological functions. This draft guidance provides FDA's recommendations for evaluation of thermal effects for devices that produce changes in tissue temperature (heating and/or cooling) as an intended or unintended consequence of device use. The draft guidance describes when
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on “Evaluation of Thermal Effects of Medical Devices That Produce Tissue Heating and/or Cooling.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
While this guidance contains no new collection of information, it does refer to previously approved FDA collections of information. The previously approved collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The collections of information in the following table have been approved by OMB:
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) has determined that DUEXIS (ibuprofen and famotidine) tablet, 800 milligrams (mg) ibuprofen and 26.6 mg famotidine, was not withdrawn from sale for reasons of safety or effectiveness. This determination means that FDA will not begin procedures to withdraw approval of abbreviated new drug applications (ANDAs) that refer to this drug product, and it will allow FDA to continue to approve ANDAs that refer to the product as long as they meet relevant legal and regulatory requirements.
Grace St. Vincent, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6215, Silver Spring, MD 20993-0002, 240-402-9201,
Section 505(j) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 355(j)) allows the submission of an ANDA to market a generic version of a previously approved drug product. To obtain approval, the ANDA applicant must show, among other things, that the generic drug product: (1) has the same active ingredient(s), dosage form, route of administration, strength, conditions of use, and (with certain exceptions) labeling as the listed drug, which is a version of the drug that was previously approved and (2) is bioequivalent to the listed drug. ANDA applicants do not have to repeat the extensive clinical testing otherwise necessary to gain approval of a new drug application (NDA).
Section 505(j)(7) of the FD&C Act requires FDA to publish a list of all approved drugs. FDA publishes this list as part of the “Approved Drug Products With Therapeutic Equivalence Evaluations,” which is known generally as the “Orange Book.” Under FDA regulations, drugs are removed from the list if the Agency withdraws or suspends approval of the drug's NDA or ANDA for reasons of safety or effectiveness or if FDA determines that the listed drug was withdrawn from sale for reasons of safety or effectiveness (21 CFR 314.162).
A person may petition the Agency to determine, or the Agency may determine on its own initiative, whether a listed drug was withdrawn from sale for reasons of safety or effectiveness. This determination may be made at any time after the drug has been withdrawn from sale, but must be made prior to approving an ANDA that refers to the listed drug (§ 314.161 (21 CFR 314.161)). FDA may not approve an ANDA that does not refer to a listed drug.
DUEXIS (ibuprofen and famotidine) tablet, 800 mg and 26.6 mg, is the subject of NDA 022519, held by Horizon Medicines LLC, and initially approved on April 23, 2011. DUEXIS is indicated for the relief of signs and symptoms of rheumatoid arthritis and osteoarthritis and to decrease the risk of developing upper gastrointestinal ulcers in patients who are taking ibuprofen for those indications.
In a letter dated August 10, 2023, Horizon Medicines LLC notified FDA
Aurobindo Pharma USA, Inc., submitted a citizen petition dated February 14, 2024 (Docket No. FDA-2024-P-0827), under 21 CFR 10.30, requesting that the Agency determine whether DUEXIS (ibuprofen and famotidine) tablet, 800 mg and 26.6 mg, was withdrawn from sale for reasons of safety or effectiveness.
After considering the citizen petition and reviewing Agency records and based on the information we have at this time, FDA has determined under § 314.161 that DUEXIS (ibuprofen and famotidine) tablet, 800 mg and 26.6 mg, was not withdrawn for reasons of safety or effectiveness. The petitioner has identified no data or other information suggesting that DUEXIS (ibuprofen and famotidine) tablet, 800 mg and 26.6 mg, was withdrawn for reasons of safety or effectiveness. We have carefully reviewed our files for records concerning the withdrawal of DUEXIS (ibuprofen and famotidine) tablet, 800 mg and 26.6 mg, from sale. We have also independently evaluated relevant literature and data for possible postmarketing adverse events. We have reviewed the available evidence and determined that this drug product was not withdrawn from sale for reasons of safety or effectiveness.
Accordingly, the Agency will continue to list DUEXIS (ibuprofen and famotidine) tablet, 800 mg and 26.6 mg, in the “Discontinued Drug Product List” section of the Orange Book. The “Discontinued Drug Product List” delineates, among other items, drug products that have been discontinued from marketing for reasons other than safety or effectiveness. FDA will not begin procedures to withdraw approval of approved ANDAs that refer to this drug product. Additional ANDAs for this drug product may also be approved by the Agency as long as they meet all other legal and regulatory requirements for the approval of ANDAs. If FDA determines that labeling for this drug product should be revised to meet current standards, the Agency will advise ANDA applicants to submit such labeling.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) has determined that NUCYNTA (tapentadol hydrochloride) solution, equivalent (eq) 20 milligrams (mg) base/milliliter (mL), was not withdrawn from sale for reasons of safety or effectiveness. This determination will allow FDA to approve abbreviated new drug applications (ANDAs) for tapentadol hydrochloride solution, eq 20 mg base/mL, if all other legal and regulatory requirements are met.
Kaetochi Okemgbo, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6624, Silver Spring, MD 20993-0002, 301-796-1546,
Section 505(j) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 355(j)) allows the submission of an ANDA to market a generic version of a previously approved drug product. To obtain approval, the ANDA applicant must show, among other things, that the generic drug product: (1) has the same active ingredient(s), dosage form, route of administration, strength, conditions of use, and (with certain exceptions) labeling as the listed drug, which is a version of the drug that was previously approved, and (2) is bioequivalent to the listed drug. ANDA applicants do not have to repeat the extensive clinical testing otherwise necessary to gain approval of a new drug application (NDA).
Section 505(j)(7) of the FD&C Act requires FDA to publish a list of all approved drugs. FDA publishes this list as part of the “Approved Drug Products With Therapeutic Equivalence Evaluations,” which is known generally as the “Orange Book.” Under FDA regulations, drugs are removed from the list if the Agency withdraws or suspends approval of the drug's NDA or ANDA for reasons of safety or effectiveness or if FDA determines that the listed drug was withdrawn from sale for reasons of safety or effectiveness § 314.162 (21 CFR 314.162).
A person may petition the Agency to determine, or the Agency may determine on its own initiative, whether a listed drug was withdrawn from sale for reasons of safety or effectiveness. This determination may be made at any time after the drug has been withdrawn from sale, but must be made prior to approving an ANDA that refers to the listed drug (§ 314.161 (21 CFR 314.161)). FDA may not approve an ANDA that does not refer to a listed drug.
NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, is the subject of NDA 203794, held by Collegium Pharmaceutical, Inc., and initially approved on October 15, 2012. NUCYNTA is indicated for the management of acute pain severe enough to require an opioid analgesic and for which alternative treatments are inadequate in adults and pediatric patients aged 6 years and older with a body weight of at least 16 kilograms.
Collegium Pharmaceutical, Inc. has never marketed NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL. In previous instances (see,
Novitium Pharma, LLC submitted a citizen petition dated September 19, 2023 (Docket No. FDA-2023-P-4065), under 21 CFR 10.30, requesting that the Agency determine whether NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, was withdrawn from sale for reasons of safety or effectiveness.
After considering the citizen petition and reviewing Agency records and based on the information we have at this time, FDA has determined under § 314.161 that NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, was not withdrawn for reasons of safety or effectiveness. The petitioner has identified no data or other information suggesting that NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, was withdrawn for reasons of safety or effectiveness. We have carefully reviewed our files for records concerning the withdrawal of NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, from sale. We have also independently evaluated relevant literature and data for possible postmarketing adverse events. We have reviewed the available evidence and
Accordingly, the Agency will continue to list NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, in the “Discontinued Drug Product List” section of the Orange Book. The “Discontinued Drug Product List” delineates, among other items, drug products that have been discontinued from marketing for reasons other than safety or effectiveness. ANDAs that refer to NUCYNTA (tapentadol hydrochloride) solution, eq 20 mg base/mL, may be approved by the Agency as long as they meet all other legal and regulatory requirements for the approval of ANDAs. If FDA determines that labeling for this drug product should be revised to meet current standards, the Agency will advise ANDA applicants to submit such labeling.
Food and Drug Administration, HHS.
Notice of availability.
The Food and Drug Administration (FDA or Agency) is announcing the availability of the draft guidance entitled “Requests for Feedback and Meetings for Medical Device Submissions: The Q-Submission Program.” This draft guidance document provides an overview of the mechanisms available to submitters through which they can request interactions with FDA related to medical device submissions. This draft guidance, when finalized, is intended to supersede the document entitled “Requests for Feedback and Meetings for Medical Device Submissions: The Q-Submission Program” issued on June 2, 2023, and provides clarification and additional information on the scope of Q-Submission (Q-Sub) types, better delineation of how to obtain feedback for different types of questions (
Submit either electronic or written comments on the draft guidance by May 14, 2024 to ensure that the Agency considers your comment on this draft guidance before it begins work on the final version of the guidance.
You may submit comments on any guidance at any time as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
You may submit comments on any guidance at any time (see 21 CFR 10.115(g)(5)).
An electronic copy of the guidance document is available for download from the internet. See the
Joshua Nipper, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 2438, Silver Spring, MD 20993-0002, 301-796-5640 or James Myers, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993, 240-402-7911.
As part of the Medical Device User Fee Amendments of 2022, the Agency committed to issuing a draft guidance to provide additional information to assist in identifying the circumstances in which an applicant's question is most appropriate for informal communication instead of a Pre-Submission and to provide an opportunity for the public to comment on the updated guidance. This draft guidance reflects such additional information and further clarifies other elements of the Q-Sub Program.
This draft guidance provides an overview of the mechanisms available to submitters through which they can request interactions with FDA, including written feedback and/or a meeting regarding medical device Investigational Device Exemption applications, Premarket Approval applications, Humanitarian Device Exemption applications, De Novo requests, 510(k) submissions, Clinical Laboratory Improvement Amendments (CLIA) Waiver by Applications, Dual 510(k) and CLIA Waiver by Application submissions, Accessory Classification Requests, and certain Investigational New Drug applications and Biologics License Applications submitted to the Center for Biologics Evaluation and Research.
This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, when finalized, will represent the current thinking of FDA on “Requests for Feedback and Meetings for Medical Device Submissions: The Q-Submission Program.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations.
Persons interested in obtaining a copy of the draft guidance may do so by downloading an electronic copy from the internet. A search capability for all Center for Devices and Radiological Health guidance documents is available at
While this guidance contains no new collection of information, it does refer to previously approved FDA collections of information. The previously approved collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3521). The collections of information in the following table have been approved by OMB:
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 of the National Institute of Biomedical Imaging and Bioengineering Special Emphasis Panel.
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 National Advisory Council for Complementary and Integrative Health. The meeting will be open to the public as indicated below, 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 open session can be accessed at the following NIH Videocast URL link
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should be less than 700 words in length, and should include the name, email address, telephone number and when applicable, the business or professional affiliation of the interested person. Any member of the public may submit written comments no later than May 3rd, 2024 (14 days before the council meeting).
In the interest of security, NIH has procedures at
Notice is hereby given of a change in the meeting of the Center for Scientific Review Special Emphasis Panel, Member Conflict: Disease, Cognitive Aging, and Related Dementias April 2, 2024, 1:00 p.m. to April 2, 2024, 7:00 p.m., National Institutes of Health, Rockledge II, 6701 Rockledge Drive, Bethesda, MD, 20892 which was published in the
This meeting is being amended to change the panel name to Member Conflict: Alzheimer's Disease, Cognitive Aging, and Related Dementias. The meeting is closed to the public in accordance with provisions set forth in sections 552b(c)(4) and 552b(c)(6).
Pursuant to section 1009 of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The 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.
Notice is hereby given of a change in the meeting of the Center for Scientific Review Special Emphasis Panel, Fellowships: Infectious Diseases and Immunology A Study Section, April 3, 2024, 10:00 a.m. to April 4, 2024, 7:00 p.m., National Institutes of Health, Rockledge II, 6701 Rockledge Drive, Bethesda, MD, 20892 which was published in the
This notice is being amended to change the meeting start time from 10:00 a.m. to 9:00 a.m. The meeting is closed to the public in accordance with provisions set forth in sections 552b(c)(4) and 552b(c)(6).
Pursuant to section 1009 of the Federal Advisory Committee Act, as
The meeting will be open to the public as indicated below. 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 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.
The meeting will be held as a virtual meeting and will be open to the public as indicated below. Individuals who plan to view the virtual meeting and need special assistance or other reasonable accommodations to view the meeting, should notify the Contact Person listed below in advance of the meeting. The meeting can be accessed from the NIH Videocast at the following link:
Open: May 14, 2024, 10:00 a.m. to 4:00 p.m.
Any member of the public may submit written comments no later than 15 days in advance of the meeting. Any interested person may file written comments with the committee by forwarding the statement to the Contact Person listed on this notice. The statement should include the name, address, telephone number and when applicable, the business or professional affiliation of the interested person.
Information is also available on the Institute's/Center's home page:
Pursuant to section 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 meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The 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.
Periodically, the Substance Abuse and Mental Health Services Administration (SAMHSA) will publish a summary of information collection requests under OMB review, in compliance with the Paperwork Reduction Act (44 U.S.C. chapter 35). To request a copy of these documents, call the SAMHSA Reports Clearance Officer at
The Substance Abuse and Mental Health Services Administration (SAMHSA) Center for Mental Health Services (CMHS) is requesting clearance for data collection that is part of a national cross-site evaluation of process, outcomes, and impact for the Advancing Wellness and Resilience in Education (hereinafter referred to as Project AWARE) and Trauma-Informed Services in Schools (TISS) programs.
The purpose of the Project AWARE-TISS Cross-Site Evaluation is to better understand how each program is implemented, the extent to which they facilitate collaboration between education agencies and mental health systems, and how each program contributes to access and referral to mental health services and improved outcomes for youth.
The AWARE-TISS Cross-Site Evaluation incorporates four evaluation components to provide a robust understanding of the implementation (process), outcomes, and associated impacts of the AWARE and TISS Programs and includes program-specific components to ensure programmatic differences and commonalities are understood. With this integrated evaluation design, SAMHSA maintains the ability to evaluate and report on each program separately, while additionally benefiting from the ability to understand the overarching impact of both programs collectively.
Approval is being requested for data collection associated with a Process Evaluation and an Outcome Evaluation. Several program specific sub-studies and cross-program impact analyses will also be conducted to assess implementation and outcomes overall as well as those outcomes specific to high-need subpopulations and under-resourced communities. A behavioral health equity and cultural equity lens will be applied to each area of evaluation to ensure a culturally specific understanding of intervention implementation, outcomes, and impacts.
The Process Evaluation will contain two studies (Implementation and Sustainability Study and Systems Change Study) that examine strategies common to both programs related to program implementation facilitators and barriers, workforce development, and grantees' plans to sustain critical program components beyond their grant period. This assessment of common elements will provide a means to compare the implementation strategies that are successful across both AWARE and TISS grantees and identify successes and challenges in changing systems, policies, service provision, and school climate; increasing behavioral health equity in access and service delivery; and increasing social and emotional development and well-being in school-aged children and youth. The Process Evaluation will also address implementation of program-specific components.
For AWARE, the evaluation will document how the grantees implement the three-tiered public health model in schools, inclusive of (Tier 1) universal prevention and mental health promotion; (Tier 2) secondary prevention and brief intervention services; and (Tier 3) tertiary intervention and behavioral health treatment along with the referral pathways to increase access to mental health promotion, prevention, and intervention. The evaluation will assess the grantee collaborative efforts and grantee activities intended to increase workforce capacity to identify the signs and symptoms of mental illness and ability to refer to appropriate services promptly.
For TISS, the Process Evaluation will focus on examining what innovative strategies the grantees use to increase access to trauma informed services for school-aged youth and how the collaborative efforts of grantees and their partners develop/improve a school-based system for identification, referral, early intervention, treatment, and supportive services. Additionally, the Process Evaluation will assess the implementation of training to improve school capacity to address trauma support needs and engagement of families and communities to increase awareness of the effects of trauma on children and youth.
The Outcome Evaluation will include two studies that examine important facets of the AWARE and TISS programs: (1) identification and referral infrastructure (Identification and Referral Study); and (2) youth resiliency and outcomes (Youth Resiliency and Outcomes Study). Both studies will provide critical information about the effectiveness of the AWARE and TISS programs in establishing and enhancing school-based mental health supports for students.
Program specific sub-studies, inclusive of two TISS case studies and an AWARE Suicide Awareness and Prevention Sub-Study, will be conducted to provide more extensive contextual and implementation information related to the AWARE and TISS programs.
Finally, in addition to assessing the process and outcomes of each of the AWARE and TISS programs, we will conduct two cross-program analyses that examine the associated impacts of the both programs on the establishment and enhancement of school-based mental health supports for students (Cross-Program Impact Analysis) and the relationships of program and contextual factors with outcomes (Behavioral Health Equity Cross-Study Analysis).
The proposed multimethod approach considers allowable and required activities, variation in the partnerships and provider networks/infrastructure, program settings, populations being served, the range of program implementation plans and goals, existing data systems, and grant infrastructures that support implementation and evaluation participation. In addition, the design considers the stage of implementation of currently funded grantees to seamlessly integrate cohorts appropriately into the evaluation studies.
Fourteen primary data collection activities compose the AWARE-TISS Cross-Site Evaluation.
The estimated response burden to collect this information associated with the AWARE-TISS Cross-Site Evaluation is as follows annualized over the requested 3-year clearance period is presented below. Annual Burden (hours) and Total Cost ($) are rounded to the nearest whole number.
Written comments
Coast Guard, DHS.
Notice of intent; request for comments.
The Coast Guard is announcing its intent to enter into a Cooperative Research and Development Agreement (CRADA) with REGENT Craft, Inc. (REGENT) to evaluate advancements in Wing-In-Ground (WIG) maritime aircraft for applicability to USCG missions. REGENT's sea gliders are representative of that technology. While the Coast Guard is currently considering partnering with REGENT, we are soliciting public comment on the possible nature of and participation of other parties in the proposed CRADA. In addition, the Coast Guard also invites other potential non-Federal participants, who have the interest and capability to bring similar contributions to this type of research, to consider submitting proposals for consideration in similar CRADAs.
Comments must be submitted to the online docket via
Synopses of proposals regarding future CRADAs must reach the Coast Guard (see
Submit comments online at
If you have questions on this notice or wish to submit proposals for future CRADAs, contact Jason Story, Project Official, Rapid Reaction Branch, U.S. Coast Guard Research and Development Center, 1 Chelsea Street, New London, CT 06320, telephone 860-271-2833, email
We request public comments on this notice. Although we do not plan to respond to comments in the
Comments should be marked with docket number USCG-2024-0043 and should provide a reason for each suggestion or recommendation. You should provide personal contact information so that we can contact you if we have questions regarding your comments; but please note that all comments will be posted to the online docket without change and that any personal information you include can be searchable online (see the
We encourage you to submit comments through the Federal eRulemaking Portal at
Do not submit detailed proposals for future CRADAs to the Docket Management Facility. Instead, submit them directly to the Coast Guard (see
CRADAs are authorized under 15 U.S.C. 3710(a).
CRADAs are not procurement contracts. Care is taken to ensure that CRADAs are not used to circumvent the contracting process. CRADAs have a specific purpose and should not be confused with procurement contracts, grants, and other type of agreements.
Under the proposed CRADA, the R&D Center will collaborate with one non-Federal participant. Together, the R&D Center and the non-Federal participant will conduct sea glider evaluations to determine the system's applicability to USCG missions.
We anticipate that the Coast Guard's contributions under the proposed CRADA will include the following:
(1) Collaborate with REGENT Craft Inc. to co-design specific operational and safety test scenarios, bringing in real-world maritime expertise;
(2) Provide information regarding the USCG's interest in the WIG technology needed for creating the Test Plan;
(3) Provide all support resources, including travel, for Coast Guard staff that supports this CRADA;
(4) Provide personnel support to non-Federal participant to assist with setting up and execute testing in accordance with the agreed upon Test Plan;
(5) Work with non-Federal participant to develop a Final Report, which will document the methodologies, findings, conclusions, and recommendations of this CRADA work.
We anticipate that the non-Federal participants' contributions under the proposed CRADA will include the following:
(1) Provide appropriate staff with pertinent expertise to support the above mentioned tasks;
(2) Provide all necessary facilities and sea glider resources needed to conduct the evaluations as outlined in the Test Plan;
(3) Provide technical approach for the Test Plan;
(4) Provide test data upon completion of testing.
The Coast Guard reserves the right to select for CRADA participants all, some, or no proposals submitted for this CRADA. The Coast Guard will provide no funding for reimbursement of proposal development costs. Proposals and any other material submitted in response to this notice will not be returned. Proposals submitted are expected to be unclassified and have not more than five single-sided pages (excluding cover page, DD 1494, JF-12, etc.). The Coast Guard will select proposals at its sole discretion on the basis of:
(1) How well they communicate an understanding, of and ability to meet, the proposed CRADA's goal; and
(2) How well they address the following criteria:
(a) Technical capability to support the non-Federal party contributions described, and
(b) Resources available for supporting the non-Federal party contributions described.
Currently, the Coast Guard is considering REGENT for participation in this CRADA. This consideration is based on the fact that REGENT has demonstrated its sea gliders and availability of appropriate facilities to execute test scenarios. However, we do not wish to exclude other viable participants from this or future similar CRADAs.
This is a technology assessment effort. The goal of the Coast Guard for this CRADA is to determine the applicability of this type of vessel to the Coast Guard's missions. Special consideration will be given to small business firms/consortia, and preference will be given to business units located in the U.S. This notice is issued under the authority of 5 U.S.C. 552(a).
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of Washington (FEMA-4759-DR), dated February 15, 2024, and related determinations.
The declaration was issued February 15, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated February 15, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of Washington resulting from wildfires during the period of August 18 to August 25, 2023, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Individual Assistance and assistance for debris removal and emergency protective measures (Categories A and B), including direct Federal assistance, under the Public Assistance program in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Public Assistance, Hazard Mitigation, and Other Needs Assistance under section 408 will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The time period prescribed for the implementation of section 310(a), Priority to Certain Applications for Public Facility and Public Housing Assistance, 42 U.S.C. 5153, shall be for a period not to exceed six months after the date of this declaration.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Toney L. Raines, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of Washington have been designated as adversely affected by this major disaster:
Spokane County for Individual Assistance.
Spokane County for debris removal and emergency protective measures (Categories A and B), including direct federal assistance, under the Public Assistance program.
All areas within the State of Washington are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Washington (FEMA-4759-DR), dated February 15, 2024, and related determinations.
This change occurred on February 20, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Lance E. Davis, of FEMA is appointed to act as the Federal Coordinating Officer for this disaster.
This action terminates the appointment of Toney L. Raines as Federal Coordinating Officer for this disaster.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of West Virginia (FEMA-4756-DR), dated January 30, 2024, and related determinations.
This amendment was issued February 27, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
The notice of a major disaster declaration for the State of West Virginia is hereby amended to include Public Assistance for the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of January 30, 2024.
Harrison and Kanawha Counties for Public Assistance (already designated for Individual Assistance).
Roane County for Public Assistance.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of Maine (FEMA-4754-DR), dated January 30, 2024, and related determinations.
The declaration was issued January 30, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated January 30, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of Maine resulting from a severe storm and flooding during the period of December 17 to December 21, 2023, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Individual Assistance and Public Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Public Assistance, Hazard Mitigation, and Other Needs Assistance under section 408 will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The time period prescribed for the implementation of section 310(a), Priority to Certain Applications for Public Facility and Public Housing Assistance, 42 U.S.C. 5153, shall be for a period not to exceed six months after the date of this declaration.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, William F. Roy, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of Maine have been designated as adversely affected by this major disaster:
Androscoggin, Franklin, Kennebec, Oxford, and Somerset Counties for Individual Assistance.
Androscoggin, Franklin, Hancock, Oxford, Penobscot, Piscataquis, Somerset, Waldo, and Washington Counties for Public Assistance.
All areas within the State of Maine are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of North Dakota (FEMA-4760-DR), dated February 15, 2024, and related determinations.
The declaration was issued February 15, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated February 15, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of North Dakota resulting from a severe winter storm and straight-line winds during the period of December 25 to December 27, 2023, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Public Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Public Assistance and Hazard Mitigation will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, James R. Stephenson, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of North Dakota have been designated as adversely affected by this major disaster:
Barnes, Cass, Dickey, Grant, LaMoure, Logan, McIntosh, Ransom, Richland, Sargent, Steele, Stutsman, and Traill Counties for Public Assistance.
All areas within the State of North Dakota are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster for the territory of the U.S. Virgin Islands (FEMA-4340-DR), dated September 20, 2017, and related determinations.
This amendment was issued February 8, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated February 8, 2024, the President amended the cost-sharing arrangements regarding Federal funds provided under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the unprecedented and combined impact of hurricanes Irma and Maria on the territory of the U.S. Virgin Islands warrant special cost-sharing arrangements for Federal funds provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
Therefore, I amend the declarations signed by the President on September 7, 2017, and September 20, 2017, to authorize the following: An increase in the Federal share to 95 percent for all Public Assistance categories, retroactive to include all projects currently funded at less than 100 percent; and an increase in the Federal share to 98 percent until September 30, 2024, for all projects utilizing Section 428 procedures. The additional 3 percent Federal share apply only to projects for which a Fixed Cost Offer has been accepted by September 30, 2024, subject to extension on a per-project basis by the Administrator of the Federal Emergency Management Agency for specific and unavoidable extenuating circumstances. Section 428 projects not completed by December 31, 2035, revert to a 95 percent Federal cost share.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of West Virginia (FEMA-4756-DR), dated January 30, 2024, and related determinations.
The declaration was issued January 30, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated January 30, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of West Virginia resulting from severe storms, flooding, landslides, and mudslides during the period of August 28 to August 30, 2023, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Individual Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Hazard Mitigation and Other Needs Assistance under section 408 will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The time period prescribed for the implementation of section 310(a), Priority to Certain Applications for Public Facility and Public Housing Assistance, 42 U.S.C. 5153, shall be for
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Jeffrey L. Jones, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of West Virginia have been designated as adversely affected by this major disaster:
Boone, Calhoun, Clay, Harrison, and Kanawha Counties for Individual Assistance.
All areas within the State of West Virginia are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Maine (FEMA-4754-DR), dated January 30, 2024, and related determinations.
This amendment was issued February 27, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
The notice of a major disaster declaration for the State of Maine is hereby amended to include the following area among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of January 30, 2024.
Kennebec County for Public Assistance (already designed for Individual Assistance).
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of Michigan (FEMA-4757-DR), dated February 8, 2024, and related determinations.
The declaration was issued February 8, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated February 8, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of Michigan resulting from severe storms, tornadoes, and flooding during the period of August 24 to August 26, 2023, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Individual Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Hazard Mitigation and Other Needs Assistance under section 408 will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The time period prescribed for the implementation of section 310(a), Priority to Certain Applications for Public Facility and Public Housing Assistance, 42 U.S.C. 5153, shall be for a period not to exceed six months after the date of this declaration.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, John F. Boyle, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of Michigan have been designated as adversely affected by this major disaster:
Eaton, Ingham, Ionia, Kent, Livingston, Macomb, Monroe, Oakland, and Wayne Counties for Individual Assistance.
All areas within the State of Michigan are eligible for assistance under the Hazard Mitigation Grant Program.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of an emergency for the State of Connecticut (FEMA-3604-EM), dated January 13, 2024, and related determinations.
The declaration was issued January 13, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated January 13, 2024, the President issued an emergency declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121-5207 (the Stafford Act), as follows:
I have determined that the emergency conditions in certain areas of the State of Connecticut resulting from severe storms, flooding, and a potential dam breach beginning on January 10, 2024, and continuing, are of sufficient severity and magnitude to warrant an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
You are authorized to provide appropriate assistance for required emergency measures, authorized under Title V of the Stafford Act, to save lives and to protect property and public health and safety, and to lessen or avert the threat of a catastrophe in the designated areas. Specifically, you are authorized to provide assistance for emergency protective measures (Category B), limited to direct Federal assistance, under the Public Assistance program.
Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Public Assistance will be limited to 75 percent of the total eligible costs. In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal emergency assistance and administrative expenses.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, Department of Homeland Security, under Executive Order 12148, as amended, Robert V. Fogel, of FEMA is appointed to act as the Federal Coordinating Officer for this declared emergency.
The following areas of the State of Connecticut have been designated as adversely affected by this declared emergency:
New London County, including the Mohegan Tribal Nation and Mashantucket Pequot Tribal Nation for emergency protective measures (Category B), limited to direct federal assistance, under the Public Assistance program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Tennessee (FEMA-4751-DR), dated December 13, 2023, and related determinations.
This amendment was issued January 30, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
The notice of a major disaster declaration for the State of Tennessee is hereby amended to include the Public Assistance program for the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of December 13, 2023.
Cheatham, Gibson, and Stewart Counties for Public Assistance (already designated for Individual Assistance).
Davidson, Dickson, Montgomery, and Sumner Counties for Public Assistance (already designated for emergency protective measures [Category B], limited to direct federal assistance, under the Public Assistance program).
Robertson and Weakley Counties for Public Assistance.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Rhode Island (FEMA-4753-DR), dated January 7, 2024, and related determinations.
This amendment was issued February 8, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
The notice of a major disaster declaration for the State of Rhode Island is hereby amended to include the Hazard Mitigation Grant Program for those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of January 7, 2024.
All areas within the State of Rhode Island are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of New York (FEMA-4755-DR), dated January 30, 2024, and related determinations.
The declaration was issued January 30, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated January 30, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of New York resulting from a severe storm and flooding during the period of September 28 to September 30, 2023, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Public Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Public Assistance and Hazard Mitigation will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended, Lai Sun Yee, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of New York have been designated as adversely affected by this major disaster:
Kings, Nassau, and Westchester Counties for Public Assistance.
All areas within the State of New York are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of an emergency declaration for the State of Connecticut (FEMA-3604-EM), dated January 13, 2024, and related determinations.
This amendment was issued January 30, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that the incident period for this emergency is closed effective January 13, 2024.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance
Federal Emergency Management Agency, DHS.
Notice.
This is a notice of the Presidential declaration of a major disaster for the State of California (FEMA-4758-DR), dated February 19, 2024, and related determinations.
The declaration was issued February 19, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated February 19, 2024, the President issued a major disaster declaration under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the damage in certain areas of the State of California resulting from a severe storm and flooding during the period of January 21 to January 23, 2024, is of sufficient severity and magnitude to warrant a major disaster declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
In order to provide Federal assistance, you are hereby authorized to allocate from funds available for these purposes such amounts as you find necessary for Federal disaster assistance and administrative expenses.
You are authorized to provide Individual Assistance in the designated areas and Hazard Mitigation throughout the State. Consistent with the requirement that Federal assistance be supplemental, any Federal funds provided under the Stafford Act for Hazard Mitigation and Other Needs Assistance under section 408 will be limited to 75 percent of the total eligible costs.
Further, you are authorized to make changes to this declaration for the approved assistance to the extent allowable under the Stafford Act.
The time period prescribed for the implementation of section 310(a), Priority to Certain Applications for Public Facility and Public Housing Assistance, 42 U.S.C. 5153, shall be for a period not to exceed six months after the date of this declaration.
The Federal Emergency Management Agency (FEMA) hereby gives notice that pursuant to the authority vested in the Administrator, under Executive Order 12148, as amended,
N. Allison Pfaendler, of FEMA is appointed to act as the Federal Coordinating Officer for this major disaster.
The following areas of the State of California have been designated as adversely affected by this major disaster:
San Diego County for Individual Assistance.
All areas within the State of California are eligible for assistance under the Hazard Mitigation Grant Program.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance (Presidentially Declared Disasters); 97.039, Hazard Mitigation Grant.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster for the territory of the U.S. Virgin Islands (FEMA-4335-DR), dated September 7, 2017, and related determinations.
This amendment was issued February 8, 2024.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW, Washington, DC 20472, (202) 646-2833.
Notice is hereby given that, in a letter dated February 8, 2024, the President amended the cost-sharing arrangements regarding Federal funds provided under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
I have determined that the unprecedented and combined impact of hurricanes Irma and Maria on the territory of the U.S. Virgin Islands warrant special cost-sharing arrangements for Federal funds provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121
Therefore, I amend the declarations signed by the President on September 7, 2017, and September 20, 2017, to authorize the following: An increase in the Federal share to 95 percent for all Public Assistance categories, retroactive to include all projects currently funded at less than 100 percent; and an increase in the Federal share to 98 percent until September 30, 2024, for all projects utilizing Section 428 procedures. The additional 3 percent Federal share apply only to projects for which a Fixed Cost Offer has been accepted by September 30, 2024, subject to extension on a per-project basis by the Administrator of the Federal Emergency Management Agency for specific and unavoidable extenuating circumstances. Section 428 projects not completed by December 31, 2035, revert to a 95 percent Federal cost share.
The following Catalog of Federal Domestic Assistance Numbers (CFDA) are to be used for reporting and drawing funds: 97.030, Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis Counseling; 97.033, Disaster Legal Services; 97.034, Disaster Unemployment Assistance (DUA); 97.046, Fire Management Assistance Grant; 97.048, Disaster Housing Assistance to Individuals and Households In Presidentially Declared Disaster Areas; 97.049, Presidentially Declared Disaster Assistance—Disaster Housing Operations for Individuals and Households; 97.050, Presidentially Declared Disaster Assistance to Individuals and Households—Other Needs; 97.036, Disaster Grants—Public Assistance
Bureau of Indian Affairs, Interior.
Notice.
This notice publishes the approval by operation of law of the Tribal-State Compact between the Rosebud Sioux Tribe and the State of South Dakota.
The Amendment takes effect on March 15, 2024.
Ms. Paula L. Hart, Director, Office of Indian Gaming, Office of the Assistant Secretary—Indian Affairs, Washington, DC 20240, (202) 219-4066.
The Indian Gaming Regulatory Act of 1988, 25 U.S.C. 2701
Bureau of Land Management, Interior.
Notice of availability.
In compliance with the National Environmental Policy Act of 1969, as amended (NEPA), and the Federal Land Policy and Management Act of 1976, as amended, the Bureau of Land Management (BLM) has prepared a Draft Resource Management Plan Amendment (RMPA) and Draft Environmental Impact Statement (EIS) for Greater Sage-Grouse Rangewide Planning and by this notice is providing information announcing the opening of the comment period on the Draft RMPA/EIS and on the BLM's consideration of potential areas of critical environmental concern (ACECs).
This notice announces the opening of a 90-day comment period for the Draft RMPA/EIS beginning with the date following the Environmental Protection Agency's (EPA) publication of its Notice of Availability (NOA) in the
To afford the BLM the opportunity to consider comments in the Proposed RMPA/Final EIS, please ensure your comments are received prior to the close of the 90-day comment period or 15 days after the last public meeting, whichever is later.
This notice also announces the opening of a 60-day comment period for ACECs. The BLM must receive your ACEC-related comments by May 14, 2024.
The BLM will hold two virtual public meetings and 11 in-person public meetings throughout the planning area. The specific dates and locations of these meetings will be announced at least 15 days in advance through the ePlanning page (see
The Draft RMPA/EIS is available for review on the BLM ePlanning project website at
Written comments related to the Greater Sage-Grouse Rangewide RMPA may be submitted by any of the following methods:
•
•
•
Documents pertinent to this proposal may be examined online at
Pat Deibert, BLM National Sage-Grouse Conservation Coordinator; telephone: 720-447-8107; address: 5353 Yellowstone Road, Cheyenne, WY 82009; email:
This document provides notice that the BLM has prepared a Draft RMPA/EIS, provides information announcing the opening of the comment period on the Draft RMPA/EIS, and announces the comment period on the BLM's consideration of potential ACECs. The RMPA would change the following 77 BLM land use plans, collectively referred to in this document as resource management plans (RMPs), across 10 Western States. The original completion date for each plan is noted in parentheses and could include later amendments or maintenance actions.
The planning area includes portions of 10 Western States with greater sage-grouse (GRSG) habitat: California, Colorado, Idaho, Montana, Nevada, North Dakota, Oregon, South Dakota, Utah, and Wyoming, and encompasses nearly 121 million acres of BLM-administered public lands. Because this effort is focused on GRSG habitat management, decisions resulting from this amendment effort could affect up to 69 million acres of BLM-administered lands associated with the applicable GRSG habitat management areas. No decisions are being made on National Forest System lands or the underlying Federal mineral estate as part of this process.
The 2015 GRSG RMPA amended or revised RMPs in the planning area to provide for GRSG conservation on public lands. In the 2019 GRSG RMPAs, the BLM amended some of the 2015 GRSG plan decisions in the States of California, Colorado, Idaho, Nevada, Oregon, Utah, and Wyoming. On October 16, 2019, the United States District Court for the District of Idaho preliminarily enjoined the BLM from implementing the 2019 GRSG RMPAs (Case No. 1:16-CV-83-BLW).
The amount and condition of GRSG habitat supports the GRSG populations that State wildlife agencies manage. Recent data suggests a continued long-term decline in sagebrush habitats and GRSG populations across the species range. Habitat and population trends vary across the range, with wildfire being a larger problem in the Great Basin States and human development being the primary issue in the Rocky Mountain States. Regardless of the cause, continued habitat loss results in smaller patches available for GRSG use, which can concentrate impacts to birds. Approximately half the remaining GRSG habitat is managed by the BLM. The BLM is considering specific changes to some GRSG RMP decisions across the species range to improve conservation and management of GRSG habitats consistent with the BLM's sensitive species policy and in coordination with State wildlife agencies.
On November 22, 2021, the BLM published a notice of intent in the
The BLM's GRSG habitat conservation efforts rely on implementing management actions that avoid, minimize, or, if necessary, compensate for land uses and other threats that reduce the amount and quality of GRSG habitat. Many actions from the 2015 and 2019 RMPAs already accomplish this. As a result, the BLM's purpose and need is to consider amending RMPs to address a sub-set of GRSG management actions on BLM-administered lands to respond to changing land uses in GRSG habitats, improve the efficiency and effectiveness of GRSG management, provide for consistent conservation across state lines, and provide the BLM with locally relevant decisions that accord with range-wide GRSG conservation goals. To this end, the BLM is focusing on the following rangewide management actions:
• Clarify the GRSG RMP goal;
• GRSG habitat management area alignment (
• Mitigation;
• GRSG habitat objectives;
• Disturbance cap;
• Fluid mineral development and leasing objective;
• Fluid mineral leasing waivers, exceptions, and modifications;
• Renewable energy development and associated transmission;
• Minimizing threats from predation;
• Livestock grazing;
• Wild horse and burro management;
• Areas of Critical Environmental Concern; and
• Adaptive Management.
Some management concerns are localized to circumstances in individual States and are influenced by the ecological diversity of the sagebrush system. As such, the purpose of this planning effort also includes amending specific RMP management actions associated with State-specific circumstances to improve GRSG habitat conservation.
Changes to RMPs may be needed to:
• Address the continued GRSG habitat losses that are contributing to declines in GRSG populations;
• Ensure habitat management areas and associated management incorporate recent relevant science to prioritize management where it will provide conservation benefit (including providing for durable planning decisions when considering the effects of climate change);
• Provide continuity in managing GRSG habitats based on biological information versus political boundaries, where appropriate, while allowing for management flexibility to address different strategies in identifying habitat management areas with state agencies, as well as local habitat variability; and
• Refine and clarify other aspects of RMPs.
The BLM has analyzed six alternatives in detail, including the no action alternative.
Alternative 1 includes the applicable elements of the 2015 GRSG amendment efforts related to the management actions noted in the purpose and need. Under Alternative 1 the BLM would re-adopt the applicable GRSG habitat management area boundaries and the associated management. The existing language in the plans from the 2019 effort would revert to that contained in the 2015 amendments (as maintained). Due to the U.S. District Court of Idaho's preliminary injunction preventing implementation of the 2019 amendments, this alternative reflects how the BLM is currently managing GRSG habitat on public lands. There is variability across the different States regarding approaches for the management actions mentioned in the purpose. While the States have similar concepts in their RMPs (
Alternative 2 is the applicable RMP goals, objectives, and management decisions from the 2019 GRSG amendment efforts. For RMPs in Montana and North and South Dakota, Alternative 2 is the same as Alternative 1 because those RMPs were not amended in 2019. Because this alternative reflects the management currently in the BLM's approved RMPs it is the No-Action Alternative. The U.S. District Court for the District of Idaho has issued a preliminary injunction, preventing the BLM from implementing the 2019 amendments but not vacating them or their Records of Decision. As such, Alternative 2 represents the actual language in the BLM's RMPs and are the words in the existing plan that the BLM would be amending. While major land uses are similar to Alternative 1, the differences between the States for specific management concepts increased. For example, there is more diversity between the States regarding mitigation (required vs. voluntary, net gain vs. no net loss), as well as the potential to use compensatory mitigation instead of avoiding disturbances, and increased flexibility to consider exceptions based on local information. Under Alternative 2, the SFAs would be removed in all States except Montana and Oregon.
It is important to note that the alternatives are limited to just those goals, objectives, or decisions associated with the list of rangewide management actions in the purpose above, as well as those associated with applicable State-specific circumstances. Any other goal, objective, or decision from the 2015 or 2019 RMPAs are not being considered for amendment and would remain in the plans regardless of the decision ultimately made in this effort.
Alternative 3 provides the greatest measures to protect and preserve GRSG and its habitat. Alternative 3 would update the habitat management area boundaries based on new information and science, however all habitat management areas would be managed as priority habitat management area (PHMA), with general, important, or other habitat management areas under other alternatives being managed as PHMA. The BLM would close PHMA to new fluid mineral leasing, saleable minerals/mineral materials permits, and nonenergy leasable minerals leasing. PHMA would be recommended for withdrawal from location and entry under the Mining Law of 1872 and would be unavailable for livestock grazing. PHMA would also be right-of-way exclusion area. In addition, Alternative 3 would include designation of 11,139,472 acres of PHMA as ACECs specific to the management of GRSG, with management described below. No areas would be identified as an SFA.
Alternative 4 adjusts GRSG habitat management areas based on new information and science available since the previous efforts. Many of the management actions to avoid or minimize impacts would be similar Alternatives 1 and 2, but the habitat management areas where they are applied would be updated to reflect the new science. One difference is in Wyoming, where under Alternative 4, all PHMA would be managed with no surface occupancy requirements for new oil and gas leases. In addition, management associated with some of the major minimization measures (
Alternative 5 considers alignments of habitat management areas and associated management to balance GRSG conservation with public land uses. If State governments updated the GRSG habitat management area boundaries in their State plans, those boundaries are considered on public lands in Alternative 5. Because of this, the habitat management areas are similar to, but refined from, Alternative 4, and restrictions would generally be similar to Alternative 4, except for oil and gas in Wyoming which is similar to Alternative 2. and some additional
Alternative 6 is based on Alternative 5, with all the habitat management areas and associated management being the same as described for Alternative 5, but with the addition of ACECs. While Alternative 6 would include designation of 11,139,472 acres of PHMA as ACECs specific to the management of GRSG (same as Alternative 3), the management (described below) would be less restrictive than that considered in Alternative 3, though generally more restrictive than the rest of Alternative 6 PHMA.
The BLM has identified Alternative 5 as the preferred alternative. Alternative 5 provides a mix of conservation that avoids and minimizes impacts to GRSG habitat while providing local managers the ability to consider site-specific conditions in applying GRSG habitat conservation.
The alternatives consider a variety of approaches to mitigation for GRSG, all focused on avoiding, minimizing, or compensating for impacts. For Alternative 1, mitigation in most States is required to achieve a net conservation gain for surface disturbances in PHMA. Under Alternative 2, most States adopted a no net loss requirement, but provided that compensatory mitigation would be voluntary. Under Alternatives 3, 4, 5, and 6, mitigation would be required to achieve a no net loss standard in PHMA. However, under Alternative 3, the primary approach would be avoiding new disturbances. Alternative 4, 5, and 6 would provide a broader balance by avoiding major disturbances, but providing for some land uses where they would minimize their impact (in location and/or intensity) and compensate for residual impacts to achieve no net loss of habitat value—considering both direct and indirect impacts. In achieving the no net loss standard, the BLM would work with the States to apply the tools that work best in those areas to achieve the desired mitigation outcome.
Consistent with land use planning regulations at 43 CFR 1610.7-2(b), the BLM is announcing the opening of a 60-day comment period on the ACECs analyzed in the EIS. Comments may be submitted using any of the methods listed in the
There are no new proposed ACECs included in the preferred alternative. Existing and nominated ACECs with relevant and important values unrelated to GRSG habitat are outside the scope of the purpose and need. Existing ACECs with relevant and important values related to GRSG are unchanged by this effort, with the exception of 15 key Research Natural Areas (RNAs) in Oregon. RNAs are a type of ACEC. This effort does not change the key RNA boundaries but does consider alternatives to availability for livestock grazing. Of the 60,362 acres across the 15 key RNAs in Oregon, the alternatives consider the following acreage as unavailable for livestock grazing: Alternative 1: 35,803, Alternative 2: 13,872, Alternative 3: 59,532, Alternative 4: 36,416, Alternative 5: 18,680, Alternative 6: 18,680.
The preferred alternative would not propose the following potential ACECs with GRSG relevant and important values for designation: Case Flats (Colorado), Triangle (Idaho), Owyhee-Shoshone Basin (Idaho), Camas-Laidlaw (Idaho), Big Desert (Idaho), Antelope Valley (Idaho), Mountain Valley Complex (Idaho), Upper Snake Complex (Idaho), Carter Crook GRSG Connectivity (Montana), South Valley Phillips GRSG Habitat (Montana), Warm Springs (Nevada), Montana Mountains (Nevada), Owyhee West (Nevada), Owyhee East (Nevada), North Fork Oneil (Nevada), South Fork Dixie Flats (Nevada), Butte Long Valley (Nevada), Eureka North and South (Nevada), Grass-Kobeh Valley (Nevada), Monitor Valley (Nevada), Reese River (Nevada), Hayes Canyon (Nevada), Utah and Idaho Boarder Connectivity (Nevada), Buffalo Skedaddle (California), Vya/Massacre (California), Rich GRSG Habitat (Utah), Box Elder GRSG Habitat (Utah), Little Sandy (Wyoming), Carter-Cook GRSG Connectivity (Wyoming), Sagebrush Focal Areas in South-Central and Southwestern Wyoming (Wyoming), Greater South Pass and Upper Green River Basin GRSG (Wyoming). These areas (11,139,472 acres) would be designated ACECs under Alternatives 3 and 6. Under Alternative 3 they would be managed as closed to new fluid mineral leasing, closed to saleable mineral disposal, closed to non-energy mineral leasing, excluded for major rights-of-way, excluded for wind and solar development, and recommended for withdrawal from mineral location. Under Alternative 6, they would be available for new fluid mineral leasing with no surface occupancy allowed, closed to non-energy mineral leasing, closed to saleable minerals except for free-use pits (for local road maintenance), not recommended for withdrawal from mineral location, excluded to major rights-of-way unless located in RMP designated corridors, and excluded from wind and solar development, as well as not allowing exceptions to the disturbance cap otherwise available in PHMA under Alternative 6.
The BLM will provide additional opportunities for public participation consistent with the NEPA and land use planning processes, including a 30-day public protest period and a 60-day Governor's consistency review on the Proposed RMPA. The Proposed RMPA/Final EIS is anticipated to be available for public protest in the fall of 2024 with an Approved RMPA and Record of Decision in winter 2024.
The BLM will hold two virtual public meetings and 11 in-person public meetings associated throughout the planning area. The specific dates and locations of these meetings will be announced at least 15 days in advance through the ePlanning page (see
The BLM will continue to consult with Indian Tribal Nations on a government-to-government basis in accordance with Executive Order 13175, BLM MS 1780, and other Departmental policies. Tribal concerns, including impacts on Indian trust assets and potential impacts to cultural resources, will be given due consideration. Consultation will continue on an induvial basis with individual Tribes.
Comments on the Draft EIS would be most helpful if associated with the level of decision making presented in the alternatives. As described in 43 CFR 1601.0-5(n), an RMP is not a final implementation decision on actions that require further specific plans, process steps, or decisions under specific provisions of law and regulations. Additional decision making and analyses will occur when considering individual project authorizations, where local conditions and management will be taken into account.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that
Bureau of Land Management, Interior.
Notice of replacement decision approving lands for conveyance.
The Bureau of Land Management (BLM) hereby provides constructive notice that it will issue an appealable decision replacing its August 3, 2023, decision (“original decision”) which approved lands for conveyance to The Aleut Corporation, pursuant to the Alaska Native Claims Settlement Act of 1971 (ANCSA). The original decision is vacated in its entirety due to an error in land status and is replaced by the new decision. The lands approved for conveyance lie entirely within the Aleutian Islands Unit of the Alaska Maritime National Wildlife Refuge.
Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the time limits set out in the
You may obtain a copy of the decision from the Bureau of Land Management, Alaska State Office, 222 West Seventh Avenue, #13, Anchorage, AK 99513-7504.
Rebecca Curtiss, Land Law Examiner, BLM Alaska State Office, 907-271-5066 or
Notice of the original decision was published on August 3, 2023, in the
As required by 43 CFR 2650.7(d), notice is hereby given that the BLM will issue an appealable decision to The Aleut Corporation. The decision approves conveyance of surface and subsurface estates in certain lands pursuant to ANCSA (43 U.S.C. 1601,
The lands aggregate 62.49 acres and are located within the Aleutian Islands Unit of the Alaska Maritime National Wildlife Refuge in the following townships:
The decision addresses public access easements, if any, to be reserved to the United States pursuant to sec. 17(b) of ANCSA (43 U.S.C. 1616(b)), in the lands approved for conveyance.
The BLM will also publish notice of the decision once a week for four consecutive weeks in “The Bristol Bay Times & The Dutch Harbor Fisherman” newspaper.
Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the following time limits:
1. Unknown parties, parties unable to be located after reasonable efforts have been expended to locate, parties who fail or refuse to sign their return receipt, and parties who receive a copy of the decision by regular mail, which is not certified, return receipt requested, shall have until April 15, 2024 to file an appeal.
2. Parties receiving service of the decision by certified mail shall have 30 days from the date of receipt to file an appeal.
Parties who do not file an appeal in accordance with the requirements of 43 CFR part 4 shall be deemed to have waived their rights. Notices of appeal transmitted by facsimile will not be accepted as timely filed.
Bureau of Land Management, Interior.
Public Land Order.
This Public Land Order (PLO) withdraws 953.06 acres of public lands from settlement, sale, location, or entry under the general land laws, including from location and entry under the United States mining laws, and 309.56 acres of National Forest System lands from location and entry under the U.S. mining laws, and reserves them for use by the Bureau of Reclamation in connection with the McPhee Dam and Reservoir, for a period of 100 years, subject to valid existing rights.
This public land order takes effect on March 15, 2024.
Information regarding the withdrawal, including environmental and other reviews, is available at the Bureau of Land Management Colorado State Office, Denver Federal Center Building 40, Lakewood, Colorado 80215.
Jennifer Jardine, Senior Realty Specialist, BLM Colorado State Office, telephone: (970) 385-1224; email:
The McPhee Dam and Reservoir was previously withdrawn by PLO No. 5811, effective January 22, 1981, as extended by PLO No. 7473, which expired on January 21, 2021. A new notice of withdrawal application was published in the
By virtue of the authority vested in the Secretary of the Interior by Section 204 of the Federal Land Policy and Management Act of 1976, 43 U.S.C. 1714, it is ordered as follows:
1. Subject to valid existing rights, the following described public lands are hereby withdrawn from settlement, sale, location and entry under the general land laws, including from location and entry under the United States mining laws, and 309.56 acres of National Forest System lands from location and entry under the United States mining laws, and reserved for use by the Bureau of Reclamation in connection with the McPhee Dam and Reservoir, for a period of 100 years.
The areas aggregate 953.06 acres.
The areas aggregate 309.56 acres.
The total area contains 1,262.62 acres.
2. The withdrawal made by this order does not alter the applicability of those laws governing the use of National Forest System lands under lease, license, or permit, or governing the disposal of the mineral or vegetative resources other than the United States mining laws.
3. This withdrawal will expire 100 years from the effective date of this order, unless, as a result of a review conducted before the expiration date pursuant to Section 204(f) of the Federal Land Policy and Management Act of 1976, 43 U.S.C 1714(f), the Secretary determines that the withdrawal shall be extended.
Bureau of Land Management, Interior.
Notice of availability.
In accordance with the National Environmental Policy Act of 1969, as amended (NEPA), and the Federal Land Policy and Management Act of 1976, as amended (FLPMA), the Bureau of Land Management (BLM) announces the availability of the Draft Environmental Impact Statement (EIS) for Nevada Gold Mines LLC (NGM) Robertson Mine Project in Lander County, Nevada.
To afford the BLM the opportunity to consider comments in the Final EIS, please ensure that the BLM receives your comments within 45 days following the date the Environmental Protection Agency (EPA) publishes its Notice of Availability (NOA) of the Draft EIS in the
The BLM will announce the date of a public meeting on the Draft EIS at least 15 days in advance of the meeting on the BLM National NEPA Register website
The Draft EIS and documents pertinent to this proposal are available for review on the BLM National NEPA Register website at
Written comments related to the Robertson Mine Project may be submitted by any of the following methods:
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Gene Gilseth, Project Manager, telephone: (775) 635-4020; address 50 Bastian Road, Battle Mountain, Nevada 89820; email:
The BLM's purpose is to respond to NGM's proposal, as described in its proposed Plan of Operations, and to analyze the potential environmental effects associated with the Proposed Action, which is the operator's proposed Plan of Operations, and alternatives to the Proposed Action. NEPA mandates that the BLM evaluate the potential effects of the Proposed Action and alternatives. The BLM's need for the action is established by the BLM's responsibilities under Section 302 of FLPMA and the BLM Surface Management Regulations at 43 CFR subpart 3809 to respond to a proposed Plan of Operations and ensure that operations prevent unnecessary or undue degradation of the public lands.
NGM is proposing to construct, operate, close, and reclaim a new surface mine within the Shoshone Range approximately 58 miles southeast of Battle Mountain, Nevada, and 70 miles southwest of Elko, Nevada. The Proposed Action would result in changes to the authorized Robertson Exploration Plan boundary (NVN-067688), the Cortez Mine Plan boundary (NVN-67575), and the Pipeline-South Pipeline-Gold Acres Exploration Plan boundary (NVN-067261). If the Robertson Mine Project Plan is approved, these authorized plans would be modified subsequent to that approval.
The Robertson Mine Project would employ a contractor workforce of approximately 150 employees during the initial two-year construction period and approximately 415 full-time employees, comprised of approximately 370 existing Cortez Mine employees and 45 new hires, for the operations period.
The Robertson Mine Project would operate 24 hours per day, 365 days per year. The total life of the Robertson Mine Project would be 15 years, including 9 years of mining, 3 additional years of ore processing, and 3 additional years of reclamation. Reclamation of disturbed areas resulting
The proposed Plan of Operations would result in approximately 4,234 acres of new surface disturbance, of which 179 acres would be on private land and 4,055 acres would be on public land administered by the BLM.
The proposed Plan of Operations boundary would encompass 5,990 acres. The total disturbance associated with the Proposed Action, including existing, reclassified, and exploration, would be 4,306 acres, with 4,127 acres on land administered by the BLM and 179 acres on private land. The proposed surface mining activities for the Robertson Mine would include:
• Three open pits (Gold Pan, Porphyry, and Altenburg Hill) and associated haul roads;
• A Waste Rock Facility;
• A Heap Leach Facility including a lined pad, process solution ponds and vaults, and carbon-in-column plant;
• Ancillary facilities including a three-stage crushing system with associated conveyors; ore stockpiles; growth media stockpiles; a gravel borrow source; secondary roads; stormwater controls and diversions; truck scale; power lines and electrical substations; water production, dewatering, and monitoring wells; water pipelines and loadouts; ready lines; fuel and reagent storage; fueling facilities; laydown yards; wildlife and range fencing; assay laboratory; trailers; buildings; and communications sites;
• Shared facilities with the Pipeline Complex at the Cortez Mine, including but not limited to haul roads, potable water well, water pipelines, warehousing and maintenance shops, hazardous waste storage, petroleum-contaminated soils facility, ore stockpiles, the Pipeline Mill, carbon handling, refinery, laboratory, and Pipeline Area 28 tailings storage facility; and
• Modifying the authorized Robertson Exploration Plan (NVN-067688) (Exploration Plan) boundary.
The Partial Backfill Alternative and No Action Alternative are described in the Draft EIS. Under the Partial Backfill Alternative, the Gold Pan Pit would be backfilled to prevent the establishment of a post-mining pit lake. All other aspects of the Partial Backfill Alternative are the same as those described for the Proposed Action. Under the No Action Alternative, the development of the Robertson Mine Project would not be authorized and NGM would not construct, operate, and close a new surface mine. Modifications to the Exploration Plan boundary, the Cortez Mine Plan boundary, and the Pipeline-South Pipeline-Gold Acres Exploration Plan boundary would not occur.
On August 18, 2023, a Notice of Intent to prepare an EIS was published in the
This Notice of Availability initiates the draft EIS review process. There will be a 45-day public comment period. Public meetings to discuss the draft EIS will be announced. The date and times of the meetings will be posted on the BLM's Robertson Mine Project website.
The purpose of public review of the draft EIS is to provide an opportunity for meaningful collaborative public engagement and for the public to provide substantive comments, such as identification of factual errors, data gaps, relevant methods, or scientific studies. The BLM will respond to substantive comments by making appropriate revisions to the EIS or explaining why a comment did not warrant a change.
The BLM has and will continue to use and coordinate the draft EIS review process to help fulfill the public involvement requirements under the National Historic Preservation Act (54 U.S.C. 306108) as provided in 36 CFR 800.2(d)(3). Information about historic and cultural resources within the area potentially affected by the Proposed Action will assist the BLM in identifying and evaluating impacts to such resources. The BLM will continue to consult with Indian Tribal Nations on a government-to-government basis in accordance with Executive Order 13175, BLM MS 1780, and other Departmental policies. Agencies will give due consideration to Tribal concerns, including impacts on Indian trust assets and treaty rights and potential impacts to cultural resources.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.
National Park Service, Interior.
Notice.
The National Park Service is soliciting electronic comments on the significance of properties nominated before March 9, 2024, for listing or related actions in the National Register of Historic Places.
Comments should be submitted electronically by April 1, 2024.
Comments are encouraged to be submitted electronically to
Sherry A. Frear, Chief, National Register of Historic Places/National Historic Landmarks Program, 1849 C Street NW, MS 7228, Washington, DC 20240,
The properties listed in this notice are being considered for listing or related actions in the National Register of Historic Places. Nominations for their consideration were received by the National Park Service before March 9, 2024. Pursuant to section 60.13 of 36 CFR part 60, comments are being accepted concerning the significance of the nominated properties under the National Register criteria for evaluation.
Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time.
Nominations submitted by State or Tribal Historic Preservation Officers:
Additional documentation has been received for the following resource(s):
Nomination(s) submitted by Federal Preservation Officers:
The State Historic Preservation Officer reviewed the following nomination(s) and responded to the Federal Preservation Officer within 45 days of receipt of the nomination(s) and supports listing the properties in the National Register of Historic Places.
On the basis of the record
Pursuant to section 207.18 of the Commission's rules, the Commission also gives notice of the commencement of the final phase of its investigations. The Commission will issue a final phase notice of scheduling, which will be published in the
On January 25, 2024, the American Paper Plate Coalition, which is comprised of AJM Packaging Corporation, Bloomfield Hills, Michigan; Aspen Products, Inc., Kansas City, Missouri; Dart Container Corporation, Mason, Michigan; Hoffmaster Group, Inc., Oshkosh, Wisconsin; Huhtamaki Americas, Inc., De Soto, Kansas; and Unique Industries, Inc., Philadelphia, Pennsylvania, filed petitions with the Commission and Commerce, alleging that an industry in the United States is materially injured or threatened with material injury by reason of subsidized imports of paper plates from China and Vietnam and LTFV imports of paper plates from China, Thailand, and Vietnam. Accordingly, effective January 25, 2024, the Commission instituted countervailing duty investigation Nos. 701-TA-704-705 and antidumping duty investigation Nos. 731-TA-1664-1666 (Preliminary).
Notice of the institution of the Commission's investigations and of a public conference to be held in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S. International Trade Commission, Washington, DC, and by publishing the notice in the
The Commission made these determinations pursuant to §§ 703(a) and 733(a) of the Act (19 U.S.C. 1671b(a) and 1673b(a)). It completed and filed its determinations in these investigations on March 11, 2024. The views of the Commission are contained in USITC Publication 5499 (March 2024), entitled
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint regarding
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-2000. The public version of the complaint can be accessed on the Commission's Electronic Document Information System (EDIS) at
General information concerning the Commission may also be obtained by accessing its internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of Motorola Mobility LLC on March 11, 2024. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain cellular base station communication equipment, components thereof, and products containing same. The complaint names as respondents: Ericsson AB of Sweden; Telefonaktiebolaget LM Ericsson of Sweden; and Ericsson Inc. Plano, TX. The complainant requests that the Commission issue a limited exclusion order, cease and desist orders, and impose a bond upon respondent alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, and members of the public are invited to file comments on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this investigation would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions on the public interest must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. Submissions should refer to the docket number (“Docket No. 3730”) in a prominent place on the cover page and/or the first page. (
Please note the Secretary's Office will accept only electronic filings during this time. Filings must be made through the Commission's Electronic Document Information System (EDIS,
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
Federal Bureau of Investigation, Department of Justice.
60-Day notice.
The Federal Bureau of Investigation, Department of Justice (DOJ), will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995.
Comments are encouraged and will be accepted for 60 days until May 14, 2024.
If you have additional comments especially on the estimated public burden or associated response time, suggestions, or need a copy of the proposed information collection instrument with instructions or additional information, please contact Shannon Hammer, Public Information Officer, FBI, at 200 Constitution Drive, Winchester, VA 22602, or 540.868.4593 or
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address one or more of the following four points:
1. Type of Information Collection: Extension of a previously approved collection.
2. The Title of the Form/Collection: FBI eFOIA Form.
3. The agency form number, if any, and the applicable component of the Department sponsoring the collection: DOJ, FBI.
4. Affected public who will be asked or required to respond, as well as the obligation to respond: Affected Public: Individuals or households. The obligation to respond is voluntary.
5. An estimate of the total number of respondents and the amount of time estimated for an average respondent to respond: An estimated 32,100 FOIA requests are completed annually. The requests can be submitted via free-form letter or the eFOIA form. In FY2023 approximately 1,053 online eFOIA forms were submitted. An average of 8 minutes per respondent is needed to complete the eFOIA form.
6. An estimate of the total annual burden (in hours) associated with the collection: The burden hours for collecting data sum is 140 hours.
7. An estimate of the total annual cost burden associated with the collection, if applicable: $1,000.00.
If additional information is required contact: Darwin Arceo, Department Clearance Officer, United States Department of Justice, Justice Management Division, Policy and Planning Staff, Two Constitution Square, 145 N Street NE, 4W-218, Washington, DC.
National Aeronautics and Space Administration (NASA).
Notice of new information collection.
The National Aeronautics and Space Administration, 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.
Comments are due by May 14, 2024.
Written comments and recommendations for this information collection should be sent within 60 days of publication of this notice to
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to NASA PRA Clearance Officer, Bill Edwards-Bodmer, NASA Headquarters, 300 E Street SW, JF0000, Washington, DC 20546, phone 757-864-7998, or email
Advanced Air Mobility (AAM)/Urban Air Mobility (UAM) aircraft are expected to form a new transportation system to move people and cargo between places previously not served or underserved by aviation. Representative AAM/UAM vehicles involve the use of electrically driven rotors, and the noise from these air vehicles in communities may restrict their operation. The human response to noise from these vehicles needs to be better understood to help minimize the noise impact. The National Aeronautics and Space Administration (NASA) seeks to execute a remotely administered test on human response to noise, which is called a psychoacoustic test, to acquire response to AAM/UAM vehicle noise. This psychoacoustic test is called the Varied AAM Noise and Geographic Area Response Difference (VANGARD) test. It will utilize the recently developed Remote Psychoacoustic Test Platform of NASA to administer the test to subjects from the public from geographic regions of the United States where AAM/UAM aircraft are likely to operate in the future. Test subjects will participate in an online test application using their own computers and audio playback devices, such as headphones, to listen to calibrated sound stimuli.
The primary research objective of the VANGARD test is to determine if there are statistically significant differences in annoyance between subjects who live in low versus high ambient noise environments; and to determine as a covariate if there is a difference between specific geographical regions. Subjects will be drawn from low and high ambient noise areas of geographical regions within the United States that are likely to see initial AAM/UAM operations, such as Los Angeles, Dallas, and New York City. “High” ambient noise environments are locations proximate to urban centers of each region, while “Low” ambient environments are suburban areas along likely AAM/UAM flight paths within 100 miles of the urban center. NASA will identify the targeted geographic regions and low and high ambient noise environments by Zip Code, based on noise survey data obtained by the National Park Service. NASA will then seek a balanced number of subjects to adequately cover the geographic regions and noise environments.
Meeting this primary research objective is critical to allow NASA to test additional hypothesis research questions based on the obtained data, including:
• Do annoyance responses differ significantly by phase of flight (takeoff, landing, and level cruise) of the AAM/UAM aircraft noise stimuli?
• Do annoyance responses differ significantly as a function of sound level, based on distance from flight operation?
• To what degree are the results explained by objective parameter analyses of the data (
• To what degree are the results explained by noise sensitivity, obtained via post-experiment questionnaires?
Test subjects will electronically indicate their annoyance rating to test AAM/UAM aircraft noise stimuli into an interface displayed on their own computers.
Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of NASA, including whether the information collected has practical utility; (2) the accuracy of NASA's estimate of the burden (including hours and cost) 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 automated collection techniques or the use of other forms of information technology.
Comments submitted in response to this notice will be summarized and included in the request for OMB approval of this information collection. They will also become a matter of public record.
Pursuant to Section 19(b)(1)
The Exchange proposes to modify the NYSE American Options Fee Schedule (“Fee Schedule”) regarding the Professional Step-Up Incentive program. The Exchange proposes to implement the fee changes effective March 1, 2024. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The purpose of this filing [sic] to modify the Fee Schedule to replace the Professional Step-Up Incentive program with the Professional Volume Incentive program.
Currently, the Exchange offers an incentive program known as the Professional Step-Up Incentive (the “Step-Up Program”), designed to encourage ATP Holders to increase their electronic volume in the “Professional” range.
The Exchange now proposes to rename the Step-Up Program as the Professional Volume Incentive program.
As proposed, Tier A of the Professional Volume Incentive program would have the same Qualifying Volume requirement as the Step-Up Program (0.20% of TCADV) and would provide qualifying ATP Holders with the same per contract Penny rate of $0.35 and the same per contract non-Penny rate of $0.65. The Exchange proposes that the Qualifying Volume requirement for Tier B would be 0.30% of TCADV under the Professional Volume Incentive program (rather than an increase of 0.25% of TCADV under the Step-Up Program), and that the per contract Penny and non-Penny rates ($0.20 and $0.55, respectively) would remain the same. ATP Holders that qualify for either tier of the proposed Professional Volume Incentive program will also continue to receive benefits offered in Tier 1 of the ACE program.
Currently, under the Step-Up Program, ATP Holders would also qualify for an additional discount on the Tier B rates by increasing their program-qualifying volume and executing a qualifying amount of posted Professional volume. The Exchange proposes to eliminate this additional discount and instead introduce additional discounts available to ATP Holders that achieve higher levels of Qualifying Volume. ATP Holders that achieve Qualifying Volume as set forth in the table below would earn the corresponding additional discount on the Tier B Penny and non-Penny rates (applicable from the first contract) as set forth in the table below:
The proposed change is intended to continue to encourage ATP Holders to increase both Professional and Customer electronic order flow to the Exchange by continuing to offer the discounted rates and credits that were available in the Step-Up Program through the new Professional Volume Incentive program, as well as additional discounts for qualifying ATP Holders. The Exchange believes the proposed change to the qualifications for the Professional Volume Incentive Program, which are based on ATP Holders' Qualifying Volume rather than increased volume over a certain base volume, is reasonable and that the volume requirements are attainable by ATP Holders.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed Professional Volume Incentive program is reasonable, equitable, and not unfairly discriminatory because it is designed to continue to incent ATP Holders to increase the amount of Professional and Customer electronic order flow directed to the Exchange. The Professional Volume Incentive program, as proposed, would continue to offer discounted rates and credits as under the Step-Up Program, as well as additional discounts for qualifying ATP Holders, based on Qualifying Volume rather than increased volume over a certain base volume. As noted above, the Exchange believes the proposed volume requirements for the Professional Volume Incentive program, including for the additional discounts on Tier B rates, are attainable by ATP Holders and are reasonably designed to incentivize ATP Holders to achieve increasingly higher levels of Qualifying Volume to earn the corresponding higher discounts. In addition, with respect to the additional discounts that would be available under the Professional Volume Incentive program, the Exchange believes that the Qualifying Volume requirements and discount amounts are reasonably designed to encourage ATP Holders to direct increased Professional and Customer electronic volume to the Exchange, thereby providing additional liquidity, attracting additional order flow from other market participants, and improving market quality for all market participants. To the extent the proposed change achieves its purpose in attracting greater volume and liquidity to the Exchange, the Exchange believes that all market participants stand to benefit from increased electronic transaction volume, whether Professional or Customer, as greater volume and liquidity would improve the Exchange's overall competitiveness and strengthen its market quality for all market participants. The Exchange also believes that the proposed change is equitable and not unfairly discriminatory because it would apply to all similarly-situated market participants on an equal and non-discriminatory basis. The qualifications for and benefits offered in the Professional Volume Incentive program are based on the amount and type of business transacted by ATP Holders, and all ATP Holders are eligible to qualify for the Professional Volume Incentive program by achieving the same Qualifying Volume as a percentage of TCADV.
Finally, the Exchange believes that it is subject to significant competitive forces, as described below in the Exchange's statement regarding the burden on competition.
For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act.
In accordance with Section 6(b)(8) of the Act, the Exchange does not believe that the proposed rule change would impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. Instead, as discussed above, the Exchange believes that the proposed changes would encourage the submission of additional liquidity to a public exchange, thereby promoting market depth, price discovery and transparency and enhancing order execution opportunities for all market participants. As a result, the Exchange believes that the proposed change furthers the Commission's goal in adopting Regulation NMS of fostering integrated competition among orders, which promotes “more efficient pricing of individual stocks for all types of orders, large and small.”
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to modify the NYSE Arca Options Fee Schedule (“Fee Schedule”) regarding certain fees and credits applicable to Lead Market Makers. The Exchange proposes to implement the fee change effective March 1, 2024. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The purpose of this filing is to modify the Fee Schedule, effective March 1, 2024, regarding the Lead Market Maker (“LMM”) Rights Fee and LMM posting credits for electronic transactions in Penny issues.
The LMM Rights Fee (“Rights Fee”) is charged on a per issue basis to the OTP Firm acting as LMM in the issue.
Currently, the Exchange also offers opportunities for LMMs to earn discounts on Rights Fees for issues in the four highest activity tiers. The discounts are based on the amount of monthly (i) total electronic volume and/or (ii) total posted volume executed in the Market Maker range relative to other Market Makers appointed in that issue. The discounts are cumulative, and an LMM is eligible to achieve the discount for both monthly volume categories.
The Exchange also offers a 50% discount on Rights Fees to LMMs who achieve either (1) daily contract volume traded electronically of at least 0.32% total industry Customer equity and ETF option ADV (“TCADV), of which 0.08% TCADV is in its LMM appointment, or (2) daily contract volume traded manually of at least 0.75% of TCADV in all account types, which can include transaction volume from the OTP Holder's or OTP Firm's affiliates (per Endnote 8) or its Appointed OFP (per Endnote 15). Qualifying LMM volume is based on an average of the daily contract volume traded electronically by an LMM or traded manually by an LMM and affiliated/appointed entities each trading day in a calendar month.
The Exchange proposes to eliminate both of the discounts currently offered on Rights Fees. To effect this change, the Exchange proposes to delete the text following the asterisk below the table in the Fee Schedule setting forth Rights Fees (as well as the asterisks in the table itself) describing the discounts based on monthly volume, as well as text in Endnote 2 describing the discount based on daily volume.
Although the proposed change would eliminate discounts currently offered to LMMs on Rights Fees, the Exchange believes it would not discourage LMMs from seeking appointments or from continuing to direct order flow to the Exchange, particularly in conjunction with the proposed change described below to offer LMMs additional posting credits in Penny issues.
Currently, LMMs receive a credit of $0.32 per contract for posted liquidity in electronic executions in Penny Issues.
The Exchange proposes to increase the Post Liquidity credit for LMMs in all Penny issues other than SPY to $0.33 per contract. In addition, the Exchange proposes to increase the credit for executions in Penny issues in an LMM's appointment, other than SPY, to an additional $0.05 above the tiered credits outlined in the Market Maker Penny and SPY Posting Credit Tiers. The Exchange further proposes to clarify the Fee Schedule to provide that the post liquidity credit for the LMM in SPY will continue to be $0.32 per contract and that the LMM in SPY will continue to be eligible for an additional $0.04 per contract credit over the tiered credits set forth in the Market Maker Penny and SPY Posting Credit Tiers for eligible executions in SPY.
Although the Exchange cannot predict with certainty whether the proposed change would incent LMMs to direct additional posted liquidity to the Exchange, the Exchange believes that the proposed change could encourage LMMs to increase their transactions executed on the Exchange to earn the increased posting credits in Penny issues other than SPY or to continue to achieve the existing credits available for executions in SPY. The Exchange notes that these credits are not volume-based and are available to all LMMs.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed change is reasonable because, although it would eliminate the volume-based discounts on the LMM Rights Fee, it would offer LMMs increased posting credits (which are not based on volume) on trades in Penny issues other than SPY. The Exchange further believes that the proposed change is equitable and not unfairly discriminatory because it would generally apply to all LMMs equally. The Exchange believes that it is reasonable, equitable, and not unfairly discriminatory to maintain the current posted liquidity credits for the LMM in SPY because Market Makers in SPY are already eligible for a higher credit through the Market Maker Penny and SPY Posting Credit Tiers, and the Exchange offers certain Market Maker incentives for SPY that are not applicable to other Penny issues.
In accordance with Section 6(b)(8) of the Act, the Exchange does not believe that the proposed rule change will impose any burden on competition that
The proposed change is designed to continue to encourage LMMs to increase liquidity directed to the Exchange by increasing the credits available to LMMs on posted liquidity in Penny issues other than SPY. Although the proposed change would eliminate the volume-based Rights Fee discounts, it would offer increased posting credits to LMMs that are not based on volume achieved. The proposed change would apply to all similarly-situated market participants and would not impose a disparate burden on competition. The Exchange does not believe that maintaining the current posted liquidity credits for the LMM in SPY would impose a disparate burden on competition given the unique incentives available to Market Makers in SPY.
The Exchange also does not believe that the proposed change would impose any burden on intermarket competition that is not necessary or appropriate in furtherance of the Act; as order execution venues are free to modify their own fees in response to competitors' fees, the Exchange believes that the degree to which the proposed change could impose any burden on competition is limited. The Exchange further believes that the proposed change could promote competition between the Exchange and other execution venues to the extent the proposed change encourages increased order flow to the Exchange, thereby making the Exchange a more attractive venue for, among other things, order execution. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues. In such an environment, the Exchange must continually review, and consider adjusting, its fees and credits to remain competitive with other exchanges. For the reasons described above, the Exchange believes that the proposed rule change reflects this competitive environment.
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Securities and Exchange Commission (“Commission” or “SEC”).
Notice.
Notice of an application under section 6(c) of the Investment Company Act of 1940 (“Act”) for an exemption from Section 15(a) of the Act, as well as from certain disclosure requirements in Rule 20a-1 under the Act, Item 19(a)(3) of Form N-1A, Items 22(c)(1)(ii), 22(c)(1)(iii), 22(c)(8) and 22(c)(9) of Schedule 14A under the Securities Exchange Act of 1934, and Sections 6-07(2)(a), (b), and (c) of Regulation S-X (“Disclosure Requirements”).
The requested exemption would permit Applicants to enter into and materially amend subadvisory agreements with certain subadvisors without shareholder approval and grant relief from the Disclosure Requirements as they relate to fees paid to the subadvisors.
James Alpha Funds Trust d/b/a Easterly Funds Trust and Easterly Investment Partners LLC.
The application was filed on December 8, 2023, and amended on February 9, 2024.
An order granting the requested relief will be issued unless the Commission orders a hearing. Interested persons may request a hearing on any application by emailing the SEC's Secretary at
The Commission:
Jill Ehrlich, Senior Counsel, or Lisa Reid Ragen, Branch Chief, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).
For Applicants' representations, legal analysis, and conditions, please refer to Applicants' amended application, dated February 9, 2024, which may be obtained via the Commission's website by searching for the file number at the top of this document, or for an Applicant using the Company name search field on the SEC's EDGAR system. The SEC's EDGAR system may be searched at
For the Commission, by the Division of Investment Management, under delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to modify Rule 7.31-E regarding Primary Pegged Orders. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Rule 7.31-E regarding Primary Pegged Orders.
Rule 7.31-E(h) defines a Pegged Order as a Limit Order that does not route with a working price that is pegged to a dynamic reference price. If the designated reference price is higher (lower) than the limit price of a Pegged Order to buy (sell), the working price will be the limit price of the order.
Rule 7.31-E(h)(2) defines a Primary Pegged Order as a Pegged Order to buy (sell) with a working price that is pegged to the PBB (PBO), with no offset allowed. A Primary Pegged Order to buy (sell) will be rejected on arrival, or cancelled when resting, if there is no PBB (PBO) against which to peg. A Primary Pegged Order is eligible to participate in auctions at the limit price of the order, provided that, a Primary Pegged Order is not eligible to participate in the Closing Auction.
Rule 7.31-E(h)(2)(A) currently provides that a Primary Pegged Order must include a minimum of one round lot displayed. Rule 7.31-E(h)(2)(A) further provides that the working price of a Primary Pegged Order equals the display price, the display quantity is ranked Priority 2—Display Orders, and the reserve interest is ranked Priority 3—Non-Display Orders.
Rule 7.31-E(h)(2)(B) provides that a Primary Pegged Order will be rejected if the PBBO is locked or crossed. If the PBBO is locked or crossed when the display quantity of a Primary Pegged Reserve Order is replenished, the entire order will be cancelled. If after arrival, the PBBO becomes locked or crossed, the Primary Pegged Order will wait for a PBBO that is not locked or crossed before the display and working price are adjusted and remains eligible to trade at its current working price.
The Exchange proposes to modify Rule 7.31-E(h)(2)(A) to permit Primary Pegged Orders to be entered in any size and thus proposes to eliminate rule text currently providing that a Primary Pegged Order must include a minimum of one round lot displayed. The Exchange believes that requiring Primary Pegged Orders to be entered in round lots is unnecessary and that providing ETP Holders with the option to enter Primary Pegged Orders in odd lots could increase liquidity and enhance opportunities for order execution on the Exchange. The Exchange notes that permitting odd-lot
Because of the technology changes associated with this proposed rule change, the Exchange will announce the implementation date by Trader Update, which, subject to effectiveness of this proposed rule change, will be in the first quarter of 2024.
The proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that the proposed change would promote just and equitable principles of trade, remove impediments to, and perfect the mechanism of, a free and open market and a national market system, and protect investors and the public interest because it would provide ETP Holders with the option to enter Primary Pegged Orders in odd-lot sized orders, which could encourage order flow to the Exchange and promote opportunities for order execution on the Exchange, to the benefit of all market participants. The Exchange notes that the proposed change would not otherwise impact the operation of Primary Pegged Orders as provided under current Exchange rules. The Exchange also believes that the proposed change would align Exchange rules with the treatment of orders analogous to Primary Pegged Orders on other cash equity exchanges, thereby removing impediments to, and perfecting the mechanism of, a free and open market and a national market system.
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. As noted above, the Exchange believes the proposed rule change would allow the Exchange to accept Primary Pegged Orders of any size and align the Exchange's handling of such orders with other cash equity exchanges' handling of similar order types,
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
A proposed rule change filed under Rule 19b-4(f)(6)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 17g-10 requires a provider of third-party due diligence services to provide the written certification required by Section 15E(s)(4) of the Exchange Act on Form ABS Due Diligence-15E. Based on Commission staff's experience, it is estimated that third-party due diligence service providers would be required to spend, on average, 0.20 hours to complete and transmit Form ABS Due Diligence-15E, for a total annual burden of 470 hours.
Written comments are invited on: (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 estimates of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information on respondents; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted by May 14, 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. Please direct your written comments to: Dave Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F St. NE, Washington, DC 20549 or send an email to:
Pursuant to Section 806(e)(1) of Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the Payment, Clearing, and Settlement Supervision Act of 2010 (“Clearing Supervision Act”)
This Advance Notice consists of amendments to FICC's Government Securities Division (“GSD”) Rulebook (“GSD Rules”)
The proposed rule change would necessitate changes to the Methodology Document—GSD Initial Market Risk Margin Model (the “QRM Methodology”), which is filed as Exhibit 5b.
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the Advance Notice and discussed any comments it received on the Advance Notice. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A and B below, of the most significant aspects of such statements.
FICC has not received or solicited any written comments relating to this proposal. If any additional written comments are received, they will be publicly filed as an Exhibit 2 to this filing, as required by Form 19b-4 and the General Instructions thereto. FICC reserves the right not to respond to any comments received.
FICC is proposing to enhance the VaR Floor by incorporating a Minimum Margin Amount in order to supplement the VaR model and improve its responsiveness and resilience to extreme market volatility. Specifically, FICC is proposing to modify the VaR Floor and the corresponding description in the GSD Rules to incorporate a Minimum Margin Amount. In addition, FICC is proposing to expand the application of the enhanced VaR Floor to include Margin Proxy. The proposed change would necessitate changes to the QRM Methodology.
FICC has observed extreme market volatility in the fixed income market due to monetary policy changes, inflation, and recession fears. The extreme market volatility has led to greater risk exposures for FICC. Specifically, the extreme market volatilities during the two arguably most stressful market periods,
In order to better manage its risk exposures during extreme market volatility events, FICC is proposing to adopt a Minimum Margin Amount that would be applied as a minimum volatility calculation to ensure that FICC calculates sufficient margin to cover its risk exposures, particularly during extreme market volatility. The proposed Minimum Margin Amount would be incorporated into the VaR Floor to supplement the VaR model and enhance its responsiveness to extreme market volatility. As proposed, the Minimum Margin Amount is designed to improve the margin backtesting performance during periods of heightened market volatility by maintaining a VaR Charge that is appropriately calibrated to reflect the current market volatility. The proposed Minimum Margin Amount aims to enhance backtesting coverage when there are potential VaR model performance challenges, particularly when securities price changes significantly exceed those implied by the VaR model risk factors, as observed during the recent periods of extreme market volatility. FICC believes the proposed Minimum Margin Amount would provide a more reliable estimate for the portfolio risk level when current market conditions significantly deviate from historical observations.
The proposed Minimum Margin Amount would be determined using historical price returns to represent risk along with amounts calculated (i) using a filtered historical simulation approach, (ii) using a haircut method, and (iii) to incorporate other risk factors. By using a filtered historical simulation approach in which historical returns are scaled to current market volatility, the proposed Minimum Margin Amount would operate as a floor to the VaR Charge to improve the responsiveness of the VaR model to extreme volatility. Because the use of historical price return-based risk representation is not dependent on any sensitivity data vendor, it would allow the proposed Minimum Margin Amount to also operate as a floor to the Margin Proxy and improve the responsiveness of Margin Proxy to extreme volatility.
As a result of this proposal, Members may experience increases in their Required Fund Deposits to the Clearing Fund. Based on an impact study conducted by FICC, on average, at the Member level, the proposed Minimum Margin Amount would have increased the SOD VaR Charge by approximately $22.45 million, or 17.69%, and the noon VaR Charge by approximately $23.22 million, or 17.44%, over a 2-year impact study period.
FICC, through GSD, serves as a central counterparty and provider of clearance and settlement services for transactions in the U.S. government securities, as well as repurchase and reverse repurchase transactions involving U.S. government securities.
The objective of a Member's Required Fund Deposit is to mitigate potential losses to FICC associated with liquidating a Member's portfolio in the event FICC ceases to act for that Member (hereinafter referred to as a “default”).
FICC regularly assesses market and liquidity risks as such risks relate to its margin methodologies to evaluate whether margin levels are commensurate with the particular risk attributes of each relevant product, portfolio, and market. For example, FICC employs daily backtesting to determine the adequacy of each Member's Required Fund Deposit.
FICC investigates the cause(s) of any backtesting deficiencies and determines if there is an identifiable cause of repeat backtesting deficiencies. FICC also evaluates whether multiple Members may experience backtesting deficiencies for the same underlying reason.
Pursuant to the GSD Rules, each Member's Required Fund Deposit amount consists of a number of applicable components, each of which is calculated to address specific risks faced by FICC, as identified within the GSD Rules.
The VaR Charge is based on the potential price volatility of unsettled positions using a sensitivity-based Value-at-Risk (VaR) methodology. The VaR methodology provides an estimate of the possible losses for a given portfolio based on: (1) confidence level, (2) a time horizon and (3) historical market volatility. The VaR methodology is intended to capture the risks related to market price that are associated with the Net Unsettled Positions in a Member's Margin Portfolios. This risk-based margin methodology is designed to project the potential losses that could occur in connection with the liquidation of a defaulting Member's Margin Portfolio, assuming a Margin Portfolio would take three days to liquidate in normal market conditions. The projected liquidation gains or losses are used to determine the amount of the VaR Charge to each Margin Portfolio, which is calculated to capture the market price risk
FICC's VaR model is designed to provide a margin calculation that covers the market risk in a Member's Margin Portfolio. The VaR model calculates the risk profile of each Member's Margin Portfolio by applying certain representative risk factors to measure the degree of responsiveness of the Margin Portfolio's value to the changes of these risk factors over a historical lookback period of at least 10 years that may be supplemented with an additional stressed period.
The VaR model has been shown to perform well in low to moderate volatility markets. From January 2013 to March 2020, the VaR model has generally performed above the 99% performance target, with deterioration in backtesting coverage only during the two arguably most stressful market periods,
On June 1, 2018, the Commission approved FICC's VaR Filing to make changes to GSD's method of calculating a Member's Required Fund Deposit amount, including the VaR Charge.
Currently, the VaR Floor is based upon the market value of the gross unsettled positions in the Member's portfolio. The VaR Floor is determined by multiplying the absolute value of the sum of Net Long Positions and Net Short Positions of Eligible Securities, grouped by product and remaining maturity, by a percentage designated by FICC from time to time for such group. For U.S. Treasury and agency securities, such percentage shall be a fraction, no less than 10%, of the historical minimum volatility of a benchmark fixed income index for such group by product and remaining maturity. For mortgage-backed securities, such percentage shall be a fixed percentage that is no less than 0.05%.
The current VaR Floor is not designed to address the risk of potential underperformance of the VaR model under extreme market volatility.
In order to mitigate the risk of potential underperformance of its VaR model under extreme market volatility, FICC proposes to incorporate a Minimum Margin Amount into the VaR Floor to supplement the VaR model and enhance its responsiveness to extreme market volatility. FICC believes this proposal would complement and improve the VaR model performance during stressed market conditions. Specifically, FICC believes this proposal would improve the margin backtesting performance during periods of heightened market volatility by maintaining a VaR Charge that is appropriately calibrated to reflect the current market volatility.
FICC is proposing to introduce a new calculation called the “Minimum Margin Amount” to complement the existing VaR Floor in the GSD Rules. The Minimum Margin Amount would enhance backtesting coverage when there are potential VaR model performance challenges, particularly when securities price changes significantly exceed those implied by the VaR model risk factors, as observed during the recent periods of extreme market volatility. FICC believes the proposed Minimum Margin Amount would provide a more reliable estimate for the portfolio risk level when current market conditions significantly deviate from historical observations.
The Minimum Margin Amount would be defined in the GSD Rules as, with respect to each Margin Portfolio, a minimum volatility calculation for specified Net Unsettled Positions of a Netting Member as of the time of such calculation. The proposed definition would provide that the Minimum Margin Amount shall use historical price returns to represent risk
FICC is proposing to revise the definition of the VaR Floor to incorporate the Minimum Margin Amount, such that the VaR Floor would be the greater of (i) the VaR Floor Percentage Amount and (ii) the Minimum Margin Amount.
The “VaR Floor Percentage Amount” would be the new defined term used to describe the current VaR Floor percentage calculation in the GSD Rules. This rule change is not proposing to change the VaR Floor percentage or the manner in which this component is calculated.
As proposed, the Minimum Margin Amount would be utilized as the VaR Charge for a Member's Margin Portfolio when it is greater than the current VaR Charge of the Margin Portfolio and the VaR Floor Percentage Amount.
Under the proposed changes to the QRM Methodology, the Minimum Margin Amount would use a price return-based risk representation (
Following the FHS method, FICC would first construct historical price returns using certain mapped fixed income securities benchmarks. As proposed, the mapped fixed income securities benchmarks to be used with the FHS method when calculating the Minimum Margin Amount in the QRM Methodology would be Bloomberg Treasury indexes for U.S. Treasury and agency securities, Bloomberg TIPS indexes for Treasury Inflation-Protected Securities (“TIPS”), and to-be-announced (“TBA”) securities for mortgage-backed securities (“MBS”) pools. These benchmarks were selected because their price movements generally closely track those of the securities mapped to them and that their price history is generally readily available and accessible.
After constructing historical price returns, FICC would estimate a market volatility associated with each historical price return by applying exponentially weighted moving average (“EWMA”) to the historical price returns. The historical price returns are then “devolatilized” by dividing them by the corresponding EWMA volatilities to obtain the residual returns. The residual returns are then “revolatilized” by multiplying them by the current EWMA volatility to obtain the filtered returns.
The filtered return time series are then used to simulate the profits and losses of a Member's Margin Portfolio and derive the volatility of the Margin Portfolio using the standard historical simulation approach. In particular, each security that is in a Member's Margin Portfolio would be mapped to a respective fixed income securities benchmark, as applicable, based on the security's asset class and remaining maturity. The filtered returns of the benchmark are used as the simulated returns of the mapped security to calculate the simulated profits and losses of a Member's Margin Portfolio. The Minimum Margin Amount is then calculated as the 99-percentile of the simulated portfolio loss.
Occasionally, a Member's Margin Portfolio(s) contain classes of securities that reflect market price changes that are not consistently related to historical price moves. The value of these securities is often uncertain because the securities' market volume varies widely, thus the price histories are limited. Because the volume and price information for such securities are not robust, the FHS method would not generate Minimum Margin Amounts that adequately reflect the risk profile of such securities. Accordingly, the proposed changes to the QRM Methodology would provide that the Minimum Margin Amount would use a haircut method to assess the market risk of those securities that are more difficult to simulate, for example, because of thin trading history.
Specifically, the proposed haircut method would be used for MBS pools that are not TBA securities eligible, floating rate notes and U.S. Treasury/agency securities with remaining time to maturities of less than or equal to one year.
A haircut method would also be used to size up the basis risk between an agency security and the mapped U.S. Treasury index to supplement the historical market price moves generated by the FHS method for agency securities to reflect any residual risks between agency securities and the mapped fixed income securities benchmarks,
FICC is proposing to modify the QRM Methodology to specify that the Minimum Margin Amount would use a price return-based risk representation and be calculated per Member Margin Portfolio as the sum of (i), (ii), and (iii):
(a) the amount calculated using historical market price returns of mapped fixed income securities benchmarks derived based on the FHS method.
(a) the haircut charge for MBS pools that are not TBA securities eligible,
(b) the supplemental haircut charge for agency securities,
(c) the haircut charge for floating rate notes and U.S. Treasury/agency securities with remaining time to maturities of less than or equal to one year, and
(d) the supplemental basis haircut charge for mortgage pool securities.
(a) the repo interest volatility charge,
(b) the bid-ask spread risk charge.
The mapped fixed income securities benchmarks, historical market price returns, parameters and volatility assessments to be used to calculate the Minimum Margin Amount would be determined by FICC from time to time in accordance with FICC's model risk management practices and governance set forth in the Clearing Agency Model Risk Management Framework.
The proposed Minimum Margin Amount uses a lookback period for the filtered historical simulation and a decay factor for calculating the EWMA volatility of the historical prices returns.
In particular, the lookback period of the proposed Minimum Margin Amount is the same as the lookback period used for the VaR model, which is 10 years, plus, to the extent applicable, a stressed period. Consistent with the VaR methodology outlined in the QRM Methodology and pursuant to the model performance monitoring required under the Model Risk Management Framework,
The decay factor in general affects (i) whether and how the Minimum Margin Amount would be invoked, (ii) the peak level of margin increase or the degree of procyclicality, and (iii) how quickly the margin would fall back to pre-stress levels. Similar to the lookback period, the decay factor of the proposed Minimum Margin Amount would also be analyzed to evaluate its sensitivity and impact to the model performance pursuant to the model performance monitoring required under the Model Risk Management Framework.
The Model Risk Management Framework would also require FICC to conduct ongoing model performance monitoring of the Minimum Margin Amount methodology.
The GSD Margin Proxy methodology is currently deployed as an alternative volatility calculation in the event that the requisite vendor data used for the VaR model is unavailable for an extended period of time.
In connection with incorporating the Minimum Margin Amount into the VaR Floor, FICC would modify the GSD Rules to:
I. Add a definition of “Minimum Margin Amount” and define it as, with respect to each Margin Portfolio, a minimum volatility calculation for specified Net Unsettled Positions of a Member as of the time of such calculation. The definition would provide that the Minimum Margin Amount shall use historical price returns to represent risk and be calculated as the sum of the following: (a) amounts calculated using a filtered historical simulation approach to assess volatility by scaling historical market price returns to current market volatility, with market volatility being measured by applying exponentially weighted moving average to the historical market price returns with a decay factor between 0.93 and 0.99, as determined by FICC from time to time based on sensitivity analysis, macroeconomic conditions, and/or backtesting performance, (b) amounts calculated using a haircut method to measure the risk exposure of those securities that lack sufficient historical price return data, and (c) amounts calculated to incorporate risks related to (i) repo interest volatility (“repo interest volatility charge”) and (ii) transaction costs related to bid-ask spread in the market that could be incurred when liquidating a portfolio (“bid-ask spread risk charge”). In addition, the proposed definition would require FICC to provide Members with at a minimum one Business Day advance notice of any change to the decay factor via an Important Notice;
II. Add a definition of “VaR Floor Percentage Amount” which would be defined the same as the current calculation for the VaR Floor percentage with non-substantive modifications to reflect that the calculated amount is a separate defined term; and
III. Move the defined term VaR Floor out of the definition of VaR Charge and define it as the greater of (i) the VaR Floor Percentage Amount and (ii) the Minimum Margin Amount.
In connection with applying the VaR Floor to include Margin Proxy, FICC would modify the GSD Rules to revise the definition of “VaR Charge” by adding a reference to the Margin Proxy with respect to the VaR Floor application and clarifying that VaR Charge is calculated at the Margin Portfolio-level.
In connection with incorporating the Minimum Margin Amount into the VaR Floor, FICC would modify the QRM Methodology to:
I. Describe how the Minimum Margin Amount, as defined in the GSD Rules, would be calculated, including:
(i) Establishing mapped fixed income securities benchmarks for purposes of the calculation using historical market price returns of such securities with the FHS method;
(ii) Using a haircut method to assess the market risk of certain securities that are more difficult to simulate due to thin trading history; and
(iii) Detailing other risk factors that would be incorporated in the calculation.
II. Describe the developmental evidence and impacts to backtesting performance and margin charges relating to Minimum Margin Amount.
In connection with applying the VaR Floor to include Margin Proxy, FICC would modify the QRM Methodology to reflect that the Minimum Margin Amount would serve as a floor for the Margin Proxy.
In addition, FICC would modify the QRM Methodology to:
I. Make certain clarifying changes to the QRM Methodology to delete an out-of-date description of the Margin Proxy being used as an adjustment factor to the VaR,
II. Make certain technical changes to the QRM Methodology to renumber sections and tables, correct grammatical and typographical errors, delete out-of-date index names, and update certain formula notations and section titles as necessary.
FICC performed an impact study on Members' Margin Portfolios for the period beginning July 1, 2021 through June 30, 2023 (“Impact Study Period').
The impact study indicated that if the proposed rule changes had been in place, the VaR model backtesting coverage would have increased from approximately 98.86% to 99.46% during the Impact Study Period. Specifically, if the proposed rule changes had been in place during the Impact Study Period, the number of VaR model backtesting deficiencies would have been reduced by 443 (from 843 to 400, or approximately 53%).
The impact study also indicated that if the proposed rule changes had been in place, overall margin backtesting coverage would have increased from approximately 98.87% to 99.33% during the Impact Study Period. Specifically, if the proposed rule changes had been in place during the Impact Study Period, the number of overall margin backtesting deficiencies would have been reduced by 280 (from 685 to 405, or approximately 41%) and the overall margin backtesting coverage for 94 Members (approximately 72% of the GSD membership) would have improved with 36 Members who were below 99% coverage would be brought back to above 99%.
On average, at the Member level, the proposed Minimum Margin Amount would have increased the SOD VaR Charge by approximately $22.45 million, or 17.69%, and the noon VaR Charge by approximately $23.22 million, or 17.44%, over the Impact Study Period. The largest average percentage increase in SOD VaR Charge for any Member would have been approximately 66.88%, or $97,051 (0.21% of the Member's average Net Capital),
FICC would implement the proposed rule changes by no later than 60 Business Days after the later of the approval of the related proposed rule change filing
FICC believes that the proposed change, which consists of a proposal to (i) modify the calculation of the VaR Floor and the corresponding description in the GSD Rules and QRM Methodology to incorporate a Minimum Margin Amount and (ii) expand the application of the VaR Floor to include Margin Proxy, would enable FICC to better limit its exposure to Members arising out of the activity in their portfolios. As stated above, the proposed change is designed to enhance the GSD VaR model performance and improve the backtesting coverage during periods of extreme market volatility. The proposed charge would help ensure that FICC maintains an appropriate level of margin to address its risk management needs.
Specifically, the proposed rule change seeks to remedy potential situations that are described above where FICC's VaR model and/or Margin Proxy, including the existing VaR Floor, does not respond effectively to increased market volatility and the VaR Charge amounts do not achieve a 99% confidence level. Therefore, by enabling FICC to collect margin that more accurately reflects the risk characteristics of its Members, the proposal would enhance FICC's risk management capabilities.
By providing FICC with a more effective limit on its exposures, the proposed change would also mitigate risk for Members because lowering the risk profile for FICC would in turn lower the risk exposure that Members may have with respect to FICC in its role as a central counterparty. Further, the proposal is designed to meet FICC's risk management goals and its regulatory obligations, as described below.
Although Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act entitled the Payment, Clearing, and Settlement Supervision Act of 2010 (“Clearing Supervision Act”) does not specify a standard of review for an advance notice, its stated purpose is instructive: to mitigate systemic risk in the financial system and promote financial stability by, among other things, promoting uniform risk management standards for systemically important financial market utilities and strengthening the liquidity of systemically important financial market utilities.
FICC believes that the proposal is consistent with the Clearing Supervision Act, specifically with the risk management objectives and principles of Section 805(b), and with certain of the risk management standards adopted by the Commission pursuant to Section 805(a)(2), for the reasons described below.
Section 805(b) of the Clearing Supervision Act
FICC is proposing to (i) modify the calculation of the VaR Floor and the corresponding description in the GSD Rules and QRM Methodology to incorporate a Minimum Margin Amount and (ii) expand the application of the VaR Floor to include Margin Proxy, both of which would enable FICC to better limit its exposure to Members arising out of the activity in their portfolios. FICC believes these proposed changes are consistent with promoting robust risk management because the changes would better enable FICC to limit its exposure to Members in the event of a Member default by collecting adequate prefunded financial resources to cover its potential losses resulting from the default of a Member and the liquidation of a defaulting Member's portfolio.
Specifically, the proposed Minimum Margin Amount would modify the VaR Floor to cover circumstances, such as extreme market volatility, where the current VaR Charge calculation and the VaR Floor are both lower than market price volatility from corresponding securities benchmarks. The proposed changes are designed to more effectively measure and address risk characteristics in situations where the risk factors used in the VaR method do not adequately predict market price movements and associated credit risk exposure. As reflected in backtesting studies, FICC believes the proposed changes would appropriately limit FICC's credit exposure to Members in the event that the VaR model yields too low a VaR Charge in such situations. Such backtesting studies indicate that the aggregate average daily Backtesting Charges would have decreased by approximately $622 million or 64.46% during the Impact Study Period, and the overall margin backtesting coverage (based on 12-month trailing backtesting) would have improved from approximately 98.87% to 99.33% during the Impact Study Period if the Minimum Margin Amount calculation had been in place. Improving the overall backtesting coverage level would help FICC ensure that it maintains an appropriate level of margin to address its risk management needs.
The use of the Minimum Margin Amount would reduce risk by allowing FICC to calculate the exposure in each portfolio using historical price returns to represent risk along with amounts calculated (i) using a FHS method that scales historical market price returns to current market volatility, (ii) using a haircut method for those securities that lack sufficient historical price return data, and (iii) to incorporate other risk factors. As reflected by backtesting studies during the Impact Study Period, using the FHS method would provide a more reliable estimate than the FICC VaR historical data set for the portfolio risk level when current market conditions deviate from historical observations. Adding the Minimum Margin Amount to the VaR Floor and applying the VaR Floor to include Margin Proxy would help to ensure that the risk exposure during periods of extreme market volatility is adequately captured in the VaR Charges. FICC believes that would help to ensure that FICC continues to accurately calculate and assess margin and in turn, collect sufficient margin from its Members and better enable FICC to limit its exposures that could be incurred when liquidating a portfolio.
The proposed change to expand the application of VaR Floor to include Margin Proxy would enable Margin Proxy to be a more effective risk mitigant under extreme market volatility and heightened market stress. By improving the effectiveness of Margin Proxy as a risk mitigant under extreme market volatility and heightened market stress would help ensure that the margin that FICC collects from Members is sufficient to mitigate the credit exposure presented by the Members.
For these reasons, FICC believes the proposed changes would help to promote GSD's robust risk management, which, in turn, is consistent with reducing systemic risks and supporting the stability of the broader financial system, consistent with Section 805(b) of the Clearing Supervision Act.
FICC also believes the changes proposed in this advance notice are consistent with promoting safety and soundness, which, in turn, is consistent with reducing systemic risks and supporting the stability of the broader financial system, consistent with Section 805(b) of the Clearing Supervision Act.
Section 805(a)(2) of the Clearing Supervision Act
The Covered Clearing Agency Standards require registered clearing agencies to establish, implement, maintain, and enforce written policies and procedures that are reasonably designed to be consistent with the minimum requirements for their operations and risk management practices on an ongoing basis.
Rule 17Ad-22(e)(4)(i) under the Act
Rule 17Ad-22(e)(6)(i) under the Act
The proposed change may be implemented if the Commission does not object to the proposed change within 60 days of the later of (i) the date that the proposed change was filed with the Commission or (ii) the date that any additional information requested by the Commission is received. The clearing agency shall not implement the proposed change if the Commission has any objection to the proposed change.
The Commission may extend the period for review by an additional 60 days if the proposed change raises novel or complex issues, subject to the Commission providing the clearing agency with prompt written notice of the extension. A proposed change may be implemented in less than 60 days from the date the advance notice is filed, or the date further information requested by the Commission is received, if the Commission notifies the clearing agency in writing that it does not object to the proposed change and authorizes the clearing agency to implement the proposed change on an earlier date, subject to any conditions imposed by the Commission.
The clearing agency shall post notice on its website of proposed changes that are implemented.
The proposal shall not take effect until all regulatory actions required
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the Advance Notice is consistent with the Clearing Supervision Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
Section 806(e)(1)(G) of the Clearing Supervision Act provides that FICC may implement the changes if it has not received an objection to the proposed changes within 60 days of the later of (i) the date that the Commission receives an advance notice or (ii) the date that any additional information requested by the Commission is received,
Pursuant to Section 806(e)(1)(H) of the Clearing Supervision Act, the Commission may extend the review period of an advance notice for an additional 60 days, if the changes proposed in the advance notice raise novel or complex issues, subject to the Commission providing the clearing agency with prompt written notice of the extension.
Here, as the Commission has not requested any additional information, the date that is 60 days after OCC filed the advance notice with the Commission is April 27, 2024. However, the Commission is extending the review period of the Advance Notice for an additional 60 days under Section 806(e)(1)(H) of the Clearing Supervision Act
The Commission believes that the changes proposed in the Advance Notice raise novel and complex issues. Specifically, FICC developed this proposal in response to extreme market volatility experienced during the two arguably most stressed market periods,
Accordingly, the Commission, pursuant to Section 806(e)(1)(H) of the Clearing Supervision Act,
All submissions should refer to File Number SR-FICC-2024-801 and should be submitted on or before April 5, 2024.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), the Securities and Exchange Commission (the “Commission”) has submitted to the Office of Management and Budget a request for extension of the previously approved collection of information discussed below.
Rule 24f-2 (17 CFR 270.24f-2) under the Investment Company Act of 1940 (15 U.S.C. 80a) requires any open-end management companies (“mutual funds”), unit investment trusts (“UITs”), registered closed-end investment companies that make periodic repurchase offers under rule 23c-3 under the Investment Company Act [17 CFR 270.23c-3] (“interval funds”), or face-amount certificate companies (collectively, “funds”) deemed to have registered an indefinite amount of securities to file, not later than 90 days after the end of any fiscal year in which it has publicly offered such securities, Form 24F-2 (17 CFR 274.24) with the Commission. Form 24F-2 is the annual notice of securities sold by funds that accompanies the payment of registration fees with respect to the securities sold during the fiscal year.
The Commission estimates that 2,074 funds file Form 24F-2 on the required annual basis. The average annual burden per respondent for Form 24F-2 is estimated to be four hours. The total annual burden for all respondents to
Compliance with the collection of information required by Form 24F-2 is mandatory. The Form 24F-2 filing that must be made to the Commission is available to the public. 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 control number.
The public may view background documentation for this information collection at the following website:
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)
The proposed rule change consists of modifications to FICC's Government Securities Division (“GSD”) Rulebook (“GSD Rules”)
The proposed rule change would necessitate changes to the Methodology Document—GSD Initial Market Risk Margin Model (the “QRM Methodology”), which is filed as Exhibit 5b.
In its filing with the Commission, the clearing agency included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The clearing agency has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
FICC is proposing to enhance the VaR Floor by incorporating a Minimum Margin Amount in order to supplement the VaR model and improve its responsiveness and resilience to extreme market volatility. Specifically, FICC is proposing to modify the VaR Floor and the corresponding description in the GSD Rules to incorporate a Minimum Margin Amount. In addition, FICC is proposing to expand the application of the enhanced VaR Floor to include Margin Proxy. The proposed change would necessitate changes to the QRM Methodology.
FICC has observed extreme market volatility in the fixed income market due to monetary policy changes, inflation, and recession fears. The extreme market volatility has led to greater risk exposures for FICC. Specifically, the extreme market volatilities during the two arguably most stressful market periods,
In order to better manage its risk exposures during extreme market volatility events, FICC is proposing to adopt a Minimum Margin Amount that would be applied as a minimum volatility calculation to ensure that FICC calculates sufficient margin to cover its risk exposures, particularly during extreme market volatility. The proposed Minimum Margin Amount would be incorporated into the VaR Floor to supplement the VaR model and enhance its responsiveness to extreme market volatility. As proposed, the Minimum Margin Amount is designed to improve the margin backtesting performance during periods of heightened market volatility by maintaining a VaR Charge that is appropriately calibrated to reflect
The proposed Minimum Margin Amount would be determined using historical price returns to represent risk along with amounts calculated (i) using a filtered historical simulation approach, (ii) using a haircut method, and (iii) to incorporate other risk factors. By using a filtered historical simulation approach in which historical returns are scaled to current market volatility, the proposed Minimum Margin Amount would operate as a floor to the VaR Charge to improve the responsiveness of the VaR model to extreme volatility. Because the use of historical price return-based risk representation is not dependent on any sensitivity data vendor, it would allow the proposed Minimum Margin Amount to also operate as a floor to the Margin Proxy and improve the responsiveness of Margin Proxy to extreme volatility.
As a result of this proposal, Members may experience increases in their Required Fund Deposits to the Clearing Fund. Based on an impact study conducted by FICC, on average, at the Member level, the proposed Minimum Margin Amount would have increased the SOD VaR Charge by approximately $22.45 million, or 17.69%, and the noon VaR Charge by approximately $23.22 million, or 17.44%, over a 2-year impact study period.
FICC, through GSD, serves as a central counterparty and provider of clearance and settlement services for transactions in the U.S. government securities, as well as repurchase and reverse repurchase transactions involving U.S. government securities.
The objective of a Member's Required Fund Deposit is to mitigate potential losses to FICC associated with liquidating a Member's portfolio in the event FICC ceases to act for that Member (hereinafter referred to as a “default”).
FICC regularly assesses market and liquidity risks as such risks relate to its margin methodologies to evaluate whether margin levels are commensurate with the particular risk attributes of each relevant product, portfolio, and market. For example, FICC employs daily backtesting to determine the adequacy of each Member's Required Fund Deposit.
FICC investigates the cause(s) of any backtesting deficiencies and determines if there is an identifiable cause of repeat backtesting deficiencies. FICC also evaluates whether multiple Members may experience backtesting deficiencies for the same underlying reason.
Pursuant to the GSD Rules, each Member's Required Fund Deposit amount consists of a number of applicable components, each of which is calculated to address specific risks faced by FICC, as identified within the GSD Rules.
The VaR Charge is based on the potential price volatility of unsettled positions using a sensitivity-based Value-at-Risk (VaR) methodology. The VaR methodology provides an estimate of the possible losses for a given portfolio based on: (1) confidence level, (2) a time horizon and (3) historical market volatility. The VaR methodology is intended to capture the risks related to market price that are associated with the Net Unsettled Positions in a Member's Margin Portfolios. This risk-based margin methodology is designed to project the potential losses that could occur in connection with the liquidation of a defaulting Member's Margin Portfolio, assuming a Margin Portfolio would take three days to liquidate in normal market conditions. The projected liquidation gains or losses are used to determine the amount of the VaR Charge to each Margin Portfolio, which is calculated to capture the market price risk
FICC's VaR model is designed to provide a margin calculation that covers the market risk in a Member's Margin
The VaR model has been shown to perform well in low to moderate volatility markets. From January 2013 to March 2020, the VaR model has generally performed above the 99% performance target, with deterioration in backtesting coverage only during the two arguably most stressful market periods,
On June 1, 2018, the Commission approved FICC's VaR Filing to make changes to GSD's method of calculating a Member's Required Fund Deposit amount, including the VaR Charge.
Currently, the VaR Floor is based upon the market value of the gross unsettled positions in the Member's portfolio. The VaR Floor is determined by multiplying the absolute value of the sum of Net Long Positions and Net Short Positions of Eligible Securities, grouped by product and remaining maturity, by a percentage designated by FICC from time to time for such group. For U.S. Treasury and agency securities, such percentage shall be a fraction, no less than 10%, of the historical minimum volatility of a benchmark fixed income index for such group by product and remaining maturity. For mortgage-backed securities, such percentage shall be a fixed percentage that is no less than 0.05%.
The current VaR Floor is not designed to address the risk of potential underperformance of the VaR model under extreme market volatility.
In order to mitigate the risk of potential underperformance of its VaR model under extreme market volatility, FICC proposes to incorporate a Minimum Margin Amount into the VaR Floor to supplement the VaR model and enhance its responsiveness to extreme market volatility. FICC believes this proposal would complement and improve the VaR model performance during stressed market conditions. Specifically, FICC believes this proposal would improve the margin backtesting performance during periods of heightened market volatility by maintaining a VaR Charge that is appropriately calibrated to reflect the current market volatility.
FICC is proposing to introduce a new calculation called the “Minimum Margin Amount” to complement the existing VaR Floor in the GSD Rules. The Minimum Margin Amount would enhance backtesting coverage when there are potential VaR model performance challenges, particularly when securities price changes significantly exceed those implied by the VaR model risk factors, as observed during the recent periods of extreme market volatility. FICC believes the proposed Minimum Margin Amount would provide a more reliable estimate for the portfolio risk level when current market conditions significantly deviate from historical observations.
The Minimum Margin Amount would be defined in the GSD Rules as, with respect to each Margin Portfolio, a minimum volatility calculation for specified Net Unsettled Positions of a Netting Member as of the time of such calculation. The proposed definition would provide that the Minimum Margin Amount shall use historical price returns to represent risk
FICC is proposing to revise the definition of the VaR Floor to incorporate the Minimum Margin Amount, such that the VaR Floor would be the greater of (i) the VaR Floor Percentage Amount and (ii) the Minimum Margin Amount.
The “VaR Floor Percentage Amount” would be the new defined term used to describe the current VaR Floor percentage calculation in the GSD Rules. This rule change is not proposing to change the VaR Floor percentage or the manner in which this component is calculated.
As proposed, the Minimum Margin Amount would be utilized as the VaR Charge for a Member's Margin Portfolio when it is greater than the current VaR Charge of the Margin Portfolio and the VaR Floor Percentage Amount.
Under the proposed changes to the QRM Methodology, the Minimum Margin Amount would use a price return-based risk representation (
Following the FHS method, FICC would first construct historical price returns using certain mapped fixed income securities benchmarks. As proposed, the mapped fixed income securities benchmarks to be used with the FHS method when calculating the Minimum Margin Amount in the QRM Methodology would be Bloomberg Treasury indexes for U.S. Treasury and agency securities, Bloomberg TIPS indexes for Treasury Inflation-Protected Securities (“TIPS”), and to-be-announced (“TBA”) securities for mortgage-backed securities (“MBS”) pools. These benchmarks were selected because their price movements generally closely track those of the securities mapped to them and that their price history is generally readily available and accessible.
After constructing historical price returns, FICC would estimate a market volatility associated with each historical price return by applying exponentially weighted moving average (“EWMA”) to the historical price returns. The historical price returns are then “devolatilized” by dividing them by the corresponding EWMA volatilities to obtain the residual returns. The residual returns are then “revolatilized” by multiplying them by the current EWMA volatility to obtain the filtered returns.
The filtered return time series are then used to simulate the profits and losses of a Member's Margin Portfolio and derive the volatility of the Margin Portfolio using the standard historical simulation approach. In particular, each security that is in a Member's Margin Portfolio would be mapped to a respective fixed income securities benchmark, as applicable, based on the security's asset class and remaining maturity. The filtered returns of the benchmark are used as the simulated returns of the mapped security to calculate the simulated profits and losses of a Member's Margin Portfolio. The Minimum Margin Amount is then calculated as the 99-percentile of the simulated portfolio loss.
Occasionally, a Member's Margin Portfolio(s) contain classes of securities that reflect market price changes that are not consistently related to historical price moves. The value of these securities is often uncertain because the securities' market volume varies widely, thus the price histories are limited. Because the volume and price information for such securities are not robust, the FHS method would not generate Minimum Margin Amounts that adequately reflect the risk profile of such securities. Accordingly, the proposed changes to the QRM Methodology would provide that the Minimum Margin Amount would use a haircut method to assess the market risk of those securities that are more difficult to simulate, for example, because of thin trading history.
Specifically, the proposed haircut method would be used for MBS pools that are not TBA securities eligible, floating rate notes and U.S. Treasury/agency securities with remaining time to maturities of less than or equal to one year.
A haircut method would also be used to size up the basis risk between an agency security and the mapped U.S. Treasury index to supplement the historical market price moves generated by the FHS method for agency securities to reflect any residual risks between agency securities and the mapped fixed income securities benchmarks,
FICC is proposing to modify the QRM Methodology to specify that the Minimum Margin Amount would use a price return-based risk representation and be calculated per Member Margin Portfolio as the sum of (i), (ii), and (iii):
(i) FHS Method
(a) the amount calculated using historical market price returns of mapped fixed income securities benchmarks derived based on the FHS method.
(ii) Haircut Method
(a) the haircut charge for MBS pools that are not TBA securities eligible,
(b) the supplemental haircut charge for agency securities,
(c) the haircut charge for floating rate notes and U.S. Treasury/agency securities with remaining time to maturities of less than or equal to one year, and
(d) the supplemental basis haircut charge for mortgage pool securities.
(iii) Additional Risk Factors
(a) the repo interest volatility charge,
(b) the bid-ask spread risk charge.
The mapped fixed income securities benchmarks, historical market price returns, parameters and volatility assessments to be used to calculate the Minimum Margin Amount would be determined by FICC from time to time in accordance with FICC's model risk management practices and governance
The proposed Minimum Margin Amount uses a lookback period for the filtered historical simulation and a decay factor for calculating the EWMA volatility of the historical prices returns.
In particular, the lookback period of the proposed Minimum Margin Amount is the same as the lookback period used for the VaR model, which is 10 years, plus, to the extent applicable, a stressed period. Consistent with the VaR methodology outlined in the QRM Methodology and pursuant to the model performance monitoring required under the Model Risk Management Framework,
The decay factor in general affects (i) whether and how the Minimum Margin Amount would be invoked, (ii) the peak level of margin increase or the degree of procyclicality, and (iii) how quickly the margin would fall back to pre-stress levels. Similar to the lookback period, the decay factor of the proposed Minimum Margin Amount would also be analyzed to evaluate its sensitivity and impact to the model performance pursuant to the model performance monitoring required under the Model Risk Management Framework.
The Model Risk Management Framework would also require FICC to conduct ongoing model performance monitoring of the Minimum Margin Amount methodology.
The GSD Margin Proxy methodology is currently deployed as an alternative volatility calculation in the event that the requisite vendor data used for the VaR model is unavailable for an extended period of time.
In connection with incorporating the Minimum Margin Amount into the VaR Floor, FICC would modify the GSD Rules to:
I. Add a definition of “Minimum Margin Amount” and define it as, with respect to each Margin Portfolio, a minimum volatility calculation for specified Net Unsettled Positions of a Member as of the time of such calculation. The definition would provide that the Minimum Margin Amount shall use historical price returns to represent risk and be calculated as the sum of the following: (a) amounts calculated using a filtered historical simulation approach to assess volatility by scaling historical market price returns to current market volatility, with market volatility being measured by applying exponentially weighted moving average to the historical market price returns with a decay factor between 0.93 and 0.99, as determined by FICC from time to time based on sensitivity analysis, macroeconomic conditions, and/or backtesting performance, (b) amounts calculated using a haircut method to measure the risk exposure of those securities that lack sufficient historical price return data, and (c) amounts calculated to incorporate risks related to (i) repo interest volatility (“repo interest volatility charge”) and (ii) transaction costs related to bid-ask spread in the market that could be incurred when liquidating a portfolio (“bid-ask spread risk charge”). In addition, the proposed definition would require FICC to provide Members with at a minimum one Business Day advance notice of any change to the decay factor via an Important Notice;
II. Add a definition of “VaR Floor Percentage Amount” which would be defined the same as the current calculation for the VaR Floor percentage with non-substantive modifications to reflect that the calculated amount is a separate defined term; and
III. Move the defined term VaR Floor out of the definition of VaR Charge and define it as the greater of (i) the VaR Floor Percentage Amount and (ii) the Minimum Margin Amount.
In connection with applying the VaR Floor to include Margin Proxy, FICC would modify the GSD Rules to revise the definition of “VaR Charge” by adding a reference to the Margin Proxy with respect to the VaR Floor application and clarifying that VaR Charge is calculated at the Margin Portfolio-level.
In connection with incorporating the Minimum Margin Amount into the VaR Floor, FICC would modify the QRM Methodology to:
I. Describe how the Minimum Margin Amount, as defined in the GSD Rules, would be calculated, including:
(i) Establishing mapped fixed income securities benchmarks for purposes of the calculation using historical market price returns of such securities with the FHS method;
(ii) Using a haircut method to assess the market risk of certain securities that are more difficult to simulate due to thin trading history; and
(iii) Detailing other risk factors that would be incorporated in the calculation.
II. Describe the developmental evidence and impacts to backtesting performance and margin charges relating to Minimum Margin Amount.
In connection with applying the VaR Floor to include Margin Proxy, FICC would modify the QRM Methodology to reflect that the Minimum Margin Amount would serve as a floor for the Margin Proxy.
In addition, FICC would modify the QRM Methodology to:
I. Make certain clarifying changes to the QRM Methodology to delete an out-of-date description of the Margin Proxy being used as an adjustment factor to the VaR,
II. Make certain technical changes to the QRM Methodology to renumber sections and tables, correct grammatical and typographical errors, delete out-of-date index names, and update certain formula notations and section titles as necessary.
FICC performed an impact study on Members' Margin Portfolios for the period beginning July 1, 2021 through June 30, 2023 (“Impact Study Period').
The impact study indicated that if the proposed rule changes had been in place, the VaR model backtesting coverage would have increased from approximately 98.86% to 99.46% during the Impact Study Period. Specifically, if the proposed rule changes had been in place during the Impact Study Period, the number of VaR model backtesting deficiencies would have been reduced by 443 (from 843 to 400, or approximately 53%).
The impact study also indicated that if the proposed rule changes had been in place, overall margin backtesting coverage would have increased from approximately 98.87% to 99.33% during the Impact Study Period. Specifically, if the proposed rule changes had been in place during the Impact Study Period, the number of overall margin backtesting deficiencies would have been reduced by 280 (from 685 to 405, or approximately 41%) and the overall margin backtesting coverage for 94 Members (approximately 72% of the GSD membership) would have improved with 36 Members who were below 99% coverage would be brought back to above 99%.
On average, at the Member level, the proposed Minimum Margin Amount would have increased the SOD VaR Charge by approximately $22.45 million, or 17.69%, and the noon VaR Charge by approximately $23.22 million, or 17.44%, over the Impact Study Period. The largest average percentage increase in SOD VaR Charge for any Member would have been approximately 66.88%, or $97,051 (0.21% of the Member's average Net Capital),
FICC would implement the proposed rule changes by no later than 60 Business Days after the later of the approval of the proposed rule change and no objection to the related advance notice
FICC believes that this proposal is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a registered clearing agency. Specifically, FICC
Section 17A(b)(3)(F) of the Act requires, in part, that the GSD Rules be designed to assure the safeguarding of securities and funds which are in the custody or control of the clearing agency or for which it is responsible.
The Required Fund Deposits are made up of risk-based components (as margin) that are calculated and assessed daily to limit FICC's credit exposures to Members. FICC is proposing changes to the GSD Rules and QRM Methodology that are designed to more effectively measure and address risk characteristics in situations where the risk factors used in the VaR method do not adequately predict market price movements. The proposed changes above would adjust the VaR Floor to help ensure that FICC collects adequate margin from its Members, particularly in periods of extreme market volatility. During periods of extreme market volatility, the existing VaR model has been shown to underperform based on backtesting performances. Backtesting percentages covering such periods indicate the risk that VaR Charges would be insufficient to manage risk in the event of a Member default. FICC pays particular attention to Members with backtesting deficiencies that bring the backtesting results for that Member below the 99% confidence target to determine if there is an identifiable cause of repeat backtesting deficiencies. During the recent period of extreme market volatility, there was an increase in observed backtesting deficiencies. The Minimum Margin Amount, to be defined in the GSD Rules and further incorporated in the QRM Methodology as described herein, is a proposed targeted response to enhance the GSD VaR model performance and improve the backtesting coverage during periods of extreme market volatility.
As a result of the recent extreme market volatility, FICC's VaR model did not achieve a 99% confidence level for all Members during the COVID period during March of 2020 and the successive interest rate hikes that began in June 2022. The Minimum Margin Amount is intended to allow the VaR Charge to be more responsive during market conditions when the VaR model projections do not closely correspond with observed market price changes. Backtesting studies indicate that the aggregate average daily SOD VaR Charges would have increased by approximately $2.90 billion or 13.89%, the aggregate average daily noon VaR Charges would have increased by approximately $3.03 billion or 14.05%, the aggregate average daily Backtesting Charges would have decreased by approximately $622 million or 64.46% during the Impact Study Period, and the overall margin backtesting coverage (based on 12-month trailing backtesting) would have improved from approximately 98.87% to 99.33% during the Impact Study Period if the Minimum Margin Amount calculation had been in place. Improving the overall backtesting coverage level would help FICC ensure that it maintains an appropriate level of margin to address its risk management needs.
The use of the Minimum Margin Amount would reduce risk by allowing FICC to calculate the exposure in each portfolio using historical price returns to represent risk along with amounts calculated (i) using a FHS method that scales historical market price returns to current market volatility, (ii) using a haircut method for securities that lack sufficient historical price return data, and (iii) to incorporate other risk factors. As reflected by backtesting studies during the Impact Study Period, the proposed changes would appropriately limit FICC's credit exposure to Members when current market conditions deviate from historical observations, resulting in the risk factors used in the VaR method do not adequately predict market price movements and associated credit risk exposure. Adding the Minimum Margin Amount to the VaR Floor would help to ensure that the risk exposure during periods of extreme market volatility is adequately captured in the VaR Charges. Similarly, the proposed change to expand the application of VaR Floor to include Margin Proxy would enable Margin Proxy to be a more effective risk mitigant under extreme market volatility and heightened market stress. By improving the effectiveness of Margin Proxy as a risk mitigant under extreme market volatility and heightened market stress would help ensure that the margin that FICC collects from Members is sufficient to mitigate the credit exposure presented by the Members. Overall, FICC believes these proposed changes would help to ensure that FICC continues to accurately calculate and assess margin and in turn, collect sufficient margin from its Members and better enable FICC to limit its exposures that could be incurred when liquidating a portfolio.
FICC believes the proposed clarifying and technical changes to the GSD Rules and QRM Methodology described above would enhance the clarity of the GSD Rules and the QRM Methodology for FICC and its membership. Having clear and accurate rules would help Members better understand their rights and obligations under the GSD Rules, and Members would be more likely to act in accordance with the GSD Rules. Similarly, having a clear and accurate methodology document that describes how the VaR Charges are calculated would help to ensure that FICC continues to accurately calculate and assess margin and in turn, collect sufficient margin from its Members and better enable FICC to limit its exposures that could be incurred when liquidating a portfolio.
By better enabling FICC to limit its exposure to Members, the proposed changes to the GSD Rules and QRM Methodology are designed to better ensure that, in the event of a Member default, FICC would have adequate margin from the defaulting Member and non-defaulting Members would not be exposed to losses they cannot anticipate or control. Therefore, the proposed changes would be designed to assure the safeguarding of securities and funds which are in the custody or control of FICC or for which it is responsible, consistent with Section 17A(b)(3)(F) of the Act.
Rule 17Ad-22(e)(4)(i) under the Act
Rule 17Ad-22(e)(6)(i) under the Act
FICC believes the proposed rule changes to (i) modify the VaR Floor to incorporate a Minimum Margin Amount and (ii) expand the application of the VaR Floor to include Margin Proxy, each as described above, could impose a burden on competition. As a result of the proposed rule changes, Members may experience increases in their Required Fund Deposits. An impact study during the Impact Study Period indicates that on average each Member would have had an increase in the SOD VaR Charge and the noon VaR Charge of approximately $22.45 million, or 17.69%, and $23.22 million, or 17.44%, respectively. Such increases could burden Members that have lower operating margins or higher costs of capital than other Members. It is not clear whether the burden on competition would necessarily be significant because it would depend on whether the affected Members were similarly situated in terms of business type and size. Regardless of whether the burden on competition is significant, FICC believes that any burden on competition would be necessary and appropriate in furtherance of the purposes of the Act, as permitted by Section 17A(b)(3)(I) of the Act.
Specifically, FICC believes that the proposed rule changes would be necessary in furtherance of the Act, as described in this filing and further below. FICC believes that the above-described burden on competition that may be created by the proposed changes is necessary, because the GSD Rules must be designed to assure the safeguarding of securities and funds that are in FICC's custody or control or which it is responsible, consistent with Section 17A(b)(3)(F) of the Act.
FICC also believes these proposed changes are necessary to support FICC's compliance with Rule 17Ad-22(e)(4)(i) and Rule 17Ad-22(e)(6)(i) under the Act,
As described above, FICC believes that implementing the Minimum Margin Amount into the VaR Floor would allow FICC to more effectively measure and address risk characteristics in situations where the risk factors used in the VaR method do not adequately predict market price movements, particularly in periods of extreme volatility and economic uncertainty. FICC's existing VaR model underperformed in response to the significant levels of extreme market volatility, and the VaR Charge amounts that were calculated using the profit and loss scenarios generated by FICC's VaR model did not achieve the 99% backtesting coverage target during the COVID period during March of 2020 and the successive interest rate hikes that began in March 2022. In addition, the current VaR Floor is not designed to address the risk of potential underperformance of the VaR model under extreme market volatility. As reflected in backtesting studies during the Impact Study Period, FICC believes the proposed changes would appropriately cover FICC's credit exposure to Members with a high degree of confidence in the event that the VaR model yields too low a VaR Charge in such situations. The proposed rule changes would limit FICC's exposure to Members by ensuring that each Member has an appropriate minimum VaR Charge applied to its portfolios in the event that the VaR model yields too low a VaR Charge for such portfolios. By identifying and providing for appropriate VaR Charges, adding the Minimum Margin Amount to the VaR Floor would help to ensure that margin levels are commensurate with the risk exposure of each portfolio during periods of extreme market volatility. Similarly, the proposed change to expand the application of VaR Floor to include Margin Proxy would enable Margin Proxy to be a more effective risk mitigant under extreme market volatility and heightened market stress. By improving the effectiveness of Margin Proxy as a risk mitigant under extreme market volatility and heightened market stress would help ensure that the margin that FICC collects from Members is sufficient to mitigate the credit exposure presented by the Members. Therefore, FICC believes that these proposed changes would allow FICC to effectively identify, measure, monitor, and manage its credit exposures to Members and better limit FICC's credit exposures to Members by maintaining sufficient financial resources to cover its credit exposure to each Member fully with a high degree of confidence and producing margin levels commensurate with the risks and particular attributes of each relevant product and portfolio consistent with the requirements of Rule 17Ad-22(e)(4)(i) and Rule 17Ad-22(e)(6)(i) under the Act.
FICC also believes that the above-described burden on competition that could be created by the proposed changes would be appropriate in furtherance of the Act because such changes have been appropriately designed to assure the safeguarding of securities and funds which are in the custody or control of FICC or for which it is responsible, as described in detail above. The proposed changes to incorporate the Minimum Margin Amount and apply the VaR Floor to include Margin Proxy would enable FICC to produce margin levels more commensurate with the risks and particular attributes of each Member's portfolio. Any increase in Required Fund Deposit as a result of such proposed changes for a particular Member would be in direct relation to the specific risks presented by such Members' portfolio, and each Member's Required Fund Deposit would continue to be calculated with the same parameters and at the same confidence level. Therefore, Members with portfolios that present similar risks, regardless of the type of Member, would have similar impacts on their Required Fund Deposit amounts. In addition, the proposed changes would improve the risk-based margining methodology that FICC employs to set margin requirements and better limit FICC's credit exposures to its Members. Impact studies indicate that the proposed methodology would result in backtesting coverage that more appropriately addresses the risks presented by each portfolio. Therefore, because the proposed changes are designed to provide FICC with a more appropriate and complete measure of the risks presented by Members' portfolios, FICC believes the proposals are appropriately designed to meet its risk management goals and its regulatory obligations.
Therefore, FICC does not believe that the proposed changes would impose any burden on competition that is not necessary or appropriate in furtherance of the Act.
FICC does not believe the proposed clarifying and technical changes to the GSD Rules and the QRM Methodology would impact competition. These changes would help to ensure that the GSD Rules and the QRM Methodology remain clear. Specifically, the changes
FICC has not received or solicited any written comments relating to this proposal. If any additional written comments are received, they will be publicly filed as an Exhibit 2 to this filing, as required by Form 19b-4 and the General Instructions thereto.
Persons submitting comments are cautioned that, according to Section IV (Solicitation of Comments) of the Exhibit 1A in the General Instructions to Form 19b-4, the Commission does not edit personal identifying information from comment submissions. Commenters should submit only information that they wish to make available publicly, including their name, email address, and any other identifying information.
All prospective commenters should follow the Commission's instructions on how to submit comments,
FICC reserves the right not to respond to any comments received.
Within 45 days of the date of publication of this notice in the
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
The proposal shall not take effect until all regulatory actions required with respect to the proposal are completed.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given of the following determinations: I hereby determine that certain objects being imported from abroad pursuant to agreements with their foreign owners or custodians for temporary display in the exhibition “Paula Modersohn-Becker: Ich bin Ich/I am Me” at the Neue Galerie New York, in New York, New York; The Art Institute of Chicago, in Chicago, Illinois; and at possible additional exhibitions or venues yet to be determined, are of cultural significance, and, further, that their temporary exhibition or display within the United States as aforementioned is in the national interest. I have ordered that Public Notice of these determinations be published in the
Reed Liriano, Program Coordinator, Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
State Justice Institute.
Notice of meeting.
The purpose of this meeting is to consider grant applications for the 2nd quarter of FY 2024, and other business.
The SJI Board of Directors will be meeting on Monday, April 8, 2024 at 1 p.m. PT.
Nevada Supreme Court Law Library, 201 South Carson Street, Room 107, Carson City, Nevada.
Jonathan Mattiello, Executive Director, State Justice Institute, 12700 Fair Lakes Circle, Suite 340, Fairfax, VA 22033, 703-660-4979,
Grainbelt Corporation (GNBC), a Class III rail carrier, has filed a verified notice of exemption under 49 CFR 1180.2(d)(7) to extend the term of the previously amended, local trackage rights on trackage owned by BNSF Railway Company (BNSF) between approximately milepost 668.73 in Long, Okla., and approximately milepost 723.30 in Quanah, Tex. (the Line). The trackage rights allow GNBC to (1) use the Line to access the Plains Cotton Cooperative Association (PCCA) facility near BNSF Chickasha Subdivision milepost 688.6 at Altus, Okla., and (2) operate additional trains on the Line to accommodate the movement of trains transporting BNSF customers' railcars (loaded or empty) located along the Line, to unit train facilities on the Line (collectively, the PCCA Trackage Rights).
The transaction may be consummated on or after March 31, 2024, the effective date of the exemption (30 days after the verified notice was filed).
As a condition to this exemption, any employees affected by the acquisition of the trackage rights will be protected by the conditions imposed in
If the verified notice contains false or misleading information, the exemption is void ab initio. Petitions to revoke the exemption under 49 U.S.C. 10502(d) may be filed at any time. The filing of a petition to revoke will not automatically stay the effectiveness of the exemption. Petitions for stay must be filed no later than March 22, 2024 (at least seven days before the exemption becomes effective).
All pleadings, referring to Docket No. FD 36486 (Sub-No. 6), must be filed with the Surface Transportation Board either via e-filing on the Board's website or in writing addressed to 395 E Street, SW, Washington, DC 20423-0001. In addition, a copy of each pleading must be served on GNBC's representative, Eric M. Hocky, Clark Hill PLC, Two Commerce Square, 2001 Market Street, Suite 2620, Philadelphia, PA 19103.
According to GNBC, this action is categorically excluded from environmental review under 49 CFR 1105.6(c) and from historic preservation reporting requirements under 49 CFR 1105.8(b).
Board decisions and notices are available at
By the Board, Mai T. Dinh, Director, Office of Proceedings.
Federal Highway Administration (FHWA), U.S. Department of Transportation (DOT).
Notice.
This notice provides information regarding FHWA's finding that it is appropriate to grant a Buy America waiver to the City of Mount Vernon, Washington, for procurement of non-domestic iron and steel products and components, used in construction of the Mount Vernon Library Commons Project (Project) in the City of Mount Vernon, Washington. The waiver relates specifically to manufactured products that are part of the elevator equipment; mechanical, electrical, and plumbing systems; and architectural elements of the Project.
The effective date of the waiver is March 18, 2024.
For questions about this notice, please contact Mr. Brian Hogge, FHWA Office of Infrastructure, 202-366-1562, or via email at
An electronic copy of this document may be downloaded from the Federal Register's home page at:
The FHWA's Buy America requirements for steel and iron are set forth at 23 U.S.C. 313 and 23 CFR 635.410 and require that all steel and iron that are permanently incorporated into a Federal-aid project must be
Under 23 U.S.C. 313(b) and 23 CFR 635.410(c), FHWA may waive the application of its Buy America requirement for steel and iron if the application would be inconsistent with the public interest; or when products are not produced in the United States in sufficient and reasonably available quantities of a satisfactory quality. This notice provides information regarding FHWA's finding that it is appropriate to grant the City of Mount Vernon a Buy America waiver for procurement of non-domestic iron and steel products that are part of the elevator equipment; mechanical, electrical, and plumbing systems; and architectural elements of the Project. The “specified products” include: (i) elevator conveying equipment; (ii) elevator sump pump; (iii) HVAC controls; (iv) hydronic pumps; (v) energy recovery ventilators; (vi) split system A/C; (vii) coalescing style air and sediment separator; (viii) air source water heat pumps; (ix) fan coil units Nailor; (x) fan coil units Daikin; (xi) switchboards; (xii) panelboards; (xiii) an intercom system; (xiv) an AV system wall rack; (xv) heat pump water heaters; (xvi) a backflow preventer; (xvii) metal wall and roof panel fasteners; (xviii) terracotta fasteners; (xix) a retractable acoustic wall; (xx) a folding glass panel partition; (xxi) electric bike charging lockers; (xxii) uni-strut fasteners; and (xxiii) a fire alarm system (collectively “waiver items”).
The notice of waiver request stated that the City of Mount Vernon had not received FHWA financial assistance to that point but was applying for funding under the Charging and Fueling Infrastructure Discretionary Grant Program (CFI Program) and Transportation Infrastructure Finance and Innovation Act program (TIFIA). Since the notice of waiver request was published, FHWA recently awarded the City $12,500,000 in funding under the CFI Program;
In accordance with section 123 of Division A of the Consolidated Appropriations Act, 2010 (Pub. L. 111-117), section 117 of the SAFETEA-LU Technical Corrections Act of 2008 (Pub. L. 110-244), and 23 U.S.C. 313(g), FHWA posted a notice of the waiver request on its website on September 13, 2023, soliciting public comment on the intent to issue a waiver of the waiver items for a 15-day period.
The other commenter, who represented a manufacturer, indicated they can make many of the waiver items domestically. In subsequent discussions between FHWA, the City of Mount Vernon, and the manufacturer, the company stated that the only Buy America-compliant waiver item that it might be able to provide domestically would be the hydronic pumps. On October 18, 2023, the city provided the manufacturer with the timeline for when each hydronic pump would be needed on site based on the project schedule. The city also requested a response that included a commitment to provide the hydronic pumps by November 21, 2023. On November 27, 2023, the City of Mount Vernon notified FHWA that the city had received no further reply. Thus, the city did not receive any new information indicating that any of the waiver items could be produced by domestic manufacturers from any of the commenters opposing the waiver.
Accordingly, FHWA believes that the city has made substantial efforts to find suitable Buy America-compliant waiver items for the Library Commons project. The FHWA reviewed the market research conducted by the city and, in consultation with the National Institute of Standards and Technology Manufacturing Extension Partnership, determined that further supplier scouting would not be warranted. The waiver items include iron and steel components of manufactured products of unknown origin, and FHWA does not believe that additional supplier scouting would uncover items where all iron and steel components could be shown to be domestically produced or manufacturers who wish to modify their manufacturing processes to incorporate such domestically produced components.
In addition, the City of Mount Vernon has not located any domestic manufacturers for the waiver items, nor has any domestic manufacturer identified the ability to produce Buy America-compliant waiver items through the public comment process. These waiver items include many small iron and steel components of unknown origin incorporated into manufactured products that under FHWA's Buy America requirements must be domestically manufactured.
Based on all the information available to the Agency, FHWA concludes that, with respect to the specified products, there are no Buy America-compliant items and is waiving its Buy America requirements for steel and iron set forth at 23 U.S.C. 313 and 23 CFR 635.410 for recipient purchases of the following produces used in the Mount Vernon Library Commons Project (“specified products”): (i) elevator conveying equipment; (ii) elevator sump pump; (iii) HVAC controls; (iv) hydronic pumps; (v) energy recovery ventilators; (vi) split system A/C; (vii) coalescing style air and sediment separator; (viii) air source water heat pumps; (ix) fan coil units Nailor; (x) fan coil units Daikin; (xi) switchboards; (xii) panelboards; (xiii) an intercom system; (xiv) an AV system wall rack; (xv) heat pump water heaters; (xvi) a backflow preventer; (xvii) metal wall and roof panel fasteners; (xviii) terracotta fasteners; (xix) a retractable acoustic wall; (xx) a folding glass panel partition; (xxi) electric bike charging lockers; (xxii) uni-strut fasteners; and (xxiii) a fire alarm system. This finding only includes components identified in the waiver request and supporting documents included on FHWA's website.
The waiver applies to the specified products used in the Project that are subject to Buy America as a result of obligations of Federal financial assistance made by FHWA for the Project. FHWA will obligate award funds following the effective date of this waiver. The City of Mount Vernon and its contractors and subcontractors involved in the procurement of the relevant components are reminded of the need to comply with the Cargo Preference Act in 46 CFR part 38, if applicable.
The OMB Memorandum M-24-02 provides that, before granting a waiver in the public interest, to the extent permitted by law, Federal Agencies shall 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.”
In accordance with the provisions of section 117 of the SAFETEA-LU Technical Corrections Act of 2008, FHWA is providing this notice as its finding that a waiver of its Buy America requirements for steel and iron is appropriate. The FHWA invites public comment on this finding for an additional five days following the effective date of the finding. Comments may be submitted to FHWA's website via the link provided to the waiver page noted above.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0041 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel JULIA LYNN is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0041 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0042 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel EIGHTBALL II is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0042 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0037 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel THE LAZY TARPON is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0037 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0038 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel DONNA LEE is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0038 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0040 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel PACIFIC SUN is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0040 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0033 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel MOJITO is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0033 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0032 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel PATIENCE is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0032 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0035 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel VALHALLA is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0035 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0034 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel SKY is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0034 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0039 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel PEACEFUL SOL is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0039 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to issue coastwise endorsement eligibility determinations for foreign-built vessels which will carry no more than twelve passengers for hire. A request for such a determination has been received by MARAD. By this notice, MARAD seeks comments from interested parties as to any effect this action may have on U.S. vessel builders or businesses in the U.S. that use U.S.-flag vessels. Information about the requestor's vessel, including a brief description of the proposed service, is listed below.
Submit comments on or before April 15, 2024.
You may submit comments identified by DOT Docket Number MARAD-2024-0036 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Patricia Hagerty, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-461, Washington, DC 20590. Telephone: (202) 366-0903. Email:
As described in the application, the intended service of the vessel CRUISENAUTIC is:
The complete application is available for review identified in the DOT docket as MARAD 2024-0036 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit the information you claim to be confidential commercial information by email to
In the event MARAD receives a Freedom of Information Act (FOIA) request for the information, procedures described in the Department's FOIA regulation at 49 CFR 7.29 will be followed. Only information that is ultimately determined to be confidential under those procedures will be exempt from disclosure under FOIA.
Anyone can search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). For information on DOT's compliance with the Privacy Act, please visit
By Order of the Maritime Administrator.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service (IRS), 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 information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning, Information Regarding Beneficiaries Acquiring Property From a Decedent.
Written comments should be received on or before May 14, 2024 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 Martha R. Brinson, at (202) 317-5753, or at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
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.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Internal Revenue Service (IRS), 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 information collections, as required by the Paperwork Reduction Act of 1995. The IRS is soliciting comments concerning, cancellation of debt and removal of the 36-month non-payment testing period rule.
Written comments should be received on or before May 14, 2024 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 Martha R. Brinson, at (202) 317-5753, or at Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224, or through the internet at
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.
Departmental Offices, Department of the Treasury.
Notice of a modified system of records.
In accordance with the Privacy Act of 1974, the Department of the Treasury (“Treasury” or the “Department”), Departmental Offices proposes to modify a current Treasury system of records titled, “Department of the Treasury, Departmental Offices .190—Office of Inspector General Investigations Management Information System.” This system's name is being amended to the “Department of the Treasury, Departmental Offices .190—Office of Inspector General Electronic Case Management System,” yet it will still maintain the same records and collected information that provides essential support for activities of the Treasury Office of Inspector General (OIG) relating to Treasury programs, operations, employees, contractors and other individuals or entities associated with the Department. Additionally, the Department proposes to amend this system of records by modifying one existing routine use, adding four new routine uses, and making technical changes and corrections.
Submit comments on or before April 15, 2024. The modification of the system of records notice will be applicable on April 15, 2024.
Written comments on this notice may be submitted electronically through the Federal government eRulemaking portal at
In general, Treasury will post all comments to
For general questions, please contact: Dawn Lay, 202-927-9842 by mail at Office of the Inspector General, 875 15th Street NW, Washington, DC 20005.
For questions about this notice and privacy issues, contact: Ryan Law, Deputy Assistant Secretary for Privacy, Transparency, & Records, U.S. Department of the Treasury, 1500 Pennsylvania Avenue NW, Washington, DC 20220; email:
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the Treasury Departmental Offices proposes to modify a current Treasury system of records titled, “Department of the Treasury, Departmental Offices .190—Office of Inspector General Investigations Management Information System.”
The proposed modification to the system of records makes the following substantive changes:
System name changed from “Investigations Management Information System” to “Electronic Case Management System,” as a more accurate depiction of the information maintained in the system and signifying that the system is not exclusively investigative. General administrative contact information was updated to reflect current information; the authority for maintenance of the system, the Inspector General Act of 1978, was updated to reflect the latest citation; the Department also amended the purpose section to remove regulation citations and instead describe in plain language how information collected and maintained in this system is used; and the Department amended, deleted, and added routine use information.
The routine use amendments, deletions, or additions include: amended routine use (8) by deleting release to the Bureau of Alcohol, Tobacco, and Firearms and the Department of Homeland Security OIG concerning investigations, and adding release to other OIGs in general, the Council of Inspectors General on Integrity and Efficiency, and to territorial or Tribal law enforcement or regulatory agencies in performance of their statutory and regulatory requirements; new routine use (9) release to foreign law enforcement entities for bona fide law enforcement purposes where release is not otherwise prohibited by law; new routine use (10) release to persons performing or working for the Federal government when accomplishing an agency function; routine use (11) release to the Merit Systems Protection Board, the Office of Special Counsel, or the Equal Employment Opportunity Office for official proceedings; routine use (12) was previously routine use (9); routine use (13) adds release to Treasury OIG Offices of Audit and Counsel, and to Treasury Department employees requiring such information for official purposes; and routine use (14) was previously routine use (10).
The policies and practices for the: storage of records section was modified to remove reference to paper and locked drawers; retrieval of records section has been limited to retrieval by name and case number; and the retention and disposal of records section was updated to the current applicable Department records and disposition schedules covering records in this system.
The notification procedures section was amended to include detailed instructions on requesting non-exempt information located in the system and how to contest its content.
Finally, the history section was added and notates this system of records' last full published date in the
The Privacy Act of 1974, as amended, embodies fair information practice principles in a statutory framework governing how Federal agencies collect, maintain, use, and disseminate individuals' records. The Privacy Act applies to records about individuals that are maintained in a “system of records.” A “system of records” is a group of any records under the control of an agency from which information is retrieved by the name of an individual or by some identifying number, symbol, or other identifying particular assigned to the individual. The Privacy Act defines an individual as a United States citizen or lawful permanent resident. In order to minimize the risk of unauthorized access to the system's contents, the Department abides by the following procedures: individuals may request access to their own records that are maintained in a system of records in the possession or under the control of Treasury by complying with Treasury Privacy Act regulations at 31 CFR part 1, subpart C, and following the procedures outlined in the Records Access, Contesting Record, and Notification Procedures sections of this notice.
Treasury has provided a report of this system of records to the Committee on Oversight and Government Reform of the House of Representatives, the Committee on Homeland Security and Governmental Affairs of the Senate, and the Office of Management and Budget (OMB), pursuant to 5 U.S.C. 552a(r) and OMB Circular A-108, “Federal Agency Responsibilities for Review, Reporting, and Publication under the Privacy Act,” dated December 23, 2016.
Department of the Treasury, DO .190—Office of Inspector General Electronic Case Management System.
Unclassified.
Office of Inspector General (OIG), Assistant Inspector General for Investigations and Counsel to the Inspector General, 875 15th St. NW, Washington, DC 20005.
Assistant Inspector General for Investigations, 875 15th St. NW, Suite 400, Washington, DC 20005 For internal investigations: Counsel to the Inspector General, 875 15th St. NW, Washington, DC 20005.
The records and information collected and maintained in this system are used to discharge the duties of the Office of Investigations, including: (a) receipt and investigation of allegations regarding a violation of any criminal or civil law, regulation, policy, or standard applicable to employees of the U.S. Department of the Treasury; (b) receipt and/or investigation of allegations regarding a violation of criminal or civil law, regulation, policy, or standard having a nexus to the U.S. Department of the Treasury, including allegations of fraud against Treasury programs or operations by any person or entity; and (c) to conduct inquiries and investigations into allegations of
(A) Current and former employees of the Department of the Treasury and persons whose association with current and former employees relate to the alleged violations of the rules of ethical conduct for employees of the Executive Branch, the Department's supplemental standards of ethical conduct, the Department's rules of conduct, merit system principles, or any other criminal or civil misconduct, which affects the integrity or facilities of the Department of the Treasury. The names of individuals and the files in their names may be: (1) Received by referral; or (2) initiated at the discretion of the Office of Inspector General in the conduct of assigned duties. Investigations of allegations against OIG employees are managed by the Assistant Inspector General for Investigations and the Counsel to the Inspector General; records are maintained in the electronic case management system.
(B) Individuals who are: Witnesses; complainants; confidential or nonconfidential informants; suspects; defendants; parties who have been identified by the Office of Inspector General, constituent units of the Department of the Treasury, other agencies, or members of the general public in connection with the authorized functions of the Inspector General.
(C) Current and former senior Treasury and bureau officials who are the subject of investigations initiated and conducted by the Office of the Inspector General.
(A) Letters, memoranda, and other documents citing complaints of alleged criminal or administrative misconduct.
(B) Investigative files which include: (1) reports of investigations to resolve allegations of misconduct or violations of law with related exhibits, statements, affidavits, records or other pertinent documents obtained during investigations; (2) transcripts and documentation concerning requests and approval for consensual telephone and consensual non-telephone monitoring; (3) body worn camera video footage, (4) reports from or to other law enforcement bodies; (5) prior criminal or noncriminal records of individuals as they relate to the investigations; and (6) reports of actions taken by management personnel regarding misconduct and reports of legal actions resulting from violations of statutes referred to state, local, foreign agencies, or the Department of Justice for prosecution.
See “Categories of Individuals . . .” above. This system contains investigatory material for which sources need not be reported.
Information may be disclosed:
(1) To the United States Department of Justice (“DOJ”), for the purpose of representing or providing legal advice to Treasury in a proceeding before a court, adjudicative body, or other administrative body before which Treasury is authorized to appear, when such proceeding involves:
(a) Treasury or any component thereof;
(b) Any employee of Treasury in his or her official capacity;
(c) Any employee of Treasury in his or her individual capacity where the DOJ or Treasury has agreed to represent the employee; or
(d) The United States, when Treasury determines that litigation is likely to affect Treasury or any of its components; and the use of such records by the DOJ is deemed by the DOJ or Treasury to be relevant and necessary to the litigation provided that the disclosure is compatible with the purpose for which records were collected;
(2) To appropriate federal, state, local, or foreign agencies responsible for investigating or prosecuting the violations of, or for enforcing or implementing a statute, rule, regulation, order, or license, or where the disclosing agency becomes aware of an indication of a violation or potential violation of civil or criminal law or regulation;
(3) To a federal, state, or local agency, maintaining civil, criminal or other relevant enforcement information or other pertinent information, which has requested information relevant to or necessary to the requesting agency's hiring or retention of an employee, or the issuance of a security clearance, license, contract, grant, or other benefit;
(4) To a court, magistrate, or administrative tribunal in the course of presenting evidence,
including disclosures to opposing counsel or witnesses in the course of civil discovery, litigation or settlement negotiations in response to a court order or in connection with criminal law proceedings;
(5) To a congressional office in response to an inquiry made at the request of the individual to whom the record pertains;
(6) To the news media in accordance with guidelines contained in 28 CFR 50.2 which relate to an agency's functions relating to civil and criminal proceedings;
(7) To third parties during the course of an investigation to the extent necessary to obtain information pertinent to the investigation;
(8) To the Department of Justice, other OIGs, the Council of Inspectors General on Integrity and Efficiency, the Federal Law Enforcement Training Center, and to other Federal, State, local, territorial or Tribal law enforcement or regulatory agencies for use in meeting their statutory and regulatory requirements;
(9) To foreign law enforcement, investigatory, or administrative authorities in order to comply with requirements set forth in international arrangements, such as memoranda of understanding.
(10) To contractors, grantees, volunteers, experts, students, and others performing or working on a contract, service, grant, cooperative agreement, or job for the Federal government when necessary to accomplish an agency function;
(11) To the Merit Systems Protection Board, the Office of Special Counsel, or the Equal Employment Opportunity Office for official proceedings, including litigation, administrative proceedings, appeals, special studies of the civil service and other merit systems.
(12) To other OIGs, the Council of Inspectors General on Integrity and Efficiency, and the Department of Justice, in connection with their review of Treasury OIG's exercise of statutory law enforcement authority, pursuant to section 6(e) of the Inspector General Act of 1978, 5 U.S.C. Chapter 4;
(13) To the Treasury OIG Offices of Audit and Counsel and to employees within the U.S. Department of the Treasury requiring such information for official purposes; and
(14) To appropriate agencies, entities, and persons when (a) the Department suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised; (b) the Department has determined that as a result of the suspected or confirmed compromise there is a risk of harm to economic or property interests, identity theft or fraud, or harm to the security or integrity of this system or other systems or programs (whether maintained by the
(15) To another Federal agency or Federal entity, when Treasury determines that information from this system of records is reasonably necessary to assist the recipient agency or entity in (1) responding to a suspected or confirmed breach or (2) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the Federal Government, or national security, resulting from a suspected or confirmed breach.
(16) To the National Archives and Records Administration or General Services Administration pursuant to records management inspections being conducted under the authority of 44 U.S.C. 2904 and 2906;
Records in this system are stored electronically or on paper per approved Office of Investigations policy. Electronic records are stored on magnetic disc, tape, digital media, and CD-ROM.
By name and by case number.
Case information is maintained for the later of: 10 years after the case is closed, or when no longer needed. Records are destroyed in accordance with approved Federal and Departmental guidelines.
Records in this system are safeguarded in accordance with applicable rules and policies, including all applicable Treasury automated systems security and access policies. Strict controls are imposed to minimize the risk of compromising the information that is stored. Access to the computer system containing the records in this system is limited to those individuals who have a need to know the information for the performance of their official duties and who have appropriate clearances or permissions. The records are available to Office of Inspector General personnel who have an appropriate security clearance on a need-to-know basis.
See “Notification Procedures” below.
See “Notification Procedures” below.
This system of records contains records that are exempt from the notification, access, and contesting records requirements pursuant to 5 U.S.C. 552a(j)(2) and (k)(2). Individuals seeking access to any non-exempt record contained in this system of records, or seeking to contest its content, may inquire in writing in accordance with instructions appearing at 31 CFR part 1, subpart C, appendix A. Written inquiries should be addressed to: Freedom of Information Act Request, Counsel to the Inspector General, Office of Inspector General, Department of the Treasury, 875 15th St. NW, Washington, DC 20005.
This system is exempt from 5 U.S.C. 552a(c)(3), (c)(4), (d)(1), (d)(2), (d)(3), (d)(4), (e)(1), (e)(2), (e)(3), (e)(4)(G), (e)(4)(H), (e)(4)(I), (e)(5), (e)(8), (f), and (g) of the Privacy Act pursuant to 5 U.S.C. 552a(j)(2) and (k)(2). See 31 CFR 1.36.
Notice of this system of records was last published in full in the
United States Mint, Department of the Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on the currently approved information collection 1525-0012, as required by the Paperwork Reduction Act of 1995. Currently, the United States Mint, a bureau of the Department of the Treasury, is soliciting comments on the United States Mint customer satisfaction and opinion surveys, focus group interviews, and web usability studies.
Written comments should be received on or before May 14, 2024 to be assured of consideration.
Direct all written comments to Manoj Pillai, Market Research Specialist, Sales and Marketing Directorate; United States Mint; 801 9th Street NW; Washington, DC 20220; (202) 354-7255 (this is not a toll-free number); or by email at
Requests for additional information or copies of the information collection package should be directed to Manoj Pillai, Market Research Specialist, Sales and Marketing Directorate; United States Mint; 801 9th Street NW, Washington, DC 20220; (202) 354-7255 (this is not a toll-free number); or by email at
(a) Whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility.
(b) the accuracy of the agency's estimate of the burden of the collection of information;
(c) ways to enhance the quality, utility, and clarity of the information to be collected;
(d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and
(e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
This is a request for a three-year generic clearance to conduct customer satisfaction and opinion surveys and focus group interviews. This clearance will allow the United States Mint to comply with Executive Order 12862 and assist the United States Mint in fulfilling its mission.
The mission of the United States Mint is to serve the American people by manufacturing and distributing the highest quality circulating coinage and national medals for the Nation to conduct its trade and commerce, and by providing security over assets entrusted to the United States Mint.
The United States Mint is responsible for producing proof, uncirculated, circulating, and commemorative coins, and medals, and platinum, gold, and silver bullion coins in response to programs legislated by Congress in support of domestic trade and commerce, civic, philanthropic and national organizations.
To effectively accomplish the goals of these programs, it is crucial for the United States Mint to know and maintain awareness of customer preferences and needs by continually monitoring customer satisfaction.
However, because the time period between program authorization, production, and product shipment is often short, the United States Mint has not always had adequate time to obtain needed information about customer preferences and market conditions.
Therefore, the use of generic clearance to conduct customer satisfaction and opinion surveys and focus group interviews will allow the United States Mint to quickly obtain useful data to create more profitable programs and to provide better service and products to the American public.
The Supporting Statement contains authorization under which these data collections efforts are implemented. Supporting Statement B contains a list of anticipated projects that may be submitted for approval through the generic clearance process between January 31, 2025, and January 31, 2028. This clearance covers data collection efforts by the United States Mint. An internal review of all proposed data collections will be performed to ensure the following:
• Consistency with United States Mint mission and strategic objectives.
• Appropriate priority within United States Mint's Strategic Plan and/or United States Mint annual business plan.
• Technical adequacy in issues such as frame, sample selection, response rates, quality control in data gathering, recording, and analysis.
• Minimized burden on respondents.
• Confidentiality of individual responses.
• Consistency with this generic clearance.
• Consistency with applicable laws and regulations.
A variety of data collection methods will be employed, including web-based surveys, telephone CATI (computer-assisted telephone interviews) systems, focus group interviews, and other appropriate means. The information will be used to:
• Determine customer opinions about the quality of products, pricing, delivery, and other services provided by the United States Mint.
• Determine customer needs and wants regarding future products and services.
• Define the next steps/actions plans to improve customer satisfaction and United States Mint sales operations.
• In past instances, the United States Mint has used CATI systems and web-based surveys (both provided by contractors) for data collection efforts. The CATI systems and web-based surveys increase efficiency and validity of surveys and decrease the time required for each interview and, consequently, the overall burden on respondents. These methodologies use computers to perform several critical quality assurance routines that are monitored by survey supervisors. These include tracking average interview length and refusal and termination rates.
Survey questions will address United States Mint related products and do not duplicate the efforts of other agencies/organizations. Our internal review and approval process ensures that duplication of data gathering within the United States Mint is eliminated.
Additionally, no other organization can conduct a survey of the United States Mint customers because our customer list is unique and secured by the United States Mint.
The data collections for the most part will be targeted to individuals. Although some customers are coin and hobby dealers that may operate a small business, all information requests will be voluntary. In addition, respondents will rarely be required to consult or access their records for detailed information.
The United States Mint would not be following Executive Order 12862 if some of the collection efforts were not undertaken. Also, the United States Mint operates as a self-funding agency, and the information and the changes resulting from data collections are crucial to United States Mint numismatic sales efforts.
No special circumstances require the collection to be conducted in a manner inconsistent with the guidelines in 5 CFR 1320.6.
The United States Mint collaborates with professional marketing firms and contractors with expertise in marketing research, statistical analysis, and customer driven marketing. Their assistance is utilized in development, administration, and analysis research.
The United States Mint has compensated respondents only when it was necessary as an incentive for their extensive time or expertise. Specific justification has accompanied such requests. In the future, the United States Mint will use compensation for respondents only when it is deemed necessary.
Survey respondents contacted by mail, fax, internet, or some other form of written communication will be advised on the survey form, cover letter, or other accompanying document that participation is voluntary, and that the data provided will be secured. As part of the introduction to a data gathering effort during telephone or personal interviews, the interviewer will inform the respondents that the survey is voluntary, and that each individual's responses will be secured. Focus group participants will verbally receive similar assurances during opening statements of the interview session.
Not applicable. Sensitive information is not collected.
The following table is a breakdown of the estimated number of hours for a three-year generic clearance and estimated number of respondents for a three-year generic clearance.
However, due to changes in the market and possible new coin programs legislated by Congress, this figure could increase.
The following table is a breakdown of estimated burden to respondents based on previous experience.
The following table is a breakdown of the estimated cost to the United States Mint based on previous experience.
There is no change.
Information from data collection will not be published for statistical purposes.
Displaying the expiration date may cause problems with respondents for data collection programs that overlap the three-year authorization periods. In addition, respondents might be declined to refuse to participate if the form carries an authorization date that is expired or soon to expire.
Not applicable. There are no exceptions for certification.
Surveys covered under this generic clearance will vary regarding the universe and respondent selection. The potential universe for some surveys will include our active and inactive customers, while others may include far fewer.
However, because the United States Mint is attempting to expand its numismatic markets and practically all Americans are users of circulating coinage, the universe for some surveys may include the entire United States population base, with a statistically valid sample selected for research.
The specific method of data collection for each survey will be provided to OMB before each survey is conducted.
The United States Mint has found that by sending an advance notice letter to those customers participating in a telephone survey the rate of response can be increased and will employ this technically when possible and cost effective. The United States Mint will employ procedures to review and test questions by survey experts to ensure that questions and instructions are clear, relevant, and unambiguous. Surveys employing non-response follow-up techniques will use multiple contacts by telephone and/or additional mailing of the questionnaire to ensure an adequate response.
In most cases, a pretest of the data collection instruments will be conducted prior to its use. Pretests will include review by knowledgeable United States Mint staff and consultants. In the case of telephone surveys, the pretest will include monitoring of interviewers and respondents by United States Mint staff and/or consultants prior to the actual survey. No pretest will include provisions for contacting more than nine respondents.
The contact person for questions regarding any statistical aspects employed or data collection procedures used will be provided to OMB before each survey. Administrative questions regarding the Mint use of this generic clearance should be directed to Manoj Pillai; Sales and Marketing, 5th Floor; United States Mint; 801 9th Street NW; Washington, DC 20220; or by email at
Office of Information and Technology (OIT), Department of Veteran Affairs (VA).
Notice of a modified system of records.
Pursuant to the Privacy Act of 1974, notice is hereby given that VA is modifying the system of records titled, “Call Detail Records-VA” (90VA194). This system is used to generate call detail records to capture information regarding calls made on telephone systems, including who made the call (calling party number), who was called (called party number), the date and time the call was made, the duration of the call, and other usages and diagnostic information elements (
Comments on this modified system of records must be received no later than April 15, 2024. If no public comment is received during the period allowed for comment or unless otherwise published in the
Comments may be submitted through
Office of Information and Technology System Owner, Bradley Mills, Department of Veterans Affairs, 810 Vermont Avenue NW, Washington, DC 20420; telephone (202) 215-1395 (Note: This is not a toll-free number) or
VA is amending the system of records by revising the System Location; System Manager; Categories of Individuals Covered by the System; Routine Uses of Records Maintained in the System, Including Categories of Users and Purposes of Such Uses; Policies and Practices for Storage of Records; Policies and Practices for Retrieval of Records; Policies and Practices for Retention and Disposal of Records; Record Access Procedures; Contesting Records Procedures; and Notification Procedures.
The Categories of Individuals Covered by the System is being updated to reflect “Individuals who are assigned telephone numbers or are authorized to use VA telephone services, and individuals who receive or make calls billed to the VA.”
The System location will be updated to replace individual local VHA facilities with “VA OIT Trusted internet Gateway Data Centers”.
The System Manager is being updated to “Deputy Director for Operations, Unified Communications. Telephone number (202) 632-9603.”
Routine Uses of Records Maintained in the System, Including Categories of Users and Purposes of Such Uses are being modified to remove current Uses number 1 and number 2; and to update current language for the remaining Routine Uses, numbers 3 through 17. This system will now have 15 Routine Uses.
Policies and Practices for Storage of Records is being updated to reflect “Records are maintained in electronic form in VA Data Centers.”
Policies and Practices for Retrieval of Records is being updates to remove “date, time, cost.”
Policies and Practices for Retention and Disposal of Records is being updated to reflect “Records in this system are retained and disposed of in accordance with the schedule approved by the Archivist of the United States, Records Control Schedule 10-1 Item Number 2525.1”
Record Access Procedures is being updated to reflect “Individuals wishing to request access to records pertaining to them should contact the System Manager in writing as indicated above. A request for access to records must contain the requester's full name, address, telephone number, be signed by the requester, and describe the records sought in sufficient detail to enable VA personnel to locate them with a reasonable amount of effort.”
Contesting Records Procedures is being updated to reflect “Individuals seeking to contest or amend records in this system pertaining to them should contact the System Manager in writing as indicated above. A request to contest or amend records must state clearly and concisely what record is being contested, the reasons for contesting it, and the proposed amendment to the record.”
Notification Procedures is being updated to reflect “Generalized notice is provided by the publication of this notice. For specific notice, see Record Access Procedure, above.”
The Report of Intent to Amend a System of Records Notice and an advance copy of the system notice have been sent to the appropriate Congressional committees and to the Director of the Office of Management and Budget (OMB) as required by 5 U.S.C. 552a(r) (Privacy Act) and guidelines issued by OMB (65 FR 77677), December 12, 2000.
The Senior Agency Official for Privacy, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Kurt D. DelBene, Assistant Secretary for Information and Technology and Chief Information Officer, approved this document on March 11, 2024 for publication.
Call Detail Records-VA 90VA194.
Unclassified.
Electronic records are located in VA OIT Trusted internet Gateway Data Centers.
Deputy Director for Operations, Unified Communications. Telephone number (202) 632-9603. (Note: This is not a toll-free number)
38 U.S.C. 501.
The system is used to generate call detail records to capture information regarding calls made on telephone systems, including who made the call (calling party number), who was called (called party number), the date and time the call was made, the duration of the call, and other usages and diagnostic information elements.
Individuals who are assigned telephone numbers or are authorized to use VA telephone services, and individuals who receive or make calls billed to the VA.
Call detail records consist of information on VA Enterprise Telephone system telephone calls placed from VA telephones or otherwise billed to VA including the originating and destination telephone number, date and time of call, duration of call, and Originating and Terminating Devices for internal VA organizational location of telephones.
Records in this system are obtained from the following sources: (a) Local VA telephone directories and other telephone assignment records; (b) call detail records provided by suppliers of telephone services; and c) the individual on whom the record is maintained.
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(a) VA or any component thereof;
(b) Any VA employee in his or her official capacity;
(c) Any VA employee in his or her individual capacity where DoJ has agreed to represent the employee; or
(d) The United States, where VA determines that litigation is likely to affect the agency or any of its components is a party to such proceedings or has an interest in such proceedings, and VA determines that use of such records is relevant and necessary to the proceedings.
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Records are maintained in electronic form in VA Data Centers.
Records may be retrieved by, VA organizational unit, originating telephone number, destination telephone number, location and/or duration of call.
Records in this system are retained and disposed of in accordance with the schedule approved by the Archivist of the United States, Records Control Schedule 10-1 Item Number 2525.1.
1. Access to telecommunication areas at VA facilities is generally limited by appropriate locking devices and restricted to authorized employees and vendor personnel. Generally, VA areas are always locked, and the facilities are protected from outside access by the Federal Protective Service or other security personnel. 2. Access to file information or the database is controlled by VA Office of Information and Technology employees. The system recognizes authorized VA employees and Contractors by two factor authentication methods. Accessing the database remotely uses encryption and two factor authentication methods.
Individuals wishing to request access to records pertaining to them should contact the System Manager in writing as indicated above. A request for access to records must contain the requester's full name, address, telephone number, be signed by the requester, and describe the records sought in sufficient detail to enable VA personnel to locate them with a reasonable amount of effort.
Individuals seeking to contest or amend records in this system pertaining to them should contact the System Manager in writing as indicated above. A request to contest or amend records must state clearly and concisely what record is being contested, the reasons for contesting it, and the proposed amendment to the record.
Generalized notice is provided by the publication of this notice. For specific notice, see Record Access Procedure, above.
None.
88 FR 87844 (December 19, 2023).
Veterans Benefits Administration, Department of Veterans Affairs.
Notice.
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Benefits Administration, Department of Veterans Affairs, will submit the collection of information abstracted below to the Office of Management and Budget (OMB) for review and comment. The PRA submission describes the nature of the information collection and its expected cost and burden and it includes the actual data collection instrument.
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
Maribel Aponte, Office of Enterprise and Integration, Data Governance Analytics (008), 810 Vermont Ave. NW, Washington, DC 20420, (202) 266-4688 or email
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The
By direction of the Secretary:.
The Department of Veterans Affairs (VA) gives notice under the Federal Advisory Committee Act, 5 U.S.C. ch. 10, that the Advisory Committee on Women Veterans will conduct a virtual meeting on April 2-4, 2024. The meeting will begin and ends as follows:
The meeting sessions are open to the public.
The purpose of the Committee is to advise the Secretary of Veterans Affairs regarding the needs of women Veterans with respect to health care, rehabilitation, compensation, outreach and other programs and activities administered by VA designed to meet such needs. The Committee makes recommendations to the Secretary regarding such programs and activities.
On Tuesday, April 2, 2024, the agenda includes updates from the Veterans Health Administration and the Veterans Benefits Administration regarding 2020 and 2022 report recommendations. Time will also be allotted for the public to provide comments starting at 3:30 p.m. and ending no later than 4:00 p.m. (EST). The comment period may end sooner, if there are no comments presented or they are exhausted before the end time. Individuals interested in providing comments during the public comment period are allowed no more than three minutes for their statements.
On Wednesday, April 3, 2024, the Committee will receive updates from the Veterans Health Administration and the Veterans Benefits Administration regarding 2018 report recommendations. Thursday, April 4, 2024, the committee will receive an update from the Veterans Health Administration, and conduct a full committee discussion on the status of 2018, 2020, 2022 report recommendations.
Those who want to submit written statements for the Committee's review should submit them to the Center for Women Veterans at
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Direct 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 residential clothes washers (“RCWs”). In this direct final rule, the U.S. Department of Energy (“DOE”) is adopting amended energy conservation standards for RCWs. DOE has determined that the 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 15, 2024. If adverse comments are received by July 3, 2024, and DOE determines that such comments may provide a reasonable basis for withdrawal of the direct final rule under 42 U.S.C. 6295(o), a timely withdrawal of this rule will be published in the
The docket for this rulemaking, which includes
The docket web page can be found at
For further information on how to submit a comment or review other public comments and the docket, contact the Appliance and Equipment Standards Program staff at (202) 287-1445 or by email:
The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the standards contained in this direct final rule. Interested persons may contact the Antitrust Division at
Dr. Carl Shapiro, 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: (202) 287-5649. Email:
Ms. Amelia Whiting, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW, Washington, DC 20585-0121. Telephone: (240) 586-2588. Email:
The Energy Policy and Conservation Act, Public Law 94-163, as amended (“EPCA”),
Pursuant to EPCA, any new or amended energy conservation standard must, among other things, 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))
In light of the above and under the authority provided by 42 U.S.C. 6295(p)(4), DOE is issuing this direct final rule amending energy conservation standards for RCWs.
The adopted standard levels in this direct final rule were proposed in a letter submitted to DOE jointly by groups representing manufacturers, energy and environmental advocates, consumer groups, and a utility. This letter, titled “Energy Efficiency Agreement of 2023” (hereafter, the “Joint Agreement”
In accordance with the direct final rule provisions at 42 U.S.C. 6295(p)(4), DOE has determined that the recommendations contained in the Joint Agreement are compliant with 42 U.S.C. 6295(o). As required by 42 U.S.C. 6295(p)(4)(A)(i), DOE is also simultaneously publishing a notice of proposed rulemaking (“NOPR”) that contains identical standards to those adopted in this direct final rule. Consistent with the statute, DOE is providing a 110-day public comment period on the direct final rule. (42 U.S.C. 6295(p)(4)(B)) If DOE determines that any comments received provide a reasonable basis for withdrawal of the direct final rule under 42 U.S.C. 6295(o) or any other applicable law, DOE will publish the reasons for withdrawal and continue the rulemaking under the NOPR. (42 U.S.C. 6295(p)(4)(C))
The amended standards that DOE is adopting in this direct final rule are the efficiency levels recommended in the Joint Agreement (shown in Table I.1). The standards are expressed in terms of energy efficiency ratio (“EER”), measured in pounds per kilowatt-hour per cycle (“lb/kWh/cycle”), and water efficiency ratio (“WER”), measured in pounds per gallon per cycle (“lb/gal/cycle”), as determined in accordance with DOE's clothes washer test procedure codified at title 10 of the Code of Federal Regulations (“CFR”), part 430, subpart B, appendix J (“appendix J”). The EER metric includes active mode, inactive mode, and off mode energy use. The amended standards recommended in the Joint Agreement are represented as trial standard level (“TSL”) 2 in this document and described in section V.A of this document. The Joint Agreement's standards for RCWs apply to all products listed in Table I.1 manufactured in, or imported into, the United States starting on March 1, 2028.
Table I.2 summarizes DOE's evaluation of the economic impacts of the adopted standards on consumers of RCWs, 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 (2024) through the end of the analysis period, which is 30 years from the analyzed compliance date.
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 RCWs would save a significant amount of energy and water. Relative to the case without amended standards, the lifetime energy and water savings for RCWs purchased in the 30-year period that begins in the anticipated year of compliance with the amended standards (2028-2057), amount to 0.67 quadrillion British thermal units (“Btu”), or quads of energy and 1.89 trillion gallons of water, respectively.
The cumulative net present value (“NPV”) of total consumer benefits of the standards for RCWs ranges from $3.28 billion (at a 7-percent discount rate) to $8.71 billion (at a 3-percent discount rate). This NPV expresses the
In addition, the adopted standards for RCWs 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 13.96 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 monetized benefits and costs expected to result from the amended standards for RCWs. There are other important unquantified effects, including certain unquantified climate benefits, unquantified public health benefits from the reduction of toxic air pollutants and other emissions, unquantified energy security benefits, and distributional effects, among others.
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 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 RCWs 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 RCWs 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 total benefits values are presented for all four SC-GHG discount rates in section V.B.6 of this document.
Table I.4 presents the total estimated monetized benefits and costs associated with the adopted standard, 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 $513.1 million per year in increased equipment costs, while the estimated annual benefits are $998.9 million in reduced operating costs, $46.9 million in climate benefits, and $90.3 million in health benefits. In this case, the net benefit would amount to $623.0 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 has determined that the Joint Agreement was submitted jointly by interested persons that are fairly representative of relevant points of view, in accordance with 42 U.S.C. 6295(p)(4)(A). After considering the recommended standards and weighing the benefits and burdens, DOE has determined that the recommended standards are in accordance with 42 U.S.C. 6295(o), which contains the criteria for prescribing new or amended standards. Specifically, the Secretary of Energy (“Secretary”) has determined that the adoption of the recommended standards would result in the significant conservation of energy and water and is the maximum improvement in energy efficiency that is technologically feasible and economically justified. In determining whether the recommended standards are economically justified, the Secretary has determined that the benefits of the recommended standards exceed the burdens. The Secretary has further concluded that the recommended standards, when considering the benefits of energy and water savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings, would yield benefits that outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers.
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 0.67 quads FFC, the equivalent of the primary annual energy use of 4.5 million homes. In addition, they are projected to reduce cumulative CO
Under the authority provided by 42 U.S.C. 6295(p)(4), DOE is issuing this direct final rule amending the energy conservation standards for RCWs. Consistent with this authority, DOE is also simultaneously publishing elsewhere in this
The following section briefly discusses the statutory authority underlying this direct final rule, as well as some of the relevant historical background related to the establishment of standards for RCWs.
EPCA authorizes DOE to regulate the energy efficiency of a number of consumer products and certain industrial equipment. Title III, Part B of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles. These products include RCWs, the subject of this document. (42 U.S.C. 6292(a)(7)) EPCA prescribed energy conservation standards for these products (42 U.S.C. 6295(g)(2) and (g)(9)(A)), and directed DOE to conduct future rulemakings to determine whether to amend these standards. (42 U.S.C. 6295(g)(4) and (g)(9)(B)) EPCA further provides that, not later than 6 years after the 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1))
In establishing energy conservation standards with both energy and water use performance standards for RCWs manufactured after January 1, 2011, Congress also directed DOE to “determin[e] whether to amend” those standards. (42 U.S.C. 6295(g)(9)(B)) Congress's directive, in section 6295(g)(9)(B), to consider whether “to amend the standards in effect for RCWs” refers to “the standards” established in the immediately preceding paragraph, 6295(g)(9)(A). There, Congress established energy conservation standards with
DOE similarly understands its authority under 42 U.S.C. 6295(m) to amend “standards” for covered products to include amending both the energy and water use performance standards for RCWs. Neither section 6295(g)(9)(B) nor section 6295(m) limit their application to “energy use standards.” Rather, they direct DOE to consider amending “the standards,” 42 U.S.C. 6295(g)(9)(B), or simply “standards,”
Finally, DOE is promulgating these standards as a direct final rule pursuant to 42 U.S.C. 6295(p)(4). That section also extends broadly to any “energy or water conservation standard” without qualification. Thus, pursuant to section 6295(p)(4), DOE may, so long as the other relevant conditions are satisfied, promulgate a direct final rule that includes water use performance standards for a covered product like RCWs, where Congress has already established energy and water use performance standards.
DOE is aware that the definition of “energy conservation standard,” in section 6291(6), expressly references water use only for four products specifically named: showerheads, faucets, water closets, and urinals.
The energy conservation program was initially limited to addressing the energy use, meaning electricity and fossil fuels, of 13 covered products. (
Later, Congress further expanded the scope of the energy conservation program several times. For instance, Congress added products and standards directly to 42 U.S.C. 6295, the section of EPCA that contains statutorily prescribed standards as well as DOE's standard-setting authorities.
Congress also expanded the scope of the energy conservation program by directly adding water use performance standards for certain products to 42 U.S.C. 6295. For example, in the Energy Policy Act of 2005, Congress added a water use performance standard (but no energy use performance standard) for commercial prerinse spray valves (“CPSVs”) and did so without updating the list of covered products in 42 U.S.C. 6292 to include CPSVs and without adding CPSVs to the list of enumerated products with water use performance standards in the “energy conservation standard” definition in 42 U.S.C. 6291(6). In the Energy Independence and Security Act of 2007 (“EISA 2007”), Congress amended 42 U.S.C. 6295 by prescribing standards for RCWs and dishwashers that included both energy and water use performance standards. (
In considering how to treat these products and standards that Congress has directly added to 42 U.S.C. 6295 without making conforming changes to the rest of the statute, including the list of covered products in 42 U.S.C. 6292, and the water-use products in the definition of an “energy conservation standard,” DOE construes the statute as a whole. When Congress added products and standards directly to 42 U.S.C. 6295 it must have meant those products to be covered products and those standards to be energy conservation standards, given that the purpose of 42 U.S.C. 6295 is to provide “energy conservation standards applicable to covered products” and to “authorize the Secretary to prescribe amended or new energy conservation standards for each type (or class) of covered product.” Elsewhere in EPCA, the statute's references to covered products and energy conservation standards can only be read coherently as including the covered products and energy conservation standards Congress added directly to section 6295, even if Congress did not make conforming edits to 6291 or 6292. For example, manufacturers are prohibited from “distribut[ing] in commerce any new
It would similarly defeat congressional intent for a manufacturer to be permitted to distribute a covered product,
DOE recognizes that some might argue that Congress's specific reference in section 6291(6) to water standards for showerheads, faucets, water closets, and urinals could “create a negative implication” that energy conservations standards for other covered products may not include water use standards.
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
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. (See 42 U.S.C. 6297(d))
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(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 procedures for RCWs appear at 10 CFR part 430, subpart B, appendices J (“appendix J”) and J2 (“appendix J2”).
DOE must follow specific statutory criteria for prescribing new or amended standards for covered products, including RCWs. Any new or amended standard for a 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)) 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 if DOE determines by rule that the standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(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 considers relevant.
(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
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, as codified, 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))
EPCA specifies requirements when promulgating an energy conservation standard for a covered product that has two or more subcategories. A rule prescribing an energy conservation standard for a type (or class) of product 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 considers such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate. (
Additionally, pursuant to the amendments contained in the EISA 2007, Public Law 110-140, final rules for new or amended energy conservation standards promulgated after July 1, 2010, are 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 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)) DOE's current test procedures for RCWs address standby mode and off mode energy use, as do the amended standards adopted in this direct final rule.
Finally, EISA 2007 amended EPCA, in relevant part, to grant DOE authority to issue a final rule (
The direct final rule must be published simultaneously with a NOPR that proposes an energy or water conservation standard that is identical to the standard established in the direct final rule, and DOE must provide a public comment period of at least 110 days on the proposal. (42 U.S.C. 6295(p)(4)(A)-(B)) While DOE typically provides a comment period of 60 days on proposed standards, for a NOPR accompanying a direct final rule, DOE provides a comment period of the same length as the comment period on the direct final rule—
DOE has previously explained its interpretation of its direct final rule authority. In a final rule amending the Department's “Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” at 10 CFR part 430, subpart C, appendix A (“Process Rule” or “appendix A”), DOE noted that it may issue standards recommended by interested persons that are fairly representative of relative points of view as a direct final rule when the recommended standards are in accordance with 42 U.S.C. 6295(o) or 42 U.S.C. 6313(a)(6)(B), as applicable. 86 FR 70892, 70912 (Dec. 13, 2021). But the direct final rule provision in EPCA does not impose additional requirements applicable to other standards rulemakings, which is consistent with the unique circumstances of rules issued through consensus agreements under DOE's direct final rule authority.
In a direct final rule published on May 31, 2012 (“May 2012 Direct Final Rule”), DOE prescribed the current energy conservation standards for RCWs manufactured on or after January 1, 2018. 77 FR 32308.
For top-loading semi-automatic clothes washers, a design standard currently applies, which requires such products to have an unheated rinse water option. 10 CFR 430.32(g)(1).
As discussed, DOE's current energy conservation standards for RCWs are expressed in terms of IMEF and IWF as measured using appendix J2. (
In a final rule published on June 1, 2022 (“June 2022 TP Final Rule”), DOE finalized a new test procedure (TP) at appendix J, which defines new energy efficiency metrics: an energy efficiency ratio (
On September 25, 2023, DOE received a joint statement (
A court decision issued after DOE received the Joint Agreement is also relevant to this rule. On March 17, 2022, various States filed a petition seeking review of a final rule revoking two final rules that established product classes for residential dishwashers with a cycle time for the normal cycle of 60 minutes or less, top-loading RCWs and certain classes of consumer clothes dryers with a cycle time of less than 30 minutes, and front-loading RCWs with a cycle time of less than 45 minutes (collectively, “short cycle product classes”). The petitioners argued that the final rule revoking the short cycle product classes violated EPCA and was arbitrary and capricious. On January 8, 2024, the United States Court of Appeals for the Fifth Circuit granted the petition for review and remanded the matter to DOE for further proceedings consistent with the Fifth Circuit's opinion.
On February 14, 2024, following the Fifth Circuit's decision in
The Joint Agreement recommends amended standard levels for RCWs as presented in Table II.2. (Joint Agreement, No. 505 at p. 9) Details of the Joint Agreement recommendations for other products are provided in the Joint Agreement posted in the docket.
When the Joint Agreement was submitted, DOE was conducting a rulemaking to consider amending the standards for RCWs. As part of that process, DOE published a NOPR and announced a public meeting on March 3, 2023 (“March 2023 NOPR”), seeking comment on its proposed amended standards to inform its decision consistent with its obligations under EPCA and the Administrative Procedure Act (“APA”). 88 FR 13520. The March 2023 NOPR proposed amended standards defined in terms of the EER and WER metrics as measured according to appendix J.
Although DOE is adopting the Joint Agreement as a direct final rule and no longer proceeding with its own rulemaking, DOE did consider relevant comments, data, and information obtained during that rulemaking process in determining whether the recommended standards from the Joint Agreement are in accordance with 42 U.S.C. 6295(o). Any discussion of comments, data, or information in this direct final rule that were obtained during DOE's prior rulemaking will include a parenthetical reference that
DOE is issuing this direct final rule after determining that the recommended standards submitted in the Joint Agreement meet the requirements in 42 U.S.C. 6295(p)(4). More specifically, DOE has determined that the recommended standards were submitted by interested persons that are fairly representative of relevant points of view and the recommended standards satisfy the criteria in 42 U.S.C. 6295(o).
On March 17, 2022, various States filed a petition seeking review of a final rule revoking two final rules that established product classes for residential dishwashers with a cycle time for the normal cycle of 60 minutes or less, top-loading RCWs and certain classes of consumer clothes dryers with a cycle time of less than 30 minutes, and front-loading RCWs with a cycle time of less than 45 minutes (collectively, “short cycle product classes”). The petitioners argued that the final rule revoking the short cycle product classes violated EPCA and was arbitrary and capricious. On January 8, 2024, the United States Court of Appeals for the Fifth Circuit granted the petition for review and remanded the matter to DOE for further proceedings consistent with the Fifth Circuit's opinion.
Following the Fifth Circuit's decision, the signatories to the Joint Agreement submitted a second letter to DOE, which stated that Joint Recommendation did not “address” “short-cycle product classes.”
In a recently issued request for information (“RFI”),
The current standards applicable to any products within the scope of that proceeding remain unchanged by this rule.
The Joint Agreement specifies the product classes for RCWs: semi-automatic; top-loading, ultra-compact; top-loading, standard-size; front-loading, compact; and front-loading, standard-size. Although these product classes were not further divided by cycle time, DOE understands them to exclude top-loading standard-size RCWs with an average cycle time of less than 30 minutes, and front-loading standard-size RCWs with an average cycle time of less than 45 minutes. As noted above, any such “short-cycle” RCWs will be considered in the Remand Proceeding; the current standards applicable to such “short-cycle” RCWs are unchanged by this rule.
Under the direct final rule authority at 42 U.S.C. 6295(p)(4), DOE evaluates whether recommended standards are in accordance with criteria contained in 42 U.S.C. 6295(o). DOE does not have the authority to revise recommended standards submitted under the direct final rule provision in EPCA. Therefore, DOE did not analyze any additional product classes beyond those product classes included in the Joint Agreement. That is, DOE has not separately considered or established amended standards applicable to any short-cycle product classes. In the event that DOE establishes short-cycle product classes, pursuant to the rulemaking on remand from the Fifth Circuit, DOE will necessarily consider what amended standards ought to apply to any such product classes and will do so in conformance with EPCA.
DOE notes that the data and analysis used to support this direct final rule includes information for standard-size, top-loading and front-loading clothes washers that is not distinguished by cycle time and is representative of all clothes washers currently on the market today. To the extent that any short cycle products were included in this data and analysis, DOE believes the amount of such data is negligible.
Before discussing how the Joint Agreement meets the requirements for issuing a direct final rule, it is important to clarify the scope of coverage for the recommended standards. EPCA does not define the term “clothes washer.” (
An “automatic clothes washer” is a class of clothes washer that has a control system which is capable of scheduling a preselected combination of operations, such as regulation of water temperature, regulation of the water fill level, and performance of wash, rinse, drain, and spin functions without the need for user intervention subsequent to the initiation of machine operation. Some models may require user intervention to initiate these different segments of the cycle after the machine has begun operation, but they do not require the user to intervene to regulate the water temperature by adjusting the external water faucet valves.
A “semi-automatic clothes washer” is a class of clothes washer that is the same as an automatic clothes washer except that user intervention is required to regulate the water temperature by adjusting the external water faucet valves.
Under the direct final rule provision in EPCA, recommended energy
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 the Process Rule.
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 the Process Rule. Section IV.B of this document discusses the results of the screening analysis for RCWs, particularly the designs DOE considered, those it screened out, and those that are the basis for the standards considered in this rulemaking. For further details on the screening analysis for this rulemaking, see chapter 4 of the direct final rule TSD.
When DOE proposes to adopt 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(o)(2)(A)) Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for RCWs, 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 direct final rule TSD.
For each TSL, DOE projected energy savings from application of the TSL to RCWs purchased in the 30-year period that begins in the year of compliance with the amended standards (2027-2056 for all TSLs except the Recommended TSL,
DOE used its national impact analysis (“NIA”) spreadsheet models to estimate national energy savings (“NES”) and national water savings (“NWS”) from potential amended standards for RCWs. 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.
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.
As stated, the standard levels adopted in this direct final rule are projected to result in national energy savings of 0.67 quads, the equivalent of the primary annual energy use of 4.5 million homes. Based on the amount of FFC savings, the corresponding reduction in emissions,
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 rulemaking.
In determining the impacts of potential new or 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 payback period (“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 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 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 would 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)) DOE will transmit a copy of this direct final rule to the Attorney General with a request that the Department of Justice (“DOJ”) provide its determination on this issue. DOE will consider DOJ's comments on the rule in determining whether to withdraw the direct final rule. DOE will also publish and respond to the DOJ's comments in the
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 maintaining the reliability of the Nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the Nation's needed power generation capacity, as discussed in section IV.M of this document.
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
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 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 section addresses the analyses DOE has performed for this rulemaking with regard to RCWs. Separate subsections address each component of DOE's analyses, including relevant comments DOE received during its separate rulemaking to amend the energy conservation standards for RCWs prior to receiving the Joint Agreement.
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 calculates national energy savings and net present value of total consumer costs and savings expected to result from potential energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (“GRIM”), to assess manufacturer impacts of potential standards. These three spreadsheet tools are available on the DOE website for this rulemaking:
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) identification of 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 RCW. The key findings of DOE's market assessment are summarized in the following sections. See chapter 3 of the direct final rule TSD for further discussion of the market and technology assessment.
The Joint Agreement specifies the five product classes for RCWs. (Joint Agreement, No. 505 at p. 9) In this direct final rule, DOE is adopting the product classes from the Joint Agreement, as listed in Table IV.1.
DOE further notes that product classes established through EPCA's direct final rule authority are not subject to the criteria specified at 42 U.S.C. 6295(q)(1) for establishing product classes. Nevertheless, in accordance with 42 U.S.C. 6295(o)(4)—which is applicable to direct final rules—DOE has concluded that the standards adopted in this direct final rule will not result in the unavailability in any covered product type (or class) of performance characteristics, features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States currently.
In this direct final rule, DOE considered the technology options listed in Table IV.2, consistent with the table of technology options presented in the March 2023 NOPR. See 88 FR 13520, 13541. DOE notes that it did not receive any comments regarding the technology options analyzed in the March 2023 NOPR.
In general, technology options for RCWs may reduce energy use alone, water use alone, or both energy and water use together. Because the energy used to heat any hot water consumed by the RCW is included as part of the EER metric, technologies that decrease hot water use also inherently decrease energy use. In Table IV.2, the technology options that reduce energy use alone are those indicated as methods for decreasing machine energy, drying energy, and standby energy. One
Chapter 3 of the TSD for this direct final rule includes a detailed list and descriptions of all technology options identified for RCWs, including a discussion of how each technology option reduces energy use only, water use only, or both energy and water use together.
DOE uses the following 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 subsequent sections of this document discuss 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. The results of the screening analysis are discussed in greater detail in chapter 4 of the TSD for this direct final rule.
DOE partially screened out capacity increase as a technology option. Specifically, DOE screened out any capacity increase that would require a corresponding increase in cabinet width larger than 27 inches, on the basis of the practicability to install and service RCWs with cabinet widths larger than 27 inches. DOE recognizes that products with a width greater than 27 inches may not be able to fit through many standards-size interior doorways.
DOE also screened out ozonated laundering and polymer bead cleaning on the basis of their practicability to install, manufacture, and service. Polymer bead cleaning is also a unique-pathway proprietary technology. DOE also screened out electrolytic disassociation of water on the basis that this technology could have impacts on product utility or availability. Chapter 3 of the TSD for this direct final rule includes a detailed description of each of these technology options.
DOE notes that the results of the screening analysis conducted for this direct final rule align with the screening analysis DOE conducted for the March 2023 NOPR. See 88 FR 13520, 13542-13453. In the March 2023 NOPR, DOE sought comment on whether any additional technology options should be screened out on the basis of any of the screening criteria.
Fisher
In response to Fisher
NEEA
Appliance Standards Awareness Project (“ASAP”), American Council for an Energy-Efficient Economy (“ACEEE”), and the New York State Energy Research and Development Authority (“NYSERDA”) commented that, contrary to concerns raised at DOE's public meeting, manufacturers
Samsung Electronics America, Inc. (“Samsung”) commented that the necessary technological advancements and solutions identified by DOE are readily available and accessible, which aligned with DOE's assessment of the technological feasibility of the standards proposed in the March 2023 NOPR. (Samsung, No. 461 at p. 4)
Strauch commented that direct-drive or brushless permanent magnet (“BPM”) motors will increase RCW cost and decrease reliability. (Strauch, No. 430 at p. 2)
DOE notes that the incremental cost of higher-efficiency design options is considered as part of the engineering analysis, from which DOE derives its cost efficiency “curves.” DOE's analysis specifically accounts for the increased cost of implementing direct drive and BPM motors to improve efficiency. (
Whirlpool Corporation (“Whirlpool”) commented that DOE's proposal may create consumer accessibility issues for shorter-than-average consumers and consumers with disabilities or limited mobility, as they may struggle to reach the bottom of larger-capacity RCWs, which manufacturers will have to deepen to satisfy the standards proposed in the March 2023 NOPR, because the width of cabinets cannot be increased beyond standard doorway clearance. (Whirlpool, No. 462 at p. 9) Whirlpool commented that people of average and below-average height may not be able to access the bottom of deeper-basket top-loading RCWs without bringing their feet off the ground, which could create a fall hazard and possible soft-tissue compression of the chest and abdominal area. (
Mannino,
DOE notes that, as discussed in section V.B.4.b of this document, for this direct final rule DOE has re-evaluated its assumption from the March 2023 NOPR that capacity increase would be required to meet the standards proposed in the March 2023 NOPR for top-loading standard-size RCWs. For this direct final rule, DOE has conducted additional analysis that indicates that the amended standards can be met by all capacities currently available on the market without the need to implement the design option of increasing capacity. Therefore, manufacturers will continue to be able to offer the same range of capacities as are currently available on the market. In chapter 5 of the direct final rule TSD, DOE provides example design pathways that manufacturers could use to achieve higher efficiency without increasing capacity as a design option, such that DOE does not expect it will raise accessibility concerns.
Whirlpool further commented that DOE must work closely with the Consumer Product Safety Commission (“CPSC”) to understand their work and ensure that RCWs can safely withstand high spin speeds under spontaneous unbalanced load conditions, given that the standards proposed in the March 2023 NOPR would effectively mandate higher spin speeds. (
Representatives Latta
DOE only considered spin increase as a design option insofar as it is already demonstrated in RCWs available on the market. The prevalence of high-speed spin features currently available on the market is indicative that RCWs can be designed to safely withstand such spin speeds. DOE notes that models at the Recommended TSL would also require faster spin speeds compared to the baseline, and the Recommended TSL is supported by the Joint Commenters, which includes manufacturers with commercially available products that meet or exceed these levels being safely used today by consumers. As previously discussed, on February 14, 2024, DOE received a second joint statement from the same group of stakeholders that submitted the Joint Agreement (of which Whirlpool is a member) in which the signatories reaffirmed the standards recommended in the Joint Agreement.
AHAM commented that high-frequency components (
AHAM further commented on similar issues regarding ground-fault circuit interrupters (“GFCIs”), which are also devices required by the National Electrical Code that trip and disable appliances when they detect a ground-fault. (
AHAM requested that DOE use its expertise and resources to properly investigate what it characterizes as the technological incompatibility between high-frequency components and AFCIs/GFCIs and suggested that DOE adjust its analysis and quantify the impact from nuisance tripping. (
In response to AHAM's concern regarding high-frequency components' impact on nuisance tripping, DOE emphasizes that it only considered design options that are already demonstrated in RCWs available on the market. DOE is aware of the potential for “nuisance tripping” of GFCI circuit protectors by high-frequency components such as variable-speed motors. However, DOE understands that nuisance tripping can generally be mitigated through the use of best practices for reducing leakage current, such as minimizing electrical cable lengths and ensuring that filtered and unfiltered cables are separated to whatever extent possible to reduce leakage current. Additionally, optimizing the variable-frequency controller power filter to reduce total leakage current to levels below the GFCI detection limits can further prevent GFCI tripping. To the extent that the use of additional electronic components is needed in conjunction with the use of design options with high-frequency components (such as variable-speed motors), and to the extent that such additional electronic components are provided in RCWs currently on the market that make use of such design options, DOE's teardown analysis captures any additional cost associated with such components.
DOE notes that despite any potential for nuisance tripping, a wide range of appliances on the market today, including clothes washers, implement variable-frequency drives in their designs. The inclusion of these variable-frequency drive designs in units on the market suggests that they do not have a significant impact on the consumer utility of these products. DOE notes that variable-speed motors have been used in RCWs for over a decade
Through a review of each technology, DOE concludes that all of the other identified technologies listed in Table IV.3 meet all screening criteria to be examined further as design options in DOE's direct final rule analysis. In summary, DOE did not screen out the following technology options:
As discussed, technology options for RCWs may reduce energy use alone, water use alone, or both energy and water use together. The technology options that reduce energy use alone are those indicated as methods for decreasing machine energy, drying energy, and standby energy. Spray rinse, indicated as one of the methods for reducing water use, reduces water use alone. The technology options that reduce both energy and water use
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 finds 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 RCWs. There are two elements to consider in the engineering analysis; the selection of efficiency levels to analyze (
As discussed in section II.B.2 of this document, the June 2022 TP Final Rule established a new test procedure, appendix J, which established new EER and WER efficiency metrics. 87 FR 33316. Appendix J also incorporates a number of revisions that affect the per-cycle energy and water use in comparison to results obtained under the current appendix J2 test procedure. See 10 CFR part 430, subpart B, appendix J. In the March 2023 NOPR, DOE identified efficiency levels initially in terms of the existing IMEF and IWF metrics and used a translation equation to convert the identified IMEF and IWF levels into corresponding EER and WER levels as the basis for the proposed amended standards. 88 FR 13520, 13545. The translation equation was based on testing performed by DOE on a representative sample of RCW models.
In this direct final rule, DOE used the same translation equations presented in the March 2023 NOPR to translate efficiency levels from the appendix J2 metrics (
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 (
For this direct final rule, DOE used an efficiency-level approach, supplemented with the design-option approach for certain “gap fill” efficiency levels. The efficiency-level approach is appropriate for RCWs given the availability of certification data to determine the market distribution of existing products and to identify efficiency level “clusters” that already exist on the market.
In conducting the efficiency analysis for the automatic clothes washer product classes, DOE first identified efficiency levels in terms of the current IMEF and IWF metrics defined in appendix J2 that are the most familiar to interested parties. DOE also initially determined the cost-efficiency relationships based on these metrics. Following that, DOE translated each efficiency level into its corresponding EER and WER values using the translation equations developed for each product class, as discussed previously in section IV.C.1 of this document.
For the semi-automatic product class, for which reliable certification data is unavailable, DOE tested a representative sample of units to appendix J and used that set of data points to determine the baseline and higher efficiency levels, as described further in section IV.C.2.c of this document.
The efficiency levels that DOE considered in the engineering analysis are attainable using technologies currently available on the market in RCWs. DOE used the results of the testing and teardown analyses to determine a representative set of technologies and design strategies that manufacturers use to achieve each higher efficiency level. This information provides interested parties with additional transparency of assumptions and results, and the ability to perform independent analyses for verification. Chapter 5 of the direct final rule TSD describes the methodology and results of the analysis used to derive the cost-efficiency relationships.
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 (
In defining the baseline efficiency levels for this direct final rule, DOE considered comments it had received in response to the baseline efficiency levels proposed in the March 2023 NOPR.
In the March 2023 NOPR, DOE analyzed the baseline efficiency levels shown in Table IV.4 for each automatic product class. 88 FR 13520, 13546. The semi-automatic product class is discussed separately in section IV.C.2.c of this document.
In the March 2023 NOPR, DOE discussed an alternate approach it was considering for defining the baseline levels.
DOE sought comment on the baseline efficiency levels analyzed in the March 2023 NOPR for each product class.
AHAM agreed with DOE's proposal to establish the baseline at the current DOE standard for top-loading standard-size RCWs and at the current standard for front-loading standard-size RCWs for the front-loading compact product class. (AHAM, No. 464 at pp. 16-17)
AHAM opposed DOE's proposal to establish the baseline for front-loading standard-size RCWs at the ENERGY STAR v. 7.0 level and instead recommended establishing the baseline at the current DOE standard. (
In response to AHAM's comment regarding the definition of the baseline level for front-loading standard-size RCWs, DOE is adopting AHAM's recommended approach for this direct final rule and defining the baseline level for the front-loading standard-size product class as the current DOE standard (corresponding to 1.84 IMEF/5.7 IWF).
The California Investor-Owned Utilities (“CA IOUs”)
In response to the CA IOUs' recommendation to use the “unadjusted” baseline approach to define the baseline efficiency levels, DOE has further evaluated this approach and determined that DOE would not be able to reliably extrapolate its test results to the entire market to determine how market shares would need to be apportioned between an “unadjusted” baseline level and the baseline level defined in the March 2023 NOPR using the translation equations. More specifically, although DOE identified units in its test sample with “Cold/Cold optimized” spin characteristic, DOE was not able to determine a consistent pattern of implementation of this characteristic—either among manufacturers or product platforms—that could be used to extrapolate to the entire RCW market. For example, DOE's test results indicated that some individual manufacturers use different spin characteristics across their RCW model offerings (
To establish higher efficiency levels for the analysis, DOE reviewed data in DOE's CCD to evaluate the range of efficiencies for RCWs currently available on the market.
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 in each product class. (42 U.S.C. 6295(p)(1)) DOE typically determines max-tech levels based on technologies that are either commercially available or have been demonstrated as working prototypes. If the max-tech design meets DOE's screening criteria, DOE considers the design in further analysis.
In defining the higher efficiency levels for this direct final rule, DOE considered comments it had received in response to the higher efficiency levels proposed in the March 2023 NOPR.
In the March 2023 NOPR, DOE tentatively determined that the max-tech efficiency level for each RCW product class corresponds to the maximum available level for each product class. 88 FR 13520, 13546. In other words, DOE did not define or analyze any efficiency levels higher than those currently available on the market.
As noted, EPCA requires that any new or amended energy conservation standard be designed to achieve the maximum improvement in energy efficiency that is technologically feasible. (42 U.S.C. 6295(o)(2)(A)) For RCWs, a determination of technological feasibility must encompass not only an achievable reduction in energy and/or water consumption, but also the ability of the product to perform its intended function (
DOE sought comment on the higher efficiency levels analyzed in the March 2023 NOPR for each product class.
DOE did not receive any comments regarding the higher efficiency levels analyzed in the March 2023 NOPR.
At each higher efficiency level, both energy use and water use decrease through the implementation of
In this direct final rule, DOE analyzed the higher efficiency levels shown in Tables IV.5 through IV.8, consistent with the levels analyzed in the March 2023 NOPR.
As discussed in section IV.A.1 of this document, this direct final rule re-establishes a separate product class for semi-automatic clothes washers and establishes performance-based standards for semi-automatic clothes washers. In considering the definition of efficiency levels for semi-automatic clothes washers for this direct final rule, DOE used the same methodology it had proposed in the March 2023 NOPR.
As discussed in the March 2023 NOPR, given the lack of specificity in appendix J2 regarding the testing of semi-automatic clothes washers, and the significant differences in testing between appendix J2 versus appendix J for semi-automatic clothes washers, DOE tentatively determined that it could not develop an accurate correlation between appendix J2 metrics (
DOE did not receive any comments regarding the efficiency levels analyzed in the March 2023 NOPR for semi-automatic RCWs. In this direct final rule, DOE used the efficiency levels defined in the March 2023 NOPR for semi-automatic RCWs.
Table IV.9 shows the efficiency levels for the semi-automatic product class. See chapter 5 of the direct final rule TSD for more details.
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, and the availability and timeliness of purchasing the product on the market. The cost approaches are summarized as follows:
•
•
•
In the present case, DOE conducted the analysis using the physical teardown approach. For each product class, DOE tore down a representative sample of models spanning the entire range of efficiency levels, as well as multiple manufacturers within each product class. DOE aggregated the results so that the cost-efficiency relationship developed for each product class reflects DOE's assessment of a market-representative “path” to achieve each higher efficiency level. The resulting bill of materials provides the basis for the manufacturer production cost (“MPC”) estimates.
To account for manufacturers' 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. DOE developed an average manufacturer markup by examining the annual Securities and Exchange Commission (“SEC”) 10-K reports filed by publicly-traded manufacturers primarily engaged in appliance manufacturing and whose combined product range includes RCWs.
In developing the baseline and incremental MPCs for each defined product class for this direct final rule, DOE considered comments it had received in response to the cost-efficiency results presented in the March 2023 NOPR.
As discussed in the March 2023 NOPR, in support of this rulemaking, DOE conducted teardowns on 47 RCW models, which covered the entire range of efficiency levels within each analyzed product class.
DOE sought comment in the March 2023 NOPR on the baseline and incremental MPCs developed for each product class.
ASAP, ACEEE, and NYSERDA commented that they believe DOE is likely overestimating incremental cost increases, especially for top-loading standard-size RCWs. (ASAP, ACEEE, and NYSERDA, No. 458 at p. 2) ASAP, ACEEE, and NYSERDA stated that while DOE assumes in the engineering analysis that baseline top-loading RCWs have enameled baskets and that units meeting the standards proposed in the March 2023 NOPR would have stainless steel baskets, NEEA market research found that almost two-thirds of baseline top-loading standard-size RCW sales already include stainless steel baskets, including half of the least-expensive baseline models. (
In response to the comment from ASAP, ACEEE, and NYSERDA regarding the prevalence of stainless steel wash baskets at the baseline level, in this direct final rule, DOE has updated its approach to calculating the baseline MPC for top-loading standard-size RCWs to reflect a market-weighted average of the use of stainless steel wash baskets versus enameled steel at the baseline level. DOE used information derived through confidential manufacturer interviews to determine the market weightings of each basket type. DOE has determined that using a market-weighted average provides a more accurate representation of the industry-average MPC at the baseline level for the top-loading standard-size product class.
In response to the comment from ASAP, ACEEE, and NYSERDA that DOE has historically overestimated cost
AHAM commented that the changes to load sizes in new appendix J will increase the inherent RMC in the loads, while the standards proposed in the March 2023 NOPR require RMC to be extremely low at the end of the cycle. (AHAM, No. 464 at p. 2) AHAM stated that in order to meet the standards proposed in the March 2023 NOPR using the updated test procedure, manufacturers will need to increase spin speed and high spin speed plateau times. (
In response to AHAM's comment regarding the impacts of the new test procedure on tested values, DOE notes that the translation equations developed to translate IMEF efficiency levels into EER efficiency levels inherently account for all the changes between the two test procedures, including the change in load size and the tested temperature settings.
Finally, for this direct final rule, DOE updated the underlying raw material prices used in its cost model to reflect current raw material prices, which resulted in slight changes to the MPC values in comparison to the values used in the March 2023 NOPR. Table IV.10 presents the baseline MPCs for each product class as determined for this direct final rule. Tables IV.11 through IV.14 provide the incremental MPCs for each higher efficiency level for each product class as determined for this direct final rule. As discussed, no automatic top-loading compact RCWs are available on the market that exceed the baseline level. Accordingly, DOE did not consider any higher efficiency levels for this product class.
The markups analysis develops appropriate markups (
For RCWs, the main parties in the post-manufacturer distribution chain are retailers/distributors and consumers.
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.
For the March 2023 NOPR, DOE relied on economic data from the U.S. Census Bureau to estimate average baseline and incremental markups.
For this direct final rule, DOE considered comments it had received regarding the markups analysis conducted for the March 2023 NOPR. The approach for determining markups in this direct final rule was the same approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM commented that it, along with AHRI and other stakeholders, disputes DOE's distinction between markups from manufacturers to end customers for the base case and those for costs added to meet proposed standards. (AHAM, No. 464 at p. 34) AHAM presented data, including quotes from retailers, which AHAM believes contradicts DOE's process and theory, arguing that it lacks empirical evidence and relies on discredited theories. (
DOE's incremental markup approach assumes that an increase in operating profits, which is implied by keeping a fixed markup when the product price goes up, is unlikely to be viable over time in a reasonably competitive market like household appliance retailers. The Herfindahl-Hirschman Index (“HHI”) reported by the 2017 Economic Census indicates that the household appliance stores sector (North American Industry Classification System (“NAICS”) 443141) is a competitive marketplace.
DOE acknowledges that markup practices in response to amended standards are complex and varying with business conditions. However, DOE's analysis necessarily only considers changes in appliance offerings that occur in response to amended standards and isolates the effect of amended standards from other factors. Obtaining data on markup practices in the situation described above is very challenging. Hence, DOE continues to maintain that its assumption that standards do not facilitate a sustainable increase in profitability is reasonable.
Chapter 6 of the direct final rule TSD provides details on DOE's development of markups for RCWs.
The purpose of the energy and water use analysis is to determine the annual energy and water consumption of RCWs at different efficiencies in representative U.S. single-family homes, multi-family residences, and mobile homes, and to assess the energy savings potential of increased RCW efficiency. The energy and water use analysis estimates the range of energy and water use of RCWs in the field (
To establish a reasonable range of energy and water consumption in the field for RCWs, DOE primarily used data from 2020 Residential Energy Conservation Survey (“RECS”).
• The household had a clothes washer.
• Clothes washer use was greater than zero.
DOE divided the sample of households into five sub-samples to characterize the product classes being analyzed: top-loading ultra-compact RCWs; automatic, top-loading standard-size RCWs; automatic, front-loading compact RCWs; automatic, front-loading standard-size RCWs; and semi-automatic RCWs. For ultra-compact, compact, and semi-automatic clothes washers, DOE developed a sub-sample consisting of households from multi-family buildings, manufactured homes, and single-family homes with less than 1,000 square feet and no garage or basement, since DOE reasoned that such products are most likely to be found in these housing types.
The energy and water use analysis requires DOE to establish a range of total annual usage or annual number of cycles in order to estimate annual energy and water consumption by a clothes washer unit. DOE unutilized data from the 2020 RECS, which provided information on the number of laundry loads washed (clothes washer cycles) per week for sample households. The average annual energy and water consumption were then calculated, reflecting an average annual weighted usage of 210 cycles per year (206 cycles for top-loading RCWs and 217 cycles for front-loading RCWs).
For each sample household, DOE estimated the field-based annual energy and water use of the clothes washer by multiplying the annual number of clothes washer cycles for each household by the per-cycle energy and water use values established by the engineering analysis (using the DOE test procedure) for each considered efficiency level. Per-cycle clothes washer energy use is calculated in the test procedure as the sum of per-cycle machine energy use associated with the clothes washer (including the energy used to heat water and remove moisture from clothing),
For this direct final rule, DOE considered comments it had received regarding the energy and water use analysis conducted for the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, Whirlpool commented that DOE appears to double-count the savings for drying energy between the RCW standard analysis and the consumer clothes dryer standard analysis. (Whirlpool, No. 462 at p. 14) Whirlpool noted that DOE's RCW analysis assumed an RMC of 37 percent and 33 percent were needed to meet the standard levels proposed in the March 2023 NOPR (for top-loading and front-loading, respectively), whereas the clothes dryer test procedure at 10 CFR part 430, subpart B, appendix D2 (“appendix D2”), assumes an initial moisture content of 57.5 percent. (
AHAM commented that DOE is overestimating the expected energy savings between clothes washers and
To the greatest extent possible, DOE avoids double-counting between the RCW standards analysis and the consumer clothes dryer standards analysis, as explained by the following. Amended RCW standards result in less total moisture needing to be removed from the clothing in a clothes dryer, whereas amended consumer clothes dryer standards result in a less energy-intensive process for removing that moisture. As such, the drying energy savings associated with amended RCW standards represent savings experienced through shorter drying times (due to the clothing being “less wet” after the completion of the wash cycle due to faster spin speeds), whereas the drying energy savings associated with amended consumer clothes dryer standards represents savings attributable to improvements to the inherent efficiency of the drying process itself. Pertaining to this RCW standards analysis, the clothes dryer energy savings associated with reduced RMC values—essentially resulting in shorter drying cycles—would be experienced by consumers regardless of whether a consumer purchases a new clothes dryer alongside a new RCW or continues to use their existing clothes dryer.
For RCWs, the embedded assumptions and usage factors defined in the test procedure for calculating drying energy are intended to reflect the characteristics of the current installed stock of consumer clothes dryers on a nationally representative basis. Similarly, for clothes dryers, the assumed initial moisture content value defined in the clothes dryer test procedure is intended to reflect the characteristics of the current installed stock of RCWs on a nationally representative basis. DOE regularly reevaluates these assumptions and usage factors as part of its test procedure rulemakings—and adjusts each value when warranted—to ensure that each respective test procedure produces test results that are nationally representative as the markets for these products evolve over time, in part due to amended energy conservation standards.
Alliance for Water Efficiency (“AWE”) recommended that DOE evaluate energy embedded in the water that will be saved as a result of the proposed standard. (AWE, No. 444 at p. 4) AWE stated that it has developed a tool for evaluating the water savings, costs, and benefits of urban water conservation programs and for projecting future demands that provides a range of estimates for embedded water and wastewater energy. (
DOE has previously determined that EPCA does not direct DOE to consider the energy used for water treatment and delivery. In the May 2012 Direct Final Rule, DOE noted that EPCA directs DOE to consider “the total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard.” 77 FR 32308, 32346 (quoting 42 U.S.C. 6295(o)(2)(B)(i)(III)). In the May 2012 Direct Final Rule, DOE interpreted “directly from the imposition of the standard” to include energy used in the generation, transmission, and distribution of fuels used by appliances. Unlike the energy used for water treatment and delivery, both DOE's current accounting of primary energy savings and the full-fuel-cycle measure are directly linked to the energy used by appliances.
ASAP, ACEEE, and NYSERDA noted that data found in the 2016 Residential End Uses of Water (“REUW”) report suggest that DOE may be significantly underestimating the average number of RCW loads per year. (ASAP, ACEEE, and NYSERDA, No. 458 at p. 3)
AWE recommended that DOE use actual data from 2016 REUW or other actual end-use data for its assumptions about RCW loads per year. (AWE, No. 444 at p. 3) AWE stated that there are often large gaps between consumer survey responses and actual behavior when it comes to fixture and appliance uses, and therefore data from reports like 2016 REUW or other sources, such as smart metering companies, could be more reliable than the 2015 RECS. (
DOE has reviewed the 2016 REUW report, published by the Water Research Foundation, which analyzed RCW end-use data from detailed log data from 737 households. However, DOE noticed a significant disparity between the annual clothes washer usage reported in this report compared to the latest data from the 2020 RECS. Specifically, as noted by AWE, the 2016 REUW shows an average of 285 loads per year compared to an average of 210 cycles per year determined based on the 2020 RECS. DOE acknowledges that RECS is based on household reported frequency of average clothes washer usage per week rather than on contemporaneous logs taken by households, which could be more reliable on an individual basis. However, unlike the 2016 REUW
Although stakeholders suggested that the cycles per year determined based on RECS may be underestimated, the 2020 RECS is the most comprehensive and most current data source available on this topic, and, as such, DOE is adopting the lower usage reported in the latest RECS. This approach results in a conservative estimate for energy and water savings.
Representatives Latta
Whirlpool commented that the assumption made by DOE that larger RCWs lead to energy savings is incorrect. (Whirlpool, No. 462 at pp. 8-9) Whirlpool asserted that many consumers do laundry based on the size of their laundry basket or on a regular schedule, disregarding the RCW's available capacity; despite load sensing technology, larger RCWs may be less efficient for the same load size compared to smaller ones; some consumers may not fill the wash basket completely, compromising the benefits
ASAP, ACEEE, and NYSERDA noted that DOE's per-cycle energy and water use analysis is based on the test procedure, which assumes that load sizes are larger for larger machines. (ASAP, ACEEE, and NYSERDA, No. 458 at p. 3) ASAP, ACEEE, and NYSERDA stated that by assuming that tub capacity would increase from 4.0 to 4.7 ft
The energy and water use values associated with each efficiency level in the energy use analysis are derived from testing conducted according to the new appendix J test procedure, as described by ASAP, ACEEE, and NYSERDA. Indeed, for the top-loading standard-size efficiency levels for which DOE has modeled as increase in tub size as a design option path, the associated energy and water use estimates are based on the assumed use of larger load sizes—as defined by the test procedure—while assuming the same number of annual cycles (
Chapter 7 of the direct final rule TSD provides details on DOE's energy use analysis for RCWs.
DOE conducted LCC and PBP analyses to evaluate the economic impacts on individual consumers of potential energy conservation standards for RCWs. 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 and water 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 RCWs 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 residential housing units. As stated previously, DOE developed household samples from the 2020 RECS. For each sample household, DOE determined the energy and water consumption for the RCWs and the appropriate energy and water prices. By developing a representative sample of households, the analysis captured the variability in energy and water consumption and energy and water prices associated with the use of RCWs.
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 and water consumption, energy and water 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 RCW user samples. For this rulemaking, the Monte Carlo approach is implemented in MS Excel together with the Crystal Ball
DOE calculated the LCC and PBP for consumers of RCWs as if each were to purchase a new product in the first year of required compliance with amended standards. Amended standards apply to RCWs manufactured 3 years after the date on which any amended standard is published. (42 U.S.C. 6295(m)(4)(A)(i)) Therefore, DOE used 2027 as the first year of compliance with any considered TSLs for RCWs, except for the Recommended TSL. For the Recommended TSL, DOE used 2028 as the first year of compliance.
Table IV.15 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 direct final rule TSD and its appendices.
The LCC Monte Carlo simulations draw from the efficiency distributions and randomly assign an efficiency to the RCW purchased by each sample household in the no-new-standards case. The resulting percent shares within the sample match the market shares in the efficiency distributions.
In the March 2023 NOPR, DOE performed a random assignment of efficiency levels to consumers in its Monte Carlo sample. 88 FR 13520, 13564. While DOE acknowledges that economic factors may play a role when consumers decide on what type of RCW to install, assignment of RCW product 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, because it simulates behavior in the RCW product market, where market failures result in purchasing decisions not being perfectly aligned with economic interests, and is more realistic than relying only on apparent cost-effectiveness criteria derived from the limited information in RECS. DOE further emphasizes that its approach does not assume that all purchasers of RCW products make economically irrational decisions (
The following discussion provides more detail about the various market failures that affect RCW product purchases. 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.
In addition to the split-incentive problem, there are other market failures that are likely to affect the choice of RCW product efficiency made by consumers. For example, unplanned replacements due to unexpected failure of equipment such as RCW products 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
These market failures affect a sizeable share of the consumer population. A study by Houde
The existence of market failures in the residential sector is well supported by the economics literature and by a number of case studies. If DOE developed an efficiency distribution that assigned RCW product 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 consumer sample would not reflect any of the market failures or behavioral factors above. Thus, DOE concludes such a distribution would not be representative of the RCW product market. Further, even if a specific household is not subject to the market failures above, the purchasing decision of RCW product efficiency can be highly complex and influenced by a number of factors (
There is a complex set of behavioral factors, with sometimes opposing effects, affecting the RCW product market. It is impractical to model every consumer decision incorporating all of these effects at this extreme level of granularity given the limited available data. Given these myriad factors, DOE estimates the resulting distribution of such a model, if it were possible, would be very scattered with high variability. It is for this reason DOE utilizes a random distribution (after accounting for efficiency market share constraints) to approximate these effects. The methodology is not an assertion of economic irrationality, but instead, it is a methodological approximation of complex consumer behavior. The analysis is neither biased toward high or low energy savings. The methodology does not preferentially assign lower-efficiency RCW products to households in the no-new-standards case where savings from the rule would be greatest, nor does it preferentially assign lower-efficiency RCW products to households in the no-new-standards case where savings from the rule would be smallest. Some consumers were assigned the RCW products that they would have chosen if they had engaged in perfect economic considerations when purchasing the products. Others were assigned less-efficient RCW products
For this direct final rule, DOE considered comments it had received regarding the LCC analysis conducted for the March 2023 NOPR. The LCC approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM commented that DOE's reliance on the RECS database in its analysis is introducing outlier values into its LCC analysis. (AHAM, No. 464 at p. 36) AHAM commented that the documentation of the 2015 RECS reveals uncertainties, errors, and approximations within its data, making it difficult to determine the accuracy of consumption projections for individual housing units. (
As described in section IV.E of this document., DOE's energy and water use analysis for this direct final rule is derived based on 2020 RECS, which provides household's clothes washer loads information ranging from 1 cycle to 30 cycles per week. The field-based annual energy and water use for each household then feed into the LCC analysis. DOE notes that there is no indication that any of households in the RECS sample represent non-valid data that should be excluded as an outlier. Excluding minimum and maximum values from the field-based usage statistics would result in a less accurate representation of the actual energy and water consumption patterns exhibited by households participating in the survey. However, as a standardized approach, DOE presents all statistical results of LCC savings in chapter 8 of its TSD (
AHAM commented that DOE should focus on conducting a purchase decision analysis instead of relying on outcomes and long-term cost analyses. (AHAM, No. 464 at p. 33) AHAM commented that the basis for regulation lies in identifying consumer and systemic market failures, where consumer failure refers to making “incorrect” decisions due to a lack of information. (
In response to the March 2023 NOPR, an anonymous commenter stated that the proposed rule change makes questionable assumptions about consumer behavior, particularly the expectation that consumers will buy their RCWs within the first year, which might skew the cost-benefit analysis. (Anonymous, No. 391 at p. 1)
First, DOE notes that the LCC analysis currently relies on market data on the distribution of efficiency of products to assign products with varying efficiency performance to each household when compliance with the standard becomes required. This approach is intended to simulate the range of individual outcomes likely to result from the hypothetical setting of a revised energy conservation standard at various levels of efficiency when the data needed to develop a product-specific consumer choice model are currently unavailable. DOE does not negate the consumer decision theory established in the broad behavioral economic field; rather, this is a methodological decision made by DOE after considering the existence of various systematic market failures (
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.
Economic literature and historical data suggest that the real costs of many products may trend downward over time according to “learning” or “experience” curves. Experience curve analysis implicitly includes factors such as efficiencies in labor, capital investment, automation, materials prices, distribution, and economies of scale at an industry-wide level.
For this direct final rule, DOE considered comments it had received regarding the methodology for calculating consumer product costs that was presented in the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, AHAM commented that DOE's application of a “learning or experience curve” to reduce expected extra manufacturing costs required to meet proposed standard levels lacks a solid theoretical foundation. (AHAM, No. 464 at p. 35) AHAM commented that the approach, based solely on empirical relationships, demands clear alignment with the actual products under consideration, with a necessity to adjust equations when data changes shape. (
DOE notes that there is considerable empirical evidence of consistent price declines for appliances in the past few decades. Several studies examined refrigerator retail prices during different periods of time and showed that prices had been steadily falling while efficiency had been increasing, for example Dale
Representatives Latta
DOE notes that in most cases—and in particular for top-loading standard-size RCWs—the MSRP of an existing model at a certain higher efficiency level does not reflect the consumer purchase price that would be expected if DOE were to enact an amended standard at that higher efficiency level, for two main reasons. First, current models at higher efficiency levels are produced at significantly lower shipment volumes than baseline models, which generally results in higher per-unit costs for each component part for the higher efficiency models. Second, higher efficiency models are often “bundled” with non-efficiency related features that add additional cost to the product and contribute to the overall higher MSRP. Because of these drawbacks to using MSRP as the basis for evaluating the economic justification of a higher standard, DOE instead uses a reverse-engineering approach—combined with a detailed analysis of markups—to estimate the impact on consumer purchase price that would be expected as a result of an amended standard. As discussed in sections IV.C.3 and IV.D of this document, DOE evaluates the cost impact to consumers by developing incremental MPC costs and multiplying the MPCs by various markups to develop the consumer purchase price. This approach allows DOE to account for any economies of scale that would result from producing more efficient RCWs at larger shipment volumes and to isolate the cost of any non-efficiency-related features that are often bundled with higher-efficiency RCWs on the market today.
Installation cost includes labor, overhead, and any miscellaneous materials and parts needed to install the product. DOE used data from 2022
For each sampled household, DOE determined the energy and water consumption for an RCW at different efficiency levels using the approach described previously in section IV.E of this document.
Because marginal electricity and gas prices more accurately capture 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 electricity and gas prices. Therefore, DOE applied average electricity and gas prices for the energy use of the product purchased in the no-new-standards case, and marginal electricity and gas prices for the incremental change in energy use associated with the other efficiency levels considered.
DOE derived electricity prices in 2022 using data from Edison Electric Institute (“EEI”) Typical Bills and Average Rates reports for summer and winter 2022.
DOE's methodology allows electricity prices to vary by sector, region and season. In the analysis, variability in electricity prices is chosen to be consistent with the way the consumer economic and energy use characteristics are defined in the LCC analysis.
DOE obtained data for calculating regional prices of natural gas from the EIA publication,
DOE assigned average prices to each household in the LCC sample based on its location and its baseline electricity and gas consumption. For sampled households who were assigned a product efficiency greater than or equal to the considered level for a standard in the no-new-standards case, DOE assigned marginal prices to each household based on its location and the decremented electricity and gas consumption. In the LCC sample, households could be assigned to one of nine census divisions.
To estimate energy prices in future years, DOE multiplied the 2022 energy prices by the projection of annual average price changes for each of the nine census divisions from the Reference case in
DOE obtained residential water and wastewater price data from the Water and Wastewater Rate Survey conducted by Raftelis Financial Consultants and the American Water Works Association.
The samples that DOE obtained of the water and wastewater utilities is too small to calculate regional prices for all U.S. Census divisions. Therefore, DOE calculated regional costs for water and wastewater service at the Census region level (Northeast, South, Midwest, and West) by weighting each State in a region by its population.
For this direct final rule analysis, DOE has updated its methodology for developing water prices for consumers who rely on a private well water system, instead of the public supply system in consideration of stakeholder comments received in response to the March 2023 NOPR DOE primarily considered well maintenance costs and pump operating costs when developing the average water price. Conversely, DOE only considered pump operating costs when developing the marginal price for well users. As a result, the estimated average and marginal water prices for well users are $1.24 and $0.39 per thousand gallons, respectively. For septic tank users, DOE considered only the septic tank maintenance cost when determining the average price and excluded the marginal cost component, as any marginal costs are likely to be negligible. DOE is unable to develop Census-region-level well water and septic tank prices due to the limitation of available data. As a result, the same values were used for each Census region.
To determine the current percentage of the U.S. population served by private wells and septic tanks, DOE used historical American Housing Survey (“AHS”) data from 1990 to 2021 to develop a projection for 2027, the effective year of potential new standards for RCWs except for the Recommended TSL.
DOE then conducted random simulations
To estimate the future trend for public water and wastewater prices, DOE used data on the historic trend in the national water price index (U.S. city average) from 1988 through 2022 provided by the Labor Department's BLS.
To estimate the future trend for well water and septic tank prices, DOE used data on the historic trend in the overall national consumer price index (“CPI”) from 1988 through 2022 provided by the Labor Department's BLS.
In response to the March 2023 NOPR, AHAM commented that it previously suggested that DOE should consider the actual water costs for households on well systems, acknowledge that there are no incremental costs for consumers
As discussed, DOE agrees with AHAM that consumers using septic systems have near-zero marginal costs for wastewater and has updated the analysis accordingly. As discussed in section IV.I.3 of this document, DOE has also included an analysis of well-water users in the consumer subgroup analysis.
AHAM commented that it opposed DOE's use of “economic value of water” in the LCC model. According to AHAM, private well users pay the actual marginal cost of water, primarily the electricity for pumping, not an “economic value”. AHAM noted that while there are embedded costs for drilling a well, these costs are sunk and the marginal cost is electricity. AHAM suggested that if DOE insists on the “economic value”, DOE should define it, demonstrate how well-water use reduces water availability, and quantify the actual “economic value” of lost well water. (AHAM, No. 464, at p. 38) AHAM further stated that even if there is an “economic value”, it should be considered in the NIA, not the LCC. (
DOE agrees with AHAM that “economic value of water” is not the actual price that well users would pay. Hence, for this direct final rule, DOE has adjusted its methodology regarding water price for well users and septic tank price. To derive well water price, DOE conducted a comprehensive literature review and took into consideration the inputs provided by AHAM. As a result, DOE estimated the average water price for well users to be $1.24 per thousand gallons, with a marginal price of $0.39 per thousand gallons representing the electricity cost for pumping as suggested by AHAM. Regarding septic tank price, DOE estimated the average cost to be $1.30 per thousand gallons and excluded the marginal cost component, as it may be negligible or close to $0 per thousand gallons. For details of the well water and septic tank prices, see chapter 8 of the direct final rule TSD. In addition, in the LCC, DOE has explicitly assigned well water and septic users randomly to the rural population based on estimated population and given them well and/or septic specific prices; DOE is no longer using composite water and sewer costs applied to the entire sample. As such, well and/or septic users are now fully accounted for in the LCC sample.
AWE commented that it is unclear why DOE referred to the water and sewerage maintenance item from the CPI to determine future price trends for water and sewage. AWE stated that DOE's methodology for price trends regarding RCWs deviates from the methodology DOE proposed regarding dishwashers. AWE recommended that DOE use the RFC/AWWA Water and Wastewater Rate Survey for both dishwashers and RCWs because the RFC/AWWA survey is more accurate and representative of price trend data between 1998 and 2020. (AWE, No. 444 at pp. 2-3)
RFC/AWWA provides water and wastewater rates survey data every two years for U.S. water and wastewater utilities. For each of the RFC/AWWA surveys, utilities in the sample respond voluntarily to the survey questions, with a limited number of overlapping utilities in each survey year. For this reason, it is possible that the annual change in rates may be affected by which utilities respond to the survey. In addition, the rate data are reported in usage tiers set by each utility and not on actual household water consumption.
The BLS Water and Sewer CPI sample represents 600 to 700 quotes for water or sewer service, and the sample is consistent for four years, which reduces the possible year over year bias as compared to RFC/AWWA. Additionally, the Water and Sewer CPI was estimated based on consumer water bills that were related to household water consumption. Therefore, DOE concludes that the BLS' CPI water and sewer data better reflect the nationally representative price trends. DOE therefore used the CPI for water and sewer for its public utilities' water and wastewater price trend forecast for this direct final rule.
DOE used a similar methodology to develop future water and wastewater prices in its dishwasher standard rulemaking as it used in the March 2023 NOPR analysis. The only difference between the two standards rulemaking analyses is that for RCWs, DOE used a constant value derived from the average values from 2046 through 2050 to estimate the price trend after 2050, whereas in the dishwashers NOPR, published May 19, 2023 (88 FR 32514), DOE used the 2050 value for the price trend after 2050.
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.
For RCWs, DOE determined the repair cost associated with loading type and clothes washer capacity commonly found on an appliance repair website.
Typically, small incremental increases in product efficiency produce no, or only minor, changes in repair and maintenance costs compared to baseline efficiency products. For this direct final rule analysis, DOE estimated that for repair costs, there is a cost difference between an ENERGY STAR and non-ENERGY STAR RCW of approximately $47 for a front-loading RCW and $34 for a top-loading RCW, based on information aggregated from manufacturer interviews. For maintenance costs, DOE assumed that there is no change with efficiency level for RCWs.
For this direct final rule, DOE considered comments it had received regarding its determination of maintenance and repair costs in the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, Representatives Latta
As discussed in the March 2023 NOPR, DOE implemented higher repair costs for ENERGY STAR qualified and above ENERGY STAR qualified RCWs compared to the baseline models based on information obtained through manufacturer interviews. These same inputs have been used in the current direct final rule analysis. DOE estimated the cost difference between an ENERGY STAR and non-ENERGY STAR RCW of approximately $34 for a top-loading and $47 for a front-loading RCW. See section 8.3.5 of chapter 8 of the direct final rule TSD for details.
The National Multifamily Housing Council (“NMHC”) and National Apartment Association (“NAA”) recommended that DOE reevaluate the costs and ongoing operations and maintenance impacts of longer cycle times, multiple wash cycles, and increased stress on the equipment. (NMHC and NAA, No. 451 at pp. 3-4)
CEI
CEI asserted that repair costs would likely increase, leading consumers to refrain from repairs under the proposed rule if they cost half or more of the price of a new machine. However, CEI did not provide additional supporting data for DOE to consider to suggest that the repair price would be higher than what was used in the March 2023 NOPR and for this direct final rule analysis. As described in section IV.F.5 of this document, DOE has estimated a slight increase in retirement for RCWs before reaching 4 years of age using the latest 2020 RECS and AHS data.
As stated in section V.B.4 of this document, at TSL 2—the standards level adopted in this direct final rule—DOE's data demonstrates no negative impact on consumer utility, including cycle time. For further discussion of performance as it relates to amended standards, see section V.B.4.a of this document.
Product lifetime is the age at which an appliance is retired from service. To determine estimates for RCW lifetime, DOE conducted an analysis of standard-capacity RCW lifetime in the field based on a combination of shipments data and data on the ages of the clothes washer products reported in the household stock from RECS conducted in 2001, 2005, 2009, 2015, and 2020.
The data allowed DOE to estimate a survival function, which provided an average appliance lifetime of approximately 14 years. From the 2015 RECS to the 2020 RECS, there was a 3.6 percent increase in the number of RCWs under 5 years of age, and an additional 0.7 percent of RCWs lasting beyond 15 years. Therefore, for this direct final rule, DOE has slightly updated its estimated average lifetime for RCWs to 13.4 years, with a distribution that includes 1.4 percent more RCWs retiring before reaching 4 years and 2.9 percent more RCWs remaining after 15 years and up to 30 years, compared to the Weibull lifetime probability distribution used in the March 2023 NOPR.
For this direct final rule, DOE considered comments it had received regarding its estimation of product lifetime in the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, NEEA
The AGs of TN
In response to the March 2023 NOPR, Representatives Latta
CEI commented that DOE does not acknowledge that its rules have shortened the useful lives of clothes washers and other appliances and that DOE also ignores the resulting adverse environmental impacts, which include the greater energy and other resources that go into manufacturing additional clothes washers as well as additional landfill and other disposal requirements for discarded units.
In the public webinar, Whirlpool commented that the average lifespan of an RCW should not only be based on historical data, as the additional stresses placed on the mechanical components (due to the combination of higher resistance and less water, which creates more tension, torque, and wear on the motor) could pose as a challenge in reaching the 13.7-year lifespan in the future. (Whirlpool, Public Webinar Transcript, No. 91 at pp. 35-36)
In the public webinar, Mannino stated that most clothes washers fail after three to four years. Mannino asked how DOE arrived at its estimate. (Mannino, Public Webinar Transcript, No. 91 at p. 32)
DOE also received comments from 23 additional individual commenters expressing concerns regarding the standards' impact on the product's lifetime.
DOE notes that it does not have data to corroborate a causal connection between the stringency of efficiency standards and the expected service lifetime of RCWs. Moreover, commenters have not provided DOE additional information or data that demonstrates that more-efficient clothes washers have shorter or longer product lifetimes than less-efficient clothes washers. As a result, DOE has not identified differences in lifetime based on differences in efficiency.
As stated, DOE updated the Weibull lifetime distribution used for this direct final rule based on the recent data from RECS and AHS. The updated data indicates a slightly shorter lifetime and delayed replacement of RCWs than was considered in the March 2023 NOPR based on previous RECS and other data sources.
Furthermore, as discussed in chapter 5 of the TSD for this direct final rule, the incremental MPCs developed in this analysis reflect units currently available on the market. Therefore, to the extent that units on the market incorporate more robust mechanical components (such as bearings, motors,
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 RCWs 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 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 top-loading standard-size, front-loading compact, and front-loading standard-size RCWs for 2027 and 2028, DOE used shipments-weighted energy efficiency ratio (“SWEER”) for 2020 as a starting point, based on information provided by AHAM. (AHAM, No. 54 at pp. 2-3) To project the trend in efficiency, DOE considered recent trends in DOE's RCW CCD and the potential effect of labeling programs such as ENERGY STAR on RCWs. DOE estimated an annual efficiency improvement of 0.4 and 0.1 percent for top-loading standard-size and front-loading (compact and standard-size) clothes washers, respectively. For semi-automatic clothes washers, DOE used the CCD database to develop a product efficiency distribution under the no-new-standards case.
The estimated market shares for the no-new-standards case for RCWs are shown in Tables IV.16 through IV.19. See chapter 8 of the direct 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 RCW purchased by each sample household in the no-new-standards case. The resulting percent shares within the sample match the market shares in the efficiency distributions.
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 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 amended standards would be required.
An anonymous commenter expressed concerns regarding the LCC and PBP associated with the proposed rule change to increase energy efficiency of RCWs. (Anonymous, No. 391 at p. 1) The anonymous commenter questioned the time it would take for the benefits to outweigh the costs, as the proposed rule suggests net positive outcomes over a period of less than the average product lifespan of 13 years, but also notes the 30-year timeframe for the cost-benefit analysis in asking how long until the benefits will be recognizable. The anonymous commented sought clarity on when the benefits will become noticeable and raises logistical concerns about the implementation of the rule change. (
As described in section V.B.1.a of this document (
DOE notes that the estimated simple payback period can be subject to change depending on several factors, such as households' RCW usage and utility bill rates, including energy and water price rates. In general, if a household runs their RCW more frequently at higher energy and water rates, it will result in a shorter payback period and vice versa.
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.
To project RCW shipments under the no-new-standards case, DOE utilized historical shipments data from AHAM. DOE estimated RCW shipments by projecting shipments into two market segments: (1) replacement of existing RCWs; (2) new housing.
To project RCW replacement shipments, DOE developed retirement functions from RCW lifetime estimates and applied them to the existing products in the housing stock, which are tracked by vintage. To estimate shipments to new housing units, DOE used projections of new housing starts coupled with RCWs' saturation data. In other words, to project the shipments for new housing units for any given year, DOE multiplied the housing projections by the estimated saturation of RCWs for new housing units. For new housing completions and mobile home placements, DOE used recorded data through 2022,
DOE aggregated the above two market segments for any given year during the analysis period
To project RCW shipments under a standards case, DOE used a price elasticity parameter, which relates the incremental total installed cost to total RCW shipments, and an efficiency elasticity parameter, which relates the change in the operating cost to RCW shipments. Both types of elasticity relate changes in demand to changes in the corresponding characteristic (price or efficiency). A regression analysis estimated these terms separately from each other and found that the price elasticity of demand for several appliances is on average −0.45.
DOE assumed when market impact occurs (
For this direct final rule, DOE considered comments it had received regarding its shipments analysis for the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, The CA IOUs commented that they agree that the relative market share for top-loading RCWs from 2012 on has remained reasonably stagnant, but they also noted that the relative market share for top-loading RCWs was more fluid before 2012. (CA IOUs, No. 460 at p. 7) The CA IOUs stated that relative market share movements from front-loading to top-loading RCWs correlate with DOE compliance dates for amended energy conservation standards. (
Electrolux Home Products, Inc. (“Electrolux”) commented that data from the September 2021 TSD
As stated in the March 2023 NOPR, DOE acknowledges the challenge of lacking historical retail pricing, sales data, and energy consumption data for top-loading and front-loading RCWs. These data are crucial for developing a regression model that accurately projects the market share between the two loading types of RCWs. In this direct final rule, DOE is not adopting the standards level proposed in the March 2023 NOPR. Instead, DOE is adopting a standards level that is one level below the efficiency level proposed in the March 2023 NOPR level for top-loading standard-size RCWs. Under the adopted standards, the incremental equipment price from the baseline model to an ENERGY STAR-rated top-loading standard-size RCW is $146, while the price difference between the adopted standard level top-loading RCW and the adopted standard level front-loading RCW is $227. Therefore, DOE does not expect that the adopted standards will drive consumers to shift from the top-loading to the front-loading RCW market because front-loading RCWs will continue to be more expensive. In line with the approach taken in the March 2023 NOPR, DOE assumed a frozen scenario for market shifting (
See chapter 9 of the direct final rule TSD for details.
The NIA assesses the national energy savings (“NES”), national water savings (“NWS”), and the NPV from a national perspective of total consumer
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.21 summarizes the inputs and methods DOE used for the NIA analysis for the direct final rule. Discussion of these inputs and methods follows the table.
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 standard. To project the trend in efficiency absent amended standards for RCWs over the entire shipments projection period, DOE considered recent trends in its CCD data and the potential effect of programs such as ENERGY STAR. As discussed in section IV.F.8 of this document, DOE estimated an annual efficiency improvement of 0.4 percent and 0.1 percent for top-loading standard-size and front-loading (compact and standard-size) RCWs, respectively.
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 (2027 or 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. See chapter 10 of the direct final rule TSD for details.
The national energy and water savings analysis involves a comparison of national energy and water consumption of the considered products between each potential standards case (“TSL”) and the case with no amended energy conservation standards. DOE calculated the national energy and water consumption by multiplying the number of units (stock) of each product (by vintage or age) by the unit energy and water consumption (also by vintage). DOE calculated annual NES and NWS based on the difference in national energy and water 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 (
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 notification, 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
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 this direct final rule, DOE considered comments it had received in response to the March 2023 NOPR regarding potential rebound effects.
In response to the March 2023 NOPR, AHAM commented that changes to water level requirements would cause perceptions of inadequate cleaning performance and lead consumers to take actions (
Whirlpool commented that the proposed standards would cause consumers to alter their purchasing behavior due to the perceived loss of utility, poor performance, and increased up-front cost of RCWs meeting the proposed standards. (Whirlpool, No. 462 at p. 5) Specifically, Whirlpool commented that consumers may delay purchases and repair older, less efficient appliances past their normal, expected life. (
CEI noted that consumer behavior resulting from performance-related deficiencies may well lead to increased water use for some consumers. (CEI, No. 454 at p. 5)
The AGs of TN
DOE also received comments from over 50 individual commenters expressing concern that amended standards could lead to more energy- and water-intensive usage of RCWs, thereby counteracting any energy or water savings resulting from amended standards.
As discussed further in section V.B.4.a of this document, in response to the March 2023 NOPR, AHAM and manufacturers presented data and information indicating that there are uncertainties regarding potential impacts on certain aspects of product performance at the standard levels proposed in the March 2023 NOPR (
DOE notes that in response to the March 2023 NOPR, manufacturers did not provide any specific data nor express any specific concerns regarding clothes washer performance at TSL 2 (
DOE acknowledges that this conclusion is contrary to its assumptions in the final rule that it published on December 16, 2020 (“December 2020 Final Rule”). 85 FR 81359. There, DOE assumed that consumers might need to re-run their clothes washers or clothes dryers through multiple cycles “to adequately clean or dry their clothing.”
Given that there is no evidence of any previous RCW standard increasing RCW cycles per year, and in fact, instead cycles per year have decreased over time through multiple standards, DOE determines that a standard at TSL 2 would not be expected to lead consumers to opt for more energy- and water-intensive washing.
To better understand and quantify the uncertainties of any impacts of potential standards at TSL 3 and TSL 4 on consumer behavior, for this direct final rule, DOE has conducted a sensitivity analysis of possible increased use of the “deep fill” option on top-loading standard-size RCWs at CEE Tier 1 (TSL 3) and max-tech (TSL 4), which are more stringent TSLs than being adopted in this direct final rule. Specifically, DOE considered the possibility that consumers might opt for more energy- and water-intensive washing using the deep fill option available on their top-loading RCWs. DOE assumed that in this case consumers would choose to wash their loads with more water, resulting in less energy and water savings compared to the standard projections. The sensitivity analysis compares the energy and water savings, as well as the NPV, between scenarios with and without the deep fill usage option, quantifying the impact of altered consumer behavior on the analytical results. The analysis does not model a change for product classes lacking a deep fill option, like front-loading RCWs, nor does it consider aspects of consumer behavior unrelated to usage intensity, such as the delayed replacement of older clothes washers.
The overall FFC national energy savings decrease by approximately 2 percent and national water savings decrease by less than 2 percent, compared to the default case. For details on the NIA sensitivity analysis results, see appendix 10E of the direct final rule TSD.
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 and water 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
As discussed in section IV.F.1 of this document, DOE developed RCW price trends based on historical PPI data. DOE applied the same trends to project prices for each product class at each considered efficiency level. By 2056, which is the end date of the projection period, the average RCW price is projected to drop 17.2 percent relative to 2022. Non-energy efficiency related features are excluded from the manufacturer production cost, therefore, the decline in price does not include any price adders associated with non-energy efficiency related features. DOE is not aware if such data exists and notes that the projected drop in price may not reflect real market prices. DOE's projection of product prices is described in appendix 10C of the direct 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 RCWs. In addition to the default price trend, DOE considered two product price sensitivity cases: (1) a high price-decline case based on PPI data for the period 1980-2022 and (2) a constant price trend at the 2022 value. Compared to the default price trend, which exhibits an annual price decline rate of 0.58 percent, the high price-decline case exhibits an annual decline rate of 1.15 percent, and the constant price case exhibits no annual decline. For the Recommended TSL under the high-price decline case, consumer NPV increases by 10 percent and 14 percent given discount rates of 3 percent and 7 percent, respectively. Under the constant price case, consumer NPV decreases by 12 percent and 16 percent given discount rates of 3 percent and 7 percent, respectively. The derivation of these price trends and the results of these sensitivity cases are described in appendix 10C of the direct final rule TSD.
The energy and water cost savings are calculated using the estimated energy and water savings in each year and the projected price of the appropriate form of energy and water. 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 calculating the NPV, DOE multiplies the net savings in future years by a discount factor to determine their present value. For this direct 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 direct final rule, DOE analyzed the impacts of the considered standard levels on three subgroups: (1) low-income households, (2) senior-only households, and (3) well-water households. The analysis used subsets of the 2020 RECS sample composed of households 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 direct final rule TSD describes the consumer subgroup analysis. The sections below discuss the individual subgroups, and additional details are found in chapter 11 of the direct final rule TSD.
Low-income households are significantly more likely to be renters or to live in subsidized housing units, compared to households that are not low-income. In these cases, the landlord purchases the equipment and may pay the energy bill as well.
For this direct final rule analysis, DOE divided low-income households into three sub-subgroups: (1) renters who pay energy bill; (2) renters who do not pay energy bill; and (3) homeowners. The 2020 RECS includes data on whether a household pays for the energy bill, allowing DOE to categorize households in the analysis narrowly,
For this direct final rule, DOE considered comments it had received regarding its consideration of low-income households in the March 2023 NOPR. DOE notes that although several of the comments discussed below are from AHAM, as previously discussed, on February 14, 2024, DOE received a second joint statement from the same group of stakeholders that submitted the Joint Agreement (including AHAM) in which the signatories reaffirmed the standards recommended in the Joint Agreement.
In response to the March 2023 NOPR, AHAM stated that an updated energy conservation standard should be aligned with DOE's analytical principles and Executive Order 13985, which requires agencies to assess whether its programs and policies perpetuate systemic barriers to opportunities and benefits for people in underserved communities. AHAM comment that it is inappropriate to concentrate the negative impacts of the standard on low-income and traditionally underserved communities and that these consumers cannot pay more for more efficient RCWs and assume they will get a payback over time on their electric bill. (AHAM, No. 464 at pp. 11-12) AHAM commented the highest savings a renter would receive on their monthly bill under the standards proposed in the March 2023 NOPR for top-loading standard-size RCWs, according to DOE's analysis, would be 82 cents. (
Whirlpool commented that many low-income households are renters and that DOE has no evidence for its assumption that renters will benefit from operational savings with no cost impacts. (Whirlpool, No. 462 at p. 6) Whirlpool stated that landlords pass along their costs to consumers to the extent they are able, or elect to delay their purchase of a new clothes washer. (
CEI commented that the March 2023 NOPR discussion of consumer sub-groups misses the possibility of adverse impacts on low-income households. (CEI, No. 454 at p. 5) CEI commented that landlords will not absorb the higher purchase price of compliant RCWs, but instead will include the cost in rental rates, harming low-income renters. (
According to the RECS clothes washer sample, around 47 percent of low-income households that have a clothes washer are renters. In most cases, the property owner would purchase a new clothes washer. While the owner might seek to pass on some of the cost in the rent, the ability to do so is constrained to some extent by lease agreements that set rents for a specific period and larger market forces that influence rent levels in particular locations. In such circumstances, renters who pay the utility bill would see a significant net benefit from a higher-efficiency RCW over the product lifetime, and this is seen in the results of DOE's analysis (see chapter 11 of the direct final rule TSD). DOE notes that there continues to be a lack of data to corroborate the notion that landlords pass on some, or all, of increased appliance costs to tenants. However, for this direct final rule, DOE implemented a scenario assuming that landlords would pass some of the incremental RCW costs to renters in the LCC. The results indicate that this scenario would not impact DOE's decision on amended standards. For details of the sensitivity results, see appendix 11A of the direct final rule TSD.
AHAM commented that DOE has not established that there is a significant proportion of split incentive issues between tenants and landlords. (AHAM, No. 464 at p. 26) AHAM commented that continuing to assert the presence of a split incentive situation without any supporting data is arbitrary and capricious stating that no states require landlords to provide clothes washers and a significant portion of rental housing would have to have clothes washers provided by landlords, which DOE has not established. (
CEI commented that DOE overestimated the percentage of low-income households who are renters rather than homeowners. (CEI, No. 454 at p. 5)
The CA IOUs supported DOE's decision to divide the low-income subgroup into renters and non-renters. (CA IOUs, No. 460 at p. 6) The CA IOUs noted that renters have a lower share of ENERGY STAR appliances than non-renters, partially due to the split incentive market failure where landlords are responsible for purchasing major home appliances while renters are responsible for paying utility bills. (
The existence of a split incentive across a substantial number of U.S. households, in which a tenant pays for the cost of electricity while the building owner furnishes appliances, has been identified through a number of studies of residential appliance and equipment use broadly, and for clothes washers in low-income settings in specific. Building from early work including Jaffe and Stavins (1994),
Energy Policy, 22 (10) 804-810, available at
With regard to AHAM's assertion that the maximum percent of low-income households with landlord-provided clothes washers is less than 10 percent of all low-income households, DOE notes that AHAM's assertion only considers households with incomes under $34,000, who have clothes washers in their units, and who pay their energy bills. This differs from DOE's definition of low-income households, which is based on poverty thresholds established by the U.S. Census Bureau.
AHAM commented that low-income consumers typically purchase entry-level RCWs, the proposed rule
AHAM commented that it commissioned Bellomy Research to conduct a study focusing on the impact of higher appliance prices on low-income households.
Representatives Latta
Salman cited concerns with DOE's proposed standards for RCWs,
DOE's low-income LCC subgroup analysis uses inputs specific to low-income consumers to estimate the impact of adopted standards. There is evidence that prior efficiency standards, by acting on a market substantially more complex than the simplified model of perfect competition, have aligned with improvements in efficiency (and in some cases additional product attributes) while maintaining a constant price for “entry-level” products. For example, Spurlock and Fujita (2022) examined appliance point of sales data and noted that the 2004 and 2007 RCW efficiency standards were associated with 30-percent increase in product efficiency contemporaneous with no change in average price within the baseline market segment (
DOE notes that, while unable to review the specific survey instrument and resulting dataset, this summary of AHAM survey findings implies that the framing does not reflect the context of a revised minimum energy conservation standard. Specifically, these are impacts AHAM is claiming would occur based on the full cost of a new RCW and are not specifically relevant to the potential increased incremental cost of purchasing a new RCW in a standards case. The incremental cost, which is substantially less than the full cost of an RCW, varies depending on the considered standard levels. Additionally, as described in section IV.G of this document, DOE implemented an extended repair scenario and a second-hand market scenario to capture the market impact resulting from consumers' sensitivity to increased clothes washer prices.
AHAM commented that DOE's approach to assessing the cost of appliances for low-income households, which uses a static balance sheet, fails to consider capital availability and non-financial costs faced by these households, such as missed payments on essential expenses like food and housing. (AHAM, No. 464 at p. 29) AHAM presented data showing that the lowest 30 percent income groups have no discretionary income to save, making it impossible for them to rebalance their balance sheets after making a purchase. AHAM commented that DOE does not provide a theory or explanation for how low-income households with negative discretionary cash flow can realistically rebalance their balance sheets, undermining the accuracy of DOE's predictions. AHAM commented on disparities between DOE's projections and interest rates and data from sources like the Bureau of Consumer Financial Protection, suggesting that DOE's estimates are not reliable. (
AHAM commented that DOE should undertake a full study of the effects of standards on low-income households beyond simply restating its belief that the balance sheet approach is appropriate in the face of comments and data demonstrating the inaccuracy of this belief. (AHAM, No. 464 at p. 31) AHAM further commented that DOE's assumption that consumers pay the water and sewer bill directly is an unproven and, often, incorrect, assumption. (
Strauch expressed concern that future dollar savings are not accessible for immediate purchase, making it unaffordable for individuals with limited incomes or fixed budgets. (Strauch, No. 430 at p. 2)
DOE notes that the LCC is not predicting a purchase decision. Rather, it estimates the net present value of the financial impact of a given standard level over the lifetime of the product (
Whirlpool commented that DOE's analysis appears to not account for the fact that a significant portion of consumers, especially low-income consumers, finance their appliance purchases, either through personal loans, in-house financing, rent-to-own, or by putting purchases on their credit cards. Whirlpool commented that it wasn't clear if DOE included the likely financing and actual rates paid by consumers in the analysis. Whirlpool commented that many more consumers than DOE anticipates may end up saving no money (and may spend more money) as a result of the proposed rule.
As discussed, the LCC analysis estimates the net present value of the financial impact of a given standard level over the lifetime of the product. In the case of top-loading standard-size RCWs, the price differential between EL 3 and baseline is $160. When a consumer purchased the more efficient unit on a credit card with a 25 percent APR, it would amount to an additional financing cost of about $3 per month in the first year of leaving the balance on the card. While the compound interest could start to accumulate if the balance was left unpaid for an extended period of time, it would be an unusual case as the Survey of Consumer Finances shows that consumers across all income groups generally rebalance their assets and debts.
AHAM commented that DOE's analysis overstates the operating costs savings from reduced water use in washing machines, as many households, especially in multi-family buildings, don't directly pay for water and sewer, as costs are often covered by landlords or included in common charges. AHAM commented that condominium owners bear the cost of efficient clothes washers, but don't see direct water bill savings because water and sewer
Whirlpool commented that many consumers in living arrangements where water is not sub-metered (
AHAM and Whirlpool identified two groups of consumers who may not see water bill savings as a result of an amended standard: (1) condominium owners in multi-family buildings where water and sewer costs are included in common charges and (2) low-income renters in multi-family housing where water is not sub-metered and/or costs are covered by landlords.
DOE notes that RECS does not identify whether or not a household pays its water bill. With regard to the first group, if assuming that owners in multi-family buildings who are identified in RECS as not paying their energy bill also do not pay their water bill, this group represents less than 0.5 percent of the national sample, indicating a relatively small group. With regard to the second group, in DOE's low-income subgroup analysis, DOE assumes that households that do not pay their energy bill also do not pay their water bill and therefore do not accrue any operating cost savings from considered standards. Therefore, this issue is already accounted for in the subgroup results.
Annual clothes washer usage for senior-only households is significantly less than the full household sample because the household size for senior-only families is typically either one or two people. A household size equal to or larger than three members accounts for less than 1 percent of senior-only households. Therefore, as described in section V.B.1 of this document, the percentage of senior-only RCW consumers experiencing a net cost at TSL 2 (the Recommended TSL) is greater (35 percent for top-loading standard-size RCWs) than in the full LCC sample (27 percent for top-loading standard-size RCWs). The simple payback period for senior-only households at TSL 2 is 1.7 years longer than in the full LCC sample.
For this direct final rule, DOE considered comments it had received regarding its consideration of senior-only households in the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, Strauch expressed concern that senior households are unlikely to recover the added cost of energy-efficient products during their lifetime. (Strauch, No. 430 at p. 2) Strauch commented that even existing rebate programs do not sufficiently offset the increased up-front cost, particularly for senior households who may not benefit from these savings. (
Strauch did not provide supporting data to demonstrate that senior households are unlikely to recover from increased purchase price at the adopted standard level over the course of their lifetime. DOE is not able to perform an analysis on seniors who might not be able to recoup the savings due to their age. However, DOE has described in section V.B.1 of this document, at the Recommended TSL, the positive average LCC savings across all product classes for senior consumers—except for front-loading compact RCWs for which about more than 70 percent of senior consumers have positive cost savings—outweigh the negative average LCC savings of $1 for front-loading compact RCWs for senior consumers.
In response to the March 2023 NOPR, AHAM commented that DOE should analyze well water households as a separate group due to substantial cost differences compared to municipal water users, noting that well water costs are about 6 percent of the combined cost of municipal water and sewer. AHAM commented that for top-loading standard-size RCWs at EL 3, using the real cash costs for water and sewer, the mean and median LCC savings are negative, resulting in a net cost for about 60 percent of these households. AHAM commented that the actual cash costs also reveal negative LCC savings for most front-loading compact clothes washer households and about half of front-loading standard-size clothes washer households. AHAM commented that DOE should therefore adjust its proposals acknowledging the burden on this group. (AHAM, No. 464 at p. 39)
Whirlpool commented that the March 2023 NOPR does not adequately consider the cost impacts on consumers residing in rural households. Whirlpool commented that many rural households use well and septic systems for which the cost of water and sewer is very low, leading to less savings than DOE anticipates. Additionally, Whirlpool stated that the water used by RCWs using well water has no societal benefit from water reductions because they are ultimately replenished by groundwater. (Whirlpool, No. 462 at pp. 5-6) Representatives Latta
As described in section IV.F.4 of this document, for this direct final rule, DOE has made adjustments to its method for estimating well water and septic costs. The updated average well water and septic tank prices is 8.8 percent
Chapter 11 in the direct final rule TSD describes the consumer subgroup analysis.
DOE performed an MIA to estimate the financial impacts of amended energy conservation standards on manufacturers of RCWs and to estimate the potential impacts of such standards on direct employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects and includes analyses of projected industry cash flows, the INPV, investments in research and development (“R&D”) and manufacturing capital, and domestic manufacturing employment. Additionally, the MIA seeks to determine how amended energy conservation standards might affect manufacturing employment, capacity, and competition, as well as how standards contribute to overall regulatory burden. Finally, the MIA serves to identify any disproportionate impacts on manufacturer subgroups, including small business manufacturers.
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. To capture the uncertainty relating to manufacturer pricing strategies following amended standards, the GRIM estimates a range of possible impacts under different manufacturer markup scenarios.
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 direct 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 RCW manufacturing industry based on the market and technology assessment and publicly-available information. This included a top-down analysis of RCW 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 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 RCWs 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. As part of Phase 3, DOE also evaluated subgroups of manufacturers that may be disproportionately impacted by 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, 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 chapter 12 of the direct final rule TSD.
DOE uses the GRIM to quantify the changes in cash flow due to new or 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 an amended energy conservation standard. The GRIM spreadsheet uses the inputs to arrive at a series of annual cash flows, beginning in 2024 (the base year of the analysis) and continuing 30 years after the analyzed compliance year.
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 or amended energy conservation standard on manufacturers. As discussed previously, DOE developed critical GRIM inputs using a number of sources, including publicly available data, results of the engineering analysis, results of the shipments 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 GRIM, the discount rate, and other financial parameters can be found in chapter 12 of the direct final rule TSD.
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. DOE conducted this analysis using the
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 the base year (2024) to the end of the analysis period (30 years after the analyzed compliance date
New or 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) capital conversion costs; and (2) product conversion costs. 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. Product conversion costs are investments in research, development, testing, marketing, and other non-capitalized costs necessary to make product designs comply with new or amended energy conservation standards.
DOE relied on information derived from manufacturer interviews, the engineering analysis, and product teardowns to evaluate the level of capital and product conversion costs manufacturers would likely incur at the various TSLs. During interviews, DOE asked manufacturers to estimate the capital conversion costs (
DOE adjusted the conversion cost estimates developed in support of the March 2023 NOPR to 2022$ for this analysis.
In general, DOE assumes all conversion-related investments occur between the year of publication of the direct final rule and the year by which manufacturers must comply with the new standard. The conversion cost figures used in the GRIM can be found in section V.B.2 of this document. For additional information on the estimated capital and product conversion costs, see chapter 12 of the direct final rule TSD.
MSPs include direct manufacturing production costs (
Under the preservation of gross margin percentage scenario, DOE applied a single uniform “gross margin percentage” 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 manufacturer production costs increase with efficiency, this scenario implies that the per-unit dollar profit will increase. DOE assumed a gross margin percentage of 18 percent for all product classes.
In the preservation of operating profit scenario, as the cost of production goes up under a standards case, manufacturers are generally required to reduce their manufacturer markups to a level that maintains base-case operating profit. DOE implemented this scenario in the GRIM by lowering the manufacturer markups at each TSL to yield approximately the same earnings before interest and taxes in the standards case as in the no-new-standards case in the year after the expected compliance date of the amended standards.
A comparison of industry financial impacts under the two scenarios is presented in section V.B.2.a of this document.
For this direct final rule, DOE considered comments it had received
In response to the March 2023 NOPR, AHAM stated that it cannot comment on the accuracy of DOE's approach for including how manufacturers would potentially recover costs and investments due to amended standards, but AHAM stated its support for DOE's intent in the microwave ovens energy conservation standards rulemaking to include those conversion costs and investments in the actual costs of products and retail prices.
DOE models different standards-case manufacturer markup scenarios to represent uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of amended energy conservation standards. The analyzed manufacturer markup scenarios vary by rulemaking as they are meant to reflect the potential range of financial impacts for manufacturers of the specific covered product or equipment. As discussed in section IV.J.2.d of this document, for RCWs, DOE modeled two standards-case manufacturer markup scenarios to represent the uncertainty regarding the potential impacts on prices and profitability for manufacturers following the implementation of amended energy conservation standards. For the March 2023 NOPR, DOE applied the preservation of gross margin percentage scenario to reflect an upper bound of industry profitability and a preservation of operating profit scenario to reflect a lower bound of industry profitability under amended standards. 88 FR 13520, 13576-13577 DOE used these scenarios to reflect the range of realistic profitability impacts under more-stringent standards. Manufacturing more efficient RCWs is generally more expensive than manufacturing baseline RCWs, as reflected by the MPCs estimated in the engineering analysis. Under the preservation of gross margin scenario for RCWs, incremental increases in MPCs at higher efficiency levels result in an increase in per-unit dollar profit per unit sold. In interviews, multiple manufacturers asserted that they would likely need to reduce manufacturer markups under more stringent standards to remain competitive in the marketplace. Therefore, the preservation of gross margin scenario represents the upper bound of industry profitability under amended standards. Applying the approach used in the microwave ovens rulemaking (
AHAM commented that laundry products (RCWs and consumer clothes dryers) are designed and used in pairs. (AHAM, No. 464 at p. 44) AHAM encouraged DOE to issue final rules for RCWs and consumer clothes dryers on the same date so that the compliance dates for these products are aligned. (
DOE is adopting the Recommended TSL in this direct final rule. The Joint Agreement included recommendations for other appliance standards rulemakings: RCWs; consumer clothes dryers; consumer conventional cooking products; dishwashers; refrigerators, refrigerator-freezers, and freezers; and miscellaneous refrigeration products. The signatories indicate that the Joint Agreement for the six rulemakings should be considered as a joint recommendation of standards, to be adopted in its entirety. (Joint Agreement, No. 505 at p. 3) The Joint Agreement specifies a compliance date of March 1, 2028, for both RCWs and consumer clothes dryers. (
Representatives Latta
NMHC and NAA commented that this rulemaking comes as part of a series of similar rulemakings DOE is proposing to change performance standards for essential residential appliances. (NMHC and NAA, No. 451 at p. 4) NMHC and NAA stated that DOE took over 100 actions related to energy efficiency standards in 2022 and noted that DOE's August 2021 Report to Congress on Energy Conservation Standards Activity showed DOE had promulgated 71 energy conservation standards rulemakings since the last report in July 2019. (
AHAM also urged DOE to consider cumulative regulatory burden in its analysis and decision-making process. (AHAM, No. 464 at p. 41) AHAM commented that the nature of EPCA's requirements that energy conservation standards be reviewed every 6 years creates a never-ending cycle in which manufacturers need to constantly update or redesign products to meet new or amended standards. (
Regarding stakeholders' requests to consider cumulative regulatory burden in its analysis and decision-making process, DOE analyzes cumulative regulatory burden in accordance with section 13(g) of the Process Rule. For this direct final rule, DOE examined Federal, product-specific regulations that could affect RCW manufacturers that take effect approximately 3 years before or after the 2028 compliance date. Table V.20 in section V.B.2.e of this document presents the DOE energy conservations standards that would impact manufacturers of RCWs in the 2025 to 2031 timeframe. As shown in Table V.20, DOE considers the potential cumulative regulatory burden from other DOE energy conservation standards rulemakings for consumer clothes dryers, consumer conventional cooking products, refrigerators, refrigerator-freezers, and freezers, miscellaneous refrigeration products, room air conditioners, and microwave ovens in this direct final rule analysis.
Regarding AHAM's suggestion about spacing out the timing of final rules for home appliance rulemakings to reduce regulatory burden, DOE has statutory requirements under EPCA on the timing of rulemakings. For RCWs, consumer clothes dryers, consumer conventional cooking products, dishwashers, refrigerators, refrigerator-freezers and freezers, miscellaneous refrigeration products, and room air conditioners, amended standards apply to covered products manufactured 3 years after the date on which any new or amended standard is published. (42 U.S.C. 6295(m)(4)(A)(i)) For miscellaneous refrigeration products, amended standards apply 5 years after the date on which any new or amended standard is published. (42 U.S.C. 6295(l)(2)) However, the multi-product Joint Agreement recommends alternative compliance dates. As discussed in section II.B.3 of this document, the Joint Agreement recommendations are in accordance with the statutory requirements of 42 U.S.C. 6295(p)(4) for the issuance of a direct final rule DOE. Therefore, as compared to the EPCA-required lead time of 3-years, RCW manufacturers have more lead time to meet amended standards at the Recommend TSL.
Regarding the pace of DOE's activity on energy conservation rulemakings, DOE has statutory requirements under EPCA on the timing of appliance rulemakings. For RCWs, EPCA provides that, not later than 6 years after the 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 NOPR including new proposed energy conservation standards (proceeding to a final rule, as appropriate). (42 U.S.C. 6295(m)(1)) Regarding incorporating the combined conversion costs across rulemakings into the GRIM, DOE is concerned that combined results would make it more difficult to discern the direct impact of the amended standard on covered manufacturers, particularly for rulemakings where there is only partial overlap of manufacturers. If DOE were to combine the conversion costs from multiple regulations, as requested, it would be appropriate to match the combined conversion costs with the combined revenues of the regulated products. For rulemakings with only a partial overlap of manufacturers, conversion costs would be spread over a larger revenue base and result in less severe INPV impacts when evaluated on a percent change basis.
Whirlpool commented that DOE's analysis fails to consider significant costs to both manufacturers and consumers, as well as the likely diminution in market competition and product utility and performance. (Whirlpool, No. 462 at p. 4) Whirlpool stated that DOE must consider all costs that manufacturers must bear to develop and market products that meet the proposed standard and that the proposed standard will result in wholesale removal of certain products and features from the market.
Fisher
Regarding the impact on product utility and consumer features, DOE considers features that provide consumer utility in its analysis of energy conservation standards (
Regarding concerns that amended standards would phase out small- and mid-size top-loading RCWs, DOE modeled incremental increases in capacity for top-loading standard-size RCWs based on the most common design strategy currently used by manufacturers at these efficiency levels as well as information gathered during manufacturer interviews about the likely design path to improve efficiency. As discussed further in section V.B.4.b of this document, DOE's engineering analysis indicates that the efficiencies required by the Recommended TSL are technically achievable across the entire capacity range of top-loading standard-size RCWs. Therefore, while the MPCs for the top-loading standard-size product class reflect increases in capacity at EL 2, EL 3, and EL 4, meeting the Recommended TSL (corresponding to EL 2 for the top-loading standard-size product class) is technologically feasible at smaller capacities. Thus, the Recommended TSL does not require manufacturers to increase the capacity of small- and mid-size models. Such units can feasibly achieve the adopted standard level through the use of other available design options. In chapter 5 of the direct final rule TSD, DOE provides example design pathways that manufacturers could use to achieve higher efficiency without increasing capacity as a design option.
Regarding the impact on competition, DOE notes that it will provide DOJ with copies of this direct final rule and TSD for review to determine the impact, if any, of any lessening of competition likely to result from a standard. DOE will consider DOJ's comments on the rule in determining whether to withdraw the direct final rule.
Representatives Latta
Regarding the potential for a reduction in direct employment as a result of amended standards, DOE notes that the standards adopted in this direct final rule are the same as the proposed in the March 2023 NOPR for three of the five product classes, but are less stringent than the standards proposed in the March 2023 NOPR for the other two product classes. DOE provides a range of potential quantitative impacts to direct employment and a discussion of the potential qualitative impacts to direct employment in section V.B.2.b of this document. The upper bound of the direct employment analysis corresponds to an increase in the number of domestic workers that results from amended energy conservation standards if manufacturers continue to produce the same scope of covered products within the United States after compliance takes effect. To establish a conservative lower bound of direct employment impacts, DOE assumes all manufacturers would shift production to foreign countries. The estimated 8,121 domestic production worker jobs cited by Representatives Latta
Salman commented that amended standards could disproportionately affect small manufacturers, including training and hiring costs, and potentially endanger jobs. Salman further commented that “low-skilled” workers would be particularly affected by this, and that industry consolidation may result. (Salman, No. 446 at pp. 1-2) Salman recommended that DOE provide financial support that helps them transform their machinery and retrain their workforce. (
DOE discusses the potential impacts of amended standards on the one small
Regarding the suggestion for DOE to provide financial support to small manufacturers, additional compliance flexibilities may be available to small manufacturers 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.
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 RCWs 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 megawatt hour (“MWh”) or Million British Thermal Units (“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.
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 direct 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 required by applicable Executive orders, and DOE would reach the same conclusion presented in this direct final rule 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,
DOE estimated the global social benefits of CO
The SC-GHG 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, which included 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
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 in the National Academies 2017 report. 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 rulemaking. The E.O. instructs the IWG to undertake a fuller update of the SC-GHG estimates that takes into consideration the advice in the National Academies 2017 report 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 efficient allocation of resources for emissions reduction on a global basis—and so benefit the U.S. and its citizens—is for all countries to base their policies on global estimates of damages. As a member of the IWG involved in the development of the February 2021 SC-GHG TSD, DOE agrees with this assessment and, therefore, in this rule DOE centers attention on a global measure of SC-GHG. This approach is the same as that taken in DOE regulatory analyses from 2012 through 2016. A robust estimate of climate damages that accrue only to U.S. citizens and residents does not currently exist in the literature. As explained in the February 2021 SC-GHG TSD, existing estimates are both incomplete and an underestimate of total damages that accrue to the citizens and residents of the U.S. because they do not fully capture the regional interactions and spillovers discussed above, nor do they include all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature. As noted in the February 2021 SC-GHG TSD, the IWG will continue to review developments in the literature, including more robust methodologies for estimating a U.S.-specific SC-GHG value, and explore ways to better inform the public of the full range of carbon impacts. As a member of the IWG, DOE will continue to follow developments in the literature pertaining to this issue.
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 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-percent and 7-percent 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-percent 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 SC-GHG TSD recommends “to ensure internal consistency—
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 inputs and are calculated using a range of discount rates. As explained in the February 2021 SC-GHG TSD, the IWG has recommended that agencies revert to the same set of four values drawn from the SC-GHG distributions based on three discount rates as were used in regulatory analyses between 2010 and 2016 and were subject to public comment. For each discount rate, the IWG combined the distributions across models and socioeconomic emissions scenarios (applying equal weight to each) and then selected a set of four values recommended for use in benefit-cost analyses: an average value resulting from the model runs for each of three discount rates (2.5 percent, 3 percent, and 5 percent), plus a fourth value, selected as the 95th percentile of estimates based on a 3 percent discount rate. The fourth value was included to provide information on potentially higher-than-expected economic impacts from climate change. As explained in the February 2021 SC-GHG TSD, and DOE agrees, this update reflects the immediate need to have an operational SC-GHG for use in regulatory benefit-cost analyses and other applications that was developed using a transparent process, peer-reviewed methodologies, and the science available at the time of that process. Those estimates were subject to public comment in the context of dozens of proposed rulemakings as well as in a dedicated public comment period in 2013.
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
DOE multiplied the CO
For this direct final rule, DOE considered comments it had received regarding its approach for monetizing greenhouse gas emissions in the March 2023 NOPR. The approach used for this direct final rule is largely the same as the approach DOE had used for the March 2023 NOPR analysis.
In response to the March 2023 NOPR, the AGs of TN
CEI reiterated its comments in response to a NOPR for residential furnaces published on July 7, 2022, which noted numerous flaws with the IWG 2021 estimates, nearly all of which serve to overstate the calculated benefits of avoided emissions. CEI commented that IWG used improperly low discount rates, relied on climate models that have consistently overstated actual warming and on baseline emission scenarios that assume an increasingly coal-centric global energy system through 2100 and beyond, while downplaying the capacity for adaptation to mitigate climate impacts. (CEI, No. 454 at pp. 6-7) CEI stated the other questionable assumptions, including the claimed climate benefits out 300 years into the future and the use of global rather than national benefits, are skewed toward inflating the end result. (
Fisher
Strauch stated that the social cost of carbon is a dubious concept, suggesting that its validity is increasingly doubted due to discrepancies between climate models and observed temperatures. (Strauch, No. 430 at p. 3)
DOE notes that the standards in this direct final rule are not based on the SC-GHG and that DOE would issue the same standards even in the absence of the climate benefits.
The IWG's SC-GHG estimates were developed over many years, using a transparent process, peer-reviewed methodologies, the best science available at the time of that process, and with input from the public. A number of criticisms raised in the comment letter attached by the AGs of TN
AHAM objected to DOE using the social cost of carbon and other monetization of emissions reductions benefits in its analysis of the factors EPCA requires DOE to balance in determining the appropriate standard. AHAM stated that while it may be acceptable for DOE to continue its current practice of examining the social cost of carbon and monetization of other emissions reductions benefits as informational so long as the underlying interagency analysis is transparent and vigorous, the monetization analysis should not impact the TSL DOE selects as a new or amended standard. AHAM commented that it is inappropriate for DOE to rely upon the highly subjective and ever-changing monetization estimates in justifying an energy conservation standard. (AHAM, No. 464 at p. 46) Additionally, AHAM stated they do not necessarily object to DOE considering the benefits, they object to DOE relying upon those benefits to justify a rule given the uncertain and ever-evolving nature of those estimates. AHAM commented that EPCA requires DOE to balance the factors, such that DOE must consider EPCA's factors together and achieve a balance of impacts and benefits. (
The AGs of TN
As stated in section III.F.1.f of this document, DOE accounts for the environmental and public health benefits associated with the more efficient use of energy, including those connected to global climate change, as they are important to take into account when considering the need for national energy conservation. (See 42 U.S.C. 6295(o)(2)(B)(i)(IV)) In addition, Executive Order 13563, which was re-affirmed on January 21, 2021, stated that each agency must, among other things: “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).” For these reasons, DOE includes the monetized value of emissions reductions in its evaluation of potential standard levels. While the benefits associated with reduction of GHG emissions inform DOE's evaluation of potential standards, the action of proposing or adopting specific standards is not “based on” the SC-GHG values, as DOE would reach the same conclusion regarding the economic justification of standards presented in this direct final rule without considering the social cost of greenhouse gases. At the Recommended TSL, the average LCC savings for all product classes is positive. In addition, 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. Even when measured at the more conservative discount rate of 7 percent, the NPV of consumer benefits is over 11 times higher than the maximum estimated manufacturers' loss in INPV.
Fisher
In the context of global CO
The SC-CH
DOE multiplied the CH
In December 2023, EPA issued a new set of SC-GHG (“2023 SC-GHG”) estimates in connection with a final rulemaking under the Clean Air Act.
The overall climate benefits are larger when using the higher, updated 2023 SC-GHG estimates, compared to the climate benefits using the older IWG SC-GHG estimates. However, DOE's conclusion that the standards are economically justified remains the same regardless of which SC-GHG estimates are used.
The results of the sensitivity analysis are presented in appendix 14C of the direct final rule TSD.
For this direct 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.
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 standards, their suppliers, and related service firms. The MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more-efficient appliances. Indirect employment impacts from standards consist of the net jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, caused by (1) reduced spending by consumers on energy, (2) reduced spending on new energy supply by the utility industry, (3) increased consumer spending on the products to which the new standards apply and other goods and services, and (4) the effects of those three factors throughout the economy.
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 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 direct 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 (2027-2031), where these uncertainties are reduced. For more details on the employment impact analysis, see chapter 16 of the direct final rule TSD.
For any regulatory action that the Administrator of the Office of Information and Regulatory Affairs (“OIRA”) within OMB determines is a significant regulatory action under section 3(f)(1) of E.O. 12866, section 6(a)(3)(C) of E.O. 12866 requires Federal agencies to provide an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, identified by the agencies or the public (including improving the current regulation and reasonably viable non-regulatory actions), and an explanation why the planned regulatory action is preferable to the identified potential alternatives. 58 FR 51735, 51741. As discussed further in section VII.A of this document, 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, as amended by E.O. 14094. Accordingly, DOE conducted a regulatory impact analysis (“RIA”) for this direct final rule.
As part of the RIA, DOE identifies major alternatives to standards that represent feasible policy options to reduce the energy and water consumption of the covered product. DOE evaluates each alternative in terms of its ability to achieve significant energy and water savings at a reasonable cost, and compares the effectiveness of each alternative to the effectiveness of the finalized standard. DOE recognizes that voluntary or other non-regulatory efforts by manufacturers, utilities, and other interested parties can substantially affect energy and water efficiency or reduce energy and water consumption. DOE bases its assessment on the recorded impacts of any such initiatives to date, but also considers information presented by interested parties regarding the impacts current initiatives may have in the future. Further details regarding the RIA are provided in chapter 17 of the direct final rule TSD.
NMHC and NAA commented that the proposed rulemaking accompanies a series of similar rulemakings DOE is proposing, all seeking to change the performance standards for essential residential appliances. (NMHC and NAA, No. 451 at p. 4) NMHC and NAA recommended that DOE consider the collective impacts of these requirements and recognize that, in practice, the effect of individual pricing increases is magnified when housing providers must manage cost escalations across multiple products at once. (
While EPCA does not specifically require DOE to consider the cumulative burden of standards on appliance purchasers when evaluating the economic justification of specific standards, DOE is sympathetic to the potential for such a burden. DOE is aware that the compliance dates of revised standards for a number of major appliances (clothes washers, consumer clothes dryers, dishwashers, and consumer conventional cooking products) are in 2027 or 2028, and those for refrigerators are in 2029 or 2030. However, consumers' replacement of older appliances with standards-compliant ones would occur gradually over time. In addition, the incremental cost increase of the adopted standards is relatively small on a percentage basis for most of these appliances.
Strauch commented that DOE's analysis does not appear to address the cumulative regulatory burden on consumers, commenting that consumer choice is diminished as many rulemakings are being pushed out in a short time frame. (Strauch, No. 430 at p. 3) Salman commented that DOE providing vouchers to low-income families to purchase new, energy efficient RCWs could lower the short-term cost barrier and facilitate wider adoption of sustainable laundry solutions. (Salman, No. 446 at p. 2)
AWE recommended that the Federal Government increase funding, rebates, direct install programs, tax credits, and other incentives to replace older, less-efficient RCWs. (AWE, No. 444 at p. 6) AWE recommended that DOE use whatever authorities and funding available to help minimize additional up-front costs for consumers and accelerate the replacement of older RCWs. (
As discussed, E.O. 12866 directs DOE to assess potentially effective and reasonably feasible alternatives to the planned regulation, and to provide an explanation why the planned regulatory action is preferable to the identified potential alternatives. As part of the RIA, DOE analyzed five non-regulatory policy alternatives to the finalized standards for RCWs, including consumer rebates, consumer tax credits, manufacturer tax credits, voluntary energy efficiency targets, and bulk government purchases. The energy saving benefits from the alternative policies, range from 0.01 percent to 9.5 percent of the benefits from the Recommended TSL. Chapter 17 of the direct final rule TSD provides DOE's analysis of the impacts of these alternatives to the planned regulation.
Notwithstanding the requirements of E.O. 12866, as discussed, DOE is required by EPCA to establish or amend standards for a covered product that are designed to achieve the maximum improvement in energy efficiency, which the Secretary determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) DOE has determined that amended standards enacted by this direct final rule achieve the maximum
As discussed previously, DOE considered relevant comments, data, and information obtained during its own rulemaking process in determining whether the recommended standards from the Joint Agreement are in accordance with 42 U.S.C. 6295(o). And while some of those comments were directed at specific aspects of DOE's analysis of the Joint Agreement under 42 U.S.C. 6295(o), others were more generally applicable to DOE's energy conservation standards rulemaking program as a whole. The ensuing discussion focuses on these general comments concerning energy conservation standards issued under EPCA.
The AGs of TN
The AGs of TN
New York State Public Service Commission (“NYS PSC”) recommended that DOE reject arguments from commenters who suggest that DOE lacks the authority to implement the proposed standards for RCWs, stating that (1) the United States Constitution empowers Congress, and (2) violate the concept of the separation of powers. (NYS PSC, No. 450 at p. 4) NYS PSC stated that the U.S. Constitution empowers Congress to enact legislation to regulate interstate commerce and it is well-settled that objects that move in interstate commerce are subject to Federal regulation and within Congress's authority to provide that objects moving in interstate commerce meet certain standards. NYS PSC added that there is no support for the notion that the delegation of authority to DOE to set energy efficiency standards runs afoul of the constitutional prohibition on executive agencies exercising legislative powers under either the “nondelegation” doctrine or “major questions” doctrine; noting that there is an “intelligible principle” provided by Congress to guide DOE's regulations and an express command from Congress to regulate this field of economic activity. (
DOE also received 13 comments from individual commenters questioning DOE's authority to promulgate energy efficiency standards.
In response to the AGs of TN
Both appendix J and appendix J2 require that testing on clothes washers be conducted using specialized test cloth that conforms to the specifications outlined in 10 CFR part 430, subpart B, appendix J3 (“appendix J3”). These specifications include fiber content, thread count, fabric weight, and weave type, among other requirements. Test cloth is manufactured in batches called “lots,” which are quantities of test cloth that have been manufactured with the same batches of cotton and polyester during one continuous process.
In response to the March 2023 NOPR, AHAM
DOE is currently working closely with industry via the AHAM Test Cloth Task Force in its evaluation of the suitability
The National Academies of Sciences, Engineering, and Medicine (“NAS”) periodically appoint a committee to peer review the assumptions, models, and methodologies that DOE uses in setting energy conservation standards for covered products and equipment. The most recent such peer review was conducted in a series of meetings in 2020, and NAS issued the report
AHAM stated that despite previous requests from AHAM and others, DOE has failed to review and incorporate the recommendations of the NAS report, instead indicating that it will conduct a separate rulemaking process without such a process having been initiated. (AHAM, No. 464 at pp. 24-25) AHAM further stated that DOE seems to be ignoring the recommendations in the NAS Report and even conducting analysis that is opposite to the recommendations. AHAM commented that DOE cannot continue to perpetuate the errors in its analytical approach that have been pointed out by stakeholders and the NAS report as to do so will lead to arbitrary and capricious rules. (
As discussed, the rulemaking process for establishing new or amended standards for covered products and equipment are specified at appendix A to subpart C of 10 CFR part 430, and DOE periodically examines and revises these provisions in separate rulemaking proceedings. The recommendations in the NAS report, which pertain to the processes by which DOE analyzes energy conservation standards, will be considered by DOE in a separate rulemaking process.
The following section addresses the results from DOE's analyses with respect to the considered energy conservation standards for RCWs. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for RCWs, and the standards levels that DOE is adopting in this direct final rule. Additional details regarding DOE's analyses are contained in the direct final rule TSD supporting this document.
In general, DOE typically evaluates potential new or 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 price elasticity of consumer purchasing decisions that may change when different standard levels are set.
In the analysis conducted for this direct final rule, DOE analyzed the benefits and burdens of four TSLs for RCWs. 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 direct final rule TSD.
Tables V.1 through V.3 present the TSLs and the corresponding efficiency levels that DOE has identified for potential amended energy conservation standards for RCWs. TSL 4 represents the maximum technologically feasible (“max-tech”) energy and water efficiency for all product classes. TSL 3 represents the ENERGY STAR Most-Efficient level for front-loading RCWs and CCE Tier 1 for top-loading RCWs. TSL 2—which corresponds to the Recommended TSL in the Joint Agreement—represents the ENERGY STAR Most Efficient level for front-loading compact RCWs, and ENERGY STAR v. 8.1 for top-loading and front-loading standard-size RCWs. TSL 1 represents EL 1 across all product classes.
While representative ELs were included in the TSLs, DOE considered all efficiency levels as part of its analysis.
DOE analyzed the economic impacts on RCW consumers by looking at the effects that potential 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 (
Tables V.4 through V.12 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 no-new-standards case in the compliance year (
In the consumer subgroup analysis, DOE estimated the impact of the considered TSLs on low-income households and senior-only households. Tables V.13 through V.16 compares the average LCC savings and PBP at each efficiency level for the consumer subgroups with similar metrics for the entire consumer sample for each RCW product class. In most cases, the average LCC savings for low-income households at the considered efficiency levels are higher and payback periods are lower relative to the results for all households across all product classes. However, LCC savings for senior-only households are significantly different when compared to the average for all households across all product classes,
As discussed in section III.E.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 RCWs. In contrast, the PBPs presented in section V.B.1 of this document were calculated using distributions that reflect the range of energy use in the field.
Table V.17 presents the rebuttable-presumption payback periods for the considered TSLs for RCWs. 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
DOE performed an MIA to estimate the impact of amended energy conservation standards on manufacturers of RCWs. The next section describes the expected impacts on manufacturers at each considered TSL. Chapter 12 of the direct 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 a standard. The following tables summarize the estimated financial impacts (represented by changes in INPV) of potential amended energy conservation standards on manufacturers of RCWs, as well as the conversion costs that DOE estimates manufacturers of RCWs would incur at each TSL.
The impact of potential amended energy conservation standards were analyzed under two scenarios: (1) the preservation of gross margin percentage; and (2) the preservation of operating profit, as discussed in section IV.J.2.d of this document. The preservation of gross margin percentage applies a “gross margin percentage” of 18 percent for all product classes and all efficiency levels.
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 does not change in absolute dollars and decreases as a percentage of revenue. The preservation of operating profit scenario results in the lower (or more severe) bound to impacts of potential amended standards on industry.
Each of the modeled scenarios results in a unique set of cash flows and corresponding INPV for each TSL. INPV is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (30 years from the analyzed compliance year).
Conversion costs are one-time investments for manufacturers to bring their manufacturing facilities and product designs into compliance with potential amended standards. As described in section IV.J.2.c of this document, conversion cost investments occur between the year of publication of the direct final rule and the year by which manufacturers must comply with the amended standard. The conversion costs can have a significant impact on the industry's short-term cash flow and generally result in lower free cash flow in the period between the publication of the direct final rule and the compliance date of potential amended standards. Conversion costs are independent of the manufacturer markup scenarios and are not presented as a range in this analysis.
The majority of the INPV impacts are associated with standard-size product classes because top-loading standard-size and front-loading standard-size RCWs comprise approximately 96 percent of the total RCW domestic shipments. More specifically, the majority of the INPV impacts are associated with top-loading RCWs due to the high volume of shipments, the high percentage of shipments at minimum efficiency, and the likely design paths required to meet more stringent standards. Top-loading RCWs account for approximately 74 percent of current standard-size RCW shipments in 2027. DOE's shipments analysis estimates approximately 66 percent of top-loading shipments are currently at the baseline efficiency level. Additionally, the engineering analysis, informed by conversations with manufacturers, indicates that the likely design path to meet the efficiencies required at TSL 3 and TSL 4 would require notable capital investments. In particular, many manufacturers would likely increase tub capacity of top-loading standard-size units with capacities of less than 4.7 ft
At TSL 1, the standard represents the least stringent efficiencies (EL 1) for all product classes. The change in INPV is expected to range from −4.0 to 0.2 percent. At this level, free cash flow is estimated to decrease by 17.1 percent compared to the no-new-standards case value of $136.6 million in the year 2026, the year before the 2027 standards year. DOE's shipments analysis estimates approximately 54 percent of current shipments meet this level.
At TSL 1, DOE expects most manufacturers would incur limited conversion costs to reach the efficiencies required. The conversion costs primarily stem from changes required for top-loading standard-size RCWs. DOE's shipments analysis estimates approximately 34 percent of current top-loading standard-size RCWs meet this level (EL 1). In contrast, nearly all the front-loading standard-size RCWs currently meet the efficiencies required at this level. Industry capital conversion costs include tooling updates and costs associated with transitioning models with porcelain wash baskets to stainless steel wash baskets. Product conversion costs may be necessary for product development and testing. DOE expects industry to incur some re-flooring costs. DOE estimates capital conversion costs of $31.8 million and product conversion costs of $27.3 million. Conversion costs total $59.0 million.
At TSL 1, the shipment-weighted average MPC for all RCWs is expected to increase by 6.4 percent relative to the no-new-standards case shipment-weighted average MPC for all RCWs in 2027. In the preservation of gross margin percentage scenario, the slight increase in cashflow slightly outweighs the $59.0 million in conversion costs, causing a minor positive change in INPV at TSL 1 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2028, the year after the analyzed 2027 compliance year. This reduction in the manufacturer markup and the $59.0 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 (
At TSL 2, the shipment-weighted average MPC for all RCWs is expected to increase by 12.1 percent relative to the no-new-standards case shipment-weighted average MPC for all RCWs in 2028. In the preservation of gross margin percentage scenario, the increase in cashflow is outweighed by the $320.0 million in conversion costs, causing a negative change in INPV at TSL 2 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2029, the year after the analyzed compliance year. This reduction in the manufacturer markup and the $320.0 million in conversion costs incurred by manufacturers cause a moderate negative change in INPV at TSL 2 under
At TSL 3, the standard represents the ENERGY STAR Most Efficient level for the front-loading product classes, the CEE Tier 1 level for the top-loading standard-size product class, and a gap fill level for the semi-automatic product class. The change in INPV is expected to range from −38.3 to −27.7 percent. At this level, free cash flow is estimated to decrease by 222.0 percent compared to the no-new-standards case value of $136.6 million in the year 2026, the year before the 2027 standards year. DOE's shipments analysis estimates approximately 18 percent of current shipments meet this level.
For the front-loading and top-loading standard-size product classes, TSL 3 corresponds to EL 3. For the remaining product classes, TSL 3 corresponds to the same efficiency level as TSL 2. At this level, the increase in conversion costs is mainly driven by the top-loading standard-size product class. Currently, approximately 3 percent of top-loading standard-size shipments meet TSL 3 efficiencies. Of the nine OEMs with top-loading standard-size products, only two offer models that meet the efficiencies required at TSL 3. The remaining seven OEMs would need to redesign all their existing top-loading standard-size platforms to meet this level.
To meet TSL 3, top-loading RCW designs would likely need to incorporate hardware features to enable faster spin speeds. These hardware updates may include reinforced wash baskets, more robust suspension and balancing system, and more advanced sensors. An increasing portion of top-loading standard-size RCWs (
At TSL 3, the large conversion costs result in a free cash flow dropping below zero in the years before the standards year. The negative free cash flow calculation indicates manufacturers may need to access cash reserves or outside capital to finance conversion efforts.
At TSL 3, the shipment-weighted average MPC for all RCWs is expected to increase by 14.4 percent relative to the no-new-standards case shipment-weighted average MPC for all RCWs in 2027. In the preservation of gross margin percentage scenario, the increase in cashflow is outweighed by the $724.6 million in conversion costs, causing a large change in INPV at TSL 3 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2028, the year after the analyzed compliance year. This reduction in the manufacturer markup and the $724.6 million in conversion costs incurred by manufacturers cause a significant negative change in INPV at TSL 3 under the preservation of operating profit scenario.
At TSL 4, the standard represents the max-tech energy and water efficiencies for all product classes. The change in INPV is expected to range from −68.6 to −56.8 percent. At this level, free cash flow is estimated to decrease by 413.9 percent compared to the no-new-standards case value of $136.6 million in the year 2026, the year before the 2027 standards year. DOE's shipments analysis estimates approximately 4 percent of current shipments meet this level.
As previously discussed, the max-tech efficiencies required for standard-size RCWs drive the increase in conversion costs from the prior TSLs. Currently, less than 1 percent of top-loading standard-size RCW shipments and approximately 9 percent of front-loading standard-size RCW shipments meet max-tech levels. Out of the nine top-loading standard-size OEMs, only one offers models that meet the efficiencies required by TSL 4. Out of the seven front-loading standard-size OEMs, only two offer models that meet the efficiencies required by TSL 4. Max-tech would require most manufacturers to significantly redesign their RCW platforms. DOE expects most standard-size RCW manufacturers would need to further increase spin speeds as compared to prior TSLs. An increasing portion of top-loading standard-size RCWs (
At TSL 4, the large conversion costs result in a free cash flow dropping below zero in the years before the standards year. The negative free cash flow calculation indicates manufacturers may need to access cash reserves or outside capital to finance conversion efforts.
At TSL 4, the shipment-weighted average MPC for all RCWs is expected to increase by 15.9 percent relative to the no-new-standards case shipment-weighted average MPC for all RCWs in 2027. In the preservation of gross margin percentage scenario, the increase in cashflow is outweighed by the $1,321.2 million in conversion costs, causing a significant negative change in INPV at TSL 4 under this scenario. Under the preservation of operating profit scenario, the manufacturer markup decreases in 2028, the year after the analyzed compliance year. This reduction in the manufacturer markup and the $1,321.2 million in conversion costs incurred by manufacturers cause a significant negative change in INPV at TSL 4 under the preservation of operating profit scenario.
To quantitatively assess the potential impacts of amended energy conservation standards on direct employment in the RCWs 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. For the direct final rule, DOE used the most up-to-date information available. DOE calculated these values using statistical data from the 2021
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 each year are calculated by multiplying the total MPCs by the labor percentage of MPCs. The total labor expenditures in the GRIM were then converted to total production employment levels by dividing production labor expenditures by the average fully burdened wage multiplied by the average number of hours worked per year per production worker. To do this, DOE relied on the
The number of production employees is then multiplied by the U.S. labor percentage to convert total production employment to total domestic production employment. The U.S. labor percentage represents the industry fraction of domestic manufacturing production capacity for the covered product. This value is derived from manufacturer interviews, product database analysis, and publicly available information. DOE estimates that 92 percent of RCWs are produced domestically.
The domestic production employees estimate covers production line workers, including line supervisors, who are directly involved in fabricating and assembling products within the OEM facility. Workers performing services that are closely associated with production operations, such as materials handling tasks using forklifts, are also included as production labor. DOE's estimates only account for production workers who manufacture the specific products covered by this direct final rule.
Non-production workers account for the remainder of the direct employment figure. The non-production employees estimate covers domestic workers who are not directly involved in the production process, such as sales, engineering, human resources, and management.
Using the GRIM, DOE estimates that in the absence of new energy conservation standards, there would be 9,070 domestic production and non-production workers for RCWs in 2027. Table V.19 shows the range of the impacts of energy conservation standards on U.S. manufacturing employment in the RCW industry. The following discussion provides a qualitative evaluation of the range of potential impacts presented in Table V.19.
The direct employment impacts shown in Table V.19 represent the potential domestic employment changes that could result following the compliance date for the RCWs covered in this rulemaking. The upper bound estimate corresponds to an increase in the number of domestic workers that results from amended energy conservation standards if manufacturers continue to produce the same scope of covered products within the United States after compliance takes effect. To establish a conservative lower bound, DOE assumes all manufacturers would shift production to foreign countries. At lower TSLs, DOE believes the likelihood of changes in production location due to amended standards are low due to the relatively minor production line updates required. However, as amended standards increase in stringency and both the complexity and cost of production facility updates increases, manufacturers are more likely to revisit their production location decisions. At max-tech, manufacturers representing a large portion of the market noted concerns about the level of investment, about the potential need to relocate production lines in order to remain competitive, and about the conversion period of 3 years being insufficient to make the necessary manufacturing line updates. At the Recommended TSL (
Additional detail on the analysis of direct employment can be found in chapter 12 of the direct final rule TSD. Additionally, the employment impacts discussed in this section are independent of the employment impacts from the broader U.S. economy, which are documented in chapter 16 of the direct final rule TSD.
As discussed in section V.B.2.a of this document, meeting the efficiencies required for each TSL would require varying levels of resources and investment. A standard level requiring notably faster spin speeds, namely TSL 3 and TSL 4, would necessitate product redesign to account for the increased spin speeds as well as the noise, vibration, and fabric care concerns related to the spin speeds required to meet these higher TSLs. These updates may include designing and manufacturing reinforced wash baskets, instituting a more robust suspension and balancing system, increasing the number of sensors, and incorporating more advanced sensors. For top-loading standard-size RCWs, manufacturers could potentially choose to increase tub capacity of smaller models to meet the efficiencies required at higher TSLs. Many manufacturers would need to invest in new tooling and equipment to either produce entirely new wash basket lines or ramp up production of their existing larger-capacity wash baskets. Based on a review of current CCD model listings and manufacturer feedback during confidential interviews, DOE's engineering analysis reflects a design path in which TSL 2 is achieved with a capacity increase from 4.0 ft
Using average cost assumptions to develop industry cash-flow estimates may not capture the differential impacts among subgroups of manufacturers. Small manufacturers, niche players, or manufacturers exhibiting a cost structure that differs substantially from the industry average could be affected disproportionately. DOE investigated small businesses as a manufacturer subgroup that could be disproportionally impacted by energy conservation standards and could merit additional analysis. DOE did not identify any other adversely impacted manufacturer subgroups for this rulemaking based on the results of the industry characterization.
DOE analyzes the impacts on small businesses in a separate analysis for the standards proposed in the NOPR published elsewhere in this issue of the
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.
For the cumulative regulatory burden analysis, DOE examines Federal, product-specific regulations that could affect RCW manufacturers that take effect approximately 3 years before or after the 2028 compliance date. This information is presented in Table V.20.
As shown in Table V.20, the rulemakings with the largest overlap of RCW OEMs include consumer clothes dryers, consumer conventional cooking products, dishwashers, refrigerators, refrigerator-freezers, and freezers, and miscellaneous refrigeration products, which are all part of the multi-product Joint Agreement submitted by interested parties.
The multi-product Joint Agreement states the “jointly recommended compliance dates will achieve the overall energy and economic benefits of this agreement while allowing necessary lead-times for manufacturers to redesign products and retool manufacturing plants to meet the recommended standards across product categories.” (Joint Agreement, No. 505 at p. 2) The staggered compliance dates help mitigate manufacturers' concerns about their ability to allocate sufficient resources to comply with multiple concurrent amended standards and about the need to align compliance dates for products that are typically designed or sold as matched pairs (such as RCWs and consumer clothes dryers).
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 and water savings attributable to potential amended standards for RCWs, DOE compared their energy and water consumption under the no-new-standards case to their anticipated energy and water 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 (2027-2056).
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 RCWs. 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.27. The impacts are counted over the lifetime of products purchased during the period 2027-2035.
The previous results reflect the use of a default trend to estimate the change in price for RCWs over the analysis period (
DOE estimates that amended energy conservation standards for RCWs will reduce energy and water 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 (2027-2031),
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 direct final rule TSD presents detailed results regarding anticipated indirect employment impacts.
As stated, EPCA, as codified, contains the provision that 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))
As discussed in the following sections, DOE has concluded that the standards adopted in this direct final rule will not lessen the utility or performance of the RCWs under consideration in this rulemaking. Manufacturers of these products currently offer units that meet or exceed the adopted standards.
EPCA authorizes DOE to design test procedures that measure energy efficiency, energy use, water use, or estimated annual operating cost of a covered product during a representative average use cycle or period of use. (42 U.S.C. 6293(b)(3)) Representative average use of a clothes washer reflects, in part, a consumer using the clothes washer to achieve an acceptable level of cleaning performance. DOE recognizes that in general, a consumer-acceptable level of cleaning performance can be easier to achieve through the use of higher amounts of energy and water use during the clothes washer cycle. Conversely, maintaining acceptable cleaning performance can be more difficult as energy and water levels are reduced. As such, improving one aspect of clothes washer performance, such as reducing energy and/or water use as a result of energy conservation standards, may require manufacturers to make a
DOE has identified through its market research certain high-efficiency RCWs that achieve equal or better cleaning performance than lower-efficiency RCWs in third-party performance reviews. For example, in the March 2023 NOPR, DOE referenced performance ratings published by Consumer Reports,
In the March 2023 NOPR, DOE sought comment on whether the Consumer Reports test produces cleaning performance results that are representative of an average use cycle as measured by the DOE test procedure.
In addition to considering the Consumer Reports ratings, in support of the March 2023 NOPR, DOE conducted performance testing on a representative sample of top-loading standard-size and front-loading standard-size units, which collectively represent around 98 percent of RCW shipments.
In the March 2023 NOPR, DOE requested comment on its use of the Hot temperature selection with the large load size to evaluate potential impacts on clothes washer performance as a result of amended standards.
AHAM commented that the warm wash (“Warm”) temperature selection would be the selection most likely targeted for reduced wash temperature as a design option for achieving higher efficiency—rather than Hot, as DOE asserted in the March 2023 NOPR—because the Warm setting is more heavily weighted in the test procedure due to its larger usage factor. (AHAM, No. 464 at pp. 4-5)
In response to AHAM's comment, DOE acknowledges that each degree of temperature reduction on the Warm temperature setting would provide a greater improvement to measured efficiency than each degree of temperature reduction on the Hot temperature setting, given the higher usage factor of the Warm temperature setting in the DOE test procedures. Despite this, DOE notes that the Hot temperature setting—which on the large majority of clothes washers provides the highest temperature available in the Normal cycle—would be the temperature setting that provides the highest level of cleaning performance for soils and stains that require heated water for adequate removal.
Additionally, as discussed in detail in the March 2023 NOPR, DOE also performed the Soil/Stain Removal test and Mechanical Action test specified in industry standard AHAM HLW-2-2020. 88 FR 13520, 13600. The Soil/Stain Removal test evaluates the performance of household clothes washers in removing representative soils and stains from fabric.
DOE requested comment on its use of the Soil/Stain Removal test and Mechanical Action test specified in AHAM HLW-2-2020 as the basis for evaluating performance-related concerns expressed by AHAM and manufacturers.
The performance characteristics test report that accompanied the March 2023 NOPR provides detailed test results in table and graphical format.
To evaluate whether more-stringent standards may reduce water temperatures below the 85 °F threshold and thus potentially decrease cleaning performance for fatty soils, DOE analyzed the wash temperature of the hottest temperature selection available in the Normal cycle for each RCW in the test sample.
For top-loading standard-size RCWs, DOE's test data showed that for units at EL 2 and below, the hottest available wash temperature in the Normal cycle ranged from around 70 °F to around 110 °F.
Based on this data, DOE tentatively concluded that the proposed standard level (
In the March 2023 NOPR, DOE requested comment on its wash temperature data presented in the performance characteristics test report and on its tentative conclusions derived from this data.
To evaluate whether more-stringent standards would result in a decrease in stain removal performance, DOE conducted the Soil/Stain Removal test specified in AHAM HLW-2-2020 using the Hot temperature selection with the largest load size, as described.
For top-loading standard-size RCWs, DOE's test data showed that for units at EL 2 and below, total cleaning scores ranged from around 90 to around 98.
In the March 2023 NOPR, DOE requested comment on its stain removal data presented in the performance characteristics test report and on its conclusions derived from this data.
To evaluate whether more-stringent standards would result in an increase in wear and tear on clothing, DOE conducted the Mechanical Action test specified in AHAM HLW-2-2020 concurrently with the Soil/Stain Removal test as described.
For top-loading standard-size RCWs, DOE's test data showed that units at EL 3 have lower (
For front-loading standard-size RCWs, DOE's test data showed that for units at or below EL 2, mechanical action scores range from around 135 to around 180.
Based on this data from the March 2023 NOPR, DOE tentatively concluded that the proposed standard level (
DOE requested comment on its mechanical action data presented in the performance characteristics test report and on its conclusions derived from this data.
To evaluate whether more-stringent standards would result in an increase in cycle time, DOE measured the average cycle time as defined in appendix J for each unit in the test sample.
Based on this data, DOE tentatively concluded that the proposed standard level (
In the March 2023 NOPR, DOE requested comment on its cycle time data presented in the performance characteristics test report and on its conclusions derived from this data.
In summary, DOE tentatively concluded in the March 2023 NOPR that the proposed standard level (
In the March 2023 NOPR, DOE sought comment on its testing and assessment of performance attributes (
ASAP, ACEEE, and NYSERDA supported DOE's performance testing methodology and agreed with DOE that clothes washer performance (including wash temperature, stain removal, mechanical action, and cycle time) would not be negatively impacted by the standards proposed in the March 2023 NOPR. (ASAP, ACEEE, and NYSERDA, No. 458 at pp. 3-4) ASAP, ACEE, and NYSERDA noted that manufacturers have previously commented that reducing water temperatures below 85 ° F could make it difficult to remove fatty soils from both, but that DOE's analysis demonstrates that by prioritizing hardware improvements in meeting the proposed standards for top-loading units could provide cleaning performance equivalent to the highest performance achieved by units at lower efficiency levels. (
NEEA
The CA IOUs supported DOE's conclusion that RCWs meeting NOPR TSL 4 will maintain their cleaning performance. (CA IOUs, No. 460 at p. 8) The CA IOUs commented that DOE's testing and analysis provide sufficient justification that along with sustained cleaning performance, the standard levels proposed in the March 2023 NOPR will not increase clothing wear and tear, or require longer average cycle times. (
Samsung supported DOE's efforts and detailed testing and analysis to consider the impact of the standard levels proposed in the March 2023 NOPR on performance. (Samsung, No. 461 at p. 3) Samsung commented that DOE's testing, data, and results support the proposed levels at NOPR TSL 4, providing a systematic and comprehensive evaluation of potential impacts on key performance metrics. (
CEI commented that neither the March 2023 NOPR nor the accompanying TSD mention mold, but that mold accumulation in RCWs—rare in pre-2007-standards models—is now a common problem, particularly in front-loading models. (
During the public webinar, Mannino commented that cleaning performance and mold concerns started in the 2000s. (Mannino, Public Webinar Transcript, No. 91 at p. 85) Mannino expressed concern that after three to five years of use clothes no longer smell or look clean after a clothes washer cycle and that these problems may not appear when testing brand new models. (
With regard to concerns about mold accumulation and odors, commenters have not presented any evidentiary basis for asserting that such concerns are a result of energy conservation standards applicable to RCWs. DOE understands that front-loading clothes washers are inherently more prone to retaining moisture—which in turn may contribute to the growth of mold or other odor-causing buildup—in components such as the rubber gasket that seals the front door opening, which by necessity has a complex geometry with folds and crevices that can retain moisture when the clothes washer is not in use. DOE notes that the “first generation” of front-loading clothes washers was widely introduced to the U.S. market in the early 2000s, prior to the establishment of any performance-based energy conservation standards for front-loading clothes washers. DOE is aware that at least four major RCW manufacturers have settled class-action litigation suits regarding concerns over mold and odors in these first-generation product lines sold on the market during the 2000s.
CEI stated that EPCA does not prioritize efficiency above all else and that EPCA prohibits setting an efficiency standard that would sacrifice any desired product characteristic. (CEI, No. 454 at pp. 2-3) CEI commented that a reduction in the quality of RCWs has already occurred due to previous efficiency standards applied by DOE in 1994, 2004, 2007, 2015, and 2018, noting that the standards in 2007 and beyond have been particularly problematic and that several respects of RCW quality have declined since then. (
During the public webinar, Mannino commented that consumers in some cases load larger capacity top-loading RCWs completely to the top with clothing, which causes the clothing to not come out clean. (Mannino, Public Webinar Transcript, No. 91 at p. 84)
Strauch expressed concern about negative impacts to RCW performance with higher efficiency levels. (Strauch, No. 430 at p. 1) Strauch specifically expressed concern about lower wash temperatures, higher spin speeds, and increased spin duration as a result of the standards proposed in the March 2023 NOPR. (
Representatives Latta
Representatives Latta
GE Appliances (“GEA”) commented that the standards proposed in the March 2023 NOPR will lead to increased cycle times. (GEA, No. 457 at p. 3) GEA commented that DOE's analysis shows the RMC requirements resulting from the standards proposed in the March 2023 NOPR will require higher spin speed (which takes greater time for the clothes washer to reach) and longer spin times. (
GEA further commented that the increased spin speeds required by the standards proposed in the March 2023 NOPR will lead to a higher incidence of canceled cycles because all modern top-loading RCWs use software monitoring of machine performance to assure safety during the spin cycle by detecting out-of-balance loads. (
AHAM commented that there is a correlation between several cleaning scores and tested IMEF in DOE's test data, contrary to DOE's statements. (AHAM, No. 464 at p. 3) AHAM commented that DOE did not evaluate whether there is a correlation between water use/efficiency and cleaning performance. (
AHAM provided data indicating that there is a decrease in cleaning performance by about 5 points for both the Warm and Hot temperature settings when the wash temperature is decreased by around 30 °F to what AHAM characterizes as the temperatures that would be required under the proposed standards. (
AHAM commented that it believes decreased water levels are likely to be the largest contributor to decreased performance, in part because the standards proposed in the March 2023 NOPR would make equal load distribution more difficult, leading to more frequent out-of-balance loads. (
AHAM further provided manufacturer testing data that showed the impact of low load turnover and of the standards proposed in the March 2023 NOPR on the ability of an RCW to remove larger particles (such as mud, sand, hair, and vomit). (
AHAM commented that there is significant consumer push-back on reduced water quantity and motion, and their perceived effect on wash performance. (
Whirlpool commented that the standards proposed in the March 2023 NOPR would lessen the utility and performance of clothes washers, particularly for small- and mid-sized RCWs. (Whirlpool, No. 462 at p. 7) Whirlpool commented that the proposal would result in fewer product features and model types, reducing the utility of numerous clothes washers, degrading their overall performance, fundamentally altering consumer choices, and changing how consumers will do their laundry. (
Whirlpool commented that DOE's performance evaluation in the March 2023 NOPR lacks comprehensive analysis on noise and vibration, wrinkling, tangling, rinse performance, particulate removal and residues, water level, and load motion. (
Whirlpool commented that DOE's data does not support the conclusion that performance will be satisfactory or reach consumer-acceptable limits for the evaluated performance metrics at the standard level proposed in the March 2023 NOPR. (
Whirlpool commented that providing a consumer-acceptable level of load motion is one of the biggest challenges to redesigning a top-loading RCW to meet the standards proposed in the March 2023 NOPR. (
Whirlpool commented that faster spin speeds would create consumer-perceptible challenges with wrinkling and tangling from fabric becoming compressed. (
DOE greatly appreciates the test data and information submitted by AHAM and individual manufacturers for DOE's review. This additional data and information provided has helped inform DOE's evaluation of potential amended standards for RCWs. Specifically, the additional data and information provided by AHAM indicates that there are uncertainties regarding potential impacts on certain aspects of product performance at the standard levels proposed in the March 2023 NOPR and that changes to consumer usage patterns to mitigate such impacts could jeopardize the energy and water savings that would be achieved at the proposed efficiency levels.
As discussed in section V.C of this document, DOE is finalizing the amended standard level at TSL 2, the Recommended TSL. For both top-loading and front-loading standard-size RCWs, TSL 2 corresponds to EL 2, which is equivalent to the current ENERGY STAR qualification criteria for each product class. DOE notes that this amended standard level for both top-loading and front-loading standard-size RCWs is less stringent than the level proposed in the March 2023 NOPR (
As discussed in the March 2023 NOPR, DOE tentatively concluded that the proposed standard level for top-loading standard-size RCWs could be achieved with key performance attributes (
However, manufacturers presented additional data suggesting that other attributes of clothes washer performance not specifically evaluated by DOE may be negatively impacted at TSLs 3 and 4 for particularly heavily soiled clothing loads, given current design technologies and approaches. DOE understands that consumers expect that a clothes washer provides a consumer-acceptable level of cleaning performance across a range of potential clothing loads. DOE further understands that consumers that experience any such negative impacts on product performance could potentially alter their usage patterns, for example by using more energy-intensive settings more frequently (
Conversely, at TSL 2 (
For front-loading standard-size RCWs, DOE's test data showed no identifiable correlation between efficiency and the hottest available wash temperature in the Normal cycle. Among units that meet or exceed EL 2, the hottest available wash temperatures in the Normal cycle range from around 70 °F to around 140 °F. This closely matches the range of the hottest wash temperatures available on units at lower efficiency levels, which ranged from around 80 °F to around 155 °F. DOE's test data also shows no observable correlation between efficiency and cleaning score. Among units that meet or exceed EL 2, cleaning scores range from around 86 to around 99. At lower efficiency levels, total cleaning scores ranged from around 90 to around 96. Regarding mechanical action, DOE's test data shows that at EL 2, mechanical action scores range from around 160 to around 195 (lower is better), compared to a range of around 135 to around 180 for units at lower efficiency levels. DOE's test data further show that for front-loading standard-size RCWs, the range of cycle times at EL 2 is no higher than for units at lower efficiency levels. Specifically, among units in DOE's test sample that meet or exceed EL 2, cycle time ranges from around 40 minutes to around 55 minutes. This closely matches the range of units at lower efficiency levels, which range from around 35 minutes to around 65 minutes.
DOE notes that in response to the March 2023 NOPR, manufacturers did not provide any specific data nor express any specific concerns regarding clothes washer performance at TSL 2 (corresponding to EL 2). Based on the information available, including DOE test results as summarized in the preceding paragraphs, DOE concludes that no lessening of product utility or performance would occur at TSL 2. As previously discussed, on February 14, 2024, DOE received a second joint
The test data presented in the March 2023 NOPR contradict certain conclusions and presumptions made by DOE in previous rulemakings with regards to cycle times. In particular, in a NOPR published on August 13, 2020 (“August 2020 NOPR”), which preceded the December 2020 Final Rule, DOE stated its presumption that the shortest possible cycle times currently available on the market represent the models for which manufacturers have prioritized cycle time while maintaining adequate performance across the other performance aspects; and that based on this presumption, the current energy conservation standards may be precluding manufacturers from bringing models to the market with substantially shorter cycle times. 85 FR 49297, 49305; reiterated at 85 FR 81359, 81361. DOE further asserted that offering products with shorter cycle times would require more per-cycle energy and/or water use than would be permitted under the current standards in order to maintain the same level of performance in other areas (
DOE has determined, contrary to the August 2020 NOPR's assumptions, that current energy conservation standards have not prevented the sale of RCWs with shorter cycle times. DOE's test data presented in the March 2023 NOPR indicates no discernable correlation between efficiency level and cycle time for either top-loading standard-size or front-loading standard-size RCWs (
Furthermore, in the second joint statement submitted February 14, 2024, by the signatories of the Joint Agreement, the signatories acknowledge that DOE's investigative testing shows that cycle times at the recommended levels for RCWs are the same as RCWs on the market today.
Finally, for the reasons discussed above, DOE has also determined that the standards adopted in this rule will not require increased cycle times.
As discussed, the adopted standards level for standard-size RCWs corresponds to the ENERGY STAR level for each product class. The ENERGY STAR certified product list indicates a wide range of models currently available on the market at this level. Currently, approximately 31 percent of all top-loading standard-size shipments meet this level. Of the nine OEMs offering top-loading standard-size RCWs, six OEMs offer 166 basic models that meet the final standard level. These six OEMs that currently offer top-loading standard-size RCW models that meet the final standard level collectively account for over 95 percent of overall top-loading standard-size RCW shipments. Currently, approximately 92 percent of all front-loading standard-size shipments meet this level. Of the seven OEMs with front-loading standard-size products, six OEMs offer 169 basic models (representing approximately 89 percent of all front-loading standard-size basic models).
Samsung recommended that DOE formalize its performance test plan or a similar approach to qualify the test cycle, similar to the approach used in the recently finalized dishwasher test procedure. (Samsung, No. 461 at p. 3) Samsung commented that ensuring products perform their basic functions during energy tests is of utmost importance, and if manufacturers compromise performance to achieve higher efficiency, it may diminish consumer trust in the U.S. Federal Trade Commission (“FTC”) EnergyGuide label and DOE minimum efficiency standards. (
EPCA authorizes DOE to design test procedures that measure energy efficiency, energy use, water use (in the case of showerheads, faucets, water closets and urinals), or estimated annual operating cost of a covered product during a representative average use cycle or period of use. (42 U.S.C. 6293(b)(3)) As discussed, DOE's test procedures address the energy and water efficiency of RCWs, but do not prescribe a method for testing clothes washer cleaning performance or other consumer-relevant attributes of performance.
DOE's test procedure for clothes washers requires testing using the Normal cycle,
DOE has previously considered in the June 2022 TP Final Rule whether to propose amendments to the test procedure to define what constitutes “washing up to a full load of normally soiled cotton clothing” (
In the March 2023 NOPR, DOE discussed how its engineering analysis accompanying the March 2023 NOPR indicated that increases in capacity would likely be required to achieve higher efficiency levels beyond EL 1 for the top-loading standard-size product class.
Whirlpool commented that DOE's proposal will effectively phase out small- and mid-sized capacity “standard-size” RCWs. (Whirlpool, No. 462 at p. 7) Whirlpool commented that the standards proposed in the March 2023 NOPR fail to account for the inherent benefit that large-capacity RCWs receive in the calculation of efficiency metrics. (
Whirlpool further commented that larger-capacity RCWs can more easily meet the standards proposed in the March 2023 NOPR with better RMC and therefore fewer additional technology options added to the product, lesser performance degradation, and lower incremental product costs than small- or mid-sized RCWs. (
Representatives Latta
AHAM commented that products with smaller capacities provide a utility to consumers because they can be used in tighter spaces, can be moved from place to place, or can be used together with a standard-size RCW. (AHAM, No. 464 at p. 14) AHAM stated its agreement with DOE's statement in the RFI published on August 2, 2019, that these products, because of their smaller size, cannot achieve the same levels of efficiency as larger products. (
EPCA prohibits DOE from prescribing an amended or new standard that is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4))
DOE notes that its observations and tentative determinations in the March 2023 NOPR regarding top-loading RCW capacity were based on DOE's observations of models currently on the market, which are subject to the current IMEF and IWF metrics as measured under the current appendix J2 test procedure. Under the current metrics, the lack of lower-capacity units at higher efficiency levels suggests that increasing capacity is required to achieve higher efficiency levels beyond EL 1. Accordingly, the “path” that DOE modeled for achieving higher efficiency levels incorporated increases in capacity at EL 2, EL 3, and EL 4, reflecting the existing market.
However, DOE notes that the new EER and WER metrics defined in appendix J, by measuring efficiency on a per-pound
Furthermore, as previously discussed, on February 14, 2024, DOE received a second joint statement from the same group of stakeholders that submitted the Joint Agreement (including AHAM, of which Whirlpool is a member) in which the signatories reaffirmed the standards recommended in the Joint Agreement.
For this direct final rule, DOE updated its engineering analysis to show multiple “paths” that manufacturers could take to reach higher efficiency levels, based on the use of the new EER and WER metrics. Specifically, for top-loading standard-size RCWs, DOE modeled multiple approaches that manufacturers could use to achieve higher efficiency levels under the new metrics, without increasing capacity. In particular, the updated analysis shows viable pathways to achieve the amended standards enacted by this direct final rule for top-loading standard-size units of any capacity. Through this analysis, DOE has determined that an increase in capacity is not required as a means for achieving the amended standards enacted by this direct final rule. Accordingly, DOE has also determined that the amended standards would not preclude the availability of smaller-capacity RCWs on the market.
Chapter 5 of the direct final rule TSD provides tables of the representative breakdown among machine energy use, heating energy use, drying energy use, and low-power-mode energy use for each of these approaches to achieving the higher efficiencies of top-loading standard-size product classes.
This section discusses comments received from manufacturers regarding certain design characteristics: consumer control over water levels, porcelain wash baskets, and agitators. DOE notes that as previously discussed, on February 14, 2024, DOE received a second joint statement from the same group of stakeholders that submitted the Joint Agreement (including AHAM, of which GEA and Whirlpool are members) in which the signatories reaffirmed the standards recommended in the Joint Agreement.
DOE discussed in chapter 5 of the NOPR TSD that most typically, current baseline top-loading standard-size RCWs provide both manual and automatic (adaptive) water fill controls; or user-adjustable automatic controls, which enable the user to customize the amount of water used during the wash cycle. Some units may provide only manual controls or only automatic water fill control. (
In response to the March 2023 NOPR, GEA commented that its consumer research has shown that consumers rate the ability to control the water level in their clothes washers in the top quartile of attributes they value, and that the standards proposed in the March 2023 NOPR will result in the elimination of manual consumer control over water levels in top-loading RCWs. (GEA, No. 457 at p. 2) GEA explained they completed consumer preference research and the manual consumer control feature is in the top quartile for attributes consumers value in washing machines across all potential features, including durability, warranty coverage, product life, and wash performance. (
DOE also received comments from around 40 individual commenters expressing concerns that the standards proposed in the March 2023 NOPR would reduce RCW water levels.
DOE notes that the amended standards enacted by this direct final rule for top-loading standard-size RCWs do not preclude the ability to offer consumer control over water levels, as demonstrated by the current availability of top-loading standard-size RCWs at the adopted standard level that offer a variety of cycle options that allow the consumer to modulate water levels, including but not limited to Deep Fill,
DOE discussed in chapter 5 of the NOPR TSD that the baseline top-loading standard-size RCW design uses an enameled steel (
In response to the March 2023 NOPR, Whirlpool commented that the proposed standards will remove porcelain baskets from the market. (Whirlpool, No. 462 at p. 11)
Strauch commented in opposition of the loss of porcelain drums at the proposed standard level. (Strauch, No. 430 at p. 2)
DOE evaluated the use of a stainless steel wash basket (as one of the hardware changes enabling spin speed increase) within its screening analysis—the purpose of which is to determine which design options to retain as the basis for considering higher efficiency levels. This change in wash basket
To the extent that manufacturers currently produce porcelain wash baskets, DOE accounts for the product redesign and capital investments associated with transitioning models with porcelain wash baskets to stainless steel wash baskets in the MIA. DOE also accounts for the potential stranded assets that may result from amending standards, including the early retirement of equipment and tooling associated with producing porcelain wash baskets. See chapter 12 of the direct final rule TSD for additional information on conversion costs and stranded assets.
The inner drum of a baseline top-loading standard-size RCW typically contains a vertically oriented agitator in the center of the drum, which undergoes a twisting motion. The motion of the agitator, which is powered by an electric motor, circulates the clothes around the center of the wash basket. Some agitators have a corkscrew-like design that also circulates the clothing vertically from the bottom to the top of the basket. Higher-efficiency top-loading RCWs typically use a disk-shaped “wash plate,” rather than a vertical agitator, to move the clothes within the basket. The rotation of the wash plate underneath the clothing circulates the clothes throughout the wash drum.
In the March 2023 NOPR, DOE proposed to adopt an amended standard for top-loading, standard-size RCWs that corresponded to the CEE Tier 1 level. As discussed in the March 2023 NOPR, DOE's market analysis indicated that top loading models currently on the market at the CEE Tier 1 level use wash plates (
DOE sought comment on any aspects of cleaning performance that provide differentiation between the use of an agitator or a wash plate that are not reflected in the Consumer Reports washing performance ratings evaluated in the March 2023 NOPR. 88 FR 13520, 13602. DOE sought comment on whether any lessening of the utility or performance of top-loading standard-size RCWs, in accordance with 42 U.S.C. 6295(o)(2)(B)(i)(IV), would result from a potential standard that would preclude the use of a traditional agitator.
GEA commented that the standards proposed in the March 2023 NOPR would eliminate the use of traditional agitators in top-loading RCWs. (
Whirlpool commented that the standards proposed in the March 2023 NOPR would remove key consumer-friendly features like agitators from the market. (Whirlpool, No. 462 at p. 11) Whirlpool commented that the elimination of agitators would be concerning, as shipment data show that the majority of consumers greatly prefer agitators for top-loading RCWs. (
Strauch commented in opposition of the loss of agitators at the proposed standard level. (Strauch, No. 430 at p. 2)
During the public webinar, Mannino commented that consumers are saying they do not see as much load turnover in large RCWs with wash plates compared to RCWs with agitators and noted that in one technician's experience, RCWs with agitators have better cleaning performance. (
Representatives Latta
DOE notes that the standards adopted in this direct final rule for RCWs do not preclude the ability to offer agitators. All major top-loading standard-size RCW manufacturers offer models at the ENERGY STAR level—which is equivalent to the amended standard level enacted by this direct final rule—that include an agitator.
For the reasons discussed in the previous sections, and based on the additional confirming statements from the Joint Agreement signatories, DOE has concluded that the standards adopted in this direct final rule will not lessen the utility or performance of the RCWs under consideration in this rulemaking.
DOE considered any lessening of competition that would be likely to result from new or amended standards. As discussed in section III.E.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 will provide the DOJ with copies of this direct final rule and the TSD for review.
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
Energy conservation resulting from potential energy conservation standards for RCWs is expected to yield environmental benefits in the form of reduced emissions of certain air pollutants and greenhouse gases. Table V.28 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 direct final rule TSD.
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
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.34 presents the NPV values that result from adding the estimates of the economic benefits resulting from reduced GHG, NO
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 direct final rule, DOE considered the impacts of amended standards for RCWs 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
It is important to recognize that while DOE is promulgating two separate regulatory actions for energy efficiency standards for RCWs and consumer clothes dryers, clothes washers and dryers are complementary products, and they are sometimes sold and purchased together as joint goods. This type of consumer purchasing behavior is not typical of DOE energy efficiency standards. These products are available in a variety of combinations and the efficiency and/or product class of one product does not restrict the efficiency and/or product class of the other. The efficiency levels are independent of each other. Hence, DOE does not directly model the joint purchasing decision of clothes washers and dryers in this rule. It is possible that if only one machine fails, consumers could replace one machine or could replace both machines jointly. If consumers replace both machines when one fails, aggregate lifecycle costs would be the combination of impacts as presented in both final rules.
Consumers value a variety of attributes in RCWs. These attributes can factor into consumer purchasing decisions along with installation and operating cost. For example, DOE understands certain consumers make purchasing decisions on non-efficiency attributes such as color or other visual features such as control panel layout, which may overlap with efficiency considerations related to and a potential preference for mechanical over electronic controls.
One specific attribute related to the joint use of clothes washers and dryers worth noting is the moisture content of clothes as consumers wash and dry them. DOE recognizes that amended RCW standards could result in less total moisture needing to be removed from the clothing in a clothes dryer, whereas amended consumer clothes dryer standards could result in a less energy-intensive process for removing that moisture. As explained in section IV.E of this document, the amended dryer test procedure in appendix D2 includes incoming RMC values (
General considerations for consumer welfare and preferences as well as the special cases of complementary goods are areas DOE plans to explore in a forthcoming RFI related to the agency's updates to its overall analytic framework.
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 direct 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.
Tables V.35 and V.36 summarize the quantitative impacts estimated for each TSL for RCWs. The national impacts are measured over the lifetime of RCWs purchased in the 30-year period that begins in the anticipated year of compliance with amended standards (2027-2056 for all TSLs except TSL 2,
DOE first considered TSL 4, which represents the max-tech efficiency levels for all product classes. Specifically for top-loading standard-size RCWs, DOE's expected design path for TSL 4 (which represents EL 4 for this product class) incorporates the use of a direct drive motor, stainless steel basket and more robust suspension and balancing systems (as methods for enabling faster spin speeds), a wash plate (as a means for enabling reduced water levels), reduced hot and warm wash water temperatures compared to temperatures available on baseline units, spray rinse, the fastest achievable spin speeds, and an increase in tub size compared to the baseline (as a means for reducing energy and water use on a per-pound of clothing basis).
For front-loading standard-size RCWs, DOE's expected design path for TSL 4 (which represents EL 4 for this product class) incorporates the use of the most efficient available direct drive motor, the implementation of advanced sensors, the fastest achievable spin speeds, and lower cold water volume (but with no change to total hot water use). Among these design options, the direct drive motor, more advanced sensors, and faster spin speeds reduce energy use only; whereas the lower cold water volume reduces water use only.
TSL 4 would save an estimated 2.12 quads of energy and 2.73 trillion gallons of water, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be $8.76 billion using a discount rate of 7 percent, and $21.12 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 4 are 55.77 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At TSL 4, the average LCC impact is a savings of $133 for top-loading standard-size, $38 for front-loading compact, $49 for front-loading standard-size, and $188 for semi-automatic clothes washers. The simple payback period is 5.4 years for top-loading standard-size, 8.0 years for front-loading compact, 1.7 years for front-loading standard-size, and 0.6 years for semi-automatic clothes washers. The fraction of consumers experiencing a net LCC cost is 26 percent for top-loading standard-size, 35 percent for front-loading compact, 16 percent for front-loading standard-size, and zero percent for semi-automatic clothes washers. For the top-loading standard-size product class, which represents 71 percent of the market, TSL 4 would increase the first cost by $166, in comparison to an installed cost of $690 for baseline units. For the front-loading standard-size product class, which represents 25 percent of the market, TSL 4 would increase the first cost by $93, compared to an installed cost of $1,027 for baseline units. At TSL 4, the standard for top-loading ultra-compact RCWs is at the baseline, resulting in no LCC impact, no simple PBP, and no consumers experiencing a net LCC cost. Additionally, as a result of lower costs associated with well water and septic tanks in rural areas, about 40 percent of well-water households would experience a net LCC cost at TSL 4.
At TSL 4, the projected change in INPV ranges from a decrease of $1,172.0 million to a decrease of $969.6 million, which correspond to a decrease of 68.6 percent and 56.8 percent, respectively. The loss in INPV is largely driven by industry conversion costs as manufacturers work to redesign their portfolios of model offerings and re-tool entire factories to comply with amended standards at this level. Industry conversion costs could reach $1,321.2 million at this TSL.
Conversion costs at max-tech are significant, as nearly all existing RCW models would need to be redesigned to meet the required efficiencies. Currently, approximately 4 percent of RCW annual shipments meet the max-tech levels. For top-loading standard-size RCWs, which DOE projects will account for 71 percent of annual shipments in 2027, less than 1 percent of current shipments meet this level. Of the nine OEMs offering top-loading standard-size products, one OEM offers five basic models (representing approximately 1 percent of all top-loading standard-size basic models) that meet the efficiencies required by TSL 4. The remaining eight OEMs would need to overhaul their existing platforms and make significant updates to their production facilities. Those manufacturers may need to incorporate increased tub capacities, wash plate designs, direct drive motors, reinforced wash baskets, robust suspension and balancing systems, and advanced sensors. These product changes require significant investment. In interviews, several manufacturers expressed concerns about their ability to meet
At TSL 3 and higher, manufacturers expressed concerns and presented data regarding potential impacts to product performance, including wash temperatures, cleaning and rinsing performance, and fabric care. At TSL 4, such concerns and uncertainties would be further exacerbated. Consumers that experience any such negative impacts on product performance could potentially alter their usage patterns, for example by using more energy-intensive settings more frequently (
Based upon the above considerations, the Secretary concludes that at TSL 4 for RCWs, the benefits of energy and water savings, positive NPV of consumer benefits, and emission reductions would be outweighed by the potential for negative consumer utility impacts, which may jeopardize the energy and water savings that would be achieved at TSL 4, and the impacts on manufacturers, including the large potential reduction in INPV. DOE estimated the potential loss in INPV to be as high as 68 percent. The potential losses in INPV are primarily driven by large conversion costs that must be made ahead of the compliance date. At max-tech, manufacturers would need to make significant upfront investments to update nearly all product lines and manufacturing facilities. Manufacturers expressed concern that they would not be able to complete product and production line updates within the 3-year conversion period. Consequently, the Secretary has concluded that TSL 4 is not economically justified.
DOE then considered TSL 3, which represents the ENERGY STAR Most Efficient level for the front-loading product classes, the CEE Tier 1 level for the top-loading standard-size product class, and a gap fill level for the semi-automatic product classes.
For front-loading standard-size RCWs, DOE's expected design path for TSL 3 (which represents EL 3 for this product class) incorporates the use of the most efficient direct drive motor available, spin speeds that are faster than the baseline level but not as fast as at TSL 4, and lower water volume (but with no change to total hot water heating). Among these design options, the direct drive motor and faster spin speeds reduce energy use only; whereas the lower water volume reduces water use only.
TSL 3 would save an estimated 1.34 quads of energy and 2.33 trillion gallons of water, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $5.96 billion using a discount rate of 7 percent, and $14.68 billion using a discount rate of 3 percent.
The cumulative emissions reductions at TSL 3 are 31.22 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At TSL 3, the average LCC impact is a savings of $116 for top-loading standard-size, $8 for front-loading compact, $15 for front-loading standard-size, and $280 for semi-automatic clothes washers. The simple payback period is 5.7 years for top-loading standard-size, 9.5 years for front-loading compact, 1.6 years for front-loading standard-size, and 0.5 years for semi-automatic clothes washers. The fraction of consumers experiencing a net LCC cost is 28 percent for top-loading standard-size, 22 percent for front-loading compact, 20 percent for front-loading standard-size, and zero percent for semi-automatic clothes washers. For the top-loading standard-size product class, TSL 3 would increase the first cost by $160, in comparison to an installed cost of $690 for baseline units. For the front-loading standard-size product class, TSL 3 would increase the first cost by $78, compared to an installed cost of $1,027 for baseline units. At TSL 3, the standard for top-loading ultra-compact RCWs is at the baseline, resulting in no LCC impact, no simple PBP, and no consumers
At TSL 3, the projected change in INPV ranges from a decrease of $654.1 million to a decrease of $473.3 million, which correspond to a decrease of 38.3 percent and 27.7 percent, respectively. The loss in INPV is largely driven by industry conversion costs as manufacturers work to redesign their portfolios of model offerings and update production facilities to comply with amended standards at this level. Industry conversion costs could reach $724.6 million at this TSL.
For top-loading standard-size products, approximately 3 percent of shipments meet TSL 3. Of the nine OEMs offering top-loading standard-size products, two OEMs offer 20 basic models (representing approximately 4 percent of all top-loading standard-size basic models) that meet the efficiencies required by TSL 3. At this level, the remaining seven manufacturers would likely implement largely similar design options as at TSL 4, but to a lesser extent for the increase in tub size and hardware changes associated with faster spin speeds (
As discussed above, manufacturers expressed concerns and presented data regarding potential impacts to product performance, including wash temperatures, cleaning and rinsing performance, and fabric care. DOE's analysis of third-party clothes washer performance ratings as well as DOE's own performance testing on a representative sample of top-loading standard-size and front-loading standard-size RCWs suggested that TSL 3 can be achieved with key performance attributes (
Based upon the above considerations, the Secretary concludes that at TSL 3 for RCWs, the benefits of energy and water savings, positive NPV of consumer benefits, and emission reductions would be outweighed by the potential for negative consumer utility impacts, which may jeopardize the energy and water savings that could be achieved at TSL 3, and the impacts on manufacturers, including the large potential reduction in INPV. DOE estimates the potential loss in INPV to be as high as 38 percent. The potential losses in INPV are primarily driven by large conversion costs associated with redesigning top-loading standard-size RCWs that must be made ahead of the compliance date. Consequently, the Secretary has concluded that TSL 3 is not economically justified.
DOE then considered the Recommended TSL, which represents the ENERGY STAR v.8.1 level for the top-loading and front-loading standard-size product classes, the ENERGY STAR Most Efficient level for the front-loading compact, and a gap fill level for the semi-automatic product classes.
For front-loading standard-size RCWs, DOE's expected design path for the Recommended TSL (which represents EL 2 for this product class) incorporates the use of a direct drive motor, spin speeds that are faster than the baseline level but not as fast as at TSL 3, and lower water volume (but with no change to total hot water heating energy). Among these design options, the direct drive motor and faster spin speeds reduce energy use only; whereas the lower water volume reduces water use only.
The Recommended TSL would save an estimated 0.67 quads of energy and 1.89 trillion gallons of water, an amount DOE considers significant. Under the Recommended TSL, the NPV of consumer benefit would be $3.28 billion using a discount rate of 7 percent, and $8.71 billion using a discount rate of 3 percent.
The cumulative emissions reductions at the Recommended TSL are 13.96 Mt of CO
Using a 7-percent discount rate for consumer benefits and costs, health benefits from reduced SO
At the Recommended TSL, the average LCC impact is a savings of $111 for top-loading standard-size, $9 for front-loading compact, $46 for front-loading standard-size, and $284 for semi-automatic clothes washers. The simple payback period is 6.2 years for top-loading standard-size, 9.3 years for front-loading compact, 1.4 years for front-loading standard-size, and 0.5 years for semi-automatic clothes washers. The fraction of consumers experiencing a net LCC cost is 27 percent for top-loading standard-size, 21 percent for front-loading compact, 2 percent for front-loading standard-size, and zero percent for semi-automatic clothes washers. For the top-loading standard-size product class, The Recommended TSL would increase the first cost by $146, in comparison to an installed cost of $687 for baseline units in 2028. For the front-loading standard-size product class, the Recommended TSL would increase the first cost by $67, compared to an installed cost of $1,021 for baseline units in 2028. At the Recommended TSL, the standard for top-loading ultra-compact RCWs is at the baseline, resulting in no LCC impact, no simple PBP, and no consumers experiencing a net LCC cost. Overall, across all product classes, around 20 percent of consumers would experience a net LCC cost at the Recommended TSL. DOE estimates that about 12 percent of low-income households would experience a net LCC cost at the Recommended TSL, and as a result of smaller households and lower annual usage, about 26 percent of senior-only households would experience a net LCC cost at the Recommended TSL. Additionally, as a result of lower costs associated with well water and septic tanks in rural areas, about 37 percent of well-water households would experience a net LCC cost at the Recommended TSL.
At the Recommended TSL, the projected change in INPV ranges from a decrease of $278.3 million to a decrease of $146.9 million, which corresponds to decreases of 16.3 percent and 8.6 percent, respectively. Industry conversion costs could reach $320.0 million at this TSL.
At this level, many existing top-loading standard-size products would need to be redesigned to meet the Recommended TSL efficiencies; however, there are a wide range of top-loading standard-size models currently available on the market due to manufacturers' participation in the ENERGY STAR program. Currently, approximately 49 percent of RCW shipments meet the Recommended TSL efficiencies, including approximately 31 percent of all top-loading standard-size shipments. Of the nine OEMs with top-loading standard-size products, six OEMs offer 166 basic models (representing approximately 30 percent of all top-loading standard-size basic models) that meet the Recommended TSL efficiencies. These six OEMs that currently offer top-loading standard-size RCW models that meet the Recommended TSL efficiencies collectively account for over 95 percent of overall top-loading standard-size RCW shipments. At this level, a substantial number of front-loading standard-size products are available on the market due to manufacturers' participation in the ENERGY STAR program. Currently, approximately 92 percent of front-loading standard-size shipments meet the Recommended TSL. Of the seven OEMs with front-loading standard-size products, six OEMs offer 169 basic models (representing approximately 89 percent of all front-loading standard-size basic models) that meet the Recommended TSL efficiencies.
For all TSLs considered in this direct final rule—except for the Recommended TSL—DOE is bound by the 3-year lead time requirements in EPCA when determining compliance dates (
At the Recommended TSL, DOE's data demonstrates no negative impact on consumer utility for both top-loading and front-loading RCWs. Manufacturers did not provide any specific data nor express any specific concerns regarding clothes washer performance at the Recommended TSL. In addition, in the second joint statement from the same group of stakeholders that submitted the Joint Agreement states that DOE's test data and industry experience agrees that the recommended standard level for RCWs can maintain good cleaning performance and do not preclude the ability to provide high wash temperatures.
After considering the analysis and weighing the benefits and burdens, the Secretary has concluded that at a standard set at the Recommended TSL for RCWs would be economically justified. At the Recommended TSL, the average LCC savings for all product classes is positive. An estimated 27 percent of top-loading standard-size users, 21 percent of front-loading compact, 2 percent of front-loading standard-size, and zero percent of semi-automatic clothes washer consumers experience a net cost. At the Recommended TSL, the positive average LCC savings across all product classes and cost savings for approximately two-thirds of RCWs consumers, outweigh the negative average LLC savings of $20 for well-water households and the 37 percent of these households that might experience a net cost. DOE notes that its analysis ensures that the financial implications for households with wells and/or septic systems are comprehensively incorporated into the national LCC analysis. In addition, 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 vastly outweigh the cost to manufacturers. At the Recommended TSL, the NPV of consumer benefits, even measured at the more conservative discount rate of 7 percent is over 11 times higher than the maximum estimated manufacturers' loss in INPV. The standard levels at the Recommended TSL are economically justified even without weighing the
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 energy savings that are 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 amended energy conservation standards, DOE notes that as compared to TSL 4 and TSL 3, the Recommended TSL has a lower maximum decrease in INPV and lower manufacturer conversion costs.
Accordingly, the Secretary has concluded that the Recommended TSL would offer the maximum improvement in efficiency that is technologically feasible and economically justified and would result in the significant conservation of energy.
Therefore, based on the previous considerations, DOE adopts the energy conservation standards for RCWs at the Recommended TSL.
While DOE considered each potential TSL under the criteria laid out in 42 U.S.C. 6295(o) as discussed above, DOE notes that the Recommended TSL for RCWs adopted in this direct final rule is part of a multi-product Joint Agreement covering six rulemakings (RCWs; consumer clothes dryers; consumer conventional cooking products; dishwashers; refrigerators, refrigerator-freezers, and freezers; and miscellaneous refrigeration products). The signatories indicate that the Joint Agreement for the six rulemakings should be considered as a joint statement of recommended standards, to be adopted in its entirety. (Joint Agreement, No. 505 at p. 3) As discussed in section V.B.2.e of this document, many RCW OEMs also manufacture consumer clothes dryers; consumer conventional cooking products; dishwashers; refrigerators, refrigerator-freezers, and freezers; and miscellaneous refrigeration products. Therefore, there are potential integrated benefits to the Joint Agreement. Rather than requiring compliance with five amended standards in a single year (2027),
As AHAM is a key signatory of the Joint Agreement, DOE understands that the compliance dates recommended in the Joint Agreement would help reduce cumulative regulatory burden. These compliance dates help relieve concern on the part of some manufacturers about their ability to allocate sufficient resources to comply with multiple concurrent amended standards and about the need to align compliance dates for products that are typically designed or sold as matched pairs. The Joint Agreement also provides additional years of regulatory certainty for manufacturers and their suppliers.
For RCWs and consumer clothes dryers specifically, aligned compliance dates would help reduce cumulative regulatory burden for the 13 OEMs that manufacture both RCWs and consumer clothes dryers. In response to the March 2023 NOPR, AHAM commented that laundry products (RCWs and consumer clothes dryers) are designed and used in pairs. (AHAM, No. 464 at p. 44) AHAM stated that an additional design cycle for clothes washers and/or clothes dryers may be necessary if the effective compliance dates for the two products were out of sync and this would undermine the investment and associated recovery assumptions underlying the MIA from the consumer clothes dryer rulemaking. (
The amended energy conservation standards for RCWs, which are expressed in EER and WER, are shown in Table V.37.
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 2022$) 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.38 shows the annualized values for RCWs under the Recommended TSL, expressed in 2022$. 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 $513.1 million per year in increased equipment costs, while the estimated annual benefits are $998.9 million in reduced operating costs, $46.9 million in climate benefits, and $90.3 million in health benefits. In this case, the net benefit would amount to $623.0 million per year.
DOE added a new paragraph (g)(2)(ii) into 10 CFR 430.32 to provide that each energy and water conservation for each RCW category is separate and severable from one another, and that if any energy or water conservation standard is stayed or determined to be invalid by a court of competent jurisdiction, the remaining standards shall continue in effect. This severability clause is intended to clearly express the Department's intent that should an energy or water conservation standard for any product class be stayed or invalidated, the other conservation standards shall continue in effect. In the event a court were to stay or invalidate one or more energy or water conservation standards for any product class as finalized, the Department would want the remaining energy conservation standards as finalized to remain in full force and legal effect.
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), and amended by E.O. 14094, “Modernizing Regulatory Review,” 88 FR 21879 (April 11, 2023), 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 the 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) 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
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 under the Administrative Procedure Act. See 5 U.S.C. 601(2), 603(a). As discussed previously, DOE has determined that the Joint Agreement meets the necessary requirements under EPCA to issue this direct final rule for energy conservation standards for RCWs under the procedures in 42 U.S.C. 6295(p)(4). DOE notes that the NOPR for energy conservation standards for RCWs published elsewhere in this issue of the
Under the procedures established by the Paperwork Reduction Act of 1995 (“PRA”), a person is not required to respond to a collection of information by a Federal agency unless that collection of information displays a currently valid OMB Control Number.
OMB Control Number 1910-1400, Compliance Statement Energy/Water Conservation Standards for Appliances, is currently valid and assigned to the certification reporting requirements applicable to covered products, including RCWs.
DOE's certification and compliance activities ensure accurate and comprehensive information about the energy and water use characteristics of covered products and covered equipment sold in the United States. Manufacturers of all covered products and covered equipment must submit a certification report before a basic model is distributed in commerce, annually thereafter, and if the basic model is redesigned in such a manner to increase the consumption or decrease the efficiency of the basic model such that the certified rating is no longer supported by the test data. Additionally, manufacturers must report when production of a basic model has ceased and is no longer offered for sale as part of the next annual certification report following such cessation. DOE requires the manufacturer of any covered product or covered equipment to establish, maintain, and retain the records of certification reports, of the underlying test data for all certification testing, and of any other testing conducted to satisfy the requirements of part 429, part 430, and/or part 431. Certification reports provide DOE and consumers with comprehensive, up-to-date efficiency information and support effective enforcement.
Revised certification data will be required for RCWs to demonstrate compliance with the amended standards enacted in this direct final rule, which are based on different metrics than the current standards. However, DOE is not amending certification or reporting requirements for RCWs in this direct final rule. Instead, DOE may consider proposals to amend the certification requirements and reporting for RCWs under a separate rulemaking regarding appliance and equipment certification. DOE will address changes to OMB Control Number 1910-1400 at that time, as necessary.
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 B, categorical exclusion B5.1, because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, none of the exceptions identified in B5.1(b) apply, no extraordinary circumstances exist that require further environmental analysis, and it meets the requirements for application of a categorical exclusion. See 10 CFR 1021.410. Therefore, DOE has determined that promulgation of this rule is not a major Federal action significantly affecting the quality of the human environment within the meaning of NEPA, and does not require an environmental assessment or an environmental impact statement.
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.
In the March 2023 NOPR, DOE tentatively determined that the proposed rule would not have a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. 88 FR 13520, 13616. Furthermore, DOE stated that EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of the proposed rule and that States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA.
The AGs of TN
DOE reiterates that this direct final rule does not have significant federalism implications. DOE has examined this rule and has determined that it would not have a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and expressly prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this direct final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297) Therefore, no further action is required by Executive Order 13135.
Even if DOE were to find otherwise, with regards to the AGs of TN
With regards to the AGs of TN
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 direct 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 direct 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 RCW manufacturers in the years between the direct final rule and the compliance date for the new standards and (2) incremental additional expenditures by consumers to purchase higher-efficiency RCWs, 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 direct 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. The
Under section 205 of UMRA, DOE 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(m), this direct final rule establishes amended energy conservation standards for RCWs 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 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 direct 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. Although this direct final rule would not have any impact on the autonomy or integrity of the family as an institution as defined, this rule could impact a family's well-being. When developing a Family Policymaking Assessment, agencies must assess whether: (1) the action strengthens or erodes the stability or safety of the family and, particularly, the marital commitment; (2) the action strengthens or erodes the authority and rights of parents in the education, nurture, and supervision of their children; (3) the action helps the family perform its functions, or substitutes governmental activity for the function; (4) the action increases or decreases disposable income or poverty of families and children; (5) the proposed benefits of the action justify the financial impact on the family; (6) the action may be carried out by State or local government or by the family; and whether (7) the action establishes an implicit or explicit policy concerning the relationship between the behavior and personal responsibility of youth, and the norms of society.
DOE has considered how the proposed benefits of this rule compare to the possible financial impact on a family (the only factor listed that is relevant to this final rule). As part of its rulemaking process, DOE must determine whether the energy conservation standards contained in this direct final rule are economically justified. As discussed in section V.C.1 of this document, DOE has determined that the standards are economically justified because the benefits to consumers far outweigh the costs to manufacturers. Families will also see LCC savings as a result of this final rule. Moreover, as discussed further in section V.B.1 of this document, DOE has determined that for low-income households, average LCC savings and PBP at the considered efficiency levels are improved (
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 amended energy conservation standards for RCWs, 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 direct 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
The Secretary of Energy has approved publication of this direct final rule.
Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Reporting and recordkeeping requirements, Small businesses.
This document of the Department of Energy was signed on February 29, 2024, by Jeffrey Marootian, Principal Deputy Assistant Secretary for Energy Efficiency and Renewable Energy, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the
For the reasons set forth in the preamble, DOE amends part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below:
42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
(g)
(2) Clothes washers manufactured on or after March 1, 2028:
(i) Shall have an Energy Efficiency Ratio and a Water Efficiency Ratio no less than:
(ii) The provisions of this paragraph (g)(2) are separate and severable from one another. Should a court of competent jurisdiction hold any provision(s) of this section to be stayed or invalid, such action shall not affect any other provisions of this section.
Consumer Financial Protection Bureau.
Final rule; official interpretation.
The Consumer Financial Protection Bureau (CFPB or Bureau) amends Regulation Z, which implements the Truth in Lending Act (TILA), to address late fees charged by card issuers that together with their affiliates have one million or more open credit card accounts (referred to as “Larger Card Issuers” herein). This final rule adopts a late fee safe harbor threshold of $8 for those issuers and provides that the annual adjustments to reflect changes in the Consumer Price Index (CPI) do not apply to this $8 amount.
Adrien Fernandez, Counsel; Krista Ayoub and Steve Wrone, Senior Counsels, Office of Regulations, at 202-435-7700. If you require this document in an alternative electronic format, please contact
The CFPB is amending provisions in Regulation Z, § 1026.52(b) and its accompanying commentary as they relate to credit card penalty fees.
To address these concerns, this final rule amends § 1026.52(b) and its accompanying commentary to help ensure that the safe harbor sets late fees imposed by Larger Card Issuers at amounts that are consistent with the TILA's requirement that such fees be reasonable and proportional to the cost from an omission or violation. First, with respect to Larger Card Issuers, this final rule repeals the current safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B), adopts in § 1026.52(b)(1)(ii) a late fee safe harbor dollar amount of $8, and eliminates for late fees a higher safe harbor dollar amount for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles.
This final rule does not adopt the following revisions for Smaller Card Issuers as defined in new § 1026.52(b)(3): (1) repeal of the current safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B), adoption of $8 late fee safe harbor threshold amount, and elimination of a higher late fee safe harbor dollar amount for subsequent violations; and (2) the elimination of the annual adjustments for the safe harbor threshold dollar amounts. This final rule defines the term “Smaller Card Issuer” in § 1026.52(b)(3) to mean a card issuer that together with its affiliates had fewer than one million open credit card accounts for the entire preceding calendar year.
Pursuant to the annual adjustments for safe harbor dollar amounts in § 1026.52(b)(1)(ii)(D), this final rule revises the safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) to $32, except that it sets forth a safe harbor of $43 for each subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles. These revised safe harbor threshold amounts of $32 and $43 apply to penalty fees other than late fees for all card issuers (
This final rule also amends comment 52(b)(1)(i)-2.i to make it explicitly clear that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions. This clarification applies to all card issuers that use the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts, including late fees.
The Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act) was signed into law on May 22, 2009.
At the time of its passage, the CARD Act required the Board of Governors of the Federal Reserve System (Board) to issue rules establishing standards for assessing the reasonableness and proportionality of such penalty fees.
On June 29, 2010, the Board issued a final rule implementing new TILA section 149 in its Regulation Z, 12 CFR 226.52(b) (2010 Final Rule).
The Board's Regulation Z, § 226.52(b)(2) also contained other restrictions on card issuers for imposing penalty fees. Specifically, § 226.52(b)(2)(i) prohibited issuers from imposing penalty fees that exceed the dollar amount associated with the violation.
The Board's 2010 Final Rule implementing TILA section 149 took effect on August 22, 2010.
On December 22, 2011, the CFPB issued an interim final rule issuing its Regulation Z, 12 CFR part 1026, to reflect its assumption of rulemaking authority over TILA.
The dollar safe harbor amounts adopted by the Board in 2010 have been adjusted pursuant to § 1026.52(b)(1)(ii)(D).
In the wake of the Board's and the CFPB's implementation of TILA section 149, late fees represent almost all
Prior to the passage of the CARD Act in 2009, the average late fee was $33 for issuers in the CFPB's Credit Card Database (CCDB) which includes information on the full consumer and small business credit card portfolios of large credit card lenders, covering approximately 85 percent of all credit card accounts in the U.S. between April 2008 and April 2016.
However, from 2010 through the onset of the COVID-19 pandemic, issuers had steadily been charging consumers more in credit card late fees each year—growing to over $14 billion in total late fee volume for issuers contained in the Y-14+ data in 2019.
Total late fee volume for issuers contained in the Y-14+ exceeded pre-pandemic levels in 2022, following declines in both 2020 and 2021 given record-high payment rates and public and private relief efforts, as discussed in the 2023 Proposal (88 FR 18906 (Mar. 29, 2023)).
Currently, § 1026.52(b)(1)(ii) sets forth a safe harbor of $30 generally for a late payment, except that it sets forth a safe harbor of $41 for each subsequent late payment within the next six billing cycles. A card issuer is not required to use the cost analysis provisions in § 1026.52(b)(1)(i) to determine the amount of late fees if it complies with these safe harbor amounts.
As noted in the 2023 Proposal, an analysis by the CFPB in 2022 of credit card agreements submitted to the CFPB's Credit Card Agreement Database in the fourth quarter of 2020 found no evidence of any issuers using the cost analysis provisions to charge an amount higher than the safe harbor.
An analysis by the CFPB in 2023 of credit card agreements submitted to the CFPB's Credit Card Agreement Database in the second quarter of 2023 was consistent with the 2022 results. The CFPB did not find evidence of issuers using the cost analysis provision to charge an amount higher than the safe harbor. Of the approximately 30 to 35 submitters that the CFPB would expect to be Larger Card Issuers, most of those issuers continued to contract at a maximum late fee at or near the higher safe harbor amount of $41 in 2023 with all Larger Card Issuers in the Y-14+ data charging a maximum late fee between $38 and $41. For Larger Card Issuers, the maximum late fee in their submitted agreements ranged from $20 to $41 with 13 issuers charging $40 and 11 charging $41. Smaller Card Issuers with more than 10,000 accounts submitting agreements to the CPFB's Credit Card Database continue to charge far below the late fee safe harbor. Only six Smaller Card Issuers for whom the CFPB has data charged a maximum late fee of $41. Over two-thirds of the sample of Smaller Issuers charge $25 or less per late payment and 10 already charge $8 or less.
Some Larger Card Issuers may be disincentivized to lower late fee amounts below the safe harbor, given that the industry as a whole continues to rely on late fees as a source of revenue and many consumers may not shop for credit cards based on the amount of the late fee. For the Larger Card Issuers in the Y-14+ data, late fees represented 10 percent of charges to consumers in 2020, but individual card issuers' revenue from late fees varied.
As noted in the 2023 Proposal, many consumers may not shop for credit cards based on the amount of late fees, which also may lessen card issuers incentive to charge late fees lower than the safe harbor amount. Survey data suggest that other factors, such as rewards, annual fees, and annual percentage rate(s)
As noted in the 2023 Proposal, late fees represented over one-tenth of the $120 billion issuers in the Y-14+ charged to consumers in interest and fees in 2019, totaling over $14 billion in that year.
Credit card accounts in the Y-14 data held by cardholders living in the U.S.' poorest neighborhoods paid twice as much on average in total late fees than those in the richest areas.
When a consumer does not make at least the minimum payment by the periodic statement due date, a late fee may not be the only consequence. However, the effect of a missed payment depends on cardholder conduct both prior to and after the due date.
For cardholders who typically pay their balance in full every month (so-called transactors), a late payment generally means both a late fee and new interest incurred for carrying or revolving a balance. For the cardholders who do not roll over a balance in the month before or after a late fee is assessed, the loss of a grace period
However, if a consumer does not make at least the minimum payment due for more than one billing cycle, non-payment may carry more severe consequences. After approximately 30 days, consumers' credit scores may decline after issuers report the delinquency to credit bureaus. A card issuer also may take actions to reprice new transactions on the account according to a penalty rate, if permitted under § 1026.55(b)(3).
On June 22, 2022, the CFPB issued an advance notice of proposed rulemaking (ANPR) seeking information from credit card issuers, consumer groups, and the public regarding credit card late fees and late payments, and card issuers' revenue and expenses.
Consumer group commenters generally made a number of recommendations with respect to restrictions on late fees, including that the CFPB should more closely tailor the late fee safe harbor to the amount of the debt owed by the cardholder, such as by establishing a sliding scale for the safe harbor amount so that late fees are proportional to the account balance.
Card issuers and their trade associations that commented on the ANPR generally opposed revisions to
On February 1, 2023, the CFPB issued a notice of proposed rulemaking containing several proposed amendments to Regulation Z, which implements TILA, to better ensure that the late fees charged on credit card accounts are “reasonable and proportional” to the late payment as required under TILA. This notice of proposed rulemaking was published in the
As described more fully below, the CFPB proposed to amend provisions in § 1026.52(b) and its accompanying commentary as they relate to credit card late fees. Because late fees are by far the most prevalent penalty fees charged by card issuers and the CFPB's current data primarily relate to late fees, the CFPB's proposed changes to the restrictions in § 1026.52(b) were limited to late fees, although the CFPB solicited comments on whether the proposed amendments should apply to other penalty fees.
The proposal would have amended § 1026.52(b) and its accompanying commentary to help ensure that late fees are reasonable and proportional. First, the proposal would have amended § 1026.52(b)(1)(ii) to lower the safe harbor dollar amount for late fees to $8 and to no longer apply to late fees a higher safe harbor dollar amount for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles.
The CFPB proposed one clarification that would have applied to penalty fees generally. Specifically, the proposal would have amended comment 52(b)(1)(i)-2.i to make it explicitly clear that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions. In addition, the CFPB solicited comment on several issues related to penalty fees generally. First, the CFPB solicited comment on whether the same or similar changes described above should be applied to other penalty fees, such as over-the-limit fees, returned-payment fees, and declined access check fees, or in the alternative, whether the CFPB should finalize the proposed safe harbor for late fees and eliminate the safe harbors for other penalty fees. Second, the CFPB solicited comment on whether instead of revising the safe harbor provisions set forth in § 1026.52(b)(1)(ii) as they apply to late fees as discussed above, the CFPB should instead eliminate the safe harbor provisions in § 1026.52(b)(1)(ii) for late fees or should instead eliminate the safe harbor for all penalty fees, including late fees, over-the-limit fees, returned-payment fees, and declined access check fees. If the safe harbor provisions were eliminated, card issuers would need to use the cost analysis provisions set forth in § 1026.52(b)(1)(i) to determine the amount of the penalty fees (subject to the limitations in § 1026.52(b)(2)). The CFPB also solicited comment on whether, in that event, the cost analysis provisions would need to be amended and, if so, how.
The CFPB received approximately 57,900 responses to the 2023 Proposal. Of those responses, around 56,800 were from consumers that generally supported the 2023 Proposal. The vast majority of these consumer letters had the same content, and specifically supported the proposed $8 safe harbor threshold amount for late fees. In certain consumer letters, consumers who supported the proposal included additional information, such as their experiences with late fees. Some consumers who supported the proposal indicated they had limited income and that even a small late fee can impact consumers on a tight budget. Some consumers who supported the proposal indicated that they were charged a late fee in the past because (1) their mailed payment was not received by the card issuer by the due date because of slower postal service; (2) they paid on the due date but after the cut off time on the due date; (3) they forgot to pay on time because of vacations, medical issues, or family issues; or (4) they experienced cash flow issues because of unexpected expenses, such as an illness, and in some cases were not able to change the due date for their payments.
Around 350 individual consumers, including approximately 170 individuals who identified themselves as “bankers” who submitted the same letter, opposed the proposed $8 safe harbor amount. The individuals who identified themselves as bankers asserted that the CFPB should withdraw the proposal and restart the rulemaking process after taking into consideration small business' input through the SBREFA process.
Consumer group commenters generally supported the 2023 Proposal. These consumer group commenters expressed strong support for: (1) the CFPB's proposed safe harbor of $8 for credit card late fees; and (2) the CFPB's proposal to limit the dollar amount associated with a late payment to 25 percent of the required minimum periodic payment due immediately prior to assessment of the late payment.
The CFPB received around 100 comment letters from industry commenters. Industry commenters generally opposed the proposal, including the following proposed changes: (1) lowering the late fee safe harbor amount to $8 and eliminating the higher safe harbor amount for subsequent late payments; (2) eliminating the annual adjustment provisions for late fee amounts; (3) limiting late fee amounts to 25 percent of the require minimum payment; and (4) clarifying that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any
One Member of Congress was concerned about the impact of the 2023 Proposal on small issuers. This commenter advised that the CFPB either work to ensure that the cost analysis provisions—an alternative to the safe harbor—would not impose undue burdens on small issuers or that the CFPB consider a separate safe harbor for small issuers that more accurately reflects their unique costs.
The Office of Advocacy, an independent office within the Small Business Administration (SBA), expressed concern that the CFPB's analysis of pre-charge-off costs from the Y-14 issuers does not accurately represent the collection costs for late payments of smaller issuers. The agency also criticized the CFPB for insufficiently considering the extent to which the proposed $8 safe harbor amount would cover the collection costs of smaller issuers.
The CFPB also received comments from other types of entities, namely several academics, law firms, and financial regulatory advocacy groups. The comments from these entities varied, with some of these entities generally supporting the 2023 Proposal, and some of them generally opposing it. These comments, as well as the other comments received by the CFPB on the 2023 Proposal, are discussed in more detail below in part VII.
Consistent with the CARD Act, the CFPB consulted with the following agencies regarding rules that implement TILA section 149, both before issuing the 2023 Proposal and before issuing this final rule: (1) the Comptroller of the Currency; (2) the Board of Directors of the Federal Deposit Insurance Corporation (FDIC); and (3) the National Credit Union Administration Board.
Section 1022(b)(1) of the CFPA authorizes the CFPB to prescribe rules “as may be necessary or appropriate to enable the CFPB to administer and carry out the purposes and objectives of the Federal consumer financial laws, and to prevent evasions thereof.”
As amended by the CFPA, TILA section 105(a)
As described above, the CARD Act was signed into law on May 22, 2009,
At the time of its passage, the CARD Act added section 149(b) to TILA, which required the Board to issue rules establishing standards for assessing the reasonableness and proportionality of such penalty fees, with a statutory deadline of February 22, 2010, for issuing this required rule.
On July 21, 2011, the Board's rulemaking authority to implement the provisions of TILA, including the discretionary authority to issue rules regarding penalty fee safe harbors in TILA section 149(e), transferred to the CFPB pursuant to sections 1061 and 1100A of the CFPA.
For the reasons discussed in this final rule, the CFPB is amending certain provisions in Regulation Z that impact the amount of late fees that Larger Card Issuers can charge.
With respect to late fees charged, pursuant to section 149(e), the CFPB has analyzed whether the current safe harbor threshold amounts for late fees should be presumed to be reasonable and proportional to a cardholder's omission or violation. In considering whether and what is the appropriate amount for the safe harbor, the CFPB
As described below and pursuant to its rulemaking authority under TILA sections 105(a) and 149(e),
The CFPB considered four primary data sources in developing the 2023 Proposal, as described below: (1) Y-14; (2) Y-14+; (3) credit card debt collection data received from an information order made pursuant to section 1022(c)(4) of the CFPA; and (4) the CFPB's Credit Card Agreement Database.
First, as explained in the 2023 Proposal, the CFPB relied upon data that the Board collects as part of its Y-14M (Y-14) data.
The Y-14 data contain confidential supervisory information.
As described in the 2023 Proposal, the Y-14 data received by the CFPB covered the period from the middle of 2012 through September 2022 and are provided by certain Larger Card Issuers that account for just under 70 percent of outstanding balances on U.S. consumer credit cards as of year-end 2020. With respect to credit card data, the 2023 Proposal explained that, for purposes of its analysis, the CFPB generally used the complete portfolio data (including late fee income and collection costs) for all the Y-14 issuers included in the data collection. The 2023 Proposal also explained that the analysis generally used a random 40 percent subsample of account information (including late fee amounts and total required payments) reported by card issuers included in the data collection. For the purposes of the analysis using these data in the 2023 Proposal, the CFPB only considered account- and portfolio-level data for issuers in a given month for consumer general purpose and private label credit cards for which there existed data on late fee income, collection costs, late fee amounts, and total required payments in the Y-14 data.
In the 2023 Proposal, the CFPB stated its understanding that collection costs in the Y-14 data are total collection costs, therefore include both pre-charge-off and post-charge-off collection costs because, as described in the 2023 Proposal, the Board requires that issuers report in the Y-14 data “costs incurred to collect problem credits that include
The CFPB did not propose to amend the Board's rule in this respect and further noted that this limitation was appropriate given that card issuers write accounts off as a loss when an account has been charged off; therefore, any cost in collecting amounts owed to a card issuer that incurred post-charge-off is related to mitigating a loss as opposed to the cost of a violation of the account terms.
Given that the rule's cost analysis provisions in § 1026.52(b)(1)(i) limit the collection costs to costs that are incurred pre-charge off, consistent with the statute, the CFPB similarly limited its calculation of the appropriate safe harbor to this pre-charge off cost in the Y-14 data by excluding the post-charge-off collection costs. As explained in the 2023 Proposal, to do this, the CFPB estimated the percentage of collection costs that may occur after charge-off so that they could be excluded from the collection costs in the Y-14 data.
To determine what percentage of Y-14 data were pre-charge off, the CFPB examined confidential information gathered in the course of its statutory functions
As explained in the 2023 Proposal, the methodology for estimating post-charge-off commissions considered the amount of charged-off balances and then estimated the commission on the volume of recovered balances by using the recovery and commission rates. For example, if an issuer had a total of $1 million in newly charged-off balances in a given year, a cumulative recovery rate for that year of five percent, and a post-charge-off commission rate of 20 percent, the CFPB estimated the post-charge-off commission costs to be $10,000. As noted in the proposal, to calculate the post-charge-off collection costs as a share of total cost of collections, the CFPB then divided the estimated post-charge-off commission costs by the total collection costs the bank reported in the Y-14 data. For issuers who sell debt, the cost of collections calculation used charge-off balances net of asset sales. The commission rate for each issuer is an average weighted by the share of post-charge-off balances in each tier placement (
Based on these commission expenses that these six major card issuers paid in 2019 and 2020 to third-party debt collectors for charged-off accounts, the CFPB explained in the 2023 Proposal that it estimated that these post-charge-off costs are around 25 percent of total collection costs for these issuers; the average ratio was 27 percent in 2019 and 21 percent in 2020. In 2019, the median ratio of estimated post-charge-off commission costs to annual collection costs in the Y-14 for individual issuers was 28 percent; in 2020, it was 23 percent. Based on these data, in the 2023 Proposal, the CFPB estimated that pre-charge-off collection costs were equal to 75 percent of the collection costs included in the Y-14 data for purposes of its analysis related to the proposed changes to the safe harbor thresholds for late fees in § 1026.52(b)(1)(ii).
As discussed in the 2023 Proposal, the CFPB also considered Y-14+ data in developing the proposal. The Y-14+ data include confidential information gathered in the course of statutory functions from the Board's Y-14 data and a diverse group of specialized issuers.
In the 2023 Proposal, the CFPB discussed a 2022 review conducted by the CFPB of credit card agreements submitted to the CFPB's Credit Card Agreement Database in the fourth quarter of 2020 to determine the maximum late fee amount charged across agreements by issuers submitting to that database. As discussed above, the 2023 Proposal relied on these data in
At the time it issued the 2023 Proposal, the CFPB also published a related report, “Credit Card Late Fees: Revenue and Collection Costs at Large Bank Holding Companies” (Revenue-Costs Report).
Several credit unions, industry trade associations, and individuals on behalf of a credit union, one law firm representing several card issuers, and one academic commenter criticized the CFPB for failure to release the underlying Y-14 data. These commenters asserted they did not have the ability to understand or evaluate the CFPB's proposal in a thorough and meaningful way or to replicate the CFPB's analysis due to the lack of insight into the underlying data, methodology used, and analyses that form the basis of the 2023 Proposal. Several of these commenters asserted that the failure to disclose the raw Y-14 data relied upon in the rulemaking conflicts with requirements under section 553 of the Administrative Procedure Act (APA).
One of the credit union commenters urged the CFPB to provide a breakdown of the components used to arrive at the proposed $8 late fee safe harbor and the source of the data. One of the industry trade association commenters noted that the CFPB failed to provide a clearly defined list of data inputs that banks provide in reporting collection costs on the Y-14 data. The law firm representing several card issuers asserted that, although the CFPB compiled and released a set of aggregated and anonymized values at the same time as the proposal, it did not include an explanation of which Y-14 data fields it used to populate the document, how and why the CFPB designated the data for inclusion in the categories the document sets forth, or how the CFPB ensured that the data categorizations were consistent from bank to bank—all of which it claimed prevented commenters from assessing the validity and accuracy of the proposal or the conclusions it supports.
One of the industry trade association commenters also expressed concerns that the CFPB did not provide information about the distribution of the ratio of late fee income to future collection costs for the Y-14 issuers; and about whether the CFPB used all of the issuers in the Y-14 data in analyzing the ratio of late fee income to future collection costs.
The academic commenter focused on a narrower set of data related to a Y-14 seven-month analysis. These data were used to support analysis in the proposal that lower late fees in month seven do not affect the late payment rate. This commenter asserted that these claims would require further review and validation by industry and urged the CFPB to release the underlying Y-14 data used in this seven-month analysis.
Several of the industry trade association commenters and the academic commenter also requested that the CFPB release further anonymized or aggregated Y-14 data to the public and postpone the rulemaking until it could release these additional data.
The CFPB disagrees with the commenters that the 2023 Proposal failed to provide sufficient data or description of methodology for commenters to offer meaningful comment. The CFPB also does not agree that it is improper to cite supervisory or other confidential data gathered for statutory functions or shared by the Board pursuant to those statutory functions in the rulemaking process; this is information the CFPB obtains as part of its lawful and authorized activities, and it provides insight into the issues addressed here. CFPB's published reports were collected through its supervision function, and the CFPB's regulations protect confidential supervisory information from disclosure. As noted above, the Board's instructions to the Y-14 issuers indicates that the Y-14 data are collected as part of the supervisory process and are subject to confidential treatment under certain exemptions of the Freedom of Information Act.
As noted above, the 2023 Proposal provides a detailed description of each of the four sources of data used in the rulemaking: (1) Y-14; (2) Y-14+; (3) credit card debt collection data received from an information order made pursuant to section 1022(c)(4) of the CFPA; and (4) the CFPB's Credit Card Agreement Database. Although the CFPB did not release the raw Y-14 data used in developing the 2023 Proposal, it took several steps to release aggregate data, as well as providing detailed descriptions of methodology and analysis, so that commenters could evaluate and provide meaningful
As noted above, contrary to what some commenters stated, the 2023 Proposal explained the source of the Y-14 data (from the Board), as well as the specific question about estimating collection costs for late fees that was used to generate the data. In the 2023 Proposal, the CFPB also described the four types of Y-14 data that it used for the analysis in the proposal, namely, late fee income, collection costs, late fee amount, and total required payments.
As noted above, the CFPB also issued along with the 2023 Proposal the Revenue-Costs Report at the time of the proposal to aid in the ability of commenters to examine data from issuers and provide additional analysis and methodology, enhancing the ability of commenters to offer meaningful comment. The Revenue-Costs Report included additional monthly values for the aggregate late fee revenue and collection costs for general purpose and private label credit cards in the Y-14 data since 2016.
Throughout the process, the CFPB sought to provide as much information as possible to ensure that commenters could themselves analyze the CFPB methodology, critique data, and provide feedback. Indeed, as described below, the CFPB received approximately 10 comments that specifically analyzed the CFPB's use of the Y-14 data, as well as the CFPB's methodology and analysis. For example, the CFPB received comments that criticized the CFPB's bottom line late fee estimate and offered contrary amounts based on issuers' own analysis using the CFPB's methodology. Other commenters also provided meaningful feedback on the source of the data and data fields. The CFPB has determined this feedback further supports the fact that throughout this rulemaking (including an ANPR that sought data from issuers), the CFPB has sought to share as much information as possible. For comparison, the CFPB's rulemaking, unlike the original 2010 rule, analyzed and presented 10 years of data specifically from card issuers' own reports of collection costs. While these raw data could not be disclosed, the CFPB published data in an aggregate form, and in both the 2023 Proposal and the related Revenue-Costs Report, the CFPB described its methodology and analysis to further the ability of commenters to meaningfully examine, understand, and comment on the data.
As noted in the 2023 Proposal, the Y-14 data provided 10 years of information related to total collection costs, which as required by the Board is defined to include “costs incurred to collect problem credits that include the total collection cost of delinquent, recovery, and bankrupt accounts.”
Several industry trade associations and one law firm representing several card issuers asserted that the CFPB improperly relied on this Y-14 data field in developing the proposal because that “total collection cost” line item may be underinclusive of some issuers' collection costs. The law firm representing several card issuers asserted that there are expenses caused by late payments that are not included in the “total collection cost” line item relied on by the CFPB in the Y-14 data. For example, this commenter asserted that technology-related expenses associated with delinquent customer servicing and processing platforms, forms of customer communications for consumers in delinquent status, payment-processing expenses associated with programs for late payers, and costs associated with supporting collection activities such as human resources, risk management, and legal may not be reported.
Several industry trade associations asserted that the CFPB's analysis of this line item from the Y-14 data incorrectly excludes attributable expenses and overhead, including systems expenses and risk department expenses related to consumer credit card accounts. These
Another industry trade association asserted that the Y-14 total collection cost line item on which the CFPB relied is not a sufficiently uniform or defined data set for purposes of assessing card issuer collection costs associated with late payments, due to variations in the way that the largest banks report their data. Specifically, this commenter asserted that Y-14 data are reported for stress-testing purposes, and as a result, institutions may not report it in a uniform way because for stress-testing purposes, it is less important whether an institution reports a particular cost in this line item or in another line item for costs, so long as the institution reports that particular cost in some way in the reporting forms overall. According to this commenter, some banks include certain overhead and fixed costs such as real estate and information technology (IT) in the total collection cost line item, while others do not. This commenter further asserted that the share of total collection costs across an institution's divisions may result in variation of how they report the Y-14 collection cost line item. In addition, this commenter asserted that not all reporting banks include commissions paid to third party collections agencies after a loan is charged off, which could mean that the reported amount is underinclusive.
This same industry trade association commenter also asserted that the Y-14 data on late fee income may be overstated. This commenter asserted that the Y-14 item for late fee income is the sum of fees assessed during the month minus fee reversals and refunds applied during the month (which included reversals due to charge off). According to this commenter, however, in accordance with banks' loss mitigation practices, each month some delinquent accounts may be modified through re-aging or converted into fixed payment plans, while others may be closed in a debt settlement, without explicit reversal of late fees but with concessions to the borrower. This commenter asserted that these implicit reversals of fee income are not captured in the Y-14 item for net fees assessed for some issuers, which therefore may overstate those issuers' realized late fee income.
Although several commenters stated that there were potential variations in the Y-14 data, the CFPB has determined that such data are relevant and an important source of information on total collection costs and late fee income. As discussed below, the CFPB notes that the Y-14 data contains 10 years of data that is collected directly from certain Larger Card Issuers by the Board, using its supervisory powers, and these issuers accounted for just under 70 percent of outstanding balances on U.S. consumer credit cards as of year-end 2022. The Y-14 dataset contains data fields that are clearly worded to collect data relevant to this rulemaking, such as late fee income and collection expenses. The CFPB notes that many of the studies cited by industry commenters, and discussed in the section-by-section analysis of § 1026.52(b)(1)(ii) in part VII, used smaller subsets of the Y-14 data or notably similar precursors for their analysis related to late fees and late payments. The CFPB recognizes that there may be some potential variation in the Y-14 data collected based on the variation of inputs from card issuers, but as discussed below, the CFPB has determined that some variations in the costs that issuers' consider to be collection costs are consistent with the cost analysis provisions in § 1026.52(b)(1)(i) and are not likely to impact the analysis related to the $8 late fee safe harbor threshold for Larger Card Issuers set forth in the section-by-section analysis of § 1026.52(b)(2)(ii).
With respect to the argument that some issuers may exclude post-charge off amounts from the total collection costs line item, the plain definition provided by the Board for such data contains no such exclusion. The total collection costs line item instructs issuers to report “costs incurred to collect problem credits that include the
In addition, as explained in the 2023 Proposal and above, this total collection costs line-item requests cost data that are generally consistent with the collection costs that may appropriately be considered under the cost analysis provisions in § 1026.52(b)(1)(i), except with respect to post-charge-off collection costs.
Current comment 52(b)(1)(i)-6.i provides that for purposes of § 1026.52(b)(1)(i), the costs incurred by a card issuer as a result of late payments include the costs associated with the collection of late payments, such as the costs associated with notifying consumers of delinquencies and resolving delinquencies (including the establishment of workout and temporary hardship arrangements). The Y-14 total collection costs line item, therefore, provides a source of data that enables the CFPB to examine more than a decade of late fee collection cost information that is relevant to the rule.
The one difference in the data, as discussed in the CFPB's 2023 Proposal, is that the Board's Y-14 late fee cost information includes post-charge off collection costs. As a result, and as described in detail in the proposal, the CFPB used a ratio based on debt collection agreements to appropriately limit the total collection costs to pre-charge off collection costs. With respect to the one comment that some issuers may not include commissions paid to third party collections agencies after a loan is charged off when reporting total collection costs in the Y-14 data, the CFPB recognizes that some issuers may not report post-charge-off costs but would expect that these issuers are outliers since the plain language of the instruction for the Y-14 data asks for total collection costs, which would cover both pre-charge-off and post-charge-off collection costs. In addition, the comments do not suggest that most card issuers exclude post-collection costs from the Y-14 data. As such, the CFPB has determined that it is appropriate to exclude the estimated ratio of post-charge-off collection costs from the Y-14 data for total collection costs when setting the safe harbor amount to be consistent with the collection costs that may be considered for purposes of the cost analysis provisions in § 1026.52(b)(1)(i).
The CFPB also recognizes that there may be some variation in the particular costs that issuers report in the Y-14 total collection costs line item with respect to late payments. For example, several trade association commenters indicated that some banks include certain overhead and fixed costs such as real estate and IT in the total collection cost line item, while others do not. Nonetheless, the CFPB has determined that these variations do not undermine the reliance on this data field to help the CFPB determine total collection costs related to late payments, particularly given that the total collection costs line
The CFPB notes that the cost analysis provisions in § 1026.52(b)(1)(i) also would involve a certain amount of variability from issuer to issuer in terms of which costs the issuer determines are related to collecting late payments for purposes of determining late fees amounts. As a general matter, if a card issuer is using the cost analysis provisions § 1026.52(b)(1)(i), the card issuer has the responsibility to determine whether certain costs it incurs relate to the collection of late payments based on all relevant facts and circumstances, within the framework set forth in § 1026.52(b)(1)(i) and related commentary. For example, while not all overhead costs would be costs of collecting late payment, some overhead costs may be incurred as a result of collecting late payments, depending on all the relevant facts and circumstances. A card issuer, however, must be able to demonstrate to the regulator responsible for enforcing compliance with TILA and Regulation Z that its determination is consistent with § 1026.52(b)(1)(i) and related commentary.
With respect to the late fee income reported in the Y-14 data, some industry commenters suggest that the reported late fee income may be overinclusive because it includes late fees where there has not been an explicit reversal of late fees, yet there have been concessions to the borrower as a result of delinquent accounts being modified through re-aging or converted into fixed payment plans or closed in a debt settlement. Although there may be instances where the late fees are waived, subject to a concession, or otherwise removed or reduced, the CFPB has determined that some overinclusion based on fee waivers would not significantly impact the ratio of pre-charge-off collection costs to late fee income discussed in the section-by-section analysis of § 1026.52(b)(1)(ii).
Further, in response to the commenter, the CFPB also notes the fact that certain fees may be waived is generally consistent with the fact that the cost analysis provisions only permit certain uncollected fees to be considered under § 1026.52(b)(1)(i). Specifically, comment 52(b)(1)(i)-5 provides that for purposes of § 1026.52(b)(1)(i), a card issuer may consider fees that it is unable to collect when determining the appropriate fee amount under the cost analysis provisions. Fees that the card issuer is unable to collect include fees imposed on accounts that have been charged off by the card issuer, fees that have been discharged in bankruptcy, and fees that the card issuer is required to waive in order to comply with a legal requirement (such as a requirement imposed by 12 CFR part 1026 or 50 U.S.C. app. 527). However, fees that the card issuer chooses not to impose or chooses not to collect (such as fees the card issuer chooses to waive at the request of the consumer or under a workout or temporary hardship arrangement) are not relevant for purposes of determining the late fee amount under the cost analysis provisions.
The CFPB also notes that it has repeatedly provided opportunities for issuers to provide specific data about their late fees, including in an ANPR, and it has carefully considered all such data that were provided, in addition to seeking out and considering additional data on its own. The Y-14 data provide the best means for the CFPB to examine relevant collections costs and late fee income data in order to determine what costs are incurred and to guide its determination of an appropriate safe harbor threshold for late fees, except with respect to Smaller Card Issuers, as discussed in part VI below. The CFPB is not using the Y-14 collection costs and late fee income data to cap the late fee amounts that issuers can charge. If the $8 safe harbor amount adopted as part of this final rule for those issuers that are subject to this safe harbor amount is not sufficient to cover a particular card issuer's pre-charge-off costs in collecting late payments, the card issuer can charge a higher amount consistent with the cost analysis provisions in § 1026.52(b)(1)(i) and the requirements in § 1026.52(b)(2). In other words, to the extent that an issuer has higher costs and determines the safe harbor amount is too low based on its own cost analysis calculation, that issuer may charge a higher late fee. The Y-14 data, therefore, are not used to create a limit on fees, but rather to ensure that the CFPB's discretionary safe harbor is appropriate and consistent with the statutory requirement that is intended to limit fees to those that are “reasonable and proportional” to the late payment.
Thus, for the reasons discussed above, the CFPB has determined that it is appropriate to use the Y-14 data for total collection costs and late fee income in this final rule to estimate (1) the collection costs that the Y-14 issuers incur in collecting late payments and the late fee income they collect for purposes of guiding the CFPB in determining an appropriate safe harbor threshold amount for late fees charged by Larger Card Issuers; and (2) how collection costs for Larger Card Issuers change over time in relation to changes in the CPI.
As discussed in part VI below, many smaller issuers and industry trade associations, several individual consumers on behalf of credit unions, one Member of Congress, and the Office of Advocacy, an independent office within the SBA, expressed concern that the CFPB's analysis of pre-charge-off costs from the Y-14 issuers does not accurately represent the collection costs for late payments of smaller issuers. These comments are discussed in more detail in part VI.
Consistent with the 2023 Proposal, the CFPB considered four primary data sources in developing this final rule: (1) Y-14; (2) Y-14+; (3) credit card debt collection data received from an information order made pursuant to section 1022(c)(4) of the CFPA; and (4)
For the reasons discussed above, the CFPB has determined that it is appropriate to consider the Y-14 data as one basis for adopting the changes to Regulation Z contained in this final rule. Prior to issuing the 2023 Proposal, the Y-14 data received by the CFPB covered the period from the middle of 2012 through September 2022 and are provided by certain Larger Card Issuers that are covered by the $8 amount. These issuers accounted for just under 70 percent of outstanding balances on U.S. consumer credit cards as of year-end 2022. Consistent with the 2023 Proposal, with respect to credit card data, in this final rule, the CFPB generally uses the complete portfolio data (including late fee income and collection costs) for all the card issuers included in the data collection. The CFPB also generally uses only a random 40 percent subsample of account information (including late fee amounts and total required payments) reported by card issuers included in the data collection. Consistent with the 2023 Proposal, the CFPB for this final rule only considered account- and portfolio-level data for issuers in a given month for consumer general purpose and private label credit cards for which there existed non-zero data on late fee income, collection costs, late fee amounts, and total required payments in the Y-14 data.
For this final rule, the CFPB relied upon the data in the proposal for its analysis. After issuing the 2023 Proposal, the CFPB received 14 more months of data for the Y-14 issuers (account-level data through November 2023, portfolio data up to August 2023). These additional data did not change the CFPB's original findings or rationale as set forth in 2023 Proposal. Because the data are relevant, however, the CFPB has determined that it is appropriate to explain how those new data supplement and support its original data and analysis. The CFPB's use of the Y-14 data (including the supplemental data received after the 2023 Proposal was issued) is discussed in more detail in part VII.
In addition, for the reasons discussed above, and consistent with the 2023 Proposal, the CFPB has determined that it is appropriate to subtract an estimate of the post-charge-off collection costs from the total collection costs Y-14 data. Consistent with the 2023 Proposal, for this final rule, the CFPB used commissions paid to third-party debt collectors for charged-off accounts to estimate the percentage of collection costs that may occur after charge-off. The CFPB understands that such commission payments, made to third-party debt collection companies, would be made almost exclusively in connection with accounts that have been charged off, and represent a conservative estimate of post-charge-off collection costs, as there may be other costs associated with collections post-charge-off beyond such commission payments. Consistent with the 2023 Proposal, the CFPB's methodology for estimating post-charge-off commissions considered the amount of charged-off balances and then estimated the commission on the volume of recovered balances by using the recovery and commission rates.
As discussed above, for the 2023 Proposal, the CFPB estimated from debt collection reports the commission expenses that six major card issuers paid in 2019 and 2020 and based on those data, the CFPB estimated that these post-charge-off costs are around 25 percent of total collection costs for these issuers. Based on those data, for the 2023 Proposal, the CFPB estimated that pre-charge-off collection costs were equal to 75 percent of the collection costs included in the Y-14 data for purposes of its analysis related to the proposed changes to the safe harbor thresholds for late fees in § 1026.52(b)(1)(ii).
For this final rule, the CFPB relied upon the data in the proposal for its analysis. In addition, after the Proposal's release—as part of the CFPB's 1022(b)(2) market gathering for purposes of its CARD Market Report—the CFPB also obtained updated data for 2021 and 2022 related to commission expenses that the CFPB collected for its most recent biennial review of the consumer credit card market released in October 2023. These additional data did not change the CFPB's original findings or rationale. Because the data are relevant, however, the CFPB has determined it is appropriate to explain how those new data supplement and support its original data and analysis. Based on commission expenses that six major card issuers paid in 2021 and 2022 to third-party debt collectors for charged-off accounts, the CFPB estimated that these post-charge-off costs are around 20 percent of total collection costs for these issuers; the average ratio was 20 percent in 2021 and 21 percent in 2022. In 2021, the median ratio of estimated post-charge-off commission costs to annual collection costs for the six major issuers surveyed was 19.0 percent; in 2022, it was 23.7 percent. Thus, for 2021 and 2022, the CFPB estimated that pre-charge-off collection costs were equal to 80 percent of the collection costs. These new data indicate pre-charge-off collection costs in 2021 and 2022 that were similar, though slightly higher than in the proposal and, therefore, supplemented and supported the CFPB's data and analysis. Both the estimates of pre-charge-off collection costs for Y-14 issuers used in the 2023 Proposal (based on the 75 percent estimate) and developed using the supplemental information (based on the 80 percent estimate) are discussed in more detail in the section-by-section analysis of § 1026.52(b)(1)(ii) for purposes of its analysis related to the final changes to the safe harbor thresholds for late fees for Larger Card Issuers.
Consistent with the 2023 Proposal, the CFPB also considered Y-14+ data in developing this final rule. As noted above, the Y-14+ data include confidential information from the Board's Y-14 data and a diverse group of specialized issuers. In the 2023 Proposal, these additional data that included specialized issuers were used to calculate the average late fee charged by Y-14+ issuers in 2019 and 2020. As explained in the proposal, in 2019 and 2020, the average late fee charged by issuers in the Y-14+ data was $31. The updated data from the Y-14+ issuers further support this original analysis because, based on the CFPB calculations, they show that the average late fee charged by those issuers was $31 in 2021 and $32 in 2022.
In addition, after issuing the 2023 Proposal, the CFPB obtained confidential total collection costs and late fee income data from specialized issuers that are included in the Y-14+ data. In particular, the CFPB requested from these issuers' data for total
The average late fees charged by the Y-14+ issuers in 2020 and 2022 and the data on total collections costs and late fee income from the specialized issuers in the Y-14+ are discussed in more detail in the section-by-section analysis of § 1026.52(b)(1)(ii).
As noted above, in the 2023 Proposal, the CFPB discussed a 2022 review conducted by the CFPB of credit card agreements submitted to the CFPB's Credit Card Agreement Database in the fourth quarter of 2020 to determine the maximum late fee amount charged across agreements by issuers submitting to that database. Since the 2023 Proposal was issued, the CFPB in 2023 conducted a subsequent review of agreements submitted to that database as of the second quarter of 2023 to determine the maximum late fee amount charged across agreements by issuers submitting to that database.
These additional data did not change the CFPB's original findings or rationale. Because the data are relevant, however, the CFPB has determined it is appropriate to explain how those new data supplement and support its original data and analysis. As discussed in part II.E, the results of the 2023 survey of agreements to determine the maximum late fee amount charged across agreements by issuers submitting to that database are consistent with the results of the 2022 survey of agreements with respect to the maximum late fee amount charged across agreements by issuers submitting to that database. The data from the 2022 review of agreements and the 2023 review of agreements are discussed in more detail in part II.E and the section-by-section analysis of § 1026.52(b)(1)(ii).
The 2023 Proposal would have applied the revisions in the proposal to all card issuers of credit card accounts under an open-end (not home-secured) consumer credit plan. Specifically, the 2023 Proposal would have applied the following proposed revisions to all issuers of such accounts: (1) the $8 late fee safe harbor threshold and the elimination of the higher late fee safe harbor amount for subsequent violations; (2) the elimination of the annual adjustments for the proposed $8 safe harbor threshold, (3) the restriction on late fee amounts to 25 percent of the required minimum payment; and (4) the clarification in comment 52(b)(1)(i)-2.i that the collection costs to calculate penalty fees under the cost analysis provisions does not include post-charge-off collection costs.
With respect to proposed revisions to the late fee safe harbor amounts, in the 2023 Proposal, the CFPB recognized its estimates of pre-charge-off collection costs incurred by card issuers were based on late fee income and collection cost data from larger issuers that report to the Y-14 collection, as well as data from some additional Y-14+ issuers. The CFPB did not have data equivalent to the Y-14 data for smaller issuers' pre-charge-off collection costs, but the CFPB stated that it had no reason to expect that smaller issuers would have substantially higher pre-charge-off collection costs than larger issuers. Based on a 2022 review of about 2,500 credit card agreements from over 500 card issuers (as discussed in part II.E), the CFPB also noted that smaller issuers appeared to charge lower late fee amounts, and therefore, any reduction in late fee amounts would have a proportionately smaller impact on their late fee income. Specifically, in the 2023 Proposal, the CFPB noted that (1) in 2020, the average late fee charged by larger issuers included in the Y-14+ data was $31;
For the reasons discussed below, including the CFPB's review of the comment letters about collection costs, as well as the CFPB's concerns about impact on consumers and competition, the CFPB is not adopting at this time certain proposed changes for Smaller Card Issuers as defined in new § 1026.52(b)(3). The term “Smaller Card Issuer” is defined to mean a card issuer that together with its affiliates had fewer than one million open credit card accounts as defined in § 1026.58(b)(6) for the entire preceding calendar year.
For these Smaller Card Issuers, the safe harbor thresholds in § 1026.52(b)(1)(ii)(A) through (C) will continue to apply to late fees that they charge (as revised in this final rule pursuant to the annual adjustment provisions in § 1026.52(b)(1)(ii)(D)). In addition, the annual adjustment provisions for the safe harbor dollar amount thresholds to reflect changes in the CPI in § 1026.52(b)(1)(ii)(D) will continue to apply to late fees imposed by Smaller Card Issuers. Also, as discussed in the section-by-section analysis of § 1026.52(b)(2)(i), the proposed provisions to restrict late fee amounts to 25 percent of the required minimum payment are not being finalized in this final rule with respect to any card issuers, including Smaller Card Issuers. In contrast, the clarification in comment 52(b)(1)(i)-2.i that the collection costs for calculating penalty fee amounts under the cost analysis provisions in § 1026.52(b)(1)(i) do not include post-charge-off collection costs is being adopted for all card issuers, including Smaller Card Issuers, because this provision is intended to
Many credit unions and individuals on behalf of credit unions and one industry credit union trade association commenter asserted that (1) credit union call report data indicate that credit card late fees incurred per member per year are only $2.65; (2) annual total pre-charge-off collection costs per credit card account offered by credit unions amounted to $0.33, which is 10 cents higher than the pre-charge-off collection costs per credit card account for large issuers that the CFPB notes in the proposal; (3) and the ratio of monthly late fees to total pre-charge-off costs for the credit union industry is 2.8, compared to 5.7 for large issuers in 2022. These commenters also asserted that credit unions (1) have much lower fee-to-cost ratios than big card issuers because credit unions are not-for-profit, community focused, relationship-oriented financial institutions; and (2) face higher pre-charge-off collection costs as compared to big banks that can achieve economies of scale based on their numbers of customers and employees.
Many credit unions and individuals on behalf of credit unions and three industry trade association commenters asserted that Federal credit unions did not have the same options as larger issuers to recover potential lost revenue from late fees, and this could impact their ability to offer credit cards to consumers. Specifically, these commenters explained that Federal Credit Union Act limits Federal credit unions' ability to increase APRs in order to recover revenue losses resulting from a lower late fee safe harbor amount. Two of these industry trade associations indicated that National Credit Union Administration (NCUA) Board's action in January 2023 regarding the Federal Credit Union Act currently imposes a cap of 18.0 percent on the APR.
Many credit unions and individuals on behalf of credit unions and one industry credit union trade association commenter asserted that credit unions already offer some of the lowest late fees in the market, which benefits consumers. One of the credit union commenters asserted that its net earnings are returned to members in the form of higher annual percentage yields (APYs), lower APRs, and greater servicing.
More than fifty individual commenters on behalf of credit unions asserted that the proposal, if adopted, would have potentially massive unintended consequences, including that some credit unions would leave the market. They asserted that this, in turn, could limit credit availability and increase industry consolidation, and would restrict credit unions' ability to offer solutions to consumers experiencing real financial hardship. A bank and a community bank trade association commenter expressed similar comments and indicated that the 2023 Proposal, if adopted, ultimately would force many community banks to exit the credit card market, leaving consumers, and in particular, rural consumers, fewer options for financial services.
A credit union trade association commenter asserted that the 2023 Proposal, if adopted, would (1) make it more difficult for credit unions to balance safety and soundness considerations with the desire to provide credit access to all consumers, especially those building or rebuilding their credit; and (2) further consolidate credit card issuers, strengthening the largest providers that may compensate lower late payment fees with product add-ons and other practices that are not consumer friendly. This commenter also asserted that (1) use of the cost-analysis provisions are not feasible for credit unions; (2) while the risk of operating outside of the safe harbor provision is common for the largest credit card issuers with large legal departments, not-for-profit credit unions are in a different position; (3) even when the fee is reasonable, it would be a safety and soundness concern to charge more than $8 as the risk of class action lawsuits continues to grow; (4) defending a reasonable fee through litigation is cost prohibitive for a not-for-profit financial institution and could severely impact their operations; and (5) while the safe harbor late fee amount proposed would not be a legal cap it may become an effective cap for credit unions, once again only benefiting the largest credit card issuers.
Many credit unions and individuals on behalf of credit unions urged the CFPB to exempt credit unions from its rulemaking as credit unions do not profit from any fees assessed to their members and the data are clear that credit unions already offer some of the lowest fees available in the market. Some of these commenters indicated that if the CFPB is hesitant to exempt just a particular type of financial institution, in light of the considerable impact that the 2023 Proposal is likely to have on small entities, the CFPB should consider a broader exemption for small entities, currently defined by the SBA's size standard of $850 million in total assets. These commenters asserted this would allow smaller entities to continue to maintain their ability to cover the costs of offering credit card accounts and remain competitive in the marketplace. An industry credit union trade association commenter asserted that one possible way to negate the impact of the 2023 Proposal on credit unions is to scale the rule for larger and smaller issuers.
One Member of Congress noted from the Congressional Research Service that smaller issuers sometimes serve more subprime cardholders who are more likely to make late payments which therefore implies that certain smaller issuers would face higher than average collection costs from late payments. The commenter noted that although the CFPB's proposal asserts that credit cards represent only a small percentage of credit unions' assets and revenues, the loss of late fee revenue would represent a distinct impact on credit unions because as nonprofits, they are unable to raise funds from stockholders. This commenter advised that the CFPB either work to ensure that the cost analysis provisions—an alternative to the safe harbor—would not impose undue burdens on small issuers or that the CFPB consider a separate safe harbor for
The Office of Advocacy, an independent office within the SBA, criticized the CFPB for insufficiently considering the extent to which the proposed $8 safe harbor amount would cover the collection costs of smaller issuers. This agency asserted that (1) determining a late fee amount under the cost analysis provisions may not be feasible for smaller institutions; (2) small institutions may not have ready access to professional staff or consultants to develop a late fee that qualifies under the cost analysis provisions, and also may lack the information systems to provide the necessary support to determine the late fee amount under those provisions; and (3) for that reason, smaller institutions may rely on safe harbors to be certain that they are complying with the law. As such, this agency noted that an adequate safe harbor amount that reflects the costs that small entities incur in processing late payments is necessary to prevent small institutions from incurring potential legal fees if they were to use the incorrect late fee amount under the cost analysis provisions. The commenter further asserted that consumers, including small businesses, may choose to obtain their credit cards from small depository institutions that offer credit cards for a variety of reasons, including the ability of consumers with low credit scores to obtain a credit card that may otherwise be unavailable. The commenter also expressed concern that if the safe harbor amount does not cover the costs of providing the service, small depository institutions may decide to stop issuing credit cards.
For the reasons discussed below, the CFPB is not adopting at this time the following proposed changes for Smaller Card Issuers that are defined in § 1026.52(b)(3) as a card issuer that together with its affiliates had fewer than one million “open credit card accounts” as defined in § 1026.58(b)(6) for the entire preceding calendar year:
The CFPB also explains below that the limit to qualify as a Smaller Card Issuers is set at one million open credit card accounts. The CFPB has determined that a one million open credit card account limit for this final rule is appropriate because comment letters have highlighted several concerns specific to these Smaller Card Issuers. The CFPB has determined that, based on comment letters from smaller issuers, the 2023 Proposal's late fee $8 safe harbor threshold would have impacted Smaller Card Issuers more significantly than Larger Card Issuers, and that Smaller Card Issuers might not have been as capable of responding by using the cost analysis provisions to cover their pre-charge-off collection costs related to late payments. Taken together, this result could harm consumers and the credit card market as a whole.
The CFPB has determined to act cautiously and ensure that all card issuers, large and small, can at least cover pre-charge-off collection costs with their late fees. If Smaller Card Issuers have higher pre-charge-off collections costs than Larger Card Issuers, Smaller Card Issuers may need to rely on the cost analysis provisions in § 1026.52(b)(1)(i) to cover their pre-charge-off collection costs, resulting in heightened compliance burden for issuers with less assets to cover them. Alternatively, Smaller Card Issuers may choose to forgo those compliance burdens by using the safe harbor threshold amount even if it does not cover their pre-charge-off collection costs rather than use the cost analysis provisions in § 1026.52(b)(1)(i). The CFPB anticipates that under this final rule Larger Card Issuers generally will recoup their applicable pre-charge-off collection costs using late fees, either using the safe harbor (which is more likely to be enough for the average Larger Card Issuer) or using the cost-analysis provisions (the compliance
Smaller Card Issuer commenters indicated that if the 2023 Proposal were adopted, they might leave the market or cease offering credit cards to certain consumers, particularly those with lower credit scores. It is unclear to the CFPB whether Smaller Card Issuers would actually leave the market entirely because they could not cover their pre-charge-off collection costs through the proposed $8 late fee safe harbor threshold. However, if they did, the CFPB is concerned about the potential detriment of these actions to consumers. Based on comments, the CFPB recognizes that consumers may choose to obtain their credit cards from small depository institutions that offer credit cards for a variety of reasons, including the access to credit cards issued by small credit unions with substantially lower annual percentage rates
Based on its review of comment letters, data from the proposal, and market expertise, the CFPB has determined that the appropriate definition of “Smaller Card Issuer” is issuers that together with their affiliates had fewer than one million open credit card accounts for the entire preceding calendar year.
The new safe harbor limit for Larger Card Issuers, which covers issuers that together with their affiliates have one million or more open credit card accounts, is consistent with the Y-14 data used in the CFPB's proposal to determine pre-charge off collection costs, as it would cover the Y-14 issuers for which the CFPB had total collections and late fee revenue data prior to the 2023 Proposal, the specialized issuers in the Y-14+ for which the CFPB obtained total collections and late fee revenue data after issuing the 2023 Proposal, and about a dozen other similarly sized issuers with large credit card portfolios. In choosing this threshold, the CFPB has determined it is appropriate to limit the rule at this time to the larger issuers that either submitted data to or had economies of scale similar to those issuers that provided Y-14 and Y-14+ data because those data support the CFPB's conclusion that the 2010 Final Rule's safe harbor amounts as to those Larger Card Issuers were not reasonable and proportional to the costs of the omission or violation, as required by the statute. For similar reasons and administrability, the CFPB has determined that it is appropriate at this time to only eliminate the annual adjustment provisions in § 1026.52(b)(1)(ii)(D) to the late fees charged by Larger Card Issuers. As discussed in the section-by-section analysis of § 1026.52(b)(1)(ii)(D), the data the CFPB uses to compare collections costs to changes in the CPI relate to certain Larger Card Issuers (namely, the Y-14 issuers).
The CFPB recognizes that the new $8 safe harbor amount will apply to about one dozen issuers for which the CFPB does not have total collections data and late fee revenue data. Based on the CFPB's market expertise and analysis of comment letters, the CFPB has determined that it is appropriate to apply this new safe harbor amount to those issuers because they have substantial credit card portfolios and, therefore, the CFPB expects they will have economies of scale similar to the Y-14+ issuers in collecting late payments and the resources to use the cost analysis provisions in § 1026.52(b)(1)(i) to determine the late fee if the $8 safe harbor threshold amount fails to cover pre-charge off collections costs.
The CFPB has determined that basing the limitation on the number of open credit card accounts, rather than total asset size for the institution or bank holding company (such as the $100 billion threshold for inclusion in the Y-14 data), or on the amount of credit card outstanding balances held by the issuer, better captures card issuers with larger credit card portfolios that may have similar economies of scale to the Y-14 issuers but may not meet a threshold based on total asset size or outstanding balances. The CFPB recognizes that some banks or credit unions with smaller total assets than Y-14 issuers, nonetheless, still may have significant credit card portfolios and would benefit from economies of scales of larger card operations with the resources to reasonably use the cost analysis provisions in § 1026.52(b)(1)(i) to determine the late fee if the $8 safe harbor threshold amount fails to cover pre-charge off collections costs, even without other lines of business that could provide additional assets. The CFPB also notes that its focus on the number of open credit card accounts as opposed to total asset size or the amount of credit card outstanding balances for purposes of this final rule is consistent with the CFPB's focus on an issuers' number of open credit card accounts for purposes of an exception to obligations of issuers to submit credit card agreements to the CFPB under § 1026.58.
Section 1026.7(b) sets forth the disclosure requirements for periodic statements that apply to open-end (not home-secured) plans. Section 1026.7(b)(11) generally requires that for a credit card account under an open-end (not home-secured) consumer credit plan, a card issuer must provide on each periodic statement: (1) the due date for a payment and the due date must be the same day of the month for each billing cycle; and (2) the amount of any late payment fee and any increased periodic rate(s) (expressed as APRs) that may be imposed on the account as a result of a late payment.
Currently, comment 7(b)(11)-4 provides that for purposes of disclosing the amount of any late payment fee and any increased APR that may be imposed on the account as a result of a late payment under § 1026.7(b)(11), a card issuer that imposes a range of late payment fees or rates on a credit card account under an open-end (not home-secured) consumer credit plan may state the highest fee or rate along with an indication lower fees or rates could be imposed. Current comment 7(b)(11)-4 also provides an example to illustrate how a card issuer may meet the
The 2023 Proposal would have amended comment 7(b)(11)-4 to read “up to $8” so that the late fee amount in the example would be consistent with the proposed $8 late fee safe harbor amount set forth in proposed § 1026.52(b)(1)(ii).
The CFPB received no comments on the proposed revisions to comment 7(b)(11)-4. This final rule adopts comment 7(b)(11)-4 as proposed. Even though Smaller Card Issuers as defined in new § 1026.52(b)(3) are not subject to the new $8 late fee safe harbor threshold amount adopted in § 1026.52(b)(1)(ii) in this final rule, the CFPB has determined it is useful to revise the late fee amount in the example to be $8, consistent with the new $8 late fee safe harbor threshold amount that applies to Larger Card Issuers.
Section 1026.52(a)(1) generally provides that the total amount of fees a consumer is required to pay with respect to a credit card account under an open-end (not home-secured) consumer credit plan during the first year after account opening must not exceed 25 percent of the credit limit in effect when the account is opened. Section 1026.52(a)(2) provides that late payment fees, over-the-limit fees, and returned-payment fees; or other fees that the consumer is not required to pay with respect to the account are excluded from the fee limitation set forth in § 1026.52(a)(1).
Current comment 52(a)(1)-1 provides that the 25 percent limit in § 1026.52(a)(1) applies to fees that the card issuer charges to the account as well as to fees that the card issuer requires the consumer to pay with respect to the account through other means (such as through a payment from the consumer's asset account to the card issuer or from another credit account provided by the card issuer). Current comment 52(a)(1)-1 also provides four examples to illustrate the provision set forth above. The two examples in current comment 52(a)(1)-1.i and iv contain late fee amounts of $15.
The 2023 Proposal would have amended the two examples in comment 52(a)(1)-1.i and iv to use a late fee amount of $8, so that the late fee amounts in the examples would be consistent with the proposed $8 late fee safe harbor amount set forth in proposed § 1026.52(b)(1)(ii).
The CFPB received no comments on the proposed revisions to comment 52(a)(1)-1.i and iv. This final rule adopts comment 52(a)(1)-1.i and iv substantially as proposed, with minor changes to make clear that the card issuer in the examples is not a Smaller Card Issuer as defined in § 1026.52(b)(3). Even though Smaller Card Issuers as defined in new § 1026.52(b)(3) are not subject to the new $8 late fee safe harbor threshold adopted in § 1026.52(b)(1)(ii) in this final rule, the CFPB has determined it is useful to revise the late fee amounts in the examples to be $8, consistent with the new $8 late fee safe harbor threshold amount that applies to Larger Card Issuers. This final rule also makes technical changes to cross references in comments 52(a)(1)-2 and 52(a)(1)-4.ii.C to conform to OFR style requirements.
Section 1026.52(b) provides that a card issuer must not impose a fee for violating the terms or other requirements of a credit card account under an open-end (not home-secured) consumer credit plan unless the issuer has determined that the dollar amount of the fee represents a reasonable proportion of the total costs incurred by the issuer for that type of violation as set forth in the cost analysis provisions in § 1026.52(b)(1)(i) or complies with the safe harbor provisions set forth in § 1026.52(b)(1)(ii). It further provides that a card issuer must not impose such a fee unless the fee is consistent with certain prohibitions set forth in § 1026.52(b)(2), including a prohibition in § 1026.52(b)(2)(i)(A) on imposing a penalty fee that exceeds the dollar amount associated with the violation, which currently prohibits late fees that exceed 100 percent of the required minimum payment.
In the 2023 Proposal, the CFPB proposed to amend § 1026.52(b)(1)(ii) to lower the safe harbor dollar amount for late fees to $8 (currently set at $30) and to provide that the higher safe harbor dollar amount for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles (currently set at $41) does not apply to late fees.
In addition, as discussed in more detail below, the CFPB proposed to provide that the current provision in § 1026.52(b)(1)(ii)(D) that provides for annual adjustments for the safe harbor dollar amounts to reflect changes in the CPI would not apply to the safe harbor amount for late fees. Also, as discussed in the section-by-section analysis of § 1026.52(b)(2)(i) below, the CFPB proposed to amend § 1026.52(b)(2)(i)(A) to provide that late fee amounts may not exceed 25 percent of the required minimum payment.
The CFPB also proposed one clarification that would apply to penalty fees generally. Specifically, the CFPB proposed to amend comment 52(b)(1)(i)-2.i to make it explicitly clear that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions.
The CFPB did not propose to amend the lead-in text of § 1026.52(b)(1). However, for consistency with the proposed amendments to other provisions in § 1026.52(b) and for clarity, the CFPB proposed certain amendments to the commentary to § 1026.52(b) introductory text and (b)(1). Specifically, the CFPB proposed to amend comment 52(b)-1.i.A to make it explicitly clear that a late payment fee or late fee is any fee imposed for a late payment and to include a cross-reference to § 1026.60(b)(9) and accompanying commentary for further guidance. The CFPB also proposed to amend comment 52(b)-2, which provides an illustrative example of how to round a penalty fee to the nearest whole dollar in compliance with the rule. The proposed amendments would have reduced the dollar amounts of late fees in the example to reflect amounts that would be permissible under the CFPB's proposals to lower the late fee safe harbor amount to $8 and to cap late
The CFPB also proposed to amend comments 52(b)(1)-1.i.B and C, which illustrate the relationship between the cost analysis provisions in § 1026.52(b)(1)(i) and the safe harbor provisions in § 1026.52(b)(1)(ii). Specifically, the CFPB proposed to amend the illustrative example in comment 52(b)(1)-1.i.B to reflect a late fee amount consistent with the proposal. In addition, because the CFPB proposed to substantially amend the safe harbor provisions for late fees, the CFPB proposed to remove references to late fees from the illustrative examples in comment 52(b)(1)-1.i.C and replace them with references to over-the-limit fees.
In addition, the CFPB proposed to amend comment 52(b)(1)-1.ii, which illustrates the relationship between the penalty fee limitations in § 1026.52(b)(1) and the prohibitions in § 1026.52(b)(2). The proposed amendments would have reduced the dollar amount of a late fee in the example to reflect an amount that would be consistent with the CFPB's proposal to lower the late fee safe harbor amount.
The CFPB solicited comment on all aspects of these proposed amendments to the commentary to § 1026.52(b) introductory text and (b)(1), including comment on what additional amendments may be needed to help ensure clarity and compliance certainty.
The CFPB received no comments on the proposed clarifications of the commentary to § 1026.52(b) introductory text and (b)(1). For purposes of clarity and compliance certainty, this final rule adopts amendments to the commentary to § 1026.52(b) introductory text and (b)(1) substantially as proposed, with minor changes reflecting the CFPB's decision not to finalize the new $8 late fee safe harbor amount for Smaller Card Issuers as defined in new § 1026.52(b)(3) or to restrict late fee amounts to 25 percent of the required minimum payment. Accordingly, consistent with the proposal, comment 52(b)-1.i.A is revised to clarify that a late payment fee or late fee is any fee imposed for a late payment and to include a cross-reference to § 1026.60(b)(9) and accompanying commentary for further guidance. The CFPB finds this clarification necessary given the slight variations in terms used to describe late fees in Regulation Z. Also, consistent with the proposal, the illustrative example of rounding the amount of a penalty fee to the nearest dollar in comment 52(b)-2 is revised to lower the late fee amounts to be consistent with the new $8 late fee safe harbor amount for Larger Card Issuers. The CFPB finds that this revision and similar revisions to the commentary discussed below are helpful to facilitate compliance with the new $8 late safe harbor amount for card issuers to which it applies.
Consistent with the proposal, this final rule also adds new comment 52(b)-5 to clarify that any dollar amount examples in the commentary to § 1026.52(b) relating to the safe harbors in § 1026.52(b)(1) are based on the original historical safe-harbor thresholds of $25 and $35 for penalty fees other than late fees, and on the threshold of $8 for late fees. In a minor change from the proposal, the comment also clarifies that the $8 threshold is applicable to card issuers other than Smaller Card Issuers as defined in § 1026.52(b)(3) (namely, Larger Card Issuers as that term is used in this document). This new comment helps to explain why the dollar amounts for penalty fees set forth in the examples in the commentary are different from the ones set forth in the regulatory text in § 1026.52(b)(1)(ii)(A) and (B).
In addition, this final rule amends the illustrative example in comment 52(b)(1)-1.i.B to reflect a late fee amount consistent with the $8 late fee safe harbor amount for Larger Card Issuers. In addition, because the CFPB in this final rule is substantially amending the safe harbor provisions for late fees with respect to Larger Card Issuers, this final rule removes references to late fees from the illustrative examples in comment 52(b)(1)-1.i.C and replaces them with references to over-the-limit fees, the amounts of which remain the same in this final rule for all card issuers. In addition, this final rule reduces the amount of the late fee in the illustrative example in comment 52(b)(1)-1.ii for consistency with the lower $8 late fee safe harbor amount for Larger Card Issuers.
As noted above, under the cost analysis provisions in § 1026.52(b)(1)(i), a card issuer may impose a fee for violating the terms or other requirements of an account consistent with the general rule in § 1026.52(b)(1) if the card issuer has determined that the dollar amount of the fee represents a reasonable proportion of the total costs incurred by the card issuer as a result of that type of violation. Section 1026.52(b)(1)(i) further provides that a card issuer must reevaluate that determination at least once every 12 months and sets forth certain other requirements and conditions that apply if, as a result of the reevaluation, the card issuer determines that either a lower or higher fee represents a reasonable proportion of the total costs incurred by the card issuer as a result of that type of violation.
The CFPB did not propose to amend the text of § 1026.52(b)(1)(i). However, for purposes of clarity and compliance certainty, the CFPB proposed to amend comment 52(b)(1)(i)-2.i to make it explicitly clear that the costs that card issuers can consider for purposes of determining the amount of a penalty fee under the cost analysis provisions in § 1026.52(b)(1)(i) do not include collection costs that are incurred after an account is charged off in accordance with loan-loss provisions.
Comment 52(b)(1)(i)-1 currently provides that card issuers may include in the costs for determining the amount of a penalty fee “the costs incurred . . . as a result of [the] violation.” Comment 52(b)(1)(i)-2 addresses amounts not considered costs incurred by a card issuer as a result of violations of the terms or other requirements of an account for purposes of § 1026.52(b)(1)(i). Comment 52(b)(1)(i)-2.i provides that one such amount that cannot be considered as costs incurred for purposes of § 1026.52(b)(1)(i) are losses and associated costs (including the cost of holding reserves against potential losses and the cost of funding delinquent accounts).
The CFPB proposed to amend comment 52(b)(1)(i)-2.i to make it explicitly clear that the “losses and associated costs” that card issuers may not consider as costs incurred for purposes of § 1026.52(b)(1)(i) include any collection costs that are incurred after an account is charged off in accordance with loan-loss provisions. The CFPB's proposal, therefore, would have made it explicit that for any collection costs that a card issuer incurs
The CFPB solicited comment on this proposed clarification of the commentary to § 1026.52(b)(1)(i), including comment on whether any additional clarification may be needed. The CFPB also solicited comment on whether there are other specific clarifications that should be made to the provisions of the commentary providing guidance on how to perform a cost analysis under the rule.
Many consumer groups in a joint letter, a credit union, and a credit union trade association expressed support for the CFPB's proposal that comment 52(b)(1)(i)-2.i be amended to clarify that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions. The consumer groups indicated that card issuers consider charged off accounts to be a loss, therefore, such accounts should be considered a loan loss. The consumer groups also indicated that card issuers build loss rates into the price of credit (
As discussed below, many industry commenters, including several trade associations, and a few individual commenters expressed concerns with the CFPB's proposal that comment 52(b)(1)(i)-2.i be amended to clarify that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions.
An individual commenter, a law firm representing several card issuers, and an industry trade association characterized charge-off as an accounting concept. These commentors collectively noted that charge-off as an accounting entry is mandated by regulators; this accounting concept was unrelated to collection costs and designed to ensure appropriate financial reporting of credit losses; and has no impact on the collectability or obligation of the debt and the only difference between pre-charge-off and post-charge-off delinquencies is the amount of time the debt has been in delinquent status. Similarly, an individual commenter noted that card issuers do not relinquish its contract rights to collect payment when accounts are charged-off.
A law firm representing several card issuers indicated that costs associated with post-charge-off collection activities are actually more like pre-charge-off collection costs, as opposed to losses, because card issuers cannot recoup those costs from consumers.
A law firm representing several card issuers, an industry trade association and a regulatory advocacy group characterized the distinction between pre-and-post-charge-off collection expenses as arbitrary or arbitrary and capricious. The law firm noted that the CFPB's proposal is arbitrary and capricious because it did not explain why a card issuer writing off costs for its own accounting purposes means that the card issuer has not incurred the cost of collecting these payments.
An industry trade association indicated that the provision the CFPB proposed to amend is currently consistent with the statutory factor that the CFPB be guided by the cost incurred by the creditor from an omission or violation. This commenter explained that in the commentary to Regulation Z, the Board excluded the costs of reserves held against potential losses and costs of funding delinquent amounts from what may be recovered through late fees. This commenter expressed concerns that the CFPB did not explain why the Board appropriately excluded these costs from losses when statutorily guided by the cost incurred by the creditor from an omission or violation.
Another industry trade association indicated that, in addition to the proposal running afoul of the CARD Act, it may also come into conflict with the Due Process and Takings Clauses of the Fifth Amendment as it may deprive card issuers their property rights to return on capital invested.
Another industry trade association suggested that the CFPB should reopen the existing regulation to address conflicts with the CARD Act to the extent that card issuers start using the cost analysis provisions. This commenter specifically suggested that the current regulation is in error because it permits the recovery of a fee that represents a reasonable proportion of the total costs incurred by the card issuer as a result of that type of violation, but those limitations are not found in the statute.
For the reasons stated herein, the CFPB is adopting the amendment to clarify comment 52(b)(1)(i)-2.i as proposed and therefore this amendment applies to both Larger Card Issuers and Smaller Card Issuers. This final rule also makes technical changes to cross references in comments 52(b)(1)(i)-6.ii.B and C, 52(b)(1)(i)-7.ii.B and C, and 52(b)(1)(i)-8.iii.B and C to conform to OFR style requirements.
With respect to the comments that post-charge-off costs are related to the cost of a late fee violation and should not be distinguished from pre-charge-off costs, comment 52(b)(1)(i)-2.i explains that card issuers may not consider “losses and associated costs” as costs incurred for purposes of the cost analysis provisions found in § 1026.52(b)(1)(i) and provides examples of what constitutes losses including the cost of holding reserves against potential losses and the cost of funding delinquent accounts. The Board's 2010 Final Rule does not characterize these specific examples as to what constitutes a “loss” as exhaustive. Instead, these examples were added into comment 52(b)(1)(i)-2.i to address specific comments received in its rulemaking process.
As discussed in the 2023 Proposal, even if “loss” is an accounting term, the purpose of excluding post-charge off costs is to exclude those costs that are not directly linked to the violation of the late payment, and indeed, where in the vast majority of instances, the consumer who pays late may never be subject to post-charge off collection or written off as a loss. As the CFPB explained in the proposal, the costs in collecting amounts owed to a card issuer that are incurred post-charge-off are substantially related to mitigating a loss as opposed to the cost of a violation of the account terms.
With respect to comments that the amendment is not supported by the CARD Act, the Board in its 2010 Final Rule received similar comments including that “ `costs incurred by the creditor from [an] omission or violation' does not expressly exclude losses and that definitions of `cost' typically include `loss.' ”
Further, the Board noted in its 2010 Final Rule that, if losses were included, it could result in obscuring the cost of credit, which was contrary to an express purpose of the CARD Act. As explained in the 2010 Final Rule, “it would be inconsistent with the purpose of the [CARD Act] to permit card issuers to begin recovering losses and associated costs through penalty fees rather than through upfront rates.”
The CFPB notes that issuers have other mechanisms to recover costs associated with post-charge off accounts, like the APR. To that extent, the CFPB acknowledges commenters who provided specific data on financial institutions whose non-interest income like annual fees and late fees are not enough to cover charge-offs. However, as noted above, card issuers use periodic rates to account for losses, and in fact, this is the justification for risk-based pricing that is the norm in the market. Permitting issuers to recover losses, like post-charge-off costs, through late fees is not the intent of the CARD Act; issuers have other means to recover such costs such as through upfront rates.
With respect to comments that certain costs associated with pre-charge-off customer service, commissions, grants, program development, collection strategies, and credit bureau disputes should be considered as collection costs, the purpose of this amendment is not to create an exhaustive list of what card issuers can consider as collection costs but to clarify what is already in the text of the commentary. The CFPB here has determined that there is a need to clarify that for card issuers using the cost analysis provisions in § 1026.52(b)(1)(i) to determine penalty fees post-charge-off collection costs are losses and therefore cannot be used in the analysis.
With respect to comments that excluding post-charge-off collection costs would reduce the funds available for other products and services and that it would hinder the ability to improve mobile and online platforms, the CFPB notes that pursuant to the CARD Act, the amount of any penalty fee, including any late payment fee, must be “reasonable and proportional” to any omission with respect to, or violation of, the cardholder agreement.
In adopting the amendment to comment 52(b)(1)(i)-2.i, the CFPB also rejects the notion raised by commenters that it is in violation of the Due Process and Takings Clauses of the Fifth Amendment. There is no public taking, and further, the discretionary $8 safe harbor is set at a threshold that will likely enable the average Larger Card Issuer to continue to recover pre-charge-off collection costs, and Larger Card Issuers can elect to use the cost analysis provisions if the safe harbor amount is insufficient for recovery of their pre-charge-off collection costs. In addition, as described above, Larger Card Issuers generally can adjust other fees or interest rates in order to recover any lost revenue.
Additionally, the CFPB declines to revise the examples in comment 52(b)(1)(i)-6 to lower the late fee amounts closer to the $8 safe harbor amount, as recommended. The CFPB views the revision as unnecessary and notes that an illustrative example is neither representative nor determinative of a reasonable and proportional late fee amount determined pursuant to the cost analysis provisions.
In the 2010 Final Rule implementing TILA section 149, the Board established penalty fee safe harbor amounts of $25 for the first violation and $35 for any additional violations of the same type that occur during the same billing cycle or in one of the next six billing cycles. In doing so, the Board indicated that it “believes that these amounts are generally consistent with the statutory factors of cost, deterrence, and consumer conduct.”
Given these limitations, instead of relying on data related to the costs of collecting late payments in setting the safe harbor dollar amounts in its Regulation Z, § 226.52(b)(1)(ii)(A) and (B), the Board primarily considered the following information in setting the safe harbor dollar amounts: (1) the dollar amounts of late fees currently charged by credit card issuers; (2) the dollar amounts of late fees charged with respect to deposit accounts and consumer credit accounts other than credit cards; (3) State and local laws regulating late fees; (4) the safe harbor threshold for credit card default charges established by the United Kingdom's Office of Fair Trading (OFT) in 2006; (5) data related to deterrence that provide evidence on whether the experience of incurring a late payment fee makes consumers less likely to pay late for a period of time; and (6) data submitted by a large credit card issuer that indicated that consumers who pay late multiple times over a six-month period generally present a significantly greater credit risk to issuers than consumers who pay late a single time.
In establishing the safe harbor amounts, the Board concluded that “it is not possible based on the available information to set safe harbor amounts that precisely reflect the costs incurred by a widely diverse group of card
With respect to late payments, the Board stated its belief that large issuers generally incur fewer collection and other costs on accounts that experience a single late payment and then pay on time for the next six billing cycles than on accounts that experience multiple late payments during that period.
With respect to the higher safe harbor amount in § 226.52(b)(1)(ii)(B), the Board explained its belief that when an account experiences additional violations that occur during the same billing cycle or in one of the six billing cycles following the initial violation, $35 would generally be sufficient to cover any increase in the costs incurred by the card issuer.
With respect to the higher $35 fee for repeat penalty fees that occur during the same billing cycle or in one of the next six billing cycles, the Board explained its belief that a higher penalty fee amount is consistent with the deterrence factor set forth in TILA section 149(c)(2) insofar as—after a violation has occurred—the amount of the fee increases to deter additional violations of the same type that occur during the same billing cycle or in one of the next six billing cycles.
The Board's Consideration of Consumer Conduct. The Board also took consumer conduct into account in adopting the higher $35 fee for repeat penalty fees that occur during the same billing cycle or in one of the next six billing cycles.
The Board stated its belief that, when evaluating the conduct of consumers who have violated the terms or other requirements of an account, it is consistent with other provisions of the CARD Act to distinguish between those who repeat that conduct during the same billing cycle or in one of the next six billing cycles and those who do not.
The safe harbor provisions in § 1026.52(b)(1)(ii) currently provide that a card issuer may impose a fee for violating the terms or other requirements of an account if the dollar amount of the fee does not exceed $30, as set forth in § 1026.52(b)(1)(ii)(A), or $41 for a violation of the same type that occurs during the same billing cycle or one of the next six billing cycles, as set forth in § 1026.52(b)(1)(ii)(B). In addition, § 1026.52(b)(1)(ii)(C) provides a special safe harbor that applies when a charge card account becomes seriously delinquent. Under that provision, when a card issuer has not received the required payment for two or more consecutive billing cycles on a charge card account that requires payment of outstanding balances in full at the end of each billing cycle, the issuer may impose a late payment fee that does not exceed 3 percent of the delinquent balance.
The CFPB proposed to amend § 1026.52(b)(1)(ii) to provide that a card issuer may impose a fee for a late payment on an account under the safe harbor if the dollar amount of the fee does not exceed $8.
In addition, under the proposal, charge card issuers could still impose a fee pursuant to § 1026.52(b)(1)(ii)(C) when a charge card account becomes seriously delinquent as defined in the rule. The CFPB stated its recognition that the fee described in § 1026.52(b)(1)(ii)(C) is a form of late fee but, for the reasons discussed below, did not propose to lower the safe harbor amount under this special provision for charge cards. However, as discussed in the section-by-section analysis of § 1026.52(b)(1)(ii)(C) below, the CFPB proposed to revise this provision for clarity to provide that a card issuer may impose a fee not exceeding 3 percent of the delinquent balance on a charge card account that requires payment of outstanding balances in full at the end of each billing cycle if the card issuer has not received the required payment for two or more consecutive billing cycles, notwithstanding the safe harbor late fee amount in proposed § 1026.52(b)(1)(ii). The CFPB emphasized that the proposed $8 safe harbor late fee amount in proposed § 1026.52(b)(1)(ii) would still apply to fees imposed on a charge card account for late payments not meeting the description in § 1026.52(b)(1)(ii)(C).
In addition to the proposed amendments to the late fee safe harbor amounts in § 1026.52(b)(1)(ii), the CFPB proposed amendments to the provision's commentary. The CFPB proposed these amendments for purposes of clarity and consistency with the proposal to lower the late fee safe harbor amount to a fee amount of $8 for the first and subsequent violations.
Existing comment 52(b)(1)(ii)-1 explains the circumstances in which a card issuer may impose a higher penalty fee amount under § 1026.52(b)(1)(ii)(B) for a violation of the same type that occurred during the same billing cycle or one of the next six billing cycles. Because § 1026.52(b)(1)(ii)(B) would have no longer applied under the CFPB's proposal to limit the late fee safe harbor amounts to a fee amount of $8 for the first and subsequent violations, the CFPB proposed to amend comment 52(b)(1)(ii)-1.i to explain additionally that a card issuer cannot impose a late fee in excess of $8, as provided in proposed § 1026.52(b)(1)(ii), regardless of whether the card issuer has imposed a late fee within the six previous billing cycles. The CFPB also proposed to amend the illustrative examples in comment 52(b)(1)(ii)-1.iii.A to remove references to late fees and replace them with references to over-the-limit fees, as § 1026.52(b)(1)(ii)(B) would still apply to such fees under the CFPB's proposed amendments to § 1026.52(b)(1)(ii). In addition, the CFPB proposed to amend the illustrative examples in comments 52(b)(1)(ii)-1.iii.B and C to reflect a late fee amount of $8, consistent with the proposed amendments to § 1026.52(b)(1)(ii), and to make minor technical changes for consistency with the proposal.
In considering all statutory factors, the CFPB preliminarily found that an $8 late fee for the first and subsequent late payments better represents a balance of issuer costs, deterrent effects, consumer conduct, as well as the benefits to issuers that result from relying on a safe harbor amount, like reduced administrative costs, and the possible beneficial effects of lower late fees on subprime cardholders' repayment behavior. Further, the CFPB preliminarily found that this amount is supported by analysis of the Y-14 data. Finally, the CFPB noted that it took into consideration changes in the market, like automatic payment, that facilitate billing and payment, thus making it easier for card issuers to collect timely payments. For these reasons, the CFPB preliminarily determined that a late fee amount of $8 for the first and subsequent violations is presumed to be reasonable and proportional to the late payment violation to which the fee relates.
The CFPB sought comment on all aspects of its proposal to lower the late fee safe harbor dollar amounts in § 1026.52(b)(1)(ii) to a fee amount of $8 for the first and subsequent violations and provide that a higher safe harbor dollar amount for penalty fees occurring within the same billing cycle or the next six billing cycles does not apply to late fees. In particular, the CFPB sought comment on whether to set a different amount and, if so, what amount and why, including any relevant data or other information. The CFPB also sought comment on whether to retain the higher safe harbor amount and, if so, what amount and why, including any data and other information related to the deterrent effects of the higher amount or its effects on consumer conduct. Further, the CFPB sought comment on whether and why to set a staggered late fee amount with a cap on the maximum dollar amount, such that card issuers could impose a fee of a small dollar amount every certain number of days until the cap is hit. The CFPB sought comment on what small dollar amount and maximum dollar amount cap may be appropriate and why, including any relevant data or other information. The CFPB also sought comment on whether the safe harbor threshold for late fees should be structured as a percentage of the minimum payment amount, and if so, what percentage should be used. In addition, the CFPB sought comment on what other revisions may be appropriate to ensure that credit card late fees imposed pursuant to the safe harbor provisions are reasonable and proportional. In particular, the CFPB sought comment on whether, as a condition of using the safe harbor for late fees, it may be appropriate to require card issuers to offer automatic payment options (such as for the minimum payment amount), or to provide notification of the payment due
The CFPB also invited comment on all aspects on the proposed amendments to the commentary to § 1026.52(b)(1)(ii), including comment on what additional amendments may be needed to help ensure clarity and compliance certainty.
In addition, the CFPB also sought comment on whether to eliminate the safe harbor provisions for late fees, rather than lowering the safe harbor amounts to a fee amount of $8 for the first and subsequent violations as proposed.
The CFPB further sought comment on whether and why to lower the safe harbor amounts in § 1026.52(b)(1)(ii)(A) and (B) (including whether and why to eliminate the higher safe harbor amount for subsequent violations that occur during the same billing cycle or in one of the next six billing cycles) for all other credit card penalty fees, including fees for returned payments, over-the-limit transactions, and when payment on a check that accesses a credit card account is declined. In particular, the CFPB sought comment on what the safe harbor amounts for such fees should be, including any relevant data and information on the costs of such violations to card issuers. In the alternative, the CFPB sought comment on whether to finalize the proposed safe harbor for late fees and eliminate the safe harbors for other penalty fees.
The comments on the proposed $8 safe harbor amount are discussed in further detail below, first in relation to the statutory factors of costs, deterrence, and consumer conduct, then in relation to other issues and concerns addressed by commenters.
As discussed in more detail in part V, larger issuers and their trade associations criticized the CFPB's analysis of the Y-14 data to determine the proposed $8 amount. These commenters argued, among other things, that the Y-14 data are underinclusive of the actual costs that card issuers incur as a result of late payments. For the reasons discussed in part V, the CFPB has determined that it is appropriate to consider and rely upon the Y-14 data for the Larger Card Issuers that are covered by the changes to Regulation Z contained in this final rule.
As noted in part V, one trade association commenter provided specific data related to costs of late payments. While the commenter did not provide data for the costs associated with all late payments, the commenter did provide data for accounts that were late for 60 days or more and estimated that these 60-day plus delinquent accounts cost issuers $46.30, including $33.00 in direct expenses, $9.00 in attributable expenses, and $4.30 in funding costs.
As discussed in more detail in part VI, many smaller issuers, industry trade associations, and individual consumers on behalf of credit unions, one Member of Congress, and the Office of Advocacy, an independent office within the SBA, expressed concern that the CFPB's estimated pre-charge-off collection costs for Y-14 issuers that the CFPB used in its analysis to support the proposed $8 do not accurately represent the pre-charge-off collection costs for late payments of smaller issuers. These comments are discussed in more detail in part VI.
In support of the proposal, several consumer groups noted that it is important to recognize that the $8 amount is a discretionary safe harbor, and if $8 does not adequately compensate an issuer for its costs in dealing with late payments, the issuer can charge more if they can justify the amount under the cost analysis provisions in § 1026.52(b)(1)(i). These commenters also recommended that card issuers be required to publicly disclose the data to support any late fee amounts they impose pursuant to the cost analysis provisions that are greater than the safe harbor.
For the reasons discussed below, the CFPB is adopting the proposed $8 safe harbor for late fee amounts for Larger Card Issuers. Nonetheless, the CFPB is not requiring in this final rule that card issuers that use the cost analysis provisions in § 1026.52(b)(1)(i) to set the late fee amount to publicly disclose the data to support any late fee amounts they impose pursuant to the cost analysis provisions that are greater than the safe harbor. The CFPB is concerned that card issuers may consider some of the supporting data that would be required to be released publicly under such a requirement to be confidential. The CFPB also notes that the CARD Act does not specifically require card issuers to disclose to the public their underlying costs data. A card issuer that chooses to base its penalty fees on its own determination (rather than on the safe harbors) must be able to demonstrate to the regulator responsible for enforcing compliance with TILA and Regulation Z that its determination is consistent with § 1026.52(b)(1)(i).
Several industry commenters asserted that the CFPB lacked sufficient evidence that the reduced safe harbor amount would have a deterrent effect. Some industry commenters criticized what they viewed as flaws in the CFPB's deterrence analysis, including misreading or failing to give proper weight to existing literature on the deterrence effect of late fees. In particular, one credit union trade association noted that the CFPB failed to present an analysis of the tradeoff between late fees and late payments. This commenter asserted that a consumer is deterred from being late on a payment if the late fee is greater than the net benefit of missing the payment. This commenter also asserted that the CFPB failed to consider in its analysis a study that the Board relied on in its 2010 Final Rule—Agarwal
Furthermore, one bank commenter suggested that the CFPB use reasonable proxies to determine the deterrence effect on the amount of a late fee. Such proxies suggested by the commenter include return check penalties as determined by States, late fees charged on utility bills and student loan late fees. The commenter asserted that these proxies could have been used by the CFPB to determine whether the proposed late fee penalty is reasonable, proportional and would have a deterrent effect.
In addition, one academic commenter and one law firm representing several card issuers asserted that empirical evidence indicates that paying a late fee encourages borrowers to opt for automatic payments, helping borrowers avoid the higher cost of borrowing by avoiding late fees and decreasing the probability of ultimately defaulting. These commenters further noted that John Gathergood
One trade association commenter, as another example, criticized the CFPB for suggesting—by comparing the effective APR a consumer might incur as a result of late payments in a series of hypothetical situations—that the deterrent effect of an $8 late fee would be similar to the deterrent effect of the current rate structure. The commenter asserted that high APRs may not adequately deter borrowers for ultra-short-term borrowing periods—such as the 10-30 days in the CFPB's hypotheticals—where the absolute dollar amounts are relatively small. This commenter also stated that the CFPB offered no analysis as to whether those APRs would have the presumed deterrent effect and noted that effective APRs may not have the meaningful deterrent effect of late fees because they are a more complicated, nebulous concept for consumers to understand.
Some industry commenters asserted that the proposed $8 safe harbor amount, due to its lack of a deterrence effect, would make it difficult for card issuers to identify riskier consumers and manage for that risk. In this vein, one industry trade association noted that when a consumer pays late, the issuer can incur unanticipated additional interest expense on that balance. This commenter further noted that during the underwriting process for a new consumer, an issuer cannot determine with complete certainty whether the consumer may become chronically delinquent, occasionally delinquent, or always current, and that the consumer's subsequent behavior in using the card determines if they are riskier than average for the cohort. According to this commenter, the late fee is an automatic “stabilizer” that adjusts pricing for riskier consumers based on their actual post-account opening behavior (
A few industry commenters submitted their own data on the purported deterrence effect of late payments in response to the CFPB's request. Those comments along with the data provided are discussed in the deterrence analysis below.
Several industry commenters noted that the CFPB failed to use studies cited by the Board in their 2010 Final Rule. One credit union trade association commenter asserted that the CFPB cherry picked studies that supported its position, rejected older data as no longer relevant when they did not support their position, but accepted even older data when the conclusion was favorable to the CFPB's position. Furthermore, this commenter asserted that the CFPB failed to appropriately consider the role of risk in finance but rather relied on theories of behavioral biases that cannot be applied generally. This commenter also asserted that the CFPB's analysis was not conducted in a transparent and consistent manner.
In criticizing the CFPB's consideration of consumer conduct in the context of proposing to eliminate the higher safe harbor amount, a bank commenter sought to distinguish the factor from the deterrence effect of late fees. Whereas deterrence requires consideration of what size and type of late fee would deter late payment, the commenter averred, consumer conduct
In a similar vein, a law firm representing several card issuers asserted that the CFPB's analysis of when consumers make late payments is inapposite to the specific issue of cardholder conduct. The commenter noted that if the problem is with consumer cash flow timing, as the CFPB hypothesizes, most major credit card issuers have mechanisms in place to allow customers to change the due date on their account in order to account for their own paycheck or earning schedules. This commenter further stated that the CFPB's analysis does nothing to address the reality that multiple late payments demonstrate an increased credit risk and reflect a more serious violation of the account terms—even if those payments occur before the account would be reported as late under credit reporting guidelines. In addition, this commenter noted that the existence of an adequate late fee creates an incentive for customers who may experience financial difficulties to call in and discuss the availability of hardship and other programs with their lender.
A bank commenter also noted that late fees prompt numerous consumers to call to discuss the delinquency after billing, giving card issuers the ability to assist consumers. This commenter expressed concern that if the fee is only $8, consumers may not bother to call, and the card issuer will lose an opportunity to provide financial assistance. According to data submitted by the commenter, its contact rate for outbound collection calls is 2 percent to 4 percent, whereas the inbound call rate (the percentage of delinquent accounts who call the bank) for collections is 13 percent to 14 percent. Of the commenter's inbound calls, 27 percent to 28 percent received one or more late fee credits. This commenter further noted virtually all such calls had a payment or other payment arrangements made.
A financial regulatory advocacy group commented specifically on consumer conduct. In supporting the proposed $8 safe harbor amount, the commenter considered the effects of late fees on consumer conduct in conjunction with their effects on consumers' financial health. The commenter noted that because payments are applied first to cover finance charges and fees, when late fees are tacked on, less of a consumer's payment goes towards reducing the principal balance, thereby adding to the duration and cost of revolving. Viewed from this lens, this commenter asserted, it would seem almost self-evident that reducing the size of late fees would have a positive impact on the financial health of those bearing those fees.
Other factors cited by commenters. In addition to addressing the statutory factors, numerous industry commenters expressed concern that the loss of late fee revenue that would result from the proposed $8 late fee safe harbor amount would adversely affect card issuers and consumers. Credit union commenters in particular expressed this concern. As a representative example, around 20 credit unions and 20 individuals noted, as part of a letter-writing campaign, that when credit unions do charge late fees, the revenue from the fees covers pre-charge off collection costs but also subsidizes products and services that members demand and need, including programs targeted toward consumers with thin credit files. Many credit union and individual commenters cautioned that the loss in late fee revenue would require credit unions and other card issuers to tighten credit standards and consider harmful tradeoffs involving the very consumers who are most at risk of paying late fees. Specifically, these commenters asserted that credit unions will need to recoup lost late fee revenue through higher interest rates (while still complying with the Federal Credit Union Act's interest rate cap, a consideration banks do not face)
In the same vein, many credit union commenters asserted that additional fees and higher rates would have a negative impact on all credit union members and potential members, including those unbanked and underbanked communities where credit unions are seeking to expand access to financial services. Some noted that credit unions may need to balance reduced fee revenue by cutting spending on branch expansion and staff to serve their membership. Other commenters noted that these losses, and thus the adverse consequences, would be magnified in the current inflationary environment. A State credit union trade association stated that banks and other financial institutions that generally are not subject to statutory rate caps will simply keep raising their interest rates to make up for lost fee revenue and thus the rule, if finalized, would have little to no effect on protecting consumers from high-cost rate or fee practices.
In discussing the potential consequences resulting from lost late fee revenue, some industry commenters expressed concerns related to risk management and safety and soundness. For example, one bank commenter asserted that the CFPB's proposed late fee safe harbor amount fails to take into account that card issuers set fees, including late fees, on a risk-adjusted basis, whereby fees applied to cardholders who do not pay in a timely manner are set so as to compensate for additional financing cost, cost of collection, funding cost, and—most of all—higher rates of loss on amounts borrowed so that, together, interest plus fees minus losses and costs make for a viable business. This commenter further asserted that setting fees on a risk-adjusted basis is essential to running a safe and sound credit card business, and to providing credit to customers who would not otherwise get it. A State bank trade association commenter noted that when its member banks establish terms and conditions for their credit plans, the late fee safe harbor weighs heavily in assuring that the bank's cost of credit match the higher costs of delinquency to targeted revenue and asking those who create such higher costs to bear those costs directly is necessary to maintain safety and soundness in the sub-prime space. In addition, a credit union commenter noted that the disruption of cash flows resulting from a higher frequency of late payments under the proposal could necessitate the acquisition of replacement dollars to meet the credit union's cash obligations, such as by accessing its lines of credit or issuing a certificate of deposit (CD) to members. This commenter further noted that such efforts to ensure that its cash flow obligations are met would impose additional administrative and finance costs on the institution.
For card issuers that are not Smaller Card Issuers (namely, Larger Card
For the reasons discussed in part VI, the CFPB is not adopting at this time the changes discussed above for Smaller Card Issuers that are defined in § 1026.52(b)(3) to mean a card issuer that together with its affiliates had fewer than one million “open credit card accounts” as defined in § 1026.58(b)(6) for the entire preceding calendar year.
Pursuant to the annual adjustments for safe harbor dollar amounts to reflect changes in the CPI in § 1026.52(b)(1)(ii)(D), this final rule revises the safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) to $32, except that it sets forth a safe harbor of $43 for each subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles. As discussed in more detail in the section-by-section analysis of § 1026.52(b)(1)(ii)(A) and (B), these revised safe harbor threshold amounts of $32 and $43 apply to penalty fees other than late fees for all card issuers (
In adopting this final rule, the CFPB has determined that the existing safe harbors in § 1026.52(b)(1)(ii), as applicable to late fees charged by Larger Card Issuers, are too high to be “reasonable and proportional” to a consumer's late payment. The CFPB therefore is repealing the existing safe harbors in § 1026.52(b)(1)(ii)(A) and (B) with respect to late fees charged by Larger Card Issuers.
In the 2023 Proposal, the CFPB proposed to replace the existing safe harbors of $30 for the first violation and $41 for subsequent violations, but it also requested comment on whether to eliminate the safe harbor provisions.
This final rule adopts the $8 safe harbor threshold for late fees charged by Larger Card Issuers, in part, based on the Y-14 data collected from certain Larger Card Issuers from 2013 up to September 2022 which show that late fee revenue is at least five times higher than relevant costs since August 2021. The $8 late fee safe harbor threshold for Larger Card Issuers is conservative because, instead of dividing the average late fee per incident for Y-14+ issuers ($31 in 2020) by five or dividing the current lower regulatory threshold ($30) by five, it divides the highest safe harbor late fee of $41 by five to reach the $8 safe harbor threshold amount.
In other words, in adopting this final rule, the CFPB has determined that the existing safe harbors of $30 and $41 are too high with respect to late fees charged by Larger Card Issuers and should be replaced with respect to late fees charged by those issuers. As discussed above, the Board set the original safe harbors based on very limited cost-related data as compared to what the CFPB has available to it now.
The CFPB now has an extensive dataset, which relates to collection costs of certain Larger Card Issuers, that allows it to judge whether the original safe harbors are adequately tailored to reflect the average outcome of the cost analysis provisions in § 1026.52(b)(1)(i) with respect to late fees charged by Larger Card Issuers. As discussed in part V and below, the CFPB has data from the 16 largest card issuers, in the Y-14 dataset, showing that the total late fee income from the first three quarters in 2022 was $4.46 billion, while estimated pre-charge off collection costs amounted to only $896 million.
In addition, as noted in part II.E, the CFPB has observed in its 2022 survey of credit card agreements that it appears there are no Larger Card Issuers who set their late fees based on the cost analysis provisions in § 1026.52(b)(1)(i), suggesting that the safe harbor is set so high that there is no issuer, even outlier
Furthermore, the safe harbor thresholds have increased by $5-6 due to annual adjustments to reflect changes in the CPI made pursuant to § 1026.52(b)(1)(ii)(D) since the thresholds were first adopted in 2010, and thus, for this reason, the threshold amounts warranted independent reconsideration. As the CFPB notes in the section-by-section analysis of § 1026.52(b)(1)(ii)(D), collection costs observed in Y-14 data from certain Larger Card Issuers do not appear to be rising lockstep with inflation particularly when considering the month-to-month changes in inflation versus those costs.
Additionally, the Board's conclusion with regard to the original safe harbor threshold amounts did not appear to consider whether it could have been too high, only that it was “generally sufficient to cover issuer's costs and to deter future violations.”
And lastly, much of the evidence used originally by the Board was not relevant to the question of whether the safe harbor was set at an appropriate level. For example, evidence of State, local, or international government approaches reflects the policy decisions of those legislative bodies. Such evidence is not determinative of whether the safe harbor appropriately meets the applicable standards in the CARD Act. In addition, setting the thresholds based on then existing late fee amounts, set by issuers before the CARD Act passed, assumes that Congress merely intended to curtail further increases, rather than lower late fees from the then-existing baseline. The CFPB sees no evidence in the legislative history to justify this assumption, and rather, concludes that the safe harbor threshold amount should be set based on the cost-analysis provisions.
In addition, the CFPB received around 56,800 comments letters from consumers that generally supported the proposed $8 late fee safe harbor threshold. Many consumers indicated that they thought the current late fees charged by issuers are too high, and some consumers indicated they had limited income and that even a small late fee can impact consumers on a tight budget.
Thus, for the reasons discussed above including the CFPB's analysis of the Y-14 data, in this final rule, the CFPB repeals the existing safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) with respect to late fees charged by Larger Card Issuers.
As a result, the CFPB has determined that, at this time and based on current data and commenter feedback, it is appropriate to revisit and amend the safe harbor as applied to Larger Card Issuers. Establishing a safe harbor is an exercise of discretionary rulemaking authority, and thus, a safe harbor need not exist.
Given this, the CFPB has determined that, in light of its data and analysis, it is appropriate to repeal the existing safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) with respect to late fees charged by Larger Card Issuers, and then to amend the safe harbor to the lower $8 amount. The decision to repeal of the safe harbor is independent of, and severable from, the decision below that $8 is an appropriate safe harbor threshold amount with respect to late fees charged by Larger Card Issuers. Accordingly, if the $8 safe harbor for Larger Card Issuers were stayed or determined to be invalid, the remainder of the regulation shall continue in effect without a safe harbor for late fees charged by Larger Card Issuers.
As an initial matter, the CFPB is not statutorily required to consider the statutory factors of costs, deterrence, and consumer conduct in setting the discretionary safe harbor amounts under TILA section 149(e). Instead, in setting discretionary safe harbor amounts, TILA section 149(e) specifies that the CFPB may issue rules to provide an amount for any penalty fee or charge that is presumed to be reasonable and proportional to the omission or violation to which the fee or charge relates. As discussed below, the CFPB analyzed whether the current safe harbor threshold amounts for late fees should be presumed to be reasonable and proportional to a cardholder's omission or violation. In considering whether and what is the appropriate amount for the safe harbor, the CFPB looked to whether the threshold is a reasonable proxy for the definition of a “reasonable and proportional” fee such that any fee under the threshold should be presumed to have met that standard.
In implementing this standard, the CFPB primarily focused on whether a particular late safe harbor amount would cover the pre-charge-off collection costs of the average Larger Card Issuer. The CFPB has determined that it is appropriate to focus on the pre-charge-off collection costs of the average Larger Card Issuer to determine a reasonable proxy for the definition of a “reasonable and proportional” because this allows the average Larger Card Issuer to obtain the benefits of relying on the safe harbor without having to incur the compliance burden of conducting the cost analysis set forth in
In considering the costs of late payments to Larger Card Issuers, the CFPB considered only those (estimated) pre-charge-off collection costs that card issuers are permitted to consider for purposes of determining the amount of a late fee under the cost analysis provisions in § 1026.52(b)(1)(i) and related commentary. As provided in the commentary to § 1026.52(b)(1)(i), such costs for late fees (1) include the costs associated with the collection of late payments, such as the costs associated with notifying consumers of delinquencies and resolving delinquencies (including the establishment of workout and temporary hardship arrangements); and (2) exclude losses and associated costs (including the cost of holding reserves against potential losses and the cost of funding delinquent accounts). As discussed in the section-by-section analysis of § 1026.52(b)(1)(i), consistent with the Board's 2010 Final Rule, the CFPB in this final rule makes it explicitly clear that costs for purposes of the cost analysis provisions in § 1026.52(b)(1)(i) for determining penalty fee amounts do not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions. The CFPB has determined that considering pre-charge-off collection costs as the “costs” of a late payment is consistent with Congress' intent to: (1) allow card issuers generally to use late fees to pass on to consumers the costs issuers incur to collect late payments or missed payments; (2) ensure that those costs are spread among consumers and that no individual consumer bears an unreasonable or disproportionate share; and (3) prevent card issuers from recovering losses and associated costs through late fees rather than through upfront rates.
As discussed in part V, the reported collection costs in the Y-14 data include costs incurred to collect problem credits that includes the total collection cost of delinquent, recovery, and bankrupt accounts. The CFPB concludes that the collection costs data in the Y-14 are consistent with the costs included for the cost analysis provisions in § 1026.52(b)(1)(i) except that the collection costs in the Y-14 data include post-charge-off collection costs. As discussed in part V, in the 2023 Proposal, the CFPB estimated that approximately 75 percent of collection costs incurred by card issuers are incurred pre-charge-off. Thus, the CFPB's estimate of pre-charge-off collection costs is based on only 75 percent of the collection costs in the Y-14 data for purposes of its analysis related to the final changes to the safe harbor thresholds in § 1026.52(b)(1)(ii), as discussed in more detail below. However, as discussed below, the conclusions are similar even if the CFPB assumes that pre-charged-off collection costs are 80 percent of total collection costs incurred by card issuers, consistent with the estimated post-charge-off commission rates for 2021 and 2022, as discussed in more detail in part V.
In developing the $8 late fee safe harbor amount adopted in this final rule, the CFPB carefully considered several sources of data and other information to determine the amount that would cover the average Larger Card Issuer's pre-charge-off collection costs. As discussed in part V, and described in detail below, the CFPB reviewed and analyzed major issuers' late fee income, collection costs, late fee amounts, and required payment information contained in the Y-14 data, a source that was not available when the Board set the initial safe harbor amounts in 2010. That analysis indicates that late fees generally generate revenue that is multiple times higher than the Y-14 issuers' collection costs. As discussed in more detail in part II.E, in 2022, the CFPB also reviewed issuers' stated late fee amounts in card agreements that issuers are required by the CARD Act to submit quarterly to the CFPB. Based on these data, the CFPB expects that even if late fees were reduced to one-fifth of current levels (implying late fees of $8 or less), most Y-14 issuers would recover pre-charge-off collection costs.
Using this one-fifth estimate, the CFPB calculated the $8 fee by dividing $41 by five and rounding to the nearest dollar. The CFPB conservatively chose to use $41, the highest late fee charged in the market, in the interest of caution. A less conservative approach would have used $30 (the safe harbor for the first fee) or $31 (the average late fee per incident for Y-14+ issuers in 2020), resulting in a $6 safe harbor.
To estimate the fee income to collection cost ratio for Larger Card Issuers, the CFPB used the late fee income data and 75 percent of the collection costs contained in the Y-14 data (referred to below as “estimated pre-charge-off collection costs”). Using the Y-14 data, the CFPB analyzed monthly late fee income and estimated pre-charge-off collection costs for the consumer segments of major issuers' credit card portfolios, namely the consumer general purpose and private label portfolios. For the 16 consumer portfolios with continuous cost data for the first three quarters of 2022 (adding up to about 73 percent of total consumer credit card balances at the end of September 2022), total late fee income in the first three quarters added up to $4.46 billion, while total collection costs added up to $1.19 billion with pre-charge-off collection costs estimated to be $896 million (where the pre-charge off collection costs are estimated to be 75 percent of the total collection costs).
In reviewing the monthly data, the CFPB observed that late payments exhibit seasonal patterns. The CFPB also considered that there may be a delay between when a late fee was assessed and when the issuer incurs substantial collection costs associated with the account. For these reasons, the CFPB compared each month's late fee income for a particular portfolio to the portfolio's average estimated pre-charge-off collection costs for that month, where that estimate was based on estimated pre-charge-off collection costs that occurred two through six months later.
Based on this analysis, the CFPB expects that the average Larger Card Issuer would recover pre-charge-off collection costs even if late fees were reduced to one-fifth of their current level. In the 2022 survey of credit card agreements discussed in part II.E, all but one issuer among those in the Y-14 data (representing the majority of balances in the credit card market) disclosed late fees “up to” $40 or $41 (the current maximum safe harbor amount) in their most recent card agreements submitted to the CFPB. Given the finding that, in the most recent data, late fee income is greater than five times estimated pre-charge-off collection costs, the CFPB expects that an $8 late fee would still recover the average Larger Card Issuer's pre-charge-off collection costs, as that fee represents one-fifth of the maximum late fee amount, which is necessarily greater than average fee income per late payment. This conclusion is also consistent with additional information from the CFPB's 2023 survey of credit card agreements in the CFPB's Credit Card Agreement Database, which the CFPB conducted after it issued the 2023 Proposal. As discussed in more detail in part II.E, of the 30-35 submitters the CFPB would expect to be Larger Card Issuers, 13 issuers charged at maximum late fee in their submitted agreements of $40 and 11 charged $41 with the minority charging between $35 and $39 and only two charging a maximum late fee below $35.
As discussed in part V, since issuing the 2023 Proposal, the CFPB obtained Y-14 data for 14 more months than were available for the analysis in the 2023 Proposal. In addition, the CFPB obtained updated data related to post-charge-off commission rates for 2021 and 2022, and based on that data estimated that pre-charged-off collection costs were 80 percent of collection costs incurred by Y-14 issuers for those years. Figure 2a below shows the ratio of fee income to collection cost ratio for Y-14 issuers, using the late fee income data and 80 percent of the collection costs contained in the Y-14 data, including the 14 more months of Y-14 data.
The CFPB has determined that these updated Y-14 data yield a ratio that is consistent with the determination that a $8 late fee safe harbor threshold would recover the average Larger Card Issuer's pre-charge-off collection costs. As shown in Figure 2a above, the ratio has been above five for those additional 14 months and above six for the last 11 months.
In addition, as discussed in part V, after issuing the 2023 Proposal, the CFPB obtained total collection costs and late fee income data from specialized issuers that are included in the Y-14+ data but do not report under the Y-14. The CFPB collected confidential quarterly data from the five specialized issuers that are included in the Y-14+ data for their consumer cards in all quarters in 2019 through 2022, split by whether the accounts in a given portfolio are general purpose or private label cards, through an information order pursuant to section 1022(c)(4) of the CFPA.
As the responses to the information order described above yielded quarterly data, the CFPB is not able to calculate the same ratio of late fee income to estimate pre-charge-off collection costs two-to-six months later for each portfolio as it did for the weighted average in Figure 1 above from the Y-14 data alone. To make use of the most widely available data from certain Larger Card Issuers but treat them consistently, the CFPB calculated a similar ratio but of a quarter's total late fee income to the same quarter's estimated pre-charge-off collection costs (where pre-charge-off costs are estimated to be 80 percent of the total collection costs) for each portfolio in the above information order or in the Y-14 data with three months of non-zero collection costs reported for that quarter. Figure 2b below shows the market-wide weighted average of these ratios from 2019 to 2022, weighted by the number of accounts. This calculation also suggests that late fee incomes recently are so far above pre-charge-off collection costs (using 80 percent of total collection costs) that a five-fold decrease in the safe harbor is reasonable.
As discussed in part VI, the CFPB recognizes that the new $8 safe harbor amount will apply to approximately a dozen issuers for which the CFPB does not have total collections data and late fee revenue data. The CFPB has determined that it is appropriate to apply this new safe harbor amount to those issuers because they together with their affiliates have at least one million open credit card accounts which result in economies of scale similar to Y-14+issuers. Specifically, and based on the CFPB's expertise and markets research, the CFPB expects that these issuers have similar mechanisms to more efficiently collect late payments and to do so at a lower cost than for Smaller Card Issuers, and thus would have similar pre-charge off collection costs to the Y-14+ issuers. Further, unlike Smaller Card Issuers, these Larger Card Issuers derive substantial revenue from credit card portfolios, and therefore, are more likely to have resources that would allow them to use the cost analysis provisions in § 1026.52(b)(1)(i) to determine the late fee if the $8 safe harbor threshold amount fails to cover pre-charge off collections costs.
Since the issuance of the proposal, the CFPB also obtained some additional data through an information order pursuant to section 1022(c)(4) of the CFPA as part of its statutorily required, bi-annual CARD Markets Report.
In addition, as discussed above, an industry trade association commenter also provided information on costs for accounts that are at least 60 days late, which again is a subgroup of all late payment incidents. This trade association asserted that the average costs per delinquent account that is at least 60 days late is $46.30, including $33.00 in direct expenses, $9.00 in attributable expenses, and $4.30 in funding costs. The CFPB has determined that these cost data for delinquent accounts that are at least 60 days late are not as relevant as the Y-14 data in understanding Larger Card Issuers' average pre-charge-off collection costs with respect to all late payments, as opposed to a certain subset of late payments (
The CFPB also notes that average late fees for Y-14+ issuers are lower than the disclosed maximum late fees. As discussed in part II.D, in 2020, the average late fee charged by issuers in the Y-14+ data was $31.
The CFPB acknowledges that not all issuers in the Y-14+ data incur the average pre-charge-off collection costs. By using estimates of pre-charge-off collection costs per paid incident using the Y-14 data from September 2021 to August 2022 (consistent with the data used in the 2023 Proposal), the CFPB estimates that fewer than four of the 12 card issuers in the Y-14 data have estimated pre-charge-off collection costs that are significantly higher than one-fifth of their late fee income. For these issuers, the proposed $8 safe harbor amount may not have been enough to fully recover estimated pre-charge-off collection costs, such that the benefits of using the cost analysis provisions may outweigh the administrative simplicity of using the safe harbor.
This result is also consistent when the CFPB considers the additional data it obtained since the publication of the 2023 Proposal, namely (1) using 14 additional months of Y-14 data; (2) estimating the pre-charge-off costs are 80 percent of the total collections costs in the Y-14 data; and (3) considering data submitted by the specialized card issuers in the Y-14+.
By using estimates of pre-charge-off collection costs (80 percent of total collection costs) per paid incident using the Y-14+ data from calendar year 2022, the CFPB estimates that fewer than six of the 16 issuers with a continuous history of non-zero collection costs had estimated pre-charge-off collection costs that were significantly higher than one-fifth of their late fee income. For the remaining issuers, who represent less than 30 percent of accounts and around a fourth of late fee income in this set, the proposed $8 safe harbor amount may not have been enough to fully recover estimated pre-charge-off collection costs in 2022, such that the benefits of using the cost analysis provisions may outweigh the administrative simplicity of using the safe harbor. While both the data considered for the proposal and this more recent, supplementary data suggest that the $8 late fee safe harbor amount adopted in this final rule would cover pre-charge-off collection costs for most Y-14+ issuers in years resembling 2022, the CFPB acknowledged in the 2023 Proposal and continues to recognize that some Larger Card Issuers may not recover pre-charge off collection costs for all portfolios at all times under the lower safe harbor. The CFPB, however, notes that the safe harbor is discretionary, and these issuers can choose to determine the late fee amount using the cost analysis provisions in § 1026.52(b)(1)(i), rather than using the proposed $8 safe harbor amount, if $8 is insufficient to recover their pre-charge-off collection costs. Larger Card Issuers also may undertake efforts to reduce collection costs or use interest rates or other charges to recover some of the costs of collecting late payments. Building those costs into upfront rates would provide consumers greater understanding regarding the cost of using their credit card accounts.
The CFPB notes that the CARD Act does not require the CFPB to establish a late fee safe harbor amount that covers the costs for all issuers or the entire costs of the omission or violation in all instances. Instead, TILA section 149(e) authorizes the CFPB to issue rules to provide, for any penalty fee or charge, a safe harbor amount that is presumed to be reasonable and proportional to the omission or violation to which the fee or charge relates. The CFPB is concerned that setting a higher safe harbor amount for late fees in order to cover the pre-charge-off collection costs of all Larger Card Issuers could result in an amount that exceeds the costs for most Larger Card Issuers. As discussed in part II.E the CFPB also is concerned that Larger Card Issuers may have a disincentive to charge a lower fee amount than the safe harbor amount, even if their average collection costs are less than the safe harbor amount, given the industry's reliance on late fees as a source of revenue and that many consumers may not shop for credit cards based on the amount of the late fee.
The CFPB notes that the analysis based on the Y-14 data discussed above does not consider any potential changes in consumer behavior in response to the change in the late fee safe harbor amount in this final rule for Larger Card Issuers. In particular, the discussion does not take into account the possibility that reduced late fees will lead to more late payments at Larger Card Issuers. However, the CFPB also expects that any increase in the frequency of late payments, if any, as a result of the reduced late fee safe harbor amount, would increase both fee income and collection costs at Larger Card Issuers. Even if more consumers pay late at Larger Card Issuers because of the decreased amount, the CFPB concludes that the increased number of late payments are unlikely to be more costly, on average, to administer and collect than the current number of late payments. Therefore, the CFPB expects that collection costs to Larger Card Issuers would not increase by more than fee income. Further, as discussed below, the CFPB's analysis of Y-14 data and other information suggests that the proposed $8 safe harbor amount for the first and subsequent late payments would still have a deterrent effect on late payments.
In addition, the CFPB has determined that the $8 late fee safe harbor provision in § 1026.52(b)(1)(ii) adopted as part of this final rule would continue to save costs for Larger Card Issuers that use the safe harbor. As discussed above, in considering the appropriate safe harbor amount for late fees, the CFPB is guided by the factors in TILA section 149(c), which provides that the CFPB can consider such other factors that the CFPB deems necessary or appropriate. The CFPB finds that it is both necessary and appropriate, when considering the portion of Larger Card Issuers' pre-charge-off costs that a late fee safe
For the foregoing reasons, the CFPB determines that a late fee of $8 for the first and subsequent violations is appropriate to cover pre-charge-off collection costs for Larger Card Issuers on average while providing those issuers compliance certainty and administrative simplicity.
Even if the CFPB were required to consider the statutory factors of costs, deterrence, and consumer conduct in setting the discretionary safe harbor amounts, the CFPB has determined that TILA section 149(e) does not require that the CFPB weigh all of the factors equally in determining what safe harbor amount is a reasonable proxy for the definition of a “reasonable and proportional” fee. In this regard, the CFPB has determined that the cost factor deserves the most weight of these factors in setting the precise late fee safe harbor amount because it is most closely correlated to the consequences to the issuer of a consumer's late payment. In other words, costs are the best guide to what constitutes a “reasonable and proportional” fee. The CFPB has determined that the data described above allows the CFPB to quantify the pre-charge-off collection costs of Larger Card Issuers and set a late fee safe harbor amount that will allow the average Larger Card Issuer to recover its pre-charge-off collection costs. By contrast, the CFPB has determined that deterrence and consumer conduct—while important—are less determinative than costs in setting a precise late fee safe harbor amount. Not only are deterrence or consumer conduct harder to quantify, but the link between the late fee amount and deterrence or consumer conduct is more tenuous. For instance, as noted by consumer commenters on the 2023 Proposal, consumers indicated that there were various reasons why they incurred a late fee in the past, including (1) their mailed payment was not received by the card issuer by the due date because of slower postal service; (2) they paid on the due date but after the cut off time on the due date; (3) they forgot to pay on time because of vacations, medical issues, or family issues; or (4) they experienced cash flow issues because of unexpected expenses. Thus, while deterrence and consumer conduct can help corroborate a safe harbor amount set based on costs, the CFPB believes that the deterrence and consumer conduct factors could not justify a safe harbor amount that is disproportionate to costs.
Nonetheless, while the CFPB has determined that deterrence or consumer conduct should not be the primary factors in deciding the precise late fee safe harbor amount for Larger Card Issuers, the CFPB has determined based on the analysis discussed below that the $8 late fee safe harbor amount will still have a deterrent effect on late payments, and that the $8 late fee safe harbor amount better reflects a consideration of consumer conduct than do the higher safe harbor amounts set by the Board.
As a threshold matter, the CFPB acknowledges, as it acknowledged in the 2023 Proposal, that a late fee of any dollar amount has some deterrent effect that is more than no late fee at all. Some of the comments received, as discussed above, support the CFPB's determination by noting that a safe harbor late fee amount of $8 would have a lesser deterrent effect than the current amounts, rather than no deterrent effect. The CFPB also recognizes, as it recognized in the 2023 Proposal, that generally a lower late fee amount has less theoretical deterrence than a higher amount, though whether that will manifest in lower repayment rates in light of the other salient factors is uncertain. As such, the many comments asserting that a late fee amount of $8 may result in a higher frequency of late payments, as discussed above, are consistent with the assumptions in the CFPB's deterrence analysis. The CFPB rejects the notion, implicit in many comments opposing the $8 late fee amount, that consideration of deterrence necessitates, as a matter of law or policy, setting a safe harbor amount that will have the maximum theoretical deterrence effect. In addition, the CFPB recognizes, as it recognized in the 2023 Proposal, that it does not have direct evidence concerning what consumers would do in response to a fee reduction similar to the one in this final rule. The CFPB notes, however, that the Y-14 data and other information on which its deterrence analysis is based, as discussed below, have become available since the Board issued its 2010 Final Rule and constitute a far richer body of evidence than that on which the Board relied. It should be noted that by the same logic, those commenters expressing concern regarding the potential deterrence effect of a lower late fee likewise had no direct evidence to proffer in support.
As discussed in the 2023 Proposal, for purposes of considering the deterrence effect of the $8 safe harbor amount, the CFPB analyzed available data from certain Larger Card Issuers to consider the extent to which lower late fees for both the first and subsequent late payments could potentially lessen deterrence. Specifically, in making its determination that the $8 safe harbor amount will still have a deterrent effect on late payments, the CFPB considered (1) a comparison of the $8 late payment safe harbor amount to minimum payment amounts on accounts in the Y-14 data; and (2) available empirical evidence on the effects of credit card late fees on the prevalence of late payments. The CFPB notes that whether a consumer is late in making a required payment depends in part on the consequences of paying late, including penalty fees for late payments and other consequences such as increased interest charges and potential credit reporting consequences (as discussed in part II.G and in more detail below). From the point of view of a rational consumer faced with the decision of whether to make a minimum balance payment on time or to put off the payment until later, the decision represents a tradeoff weighing the value to the consumer of retaining the money for longer against the total costs of paying late. For the median minimum payment amount of
In addition to the analysis discussed above, the CFPB considered available empirical evidence on the effects of credit card late fees on the prevalence of late payments. In particular, the CFPB considered (1) a 2023 paper analyzing the effect of the reduction of late fee amounts that became effective as a result of the CARD Act in 2010; (2) analysis by the CFPB using Y-14 data of how the prevalence of late payments is affected by increases in late fee amounts during the six months following a violation; and (3) other empirical investigations into the correlates of late fee amounts and late fee incidence as discussed below.
As discussed in the 2023 Proposal, in analyzing the available data, the CFPB notes a 2023 paper by Grodzicki
In developing the deterrence analysis, the CFPB also analyzed Y-14 data from 2019, where the variation in late fees does not correspond to other big changes or differences that might plausibly affect late payment. As discussed above, the current rule sets a higher late fee safe harbor amount for instances where another late payment occurred over the course of the preceding six billing cycles. The CFPB conducted statistical analysis to investigate whether the lower late fee amount in month seven leads to a distinct rise in late payments (Y-14 seventh-month analysis). Specifically, the CFPB estimated whether there is a discontinuous jump in late payments in the seventh month after the last late payment.
The CFPB acknowledges that the variation in late payments in the Y-14 seventh-month analysis discussed above is not the same as the changes that will result from this final rule. Nonetheless, the CFPB has determined that this evidence suggests the prevalence of late payments is not highly sensitive to the level of late fees at the current order of magnitude.
As discussed in the 2023 Proposal, an advantage of the Y-14 seventh-month analysis is that it avoids confounding factors that often are found in other studies of late fees, including the 2023 paper by Grodzicki
The CFPB notes that the finding from the Y-14 seventh-month analysis described above is still contingent upon the fact that some consumers understand that their issuers charge lower late fees starting the seventh month after an initial violation. The CFPB recognizes that the higher late fees for subsequent late payments within the next six billing cycles might be more of a deterrent if consumers understood them better in 2022 than they did in 2019, but the CFPB has no evidence to indicate that is the case. However, as discussed in the 2023 Proposal, the CFPB's analysis is not dependent on all issuers charging the lower late fee safe harbor amount more than six months after a late payment nor the higher late fee safe harbor amount within the six billing cycles. As long as some card issuers made use of the higher safe harbor, as the analysis described above shows that they did, the CFPB should still have been able to detect an increase in the deterrent effect of their fee structure.
The CFPB also notes that because the Y-14 seventh-month analysis discussed above focused on a potential discrete jump in late payments more than six months after a preceding late payment, it also allowed for late payments to trend down as more time passed after a late payment. As described above, the CFPB did not see the lower late fee amount that could be charged in month seven change this downward trend.
The CFPB also determines that other publicly available studies on late fees suggest that the $8 safe harbor amount will still have a deterrent effect on late payments. As discussed in the 2023 Proposal, empirical investigations into the correlates of late fee amounts
With respect to other publicly available studies, the CFPB notes (as it did in the 2023 Proposal) that the Board—in support of setting higher late fee safe harbor amounts for violations that occur in the following six billing cycles after a late payment—pointed in its 2010 Final Rule to a 2008 study by Agarwal
In addition, the CFPB notes that the Y-14 seventh-month analysis discussed above shows that in the surrounding months reoffending rates trend down with each month after the last late payment. That seventh-month analysis, however, did not show a jump in late payment rates in month seven after the last late fee, which suggests that the higher late fee amount during the prior six months is not contributing to this downward trend. The CFPB also notes that the 2013 study by Agarwal
As discussed in the 2023 Proposal, in adopting the safe harbor amounts in its 2010 Final Rule, the Board also considered the limitations that the United Kingdom's OFT placed on credit card default charges in 2006. The CFPB notes that it is not aware of evidence suggesting that the £12 ($21 on April 5, 2006, $13.40 in November 2022) limit the OFT imposed on default charges (including late fees) in 2006 meaningfully increased late payments in the United Kingdom (U.K.). The OFT ruled on April 5, 2006, that it would presume default charges higher than £12 unfair and challenge the company unless exceptional business factors drove the decision for the company to charge higher fees. As fees were routinely as high as £25 ($43.75 on April 5, 2006) until that spring, this episode is the closest to what the CFPB would foresee as the outcome to its proposal: a salient reduction in late fees impacting a large portion of the marketplace at once, letting both issuers and cardholders learn and adapt to the lower later fees. As such, the CFPB has taken it into account in its deterrence analysis.
As discussed above, two academic commenters suggested that the CFPB consider for purposes of its deterrence analysis a study by John Gathergood
Some industry commenters submitted additional data on deterrence in response to the CFPB's request for additional data. The CFPB appreciates these submissions but does not find the data persuasive. In particular, one large industry trade association submitted the results from a survey of 2,000 consumers it conducted for the purpose of identifying the fee point at which consumers would likely be deterred from paying their credit card bills late. The commenter reported that, among other things, the survey found that late fees are more effective in motivating consumers to pay bills on time than negative credit score impacts. Almost half of consumers (46 percent) said that avoiding late fees was the most important reason to pay credit card bills on time, and 30 percent said that doing the responsible thing was the most important reason to pay on time. Only 15 percent said that concerns about credit ratings was the most important reason to pay on time. This commenter further reported that the survey found that the CFPB's proposed $8 safe harbor would not motivate many consumers to pay their credit card bills on time. In the survey, more than 4 in 5 consumers (83 percent) said that a $10 late fee would be insufficient to deter them from paying a credit card bill late. Only 6 percent of respondents said that a fee of $10 would have a deterrent effect. For those who have paid a late fee in the past year, the deterrence effect of a $10 fee is even lower: only 4.3 percent said that such a fee would deter them from paying late.
The CFPB notes that the submitted survey asked consumers about the primary reason they avoid a late fee. As such, it is consistent with current fees being excessive that 46 percent of consumers pay on time primarily to avoid late fees, while only 30 percent would do so to do the responsible thing. The posed question does not shed light on whether concerns about a credit rating or the other listed reasons (or other reasons not even listed) in combination with a $8 late fee would be sufficient for most consumers not to breach a contract. It is unclear from the results submitted whether the amount of the hypothetical late fee was meant or understood to be considered in isolation or alongside the other consequences of a missed payment. For example, did respondents say that a $10 fee would not deter them because they thought that the fee would be the only consequence of a missed payment? Would respondents have said something else had they known (and understood) the loss of the grace period or larger interest payments? The survey results leave these questions unanswered.
Although the survey did ask respondents if they would be deterred by a late fee amount below $5, $10, and $15, the reported “yes” response rates in the single digits are missing crucial context—specifically, whether the respondents would indeed have said they would be deterred by late fee amounts close to $30 and $41. The survey is hypothetical. In practice, the vast majority of cardholders pay on time in the vast majority of months. The survey results submitted to the CFPB do not show whether respondents, within the hypothetical world posited by the survey, indicated whether $30 is at or near the price point at which they would be deterred from making a late payment. In other words, the results reveal nothing about the extent to which a $30 late fee determines consumers' payment behavior in the real world.
An additional reason why the survey is of limited value is that, based on the results provided to the CFPB, the survey seems to have posited a hypothetical world in which it is assumed that respondents had the money to pay the bill and were aware of the due date. In practice, consumer commenters indicated that they pay late for a variety of reasons, including (1) their mailed payment was not received by the card issuer by the due date because of slower postal service; (2) they paid on the due date but after the cut off time on the due date; (3) they forgot to pay on time because of vacations, medical issues, or family issues; or (4) they experienced cash flow issues because of unexpected expenses, such as an illness. To the extent consumers are late in paying because of mail delivery issues, they are inattentive to their account, or they are so cash-constrained that they are unable to make a minimum payment, the amount of the late fee may have little effect on whether they pay late.
Further, the appendix to the comment letter mentions that the contractor used the Van Westendorp's Price Sensitivity Meter
A regulatory advocacy group commenter submitted data from its recent poll of approximately 1,100 consumers regarding credit card late fees. The commenter reported the poll shows that by a 21-point margin, respondents believe that a decrease in the penalty will result in more people making late payments. Further, 53 percent of those surveyed believe they will be more likely to make late payments on their credit cards if the late payment penalty is reduced from $30 to $8. A large trade association commenter cited the same poll results as direct evidence of what consumers would do in response to a reduction in late fee amounts similar to the one proposed.
The CFPB acknowledges that the direction of the response to a fee change in these results seems correct, and that such a reaction has never really been in doubt in the CFPB's development of this final rule. Lower fee amounts would be less deterrent than higher fee amounts, but this observation provides scant evidence to help the CFPB ensure that
In addition, a bank commenter asserted that it has consistently found that late fee assessments under the current safe harbor amounts reduce the incidents of recurring delinquencies and submitted its own data in support of the statement. According to the commenter, between 2019 and 2021, 43 percent of its 30-day delinquent cardholders did not subsequently enter a 60-day delinquency after incurring a late fee. Furthermore, over the same time period, 48 percent of 60-day its delinquent cardholders who were assessed two late fees did not enter a 90-day delinquency status.
The CFPB notes that the disclosed information does not show the effects of charging a late fee, let alone the effects of charging the $41 current safe harbor amount, against the counterfactual of charging an $8 safe harbor amount. The fact that a decreasing share of late payers are delinquent for one, two, or three months is fully consistent with the CFPB's understanding of consumer behavior in this market and with the CFPB's analysis of the effects of late fee charges and other consequences of late payments, as discussed herein. The commenter did not formulate how many more cardholders would be delinquent for 30, 60, and 90 days or more if no late fee were charged or if a $8 late fee were assessed after a late payment.
As discussed above, one credit union trade association asserted that the CFPB failed to present in the 2023 Proposal an analysis of the tradeoff between late fees and late payments. This commenter asserted that a consumer is deterred from being late on a payment if the late fee is greater than the net benefit of missing the payment. Similarly, one credit union commenter expressed concern that if the late fee amount is set too low, consumers are more likely to pay the fee without considering the long-term consequence of lowering their credit scores, higher borrowing costs, reduced ability to access credit, and ultimately less disposable income. Many other industry commenters expressed similar concerns. In response, the CFPB notes that calculating consumers would trade off the total costs of a missed payment against the full array of benefits of missing the deadline on minimum payments. The CFPB notes, however, that the total costs of a late payment are higher than just the late fee, as the 2023 Proposal and this final rule have enumerated.
Also, as discussed above, several commenters posited that because $8 is roughly comparable to the price of common items such as a cup of coffee or movie ticket, more consumers may view that amount as a reasonable price to pay in exchange for postponing making their credit card payments. The CFPB reiterates that some late payments are the result of circumstances beyond consumers' control.
For the reasons discussed above, the CFPB finds that the available evidence and the CFPB's study of the Y-14 data of certain Larger Card Issuers indicate that the $8 safe harbor amount for the first and subsequent late payments will still have a deterrent effect on late payments, although that effect may be lessened to some extent, and other factors may be more relevant (or may become more relevant) toward creating deterrence.
In addition, for the reasons discussed herein, the CFPB determines that some consumers may benefit from the $8 safe harbor threshold amount, including some consumers who may experience an increase in late payments under the lower safe harbor amount. With respect to those consumers, the CFPB notes, as it did in the 2023 Proposal, that for the more constrained cardholders, like subprime borrowers, who pay a disproportionate proportion of late fees, the current, higher late fee may be impacting cardholder repayment conduct—
The CFPB rejects the notion, as one commenter asserted, that potential benefits to the vast majority of consumers (including subprime consumers) who obtain credit cards through larger issuers are irrelevant to the analysis because those benefits are not among the specific statutory factors
In addition, as discussed in the 2023 Proposal, the CFPB notes that card issuers have available methods and tools other than charging higher late fees to deter late payment behavior, and thereby minimize the potential frequency and cost to card issuers of late payments. In particular, as discussed in part II.G, for cardholders who typically pay their balance in full every month (so-called transactors), a late fee is in addition to new interest incurred for carrying or revolving a balance. For these consumers, who do not roll over a balance in the month before or after a late fee is assessed, the loss of a grace period and coinciding interest charges may pose a similar or even greater deterrent effect than the late fee itself. For some consumers, card issuers may also report the late payment to a credit bureau, which could affect the consumers' credit scores. The CFPB notes that since the Board's 2010 Final Rule went into effect, many credit card issuers, financial institutions, and third parties have begun providing free credit scores to consumers.
Further, as noted, card issuers may decrease the consumer's credit line, limit the cardholder's earning or redemption of rewards, or impose penalty rates in certain circumstances—all of which can have a deterrent effect. For example, if a consumer does not make the required payment by the due date, § 1026.55(b)(3) permits a card issuer to take actions to reprice new transactions on the account according to a penalty rate in certain circumstances. After 60 days, § 1026.55(b)(4) permits issuers to take steps to reprice the entire outstanding balance on the account according to a penalty rate in certain circumstances.
As discussed above, several commenters expressed concerns about the negative consequences that consumers may incur—including higher APRs and lower credit scores—if a lower late fee safe harbor amount results in an increase in late payments. Further, as noted in the 2023 Proposal, card issuers have non-punitive methods to facilitate timely payments, including, for example, automatic payment and notification within a certain number of days (
The CFPB expects that these other methods, and the negative consequences resulting from missed payments, will decrease the likelihood of late payments not only in cases where card issuers consider the deterrent effects of lower late fees to be insufficient, but for other reasons as well. As discussed above, Larger Card Issuers also may offset lost revenue from lower late fees by increasing interest rates, which would indirectly make late payments more costly than without this response. Also, issuers may have less ability to charge consumers higher late fees to maximize profits and thus may be more inclined to take other, more efficient steps to deter late payments, including providing timely reminders of an upcoming due date, well-chosen due dates aligned with cardholders' cash flow, and encouraging automatic payments.
Some industry commenters, as discussed above, expressed concern that a late fee safe harbor amount of $8, due to its diminished deterrence effect, would make it difficult for card issuers to identify riskier consumers and manage for that risk, and thus result in higher costs to card issuers. The CFPB finds these concerns unwarranted. As discussed above, the CFPB determines that the $8 safe harbor will cover pre-charge-off collection costs for the average Larger Card Issuer. As also discussed above, the CFPB determines that this result is the approach most consistent with the CARD Act's requirements and purpose. To manage credit risk and post-charge-off collection costs resulting therefrom, card issuers can continue to customize rates using risk based-pricing, and to adjust those rates and apply penalty rates—consistent with limitations in the CARD Act as implemented in Regulation Z—if they indeed learn something from consumers' delinquency.
The CFPB also declines to look to proxies, as one commenter suggested, such as returned-check penalties under State laws, late fees charged on utility bills, and student loan late fees. The CFPB notes that those violations do not trigger financial consequences, such as a missed grace period or a month's worth of interest on the balance and new purchases that otherwise would not have applied. As such, the penalty fees for those violations are inapt proxies for purposes of the CFPB's deterrence analysis.
In addition, as discussed in the 2023 Proposal, the CFPB understands that the Metro 2 reporting format used by the industry for reporting information to credit bureaus does not consider a payment to be late if it is made within 30 days of the due date. Thus, for risk management purposes, the industry itself does not appear to consider the consumer's conduct in paying late to be a serious form of consumer conduct until the consumer is 30 or more days late. As discussed above, the CFPB estimates that a majority of accounts become current before card issuers even consider the consumer late for credit reporting purposes.
An academic commenter, as discussed above, stated that the CFPB's analysis does nothing to address the reality that multiple late payments demonstrate an increased credit risk and reflect a more serious violation of the account terms—even if those payments occur before the account would be reported as late under credit reporting guidelines. The CFPB does not accept the notion that a late fee safe harbor amount should reflect a more expansive idea of what constitutes an increased credit risk or serious violation than does the credit reporting format that the credit card industry has adopted. The CFPB further notes that, for the subset of consumers who do make their credit card payment 30 or more days late, the consequences of being reported to a credit bureau are potentially quite costly. In this respect, reporting late payments to the credit bureaus is just one of the several other tools and methods that card issuers can employ to address the conduct of late-paying consumers.
Further, the CFPB has determined that permitting risk-based pricing in setting the amount of a late fee is generally inconsistent with the CARD Act's requirement that late fees be reasonable and proportional to the cost of the omission or violation. This type of pricing would enable issuers to set late fee amounts based on estimation of risk among groups of consumers, as compared with the statutory requirement that late fees be based on the actual violation, rather than the potential risk of consumers. Moreover, the safe harbor is a discretionary amount that is presumptively reasonable and proportional, and use of risk-based pricing could result in a higher late fee amount than the cost of the omission or violation for many Larger Card Issuers. Further, the CFPB disagrees that this pricing is necessary to manage the risk presented by consumers who pay late more than once within the next six billing cycles. As a basic matter, bona fide late fees are excluded from the definition of finance charge in Regulation Z and thus are not reflected in TILA's cost of credit. It is difficult to square why a fee that is not considered a price component for all other purposes under TILA and Regulation Z should be treated as one for purposes of risk management. Indeed, as discussed in the 2023 Proposal, increasing the APR is among the methods other than late fees that card issuers have to address credit risk. Specifically, card issuers that charge an interest rate are permitted by § 1026.55(b)(3) to reprice new transactions on the account according to a penalty rate in certain circumstances. In addition, after 60 days, § 1026.55(b)(4) permits these issuers to take actions to reprice the entire outstanding balance on the account according to a penalty rate in certain circumstances. In addition, card issuers may take steps to reduce a cardholder's credit line.
The CFPB recognizes that a special rule in § 1026.52(b)(1)(ii)(C), as discussed below in the section-by-section analysis of that provision, permits card issuers to impose a late fee that does not exceed 3 percent of the delinquent balance on a charge card account that requires payment of outstanding balances in full at the end of each billing cycle, when a charge card issuer has not received the required payment for two or more consecutive billing cycles. As the Board noted in the 2010 Final Rule, this provision is intended to provide charge card issuers with more flexibility to charge higher late fees and thereby manage credit risk when an account becomes seriously delinquent, because charge card issuers do not apply an APR to the account balance and therefore cannot respond to serious delinquencies by increasing that rate. Thus, the Board acknowledged in its rationale for adopting this special rule that for most card issuers, increasing the rate is an appropriate tool for managing the risk resulting from seriously delinquent accounts. As discussed below, the CFPB is not substantively amending the current safe harbor set forth in § 1026.52(b)(1)(ii)(C). The CFPB recognizes that card issuers do not charge interest on charge card accounts, and thus would not be able to use the interest rate charged on the account to manage credit risk.
As discussed in the 2023 Proposal, in considering consumer conduct, the CFPB also recognizes that some consumers may pay late chronically but otherwise make a payment within 30 days for a number of reasons, including cash flow issues, that do not necessarily indicate that they are at significant risk of defaulting on the credit. For example, consumers may make a credit card payment after the due date from the next paycheck to smooth out expenses and avoid paying overdraft fees. As discussed above, some commenters asserted that the CFPB placed too much emphasis on cash flow issues in its analysis, with one commenter noting that if the problem is with consumer cash flow timing, as the CFPB hypothesizes, most major credit card issuers have mechanisms in place to allow customers to change the due date on their account in order to account for their own paycheck or earning schedules. The CFPB encourages the use of such mechanisms. However, even with the availability of those mechanisms, the CFPB notes, as it did in the 2023 Proposal, that a 2021 study suggests that some consumers who are paid on a bi-weekly basis may not make the required payment by the due date but will make the required payment within 30 days after the due date from their next paycheck. In addition, as discussed in part III.B, some consumer commenters who supported the proposal indicated that they had been charged a late fee because they experienced cash flow issues due to unexpected expenses, such as an illness,
As discussed above, a bank commenter expressed concern that if a late fee is only $8, consumers may not bother to call, and the card issuer will lose an opportunity to provide financial assistance. The CFPB notes that $8 is a significant sum for many consumers, particularly deep subprime consumers who pay a disproportionately large share of credit card late fees. Indeed, as discussed part III.B, some consumers who supported the proposal indicated they had limited income and that even a small late fee can impact consumers on a tight budget. The CFPB also notes that card issuers have other options for offering financial assistance besides waiting for delinquent cardholders to call. These include proactively contacting such cardholders through email, letters, and web and mobile notifications. The CFPB encourages card issuers to use nonintrusive methods of reaching out to cardholders. The CFPB also notes, as a financial regulatory advocacy group commented, that because credit card payments are applied first to cover finance charges and fees, when late fees are tacked on, less of a consumer's payment goes toward reducing the principal balance. For consumers, this in turn adds to the duration and cost of revolving an outstanding balance. The CFPB anticipates, as the commenter asserted, that the lower safe harbor amount may have a positive impact on the financial health of consumers who bear late fees, and that it is necessary and appropriate to take that effect into consideration in conjunction with safe harbor amount's effects on consumer conduct.
The CFPB notes that to the extent that industry commenters raising these concerns are Smaller Card Issuers as defined in § 1026.52(b)(3) (
As discussed above, one bank and one State bank trade association cited safety and soundness concerns as another factor that the CFPB should consider. One of these commenters asserted that setting fees on a risk-adjusted basis is essential to running a safe and sound credit card business, as well as to providing credit to customers who would not otherwise get it. A State bank trade association commenter noted that when its member banks establish terms and conditions for their credit plans, the late fee safe harbor weighs heavily in assuring that the bank's cost of credit match the higher costs of delinquency to targeted revenue and asking those who create such higher costs to bear those costs directly is necessary to maintain safety and soundness in the sub-prime space. The CFPB notes that, if these banks are Smaller Card Issuers, they are not covered by the $8 safe harbor threshold amount adopted in this final rule because it is limited to the Larger Card Issuers (as that term is used in this document), for the reasons discussed in part VI.
The CFPB also notes, however, that even if these banks are covered by this final rule the available evidence does not support the suggestion that late fees imposed pursuant to the current safe harbor amounts are adjusted or priced according to risk. In the 2022 survey of agreements as discussed in part II.E, most of the top 20 card issuers based on outstanding balances impose late fees at or near the safe harbor amounts—little to no adjusting or pricing is done at all. Moreover, none of these top issuers appear to be charging late fee amounts above the current late fees safe harbor amounts to adjust for particularly risky consumers. This conclusion also is supported by the data the CFPB collected through its 2023 survey of agreements discussed in part II.E, showing that most Larger Card Issuers charged a maximum late fee at or near the higher safe harbor amount of $41 in 2023 but did not go beyond that level. Further, as discussed in the analysis of consumer conduct above, the CFPB notes that card issuers have many other tools at their disposal for managing the higher risks posed by cardholders who chronically pay late. These include raising the rates on those cardholders' accounts, consistent with certain limitations in the CARD Act. The CFPB also notes that none of the prudential regulators with which it consulted on this final rule, as discussed in part III.C, raised safety and soundness concerns.
As discussed above, the CFPB requested comment on a number of different issues related to its proposal to lower the late fee safe harbor amount to $8 for first and subsequent violations, including eliminating the late fee safe harbor, alternative approaches to determining the late fee safe harbor amount, or whether to impose certain conditions on the use of the safe harbor or on assessing late fees generally. The CFPB also request for comment on a number of issues related to penalty fees generally, including whether to extend the $8 safe harbor amount to all penalty fees, such as over-the-limit fees, returned-payment fees, and declined access check fees. The CFPB is not finalizing any of these alternative approaches or conditions for the reasons discussed below.
The CFPB restates its conclusion, as discussed above, that establishing a safe harbor amount is an exercise of discretionary rulemaking authority, and thus, a safe harbor need not exist. The CFPB also reiterates its expectation that some Larger Card Issuers will opt to use the cost analysis provisions in § 1026.52(b)(1)(i) to set the amount of their late fees. The CFPB disagrees that the cost analysis will be an operational challenge for Larger Card Issuers with sophisticated businesses. These institutions should be able to track their pre-charge off collection costs and perform the mathematics necessary to calculate a cost-basis fee.
A few commenters responded to the CFPB's request for comment on whether to adopt a staggered late fee safe harbor amount with a cap on the maximum dollar amount, such that card issuers could impose a fee of a small dollar amount every certain number of days until a cap is hit. All opposed the idea, asserting that it would add needless complexity, be expensive to implement, or would confuse consumers.
For the reasons discussed in detail above, this final rule for Larger Card Issuers repeals the current safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) as they apply to late fees and sets late fee safe harbor threshold amount of $8. The CFPB determines that this approach better ensures that late fees imposed by Larger Card Issuers for the first and subsequent violations are reasonable and proportional than do any of the other approaches suggested by commenters, many of which would result in late fee amounts that are too high or would add unnecessary complexity to the rule.
Industry commenters generally opposed imposing either condition, with the exception of at least two card issuers that expressed support for requiring issuers to offer an autopay option. In opposing both conditions, one large industry trade association stated its belief that because the two ideas, along with a 15-day courtesy period, are only briefly referenced in the proposal, the CFPB cannot move forward on the matters absent (1) more work on the CFPB's part to understand the benefits and burdens of this approach; and (2) far more opportunity for the public to understand the specifics of any proposed approach with an opportunity to meaningfully comment. Accordingly, the commenter concluded, a new proposed rule would be required if the CFPB sought to pursue these ideas. Another industry trade association commenter stated that TILA does not authorize the CFPB to make the safe harbor subject to prerequisites or conditions, reasoning that if Congress intended to so limit card issuers' ability to use the safe harbor, it would have made any such prerequisites or conditions explicit in the statute or expressly granted the CFPB the authority to adopt such prerequisites or conditions. This commenter also expressed concern that a regulatory requirement that card issuers provide one or both of these options in order to rely on the safe harbor would limit issuer flexibility and increase compliance costs.
With respect to autopay, industry commenters noted that most card issuers already offer an autopay option, as well as the option for mail-in payments, online payments, and phone payments. Some noted that many consumers prefer to pay by other means even when autopay is an option and may be concerned about maintaining control over the timing and amount of their payments in order to avoid nonsufficient funds (NSF) or overdraft fees. A credit union commenter expressed concern that requiring issuers to offer an autopay option could be especially burdensome for smaller credit unions. This commenter noted that because some smaller financial institutions must outsource an autopay service for members who opt in for automatic payments, requiring all credit unions to employ this service would be an added expense, which would ultimately force the smaller credit unions to pass these costs on to their
With respect to additional notices, one industry trade association noted that issuers currently often send multiple proactive payment reminders prior to the payment due date across multiple channels, including through email, push notifications in an app, and prompting users when they log into their online account. Additionally, this commenter noted that email alerts may be sent each month when a credit card statement is generated, which includes the statement balance, minimum payment amount, due date, and links to other resources to answer questions customers may have related to the credit card program. This commenter further noted that consumers can also often set their own alerts, including payment due and credit card past due notices. While acknowledging that these alerts have had a positive impact on consumer behavior, this commenter asserted that the CFPB provided no data or evidence suggesting the effectiveness or ineffectiveness of these notifications and services; nor did it provide any evidence that additional notifications or services would reduce late payments or suggest alternative notifications or services that issuers should be employing.
A card issuer commenter noted the relatively low take-up rate for the expanded alert registration system that it rolled out a part of the online account opening process a few years ago, whereby consumers are prompted to enroll and select which types of alerts they want to receive, if any. This commenter reported that even with all of those processes, reminders and ease of registration, the percentage of accounts that have selected payment alerts by type are 14.9 percent by text, 13.4 percent by email, and 1.5 percent by push notification (through mobile app). This commenter further stated that as it does not want to harass or create dissatisfaction for its customers, it is incredibly important to engage them when and how they want to be engaged. In addition, this commenter noted that each alert delivery method has its own legal implications as a result of Federal laws—such as the Telephone Consumer Protection Act (TCPA)—designed to protect consumers from unwanted communications. This commenter suggested that if the CFPB has determined that additional notifications are warranted, it should seek Congressional exceptions to the TCPA and other applicable laws, as well as the preemption of any applicable State laws.
The CFPB declines to impose conditions on using the late fee safe harbor or on assessing late fees generally. The CFPB will continue to consider whether these additional regulatory requirements are appropriate.
Several consumer groups in a joint letter supported lowering the safe harbor amount for all penalty fees, expressing particular concern that card issuers will try to push cardholders into over-the-limit transactions. These commenters posited that while over-the-limit fees virtually disappeared because of the CARD Act's requirement that issuers must obtain the consumer's consent or opt in for over-the-limit transactions, that might not be a permanent condition. These commenters further noted that as can be seen from the experience for overdrafts in the early 2010s, banks are very good at overcoming the stickiness of defaults and getting consumers to opt in to a harmful product.
The CFPB declines to extend the $8 safe harbor amount to all penalty fees or otherwise lower the safe harbor amounts of those fees. As discussed in part II.D, late fees are by far the most prevalent penalty fees charged by card issuers and as such pose the greatest consumer protection concerns at this time. Moreover, the CFPB's current data and other evidence primarily relate to late fees charged by Larger Card Issuers. For these reasons, the CFPB is not adopting the $8 late fee safe harbor amount to all penalty fees or otherwise lower the safe harbor amounts of those fees. As discussed in more details in the section-by-section analysis of § 1026.52(b)(1)(ii)(A) and (B), this final rule adjusts the safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) for penalty fees other than late fees imposed by Larger Card Issuers pursuant to the annual adjustment provisions in § 1026.52(b)(1)(ii)(D). The CFPB will monitor the market for any notable increases in the prevalence of other types of penalty fees, including over-the-limit fees.
The CFPB did not include in its 2023 Proposal the annually adjusted amounts for 2023 (effective for the year 2024) for § 1026.52(b)(1)(ii)(A) and (B) pursuant to § 1026.52(b)(1)(ii)(D). The APA does not require notice and opportunity for public comment if an agency finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.
Section 1026.52(b)(1)(ii)(D) provides that amounts in § 1026.52(b)(1)(ii)(A) and (B) will be re-calculated annually using the CPI that was in effect on the preceding June 1; the CFPB uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for this adjustment. If the cumulative change in the adjusted value derived from applying the annual CPI-W to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has risen by a whole dollar, those amounts will be increased by $1.00. Similarly, if the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has decreased by a whole dollar, those amounts will be decreased by $1.00.
The CFPB did not issue a final rule adjusting the amounts in § 1026.52(b)(1)(ii)(A) and (B) in 2022 for
As noted above, the CFPB did not propose to lower the safe harbor amount of a late fee that card issuers may impose under the special rule in § 1026.52(b)(1)(ii)(C) when a charge card account becomes seriously delinquent. For the reasons discussed below, the CFPB is not finalizing any substantive changes to the special rule, but it is finalizing certain technical changes to the provision and its commentary.
Under the special rule § 1026.52(b)(1)(ii)(C), a card issuer may impose a fee of 3 percent of the delinquent balance on a charge card account that requires payment of outstanding balances in full at the end of each billing cycle if the card issuer has not received the required payment for two or more consecutive billing cycles. This safe harbor provision, as discussed above, is intended to provide charge card issuers with more flexibility to charge higher late fees and thereby manage credit risk when an account becomes seriously delinquent, because charge card issuers do not apply an APR to the account balance and therefore cannot respond to serious delinquencies by increasing that rate, as other card issuers can. For clarity, the CFPB proposed to amend the special rule to provide that card issuers may impose a fee on a charge card account in those circumstances notwithstanding the limitation on the amount of a late payment fee in proposed § 1026.52(b)(1)(ii). In addition, the CFPB proposed to amend comment 52(b)(1)(ii)-3, which provides illustrative examples of the application of § 1026.52(b)(1)(ii)(C). The 2023 Proposal would have amended these examples to use a $8 late fee amount, consistent with the proposed changes to the late fee safe harbor amount in proposed § 1026.52(b)(1)(ii). The 2023 Proposal also would have amended a cross reference contained in comment 52(b)(1)(ii)-3.iii so that it would correctly reference paragraph i.
The CFPB received one comment on its preliminary decision not to propose lowering the safe harbor amount of a late fee that card issuers may impose under the special rule in § 1026.52(b)(1)(ii)(C). In that comment, several consumer groups jointly urged the CFPB to revise the special rule to explicitly state that it is only applicable if there is no possibility of interest being charged on a balance for the account, given that the lack of interest rate applied to charge card balances is the rationale for the special rule. The commenters noted that there appear to be no traditional charge cards left on the market that do not charge interest at all. The commenters further noted their concern that without the suggested revision, issuers will start offering a “charge card balance” feature on credit cards in order to take advantage of the ability to impose late fees of three percent of the balance. The CFPB declines to adopt the recommended clarification because it is unnecessary. Section 1026.2(a)(15)(iii) defines a charge card as a credit card on an account for which not periodic rate (
For the reasons discussed above and below, the CFPB is adopting as proposed revisions to the special rule § 1026.52(b)(1)(ii)(C) regarding the safe harbor amount that card issuers may impose when a charge card account becomes seriously delinquent. Accordingly, the CFPB has determined not to lower that particular late fee amount. Specifically, the revisions clarify that card issuers may impose a fee on a seriously delinquent charge card account notwithstanding the limitation on the amount of a late payment fee in § 1026.52(b)(1)(ii). This clarification is necessary because, as discussed above, the CFPB is finalizing amendments to § 1026.52(b)(1)(ii) for Larger Card Issuers that repeal the current safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) as they apply to late fees charged by Larger Card Issuers and set a late fee safe harbor threshold amount of $8 for the first and subsequent violations for Larger Card Issuers. As noted in the proposal, charge card issuers do not apply an APR to the account balance and therefore cannot respond to serious delinquencies by increasing that rate, as other card issuers can. The CFPB determines that preserving the special rule's current safe harbor amounts is necessary and appropriate to provide charge card issuers with more flexibility to charge higher late fees and thereby manage credit risk resulting from seriously delinquent accounts.
The CFPB also is adopting amendments to comment 52(b)(1)(ii)-3, which provides illustrative examples of the application of § 1026.52(b)(1)(ii)(C), substantially as proposed. Specifically, an amendment to comment 52(b)(1)(ii)-3 clarifies that the card issuer in the examples is not a Smaller Card Issuer as defined in § 1026.52(b)(3). This final rule also amends the examples to use a $8 late fee amount, consistent with the changes to the late fee safe harbor amount in § 1026.52(b)(1)(ii). In addition, this final rule amends the cross reference in comment 52(b)(1)(ii)-3.iii so that it correctly references paragraph i. This final rule also makes a technical change to a cross reference in comment 52(b)(1)(ii)-3.ii to conform to OFR style requirements.
Section 1026.52(b)(1)(ii)(D) provides that the dollar safe harbor amounts for penalty fees set forth in § 1026.52(b)(1)(ii)(A) and (B) will be adjusted annually by the CFPB to reflect the changes in the CPI. The Board included this provision in its Regulation Z, § 226.52(b)(1)(ii)(D) as part of its 2010 Final Rule where it determined that changes in the CPI, while not a perfect substitute, would be “sufficiently similar to changes in issuers' costs and the deterrent effect of the safe harbor amounts.”
The CFPB proposed to no longer apply the annual adjustments to the safe harbor amount for late fees. The 2023 Proposal would have accomplished this by including the $8 proposed late fee safe harbor amount in the lead in text to § 1026.52(b)(1)(ii), instead of including it in § 1026.52(b)(1)(ii)(A) or (B). Thus, § 1026.52(b)(1)(ii)(D), which only applies the annual adjustments to the dollar safe harbor amounts in § 1026.52(b)(1)(ii)(A) and (B), would have no longer applied to the late fee safe harbor amount. The CFPB proposed one technical change to the cross reference to § 1026.52(b)(1)(ii)(A) and (B) used in § 1026.52(b)(1)(ii)(D) to conform to OFR style requirements. In addition, for clarity, the 2023 Proposal would have amended the lead-in paragraph in comment 52(b)(1)(ii)-2 to indicate that the annual adjustments in § 1026.52(b)(1)(ii)(D) do not apply to late fees. Under the proposal, § 1026.52(b)(1)(ii)(D) would have continued to apply to the dollar amount safe harbor amounts that apply to other penalty fees, such as over-the-limit fees, and returned-payment fees. With respect to the dollar amount of the late fee safe harbor, the CFPB would have then monitored the safe harbor amount for late fees for potential adjustments as necessary.
The CFPB noted that to reflect changes in the CPI, annual or otherwise, are not statutorily required. TILA section 149, however, does statutorily require that any late payment fee or any other penalty fee or charge, must be “reasonable and proportional” to such omission or violation. When the Board determined that the dollar safe harbor amounts for penalty fees should be subjected to annual adjustments, it did not expressly consider the effect such adjustments may have on the reasonableness and proportionality of the late payment fee (or any other penalty fee). The Board also did not provide any other data or evidence to support these adjustments as necessary. Instead, the Board summarily stated that annual adjustments would be “sufficiently similar to changes in issuers' costs and the deterrent effect of the safe harbor amounts”
In the proposal, the CFPB analyzed relevant data from certain Larger Card Issuers that were not available to the Board to take into consideration the statutorily mandated reasonable and proportional standard by considering the costs incurred as a result of the violation in determining whether a fee amount is reasonable and proportional. The CFPB, based on these data, preliminarily determined that annual adjustments based on the CPI are not necessarily reflective of how the cost of late payment to issuers changes over time and, therefore, may not reflect the “reasonable and proportional” standard in the statute. The proposal stated that while Larger Card Issuers' costs do appear to be trending up, it does not appear that they are doing so lockstep with inflation particularly when considering the month-to-month changes in inflation versus costs. Additionally, there are factors outside of inflation that may impact when issuers' cost goes up and by how much. Figure 3 below shows monthly per-account collection costs in the Y-14 collection (for all consumer portfolios with positive costs that month, solid line) and the Consumer Price Index for all Urban Consumers (CPI-U) price index since 2013 (dashed). Given that the costs fluctuate more than the price level, the CFPB preliminarily determined that any overarching trend in costs is better dealt with through ad hoc adjustments when the safe harbor amounts are revisited.
Thus, in the 2023 Proposal, the CFPB considered the cost incurred as a result of a late payment violation and preliminarily determined that the proposal was more aligned with Congress' intent for late fees to be reasonable and proportional than the current provision which requires the CFPB to adjust the safe harbor amounts to reflect changes in the CPI regardless of what the exact changes are, if any, in actual costs incurred by the card issuer.
As noted above, the Board also briefly considered deterrence and efficiency when making the determination to implement annual adjustments to reflect changes in the CPI. In the 2023 Proposal, the CFPB preliminarily determined that deterrence should not be the driving factor in whether the late fee safe harbor amount should be adjusted annually according to the CPI, nor should it outweigh considerations of issuers' costs. The CFPB noted while it
The CFPB solicited comment on the proposal to eliminate the annual adjustments to reflect changes in the CPI for the late fee safe harbor amount, including data and evidence as to why the adjustment may or may not reflect the reasonable and proportional standard. The CFPB also sought comment on potential future monitoring or other approaches to ensure that the late fee amount is consistent with the reasonable and proportional standard. The CFPB also solicited comments on whether annual adjustments to reflect changes in the CPI should be eliminated for all other penalty fees subject to § 1026.52(b), including over-the-limit fees, returned-payment fees, and declined access check fees.
A few individual commenters, a credit union, and two financial regulatory advocacy groups expressed support for the CFPB's proposal to no longer apply the annual adjustments to the safe harbor amount for late fees. Both the regulatory advocacy groups along with one individual supported the CFPB's analysis that collection costs do not increase in lockstep with the cost of living. One of the regulatory advocacy groups did, however, urge the CFPB to consider that reducing the safe harbor amount to $8 and eliminating future annual adjustments for late fees could cause card issuers to reduce their minimum payment formula or maintain minimum payments at a lower amount than would otherwise be expected.
As discussed in more detail below, many banks and credit unions, a few industry trade associations, and a few individuals expressed concerns with the CFPB's proposal to no longer apply the annual adjustments to the safe harbor amount for late fees.
A bank and two trade associations argued that if the late fee is no longer reasonable and proportional to costs due to the elimination of annual adjustments then card issuers would experience financial strain which could lead to increased consumer fees and reductions in customer service, technology, and access to credit for lower income consumers.
Two bank commenters and an industry trade association commenter
For reasons set forth herein, the CFPB is adopting the amendment as proposed for Larger Card Issuers as that term is used in this document (
In eliminating the annual adjustments for Larger Card Issuers, the CFPB is not persuaded by the commenters who expressed concerns that by doing so card issuer costs would outpace the safe harbor amount and late fees assessed at the safe harbor would not be reasonable and proportional to card issuers' costs. The CFPB understands that Larger Card Issuers' costs do not appear to be rising lockstep with inflation particularly when considering the month-to-month changes in inflation versus costs based on the Y-14 data. Figure 3 above, which was also provided in the 2023 Proposal, illustrates that monthly per-account collection costs in the Y-14 collection (for all consumer portfolios with positive costs that month) and the CPI-U price index since at least 2013 have not fluctuated at the same rate. The CFPB has also included Figure 4 below demonstrating that, like the CPI-U, monthly per-account collection costs in the Y-14 collection (for all consumer portfolios with positive costs that month) and the CPI-W price index since at least 2013 have not fluctuated at the same rate.
The CFPB has further considered and determined that deterrence is not a driving factor in whether the late fee safe harbor amount should be annually adjusted according to the CPI, nor should it outweigh considerations of issuers' costs. The CFPB acknowledges that it is possible for the deterrent effect of the safe harbor amount to be eroded year-to-year with inflation. However, the CFPB has determined that (1) it does not intend to tightly peg the deterrent effect to a specific value and recognizes there may be a range of values under which the deterrent effect would be suitable; further, the deterrence of the $8 safe harbor amount is sufficiently high so that the CFPB is not concerned by the lesser deterrence of a potentially eroded real value under realistic trajectories for medium-term inflation before any potential readjustment could be put in effect; (2) the deterrent effect does not move in lockstep with the CPI; and (3) the CFPB monitors this market and will continue to do so in order to, among other things, consider the deterrent effect when promulgating a new safe harbor amount when making adjustments to the safe harbor amount on an ad hoc basis. The CFPB acknowledges commenters who highlighted that the CFPB adjusts for inflation in other regulations, but here, the CFPB is not statutorily required to make annual adjustments like it is in certain other statutes such as the Federal Civil Penalties Inflation Adjustment Act of 1990 and the Fair Credit Reporting Act. Instead, when considering the appropriate safe harbor amount the CFPB is guided by certain statutory factors it has considered here such as costs to issuers and deterrence.
Given that the costs fluctuate more than the price level and any erosion in deterrence should not outweigh consideration of issuers' costs, that CFPB has determined that any overarching trend in costs and other factors that affect whether the late fee safe harbor amount is reasonable and proportional for Larger Card Issuers is better dealt with through ad hoc adjustments when the safe harbor amounts are revisited.
The CFPB also acknowledges commenters who provided concerns and specific data about the effect eliminating the annual adjustments could have on the real value of the safe harbor amount. For example, some industry commenters expressed concerns that the real value of the safe harbor amount would “quickly” be reduced to $0. A law firm representing several card issuers adjusted the $8 safe harbor to reflect the amount it would have been in 2010 which would have been approximately $5.74. An individual commenter showed that the $8 amount would be cut in half in 10 years at the current inflation rate. A different individual commenter indicated that holding the safe harbor steady would have resulted in the safe-harbor cap declining by 15 percent in real terms since the beginning of 2020. Although the CFPB acknowledges the real value of the safe harbor could decline with time (1) it would not happen as quickly as commenters suggested; for example, it would have taken 53 years to erode a nominal $8 set over the summer of 1970 to $1 and (2) because erosion would not occur quickly, the CFPB maintains that monitoring the market for any such erosion and making ad hoc adjustments as needed is appropriate.
The CFPB further acknowledges comments that expressed concerns that manually monitoring the market and making ad hoc adjustments would be burdensome to the CFPB and card issuers. The CFPB is obligated to monitor
As discussed in more detail in part VI, the CFPB acknowledges commenters that expressed concerns surrounding the impact eliminating the annual adjustments may have on credit unions and small card issuers. Also as discussed in more detail in part VI, the CFPB is not amending § 1026.52(b) in this final rule to eliminate annual adjustments to the safe harbor threshold
The CFPB received only a few responses to its request for comment on whether the elimination of the annual adjustments should be applied to all penalty fees covered by § 1026.52(b). The few commenters that did express concern highlighted that they were generally concerned extending the proposal to other penalty fees was not adequately addressed or analyzed in the CFPB's 2023 Proposal and that, just like late fees, the elimination of annual adjustments to reflect changes in the CPI should not apply to other credit card penalty fees because the cost of everything goes up with time. Although the CFPB rejects the broad notion that the cost of everything goes up with time, it has declined to adopt the elimination of the annual adjustments for all other credit card penalty fees covered by § 1026.52(b) because at this time the CFPB does not have the same in-depth data to base its decision as it does with late fees.
As discussed in part VI, with respect to Smaller Card Issuers as defined in § 1026.52(b)(3), the CFPB is not adopting at this time the $8 late fee safe harbor threshold and the elimination of the higher late fee safe harbor amount for subsequent violations. In addition, as discussed in part VI and in the section-by section analysis of § 1026.52(b)(1)(ii)(D), with respect to Smaller Card Issuers, the CFPB also is not adopting the proposed elimination of the annual adjustments for the late fee safe harbor threshold.
Accordingly, the CFPB is adopting a new § 1026.52(b)(1)(ii)(E) to implement those decisions. Specifically, § 1026.52(b)(1)(ii)(E) provides that a Smaller Card Issuer, as defined in § 1026.52(b)(3), may impose a fee for a late payment on an account if the dollar amount of the fee does not exceed the safe harbor amount in § 1026.52(b)(1)(ii)(A) or (B), as applicable, notwithstanding the $8 limitation on the amount of a late fee in the lead-in text to § 1026.52(b)(1)(ii). Thus, Smaller Card Issuers as defined in this final rule may continue imposing a late fee pursuant to the safe harbor in an amount that does not exceed the amount in § 1026.52(b)(1)(ii)(A) for a first violation or the amount in § 1026.52(b)(1)(ii)(B) for a late payment violation that occurs during the same billing cycle or one of the next six billing cycles. Further, because the penalty fee dollar amounts in § 1026.52(b)(1)(ii)(A) and (B) are adjusted annually to reflect changes in the CPI as described in § 1026.52(b)(1)(ii)(D), late fees imposed by Smaller Card Issuers pursuant to § 1026.52(b)(1)(ii)(A) and (B) also will be adjusted annually. The CFPB determines that adopting these separate late fee safe harbor provisions for Smaller Card Issuers is necessary and appropriate for the reasons set forth in part VI.
The CFPB also is adopting a new comment 52(b)(1)(ii)-4 explaining the late fee safe harbor provision for Smaller Card Issuers in § 1026.52(b)(1)(ii)(E). The comment explains that pursuant to the provision, and assuming that the original historical safe harbor threshold amounts apply, a Smaller Card Issuer may impose a late fee of $25 for a first late payment violation under § 1026.52(b)(1)(ii)(A) and a late fee of $35 for a late payment violation that occurs during the same billing cycle or one of the next six billing cycles under § 1026.52(b)(1)(ii)(B), provided that those amounts are consistent with the prohibitions in § 1026.52(b)(2). The CFPB is adopting comment 52(b)(1)(ii)-4 to facilitate compliance.
As previously discussed, a card issuer must not impose a fee for violating the terms or other requirements of a credit card account under an open-end (not home-secured) consumer credit plan unless the dollar amount of the fee is consistent with § 1026.52(b)(1) and (2). Section 1026.52(b)(2) provides certain circumstances where fees are prohibited. Specifically, § 1026.52(b)(2) prohibits (1) fees that exceed the dollar amount associated with the violation; and (2) multiple fees based on a single event or transaction.
In the 2023 Proposal, the CFPB considered whether to require a courtesy period, which would have prohibited late fees imposed within 15 calendar days after each payment due date and be applicable only to late fees assessed if the card issuer uses the safe harbor or alternatively, applicable to all late fees generally (regardless of whether the card issuer assesses late fees pursuant to the safe harbor amount set forth in § 1026.52(b)(1)(ii) or the cost analysis provisions set forth in § 1026.52(b)(1)(i)). The CFPB had preliminary determined that it may be appropriate that the late fee amount essentially be $0 during the courtesy period because card issuers may not incur significant costs to collect late payments immediately after a late payment violation.
Further, the 2023 Proposal noted that given that the late payments may be caused by problems with unavoidable processing delays, the implementation of a courtesy period also would be consistent with considerations of consumer conduct and deterrence, since, in these circumstances, the consumer attempted to pay timely. To the extent card issuers face increased cost from this 15-day courtesy period, the CFPB also noted that issuers have options that may not have been as readily available at the time of the Board's 2010 Final Rule to encourage timely payment, like sending notifications to consumers to warn them of payment due dates or facilitating automatic payment.
The CFPB solicited comments on whether § 1026.52(b)(2) should be amended to provide for a courtesy period which would prohibit late fees imposed within 15 calendar days after each payment due date. The CFPB additionally solicited comment on whether, if a 15-day courtesy period was required, the courtesy period should be applicable only to late fees assessed if the card issuer is using the late fee safe harbor amount (in which case § 1026.52(b)(1)(ii) would have been amended instead of § 1026.52(b)(2)) or alternatively, if the courtesy period should be applicable generally (regardless of whether the card issuer assesses late fees pursuant to the safe harbor amount set forth in § 1026.52(b)(1)(ii) or the cost analysis provisions set forth in § 1026.52(b)(1)(i)). The CFPB also solicited comment, as well as data, on whether a courtesy period of fewer or greater than 15 days may have been appropriate.
The CFPB noted that the alternative of applying a 15-day courtesy period only to use of the safe harbor late fee amount may have certain unintended effects on the possible late fee amounts assessed under the cost analysis provisions. To illustrate, using the Y-14 data, the CFPB estimated that a 15-day courtesy period tied to the proposed $8 safe harbor would cut the incidence of consumers charged the proposed $8 safe harbor amount by as much as half. This would have caused card issuers who use the proposed $8 safe harbor amount to recover as much as half of what they would have recovered if a 15-day courtesy period was not required. Card issuers who use the proposed $8 safe harbor amount, therefore, would have recovered an average of $4 in late fees per late payment. On the other hand, card issuers that opted to use the cost analysis provisions to assess late fees would not have been required to provide a 15-day courtesy period. This could have resulted in an outcome where card issuers who used the cost
The CFPB additionally solicited comments on whether a 15-day courtesy period should apply to the other penalty fees that are subject to § 1026.52(b), including over-the-limit fees and returned-payment fees, and if so, why it would be appropriate to apply a 15-day courtesy period to these other penalty fees. The proposal inquired, for example, should the CFPB provide consumers with (1) 15 calendar days after the billing cycle ends to bring the balance below the credit limit to avoid being charged an over-the-limit fee; and (2) 15 calendar days after each due date to make the required periodic payment to avoid a returned-payment fee if a payment has been returned. With respect to declined access checks, the CFPB solicitated comment on whether a 15-day courtesy period is appropriate and if so, how should it be structured.
An individual commenter indicated that a courtesy period for payments would help consumers who mail in their payments to not be penalized for any payment that is late due to issues with mail delivery.
Two credit unions and a trade association highlighted that many credit unions and other card issuers currently offer consumers a courtesy period. The trade association specifically noted that courtesy periods more appropriately help consumers who may barely miss the minimum payment due date than a staggered late fee schedule. A credit union commenter specifically noted that a 15-day-or-less courtesy period was preferable to any additional notification requirements because notifications run the risk of confusing consumers.
Several banks and credit unions, an industry trade association, and an individual commenter indicated that a 15-day courtesy period was not necessary because card issuers are already required to provide consumers with a periodic statement at least 21 days prior to the payment due date disclosed on the statement which puts consumers on notice when the payment is due and gives consumers enough time to then timely make the required payment. Many of these commenters indicated that this 21-day timeframe is akin to a courtesy period.
Two industry trade associations indicated that a courtesy period would contradict, and thus could not be implemented by a card issuer, § 1026.5(b)(2)(ii)(A)'s requirement that periodic statement be mailed or delivered at least 21 days prior to the payment due date disclosed on the statement. The commenters noted that statutorily a card issuer is permitted to treat payments not received by the due date as late immediately so long as the consumer was sent a periodic statement at least 21 days before the payment is due. The commenters believe that a courtesy period runs in contradiction to the ability to treat a payment late immediately.
A bank and a credit union indicated that available payment methods provided by card issuers aid and ensure consumers make timely payments.
Many banks and credit unions and industry trade associations, a law firm representing several card issuers, and a financial regulatory advocacy group expressed concerns about the potential negative impacts a 15-day courtesy period may have on consumers.
Many of these commenters indicated that a 15-day courtesy period would generally cause consumer confusion because there would now be a minimum payment due date and a date by which a late fee may be incurred. Many of these commenters further specified that consumers would be confused about when their payment was actually due or that consumers may be confused by what consequences are triggered by missing the minimum payment on the due date versus paying it within the 15-day courtesy period. For example, one credit union expressed concern that a consumer may not be aware that making a payment within the 15-day courtesy period but after the minimum payment due date could still negatively impact the consumer's credit score. An industry trade association indicated that consumers may not be aware that they could lose the grace period on purchases by not making a payment by the minimum payment due date but within the 15-day courtesy period.
Two trade associations and a financial regulatory advocacy group specifically expressed concerns about the potential confusion surrounding the principal payment and interest accrual. These commenters generally indicated that consumers may not be aware that their payment is actually due on the payment due date and not 15 days thereafter and that interest may continue to accrue between the due date and the end of the courtesy period. An industry trade association indicated it would be difficult to develop a disclosure that accurately informs consumers that the courtesy period applies to a late fee but other negative consequences, like interest accrual, would still occur even if the consumer paid within the 15-day period. A financial regulatory advocacy group also expressed concerns that disclosures would be more confusing because it would include both a minimum payment due date and a different date to avoid incurring a late fee.
Several of these industry commenters cautioned the CFPB that a 15-day
Several industry trade associations, two banks, and one financial regulatory advocacy group expressed concerns that a 15-day courtesy period would cause negative impacts for card issuers. Many of these commenters indicated that a 15-day courtesy period would generally increase delinquencies thereby decreasing card issuers' revenue and negatively impacting card issuers' costs. These commenters collectively noted that an impact on card issuers' cost could raise significant safety and soundness risks; impact card issuers' cash flow and thus affect their liquidity and financial management; impact a card issuers' ability to absorb losses associated with riskier accounts; and cause card issuers to spend more on monitoring and managing delinquent accounts. The financial regulatory advocacy group also noted that it believed the safe harbor amount would need to be as much as double the proposed $8 in order for card issuers to recover their collection costs. A credit union trade association cautioned the CFPB that card issuers may compensate for reduced revenue by raising interest rates or other fees associated with their credit card products. This trade association warned that due to increases in interest rates cardholders may face higher borrowing costs and credit unions may be less competitive in the market.
A few industry trade associations additionally expressed concerns that a 15-day courtesy period would create a substantial credit risk to card issuers. One of the industry trade associations specifically noted that a courtesy period would make underwriting more difficult because card issuers would have to evaluate whether a cardholder is likely to take advantage of a courtesy period. This commenter indicated that this would cause card issuers to take a more conservative approach to ensure they are not exposed to undue financial risk.
An individual commenter and an industry trade association indicated that courtesy periods provided for mortgage payments are not an applicable comparison to courtesy periods for credit card payments. The individual commenter indicated that for mortgage payments the monthly statement does not provide as much advance notice as is required for credit cards. Further, this individual commenter expressed concern about the comparison between mortgages and credit cards because the risks in mortgage transactions are different in that the mortgages have collateral to offset losses whereas credit cards are unsecured credit. Similarly, the trade association indicated that the CFPB did not adequately explain why mortgages, which are a form of secured lending, are compared to credit cards, a form of unsecured lending.
A few trade associations and one law firm representing several card issuers expressed concerns that the CFPB does not have the authority under TILA to implement a courtesy period. One of these industry trade associations specifically indicated that the CARD Act authorizes the CFPB to regulate only the amount of penalty fees in connection with a violation of a cardholder agreement and not when a violation of such an agreement occurs. The law firm described above specifically expressed concerns that a 15-day courtesy period would redefine when an issuer can consider a payment to be late and this would run contrary to congressional intent and would eliminate limitations created by other statutory provisions.
Several industry trade associations expressed concerns that the proposal lacked data or an overall explanation when the CFPB sought comments on whether § 1026.52(b)(2) should be amended to provide for a courtesy period which would prohibit late fees imposed within 15 calendar days after each payment due date. The trade association indicated that the CFPB did not provide quantification of consumer benefits or harm for the 15-day courtesy period or a courtesy period of any other length. One of the industry trade association commenters indicated that the CFPB, absent a new proposed rule with more specificity, could not implement the 15-day courtesy period because it was not detailed or formally proposed. Another of the trade association commenter indicated that the 15-day courtesy period did not include research specifically on any unintended negative consequences on consumers and credit access.
One bank and one industry trade association indicated they would not be supportive of extending the 15-day courtesy period to all other credit card penalty fees. These two commenters were generally concerned that extending the proposal to other penalty fees was not adequately addressed or analyzed in the CFPB's proposal and therefore should not be considered as a part of the final rule.
For the reasons stated below, the CFPB has determined it will not be implementing any courtesy period for late fees or other penalty fees at this time. In doing so, the CFPB acknowledges commenters who expressed concerns about the impact a 15-day courtesy period may have on consumers and issuers' costs. Specifically, commenters expressed concerns that a courtesy period would raise issuers' costs and create a substantial credit risk to card issuers including by making underwriting more difficult. Commenters also raised concerns that a courtesy period could cause consumer confusion about when a payment was actually due or that consumers may be confused by what consequences are triggered by missing the minimum payment on the due date versus paying it within the 15-day
In recognizing the availability of courtesy periods, the CFPB acknowledges commenters who discussed the interaction between a courtesy period and § 1026.5(b)(2)(ii)(A)'s requirement that a periodic statement be mailed or delivered at least 21 days prior to the payment due date disclosed on the statement. Specifically, many commenters believed that the 21-day notification of a payment due date was akin to providing a courtesy period. Other commenters noted that comparing courtesy periods for credit cards and mortgages was not an accurate comparison because the 21-day periodic statement provides a longer advance notice, and the risks are different. However, the CFPB notes that the requirement to provide a periodic statement at least 21 days prior to the payment due date is not the same as a courtesy period. Further, although the CFPB is not implementing a 15-day courtesy period, it does reject the notion that it does not have the authority to do so.
The CFPB also acknowledges commenters who provided alternative suggestions including (1) allowing card issuers to back-date late fees to the original due date if the payment was not made by the end of the courtesy period, (2) allowing card issuers to charge the late fee if the payment was not made by the due date but requiring a reversal of the charge if the payment was made within the courtesy period, (3) providing a courtesy period but maintaining a $30 safe harbor amount, and (4) providing for a 10-day courtesy period and not a 15-day period. The CFPB declines to adopt any of the alternative suggestions for the same reasons it is declining to adopt the courtesy period that the CFPB put forth in the 2023 Proposal. Absent additional evidence, the potential impacts to consumers and card issuers' costs outweigh the benefits at this time.
Section 1026.52(b)(2)(i)(A) provides that a card issuer must not impose a fee for violating the terms or other requirements of a credit card account under an open-end (not home-secured) consumer credit plan that exceeds the dollar amount associated with the violation. For late fees, accompanying comment 52(b)(2)(i)-1 provides that the dollar amount associated with a late payment is the full amount of the required minimum periodic payment due immediately prior to assessment of the late payment. Thus, § 1026.52(b)(2)(i)(A) prohibits a card issuer from imposing a late payment fee that exceeds the full amount of the required minimum periodic payment.
In implementing TILA section 149, the Board noted that the prohibition of fees based on violations of the terms or other requirements of an account that exceed the dollar amount associated with the violation as set forth in its Regulation Z, § 226.52(b)(2)(i)(A) would be consistent with Congress' intent to prohibit penalty fees that are not reasonable and proportional to the violation.
The Board also considered whether compliance with its Regulation Z, § 226.52(b)(2)(i)(A) would be burdensome on card issuers and concluded that it would not be overly burdensome.
When implementing comment 52(b)(2)(i)-1, the Board clarified that the dollar amount associated with a late payment is the full amount of the required minimum periodic payment due immediately prior to the assessment of the late payment. Industry commenters had argued that the dollar amount associated with a late payment should be the outstanding balance on the account because that is the amount the issuer stands to lose if the delinquency continues and the account eventually becomes a loss.
The CFPB proposed to amend § 1026.52(b)(2)(i)(A) to limit the dollar amount associated with a late payment to 25 percent of the required minimum periodic payment due immediately prior to assessment of the late payment. The CFPB also proposed to revise comment 52(b)(2)(i)-1 in the following two ways: (1) to clarify that the required minimum periodic payment due immediately prior to assessment of the
Like the Board's reasoning in the 2010 Final Rule, the proposal intended to ensure that late fees are reasonable and proportional, even late fees that are imposed when consumers are late in paying small minimum payments. However, the CFPB preliminarily determined that restricting the late fee to 25 percent of the minimum payment is more consistent with Congress' intent to prohibit penalty fees that are not reasonable and proportional to the violation than the current rule that allows for a card issuer to potentially charge a late fee that is 100 percent of the minimum payment.
For example, the proposal stated that when considering collection costs incurred by card issuers, it is likely that allowing a late fee that is 100 percent of the minimum payment is not reasonable and proportional to such costs. Generally, most card issuers do not incur collection costs that are 100 percent of the amount they are trying to collect. The CFPB preliminarily determined that lowering the limitation on late fees to 25 percent of the minimum payment due would still likely allow card issuers to cover contingency fees paid to third-party agencies for collecting the amount of the minimum payment prior to account charge-off. The CFPB understood, based on information obtained through orders pursuant to section 1022(c)(4) of the CFPA for purposes of compiling the CFPB's periodic CARD Act reports to Congress, that card issuers that contract with third-party agencies for pre-charge-off collections pay a contingency fee that is a percentage of the amount collected, which may include an amount (if collected) exceeding the minimum payment. These contingency fees can range from 9.5 percent to 23 percent, further supporting that the proposed 25 percent of minimum payment due is more reasonable and proportional than permitting 100 percent of the minimum payment.
The CFPB recognized that the proposed 25 percent limitation would most likely impact the amount of the late fee a card issuer can charge when (1) the minimum payment is small, and (2) the card issuer is using the cost analysis provisions in § 1026.52(b)(1)(i) generally to set the late fee amount. Based on the distribution of minimum payments in the Y-14 data, the CFPB estimated that this may occur infrequently. Y-14 data from October 2021 to September 2022 show that for those months in which an account was late, only 12.7 percent of accounts had a minimum payment of $40 or less. Additionally for those months in which an account was late, at least 48.5 percent of accounts had a minimum payment above $100. If a card issuer had used the proposed late fee safe harbor of $8, however, the instances where 25 percent of the minimum payment may be less than the proposed $8 safe harbor appeared to have been even less frequent. For instance, based on the distribution of minimum payments due in the Y-14 on a monthly basis from October 2021 to September 2022, if card issuers could have only charged up to 25 percent of the minimum payment, only 7.7 percent of accounts would have been charged a late fee of less than $8. Figure 5 below, which was provided in the 2023 Proposal, plots the cumulative distribution function
Additionally, when the dollar amount associated with the late payment is small, the CFPB recognized that the proposal could have had the potential to limit the late fee to an amount that is insufficient to cover a card issuer's costs
Furthermore, as the Board noted in its 2010 Final Rule and which the CFPB preliminarily determined was still relevant in the 2023 Proposal, to the extent card issuers cannot recover all of their costs through a late fee when a late payment involves a small dollar amount, the proposed limitation would have likely encouraged card issuers to undertake efforts to either reduce costs incurred as a result of violations that involve small dollar amounts or to build those costs into upfront rates, which had the additional benefit of resulting in greater transparency for consumers regarding the cost of using credit card accounts. Finally, in the 2023 Proposal, the CFPB preliminarily determined that the Board's explanation that compliance would not be overly burdensome also remained applicable to the CFPB's proposal. The proposal would have similarly required a mathematical determination that issuers should generally be able to program their systems to perform automatically.
In addition, as discussed above, the CFPB proposed to revise comment 52(b)(2)(i)-1 to clarify that the required minimum periodic payment due immediately prior to assessment of the late payment is the amount that the consumer is required to pay to avoid the late payment fee, including as applicable any missed payments and fees assessed from prior billing cycles. The CFPB understood that card issuers report two payment amounts when responding to Y-14 collection efforts, a minimum payment calculated just for that billing cycle and the total amount that is required to be paid that billing cycle which includes missed payment amounts or fees assessed. The CFPB proposed this revision to comment 52(b)(2)(i)-1 to address any potential confusion about the payment amount to which the proposed 25 percent limitation would apply.
The CFPB solicited comment on the proposed 25 percent limitation discussed above. The CFPB also solicited comment on whether the dollar amount associated with the other penalty fees covered by § 1026.52(b) should be limited to 25 percent of the dollar amount associated with the violation. The proposal inquired, for example, (1) should over-the-limit fees be limited to 25 percent of the amount of credit extended by the card issuer in excess of the credit limit during the billing cycle in which the over-the-limit fee is imposed;
Several trade associations, a few banks and credit unions, and an individual commenter urged the CFPB to consider the impact the 25 percent limitation would have on card issuers' costs. Commenters expressed concerns that the 25 percent limitation would be an impediment to card issuers' ability to cover current or future increased costs associated with late payments. Two commenters specifically highlighted that many costs associated with a late payment are fixed and do not depend on the minimum payment due. A few of the trade associations urged the CFPB to consider the upfront costs card issuers could incur due to a change in the minimum payment requirement, namely that applications, solicitations, and initial disclosures would need to be amended along with the issuance of a change in terms notice to reflect the new minimum payment calculation. Another trade association reported that one of its credit union members indicated that for certain balances, its current minimum payment due is $40 so with the 25 percent limitation the late fee would be $10 which would not cover its costs (and it would be $2 higher than the proposed safe harbor amount). One bank highlighted that the CFPB indicated 7.7 percent of accounts would have been charged a late fee of less than $8 if card issuers could only charge up to 25 percent between October 2021 to September 2022. This commenter indicated that the CFPB failed to explain why $8 would be a reasonable estimate of costs incurred if nearly 8 percent of late payment incidents would be subject to a fee lower than the proposed safe harbor due to the 25 percent limitation.
A law firm representing several card issuers, an individual commenter, and two trade associations expressed concerns that the 25 percent limitation would lead to a late fee amount that is not reasonable or proportional to a cardholder's omission or violation or otherwise did not properly consider the factors the CFPB is guided by when considering the appropriate safe harbor amount.
One credit union indicated that the CFPB inaccurately based the 25 percent limitation on the cost of collecting delinquent accounts pre-charge-off. The commenter expressed concerns with this analysis because accounts assessed late fees pose a higher risk of delinquency and thus charge-off. The commenter noted that all costs incurred on credit unions' credit card products are also incurred by all members and, therefore, all costs should be included in the analysis.
Several banks and credit unions and many trade associations cautioned the CFPB that the 25 percent limitation could potentially cause negative consequences for consumers. One credit union and several trade associations indicated that the 25 percent limitation would cause card issuers to raise their minimum payment requirements in order to charge a higher late fee. Industry commenters and trade associations highlighted various potential consequences that could result from card issuers increasing their minimum payment requirements including an increase in delinquencies and defaults; damage to consumers' credit scores; higher rates for credit cards; decrease in credit availability, and an increase in consumers' future borrowing costs.
Many trade associations also raised concerns that any potential effect that the 25 percent limitation may have on raising card issuers' costs, from upfront costs like additional computer programming needs to the late fee not covering issuers' costs, could cause card issuers to take actions that may have a negative effect on consumers. For example, these commenters asserted that card issuers may raise other fees associated with their credit card products, raise rates, be unable to issue credit cards, or be unable to provide credit access to as many consumers.
One credit union trade association also cautioned the CFPB that the 25 percent limitation may cause consumers to be less likely to try to avoid late fees by communicating with credit unions that they are experiencing financial difficulties which would ultimately cost both the consumer and the credit union.
The individual commenter suggested that a card issuer should be permitted to charge a late fee that is 3 percent of the total underlying debt, similar to § 1026.52(b)(1)(ii)(C). The individual commenter indicated that a card issuer who permits a consumer to pay the underlying debt off over time is taking on a higher credit risk than card issuers that require payments in full. Therefore, all card issuers, at a minimum, should be able to charge 3 percent of the total underlying debt. Similarly, a bank suggested the CFPB tie the late fee to the underlying balance rather than the minimum payment.
An industry trade association and many individual commenters on behalf of a credit union indicated that the credit union's late fee of $25 would effectively be reduced to $6.25 under the proposal. The individual commenters also indicated that the CFPB's proposal would require the card issuer to elect the lesser of the proposed $8 safe harbor amount or 25 percent of the missed payment.
One credit union indicated that according to estimates, the 25 percent limitation would result in an average late fee amount of $4.61, which is a 62 percent decrease compared to the credit union's average late fee of $12.13. A bank commenter indicated that more than 53 percent of its accounts have a minimum payment less than $32 and two-thirds of its accounts have a minimum payment below $50.
A few trade associations indicated that one bank reported that 40 percent of its required minimum payments for consumer credit card accounts are under $32. These trade associations also indicated that a small card issuer reported to the trade associations that it estimated 53 percent of its accounts and 29.1 percent of balances have minimum payments under $32.
One bank and one industry trade association indicated they would not be supportive of extending the 25 percent limitation to all other credit card penalty fees. These two commenters were generally concerned that extending the proposal to other penalty fees was not adequately addressed or analyzed in the CFPB's proposal and therefore should not be considered as a part of the final rule.
For the reasons stated herein, the CFPB is not adopting, for either Larger Card Issuers or Smaller Card Issuers, the proposed amendment to § 1026.52(b)(2)(i)(A) to limit the dollar amount associated with a late payment to 25 percent of the required minimum periodic payment due immediately prior to assessment of the late payment. Therefore, the CFPB is also not adopting the proposed revision to comment 52(b)(2)(i)-1.
The CFPB recognizes that some of the concerns discussed above could be addressed by only applying the 25 percent restriction to Larger Card Issuers. Nonetheless, the CFPB has determined that even with respect to Larger Card Issuers, the benefits the 25 percent limitation may have for consumers, such as requiring a more reasonable and proportional late fee for instances where the minimum payment due is small, do not outweigh considerations of card issuers' ability to recoup their pre-charge-off collection costs when they are using the $8 safe harbor threshold amount. In addition to considering the comments noted above, the CFPB also acknowledges the specific data provided by commenters demonstrating potential late fee amounts based on current minimum payments due. Commenters here highlighted that some card issuers have a large percentage of their accounts with a minimum payment of less than $32. For these card issuers, the 25 percent limitation would be especially impactful because, as reported in comments, 40 to 53 percent of accounts would have charges under the $8 safe harbor. The CFPB is concerned that when a card issuer cannot charge a significant number of their accounts the $8 safe harbor amount, card issuers' pre-charge-off collection costs may not be covered.
The CFPB also acknowledges commenters who highlighted the potential for card issuers to raise its minimum payments due in response to the 25 percent limitation and the impacts this may have on consumers. These comments noted that in order to combat lower late payment fees that the 25 percent limitation may impose, card issuers might raise minimum payments due. Conversely, other commenters explained that card issuers raising minimum payments would be a positive for consumers because, according to these commenters, current minimum payments due result in long repayment periods and higher finance charges.
In weighing these considerations, the CFPB has determined not to adopt the 25 percent limitation proposal in order to minimize impacts to minimum balances due. While the CFPB agrees with commenters that raising minimum payments due could be a positive for some consumers, the potential negative impacts of higher minimum payments on consumers, like an increase in delinquencies and defaults in particular for consumers with limited cash flow, do not outweigh any benefits higher minimum payments due may have for consumers.
The CFPB also acknowledges alternative suggestions provided by commenters such as limiting the late fee to 25 percent of the minimum payment remaining or permitting a late fee that is 3 percent of the total underlying debt. The CFPB declines to adopt alternatives suggested for the same reasons the CFPB is not adopting the proposed 25 percent limitation. That is to say, the CFPB has determined that the potential impacts on card issuers' ability to recoup pre-charge-off collection costs does not outweigh the benefits to consumers, and the CFPB is concerned about the impact the 25 percent restriction may have on minimum payments due.
As discussed above, the CFPB received only a few responses to its request for comment on whether the 25 percent limitation should be applied to all penalty fees covered by § 1026.52(b). The CFPB has determined that, like the 25 percent limitation for late payments, the benefits to consumers do not outweigh the impact on card issuers' costs. Additionally, with respect to consumer groups' concern that card issuers will begin to engage in tactics to increase the number of those penalty fees if the CFPB lowers the safe harbor late fee amounts, the CFPB notes that this is less likely because it has not adopted the 25 percent limitation for late fees. As such, a 25 percent limitation for all other credit card penalty fees will not be implemented. In doing so, the CFPB rejects the notion raised by industry commenters that the CFPB could not have adopted the 25 percent limitation with respect to these other penalty fees in this final rule because it did not establish a sufficient factual or legal analysis with respect to these penalty fees.
Section 1026.52(b)(2)(ii) prohibits card issuers from imposing multiple penalty fees based on a single event or transaction.
The CFPB did not propose to amend the text of § 1026.52(b)(2)(ii). However, the CFPB proposed to revise comment 52(b)(2)(ii)-1 to clarify several examples illustrating this requirement. Specifically, the 2023 Proposal would have amended several examples in comment 52(b)(2)(ii)-1 to reflect a late fee amount of $8, consistent with the proposed amendments to § 1026.52(b)(1)(ii), and to make minor technical changes for consistency with the proposal.
The CFPB received no comments on the proposed revisions to comment 52(b)(2)(ii)-1. This final rule adopts comment 52(b)(2)(ii)-1 as proposed with several revisions. Consistent with the proposal, this final rule amends comment 52(b)(2)(ii)-1 to reflect a late fee amount of $8 for purposes of the examples, consistent with the new late fee safe harbor amount applicable to Larger Card Issuers. This final rule also amends comment 52(b)(2)(ii)-1.i and ii to specify that the card issuer for purposes of the examples is not a Smaller Card Issuer pursuant to § 1026.52(b)(3). This final rule also makes a technical change to a cross reference in comment 52(b)(2)(ii)-1.ii.B to conform to OFR style requirements. Even though Smaller Card Issuers are not subject to the $8 late fee safe harbor threshold in § 1026.52(b)(1)(ii), the CFPB has determined it is useful to revise the late fee amounts in the examples to be $8, consistent with the late fee safe harbor threshold amount that applies to Larger Card Issuers.
As discussed in part VI, the CFPB is not adopting at this time certain proposed provisions with respect to Smaller Card Issuers. Specifically, with respect to such card issuers, the CFPB is not adopting: (1) the $8 late fee safe harbor threshold and the elimination of the higher late fee safe harbor amount for subsequent violations; and (2) the elimination of the annual adjustments for the safe harbor threshold. To implement that distinction, the CFPB is adopting a definition of Smaller Card Issuer in new § 1026.52(b)(3). The CFPB's reasons for not adopting the provisions as to Smaller Card Issuers, including the reasons for setting the
Section 1026.52(b)(3)(i) sets forth the general definition of Smaller Card Issuer. It provides that, except as provided in § 1026.52(b)(3)(ii), a card issuer is a Smaller Card Issuer for purposes of the safe harbor late fee provisions in § 1026.52(b)(1)(ii)(E) if the card issuer together with its affiliates had fewer than one million open credit card accounts, as defined in § 1026.58(b)(6), for the entire preceding calendar year.
The Smaller Card Issuer definition also incorporates the existing definition of open credit card account in § 1026.58(b)(6) of Regulation Z, which is used for purposes of determining whether a card issuer meets certain exceptions to requirements for submitting card agreements to the CFPB. The CFPB is incorporating this open credit card account definition into the definition of Smaller Card Issuer because it is one with which card issuers are familiar and, as such, will facilitate compliance.
Existing § 1026.58(b)(6) defines open account, or open credit card account, broadly as a credit card account under an open-end (not home-secured) consumer credit plan for which either (1) the cardholder can obtain extensions of credit on the account; or (2) there is an outstanding balance on the account that has not been charged off. The definition further provides that an account that has been suspended temporarily is considered an open account or open credit card account. The CFPB notes that this broad definition generally encompasses open credit card accounts that a card issuer keeps on-balance sheet as well as those that a card issuer may have sold or otherwise keeps off-balance sheet (except for accounts that have been charged off). The CFPB determines that this metric more accurately reflects the size of a card issuer's portfolio and ensures that card issuers cannot meet the Smaller Card Issuer definition, and thereby impose higher late fee safe harbor amounts, by simply securitizing their accounts and moving them off-balance sheet.
The CFPB also notes that to meet the Smaller Card Issuer definition in § 1026.52(b)(3), a card issuer together with its affiliates must have fewer than one million open credit card accounts for the entire preceding calendar year. Thus, as explained in new comment 52(b)(3)(i)-1, if a card issuer together with its affiliates had more than one million open credit card accounts from January through October of the preceding calendar year, for example, but had fewer than that threshold number in November and December, the card issuer is not a Smaller Card Issuer in the next calendar year. Further, as also explained in the comment, the card issuer is not a Smaller Card Issuer until such time that the card issuer's number of open credit card accounts, together with those of its affiliates, remains below one million for an entire preceding calendar year.
Section 1026.52(b)(3)(ii) sets forth an exception to the general definition of Smaller Card Issuer in § 1026.52(b)(3)(i). It provides that if a card issuer together with its affiliates had fewer than one million open credit card accounts for the entire preceding calendar year but meets or exceeds that number of open credit card accounts in the current calendar year, then the card issuer will no longer be a Smaller Card Issuer for purposes of § 1026.52(b)(1)(ii)(E) as of 60 days after meeting or exceeding that number of open credit card accounts.
The CFPB notes that this approach is similar to the definition of creditor in § 1026.2(a)(17). That definition generally provides, in relevant part, that a creditor is a person who regularly extends consumer credit that is subject to finance charge or is payable by written agreement in more than four installments. It further provides that a person regularly extends consumer credit if, with certain exceptions, that person extended consumer credit more than 25 times in the preceding calendar year. However, the definition also generally provides that if a person did not meet the numerical standard (
Similarly, under this final rule, the definition of Smaller Card Issuer generally provides that if a card issuer together with its affiliates did not meet the numerical standards (
The CFPB is adopting a technical amendment to the definition of open account, or open credit card account, in § 1026.58. As discussed in the section-by-section analysis of § 1026.52(b)(3), the CFPB is adopting a definition of Smaller Card Issuer to implement its decision not to finalize certain provisions of this final rule with respect to card issuers with fewer than one million open credit card accounts. That definition incorporates the definition of open account, or open credit card account, in § 1026.58(b)(6). The CFPB is revising § 1026.58(b)(6) to clarify that the definition of open account, or open credit card account, is for purposes of both § 1026.58 and § 1026.52.
Section 1026.60(a) provides that a card issuer must provide the disclosures set forth in § 1026.60 on or with a solicitation or an application to open a credit or charge card account. Section 1026.60(a)(2) provides certain format requirements for the disclosures required under § 1026.60. Section 1026.60(a)(2)(i) provides that in certain circumstances the disclosures required by § 1026.60 generally must be disclosed in a tabular format. Section 1026.60(a)(2)(ii) provides that when a tabular format is required, certain disclosures must be disclosed in the table using bold text, including any late fee amounts and any maximum limits on late fee amounts required to be disclosed under § 1026.60(b)(9). Comment 60(a)(2)-5.ii includes a late fee example to illustrate the requirement that any maximum limits on fee amounts must be disclosed in bold text. The current example assumes that a card issuer's late fee will not exceed $35.
The CFPB proposed to amend the example to assume that the late fee would not exceed $8, so that the maximum late fee amount in the example would have been consistent with the proposed $8 late fee safe harbor amount set forth in proposed § 1026.52(b)(1)(ii).
The CFPB received no comments on the proposed revisions to comment 60(a)(2)-5.ii. This final rule adopts comment 60(a)(2)-5.ii as proposed with minor revisions to specify that the card issuer in the example is not a Smaller Card Issuer as defined in § 1026.52(b)(3). The CFPB has determined that revising the example to be consistent with the late fee safe harbor amount of $8 is necessary to reflect the changes to the late fee safe harbor dollar amount as set forth in § 1026.52(b)(1)(ii) for Larger Card Issuers. Notwithstanding the revisions to the late fee safe harbor amount in the example, Smaller Card Issuers as defined in § 1026.52(b)(3) are not subject to the $8 late fee safe harbor threshold adopted in this final rule and may use the relevant safe harbor thresholds set forth in § 1026.52(b)(1)(ii)(A) through (C). This final rule also makes a technical change to a cross reference in comment 60(a)(2)-6.i to conform to OFR style requirements.
Appendix G to part 1026 generally provides model or sample forms or clauses for complying with certain disclosure requirements applicable to open-end credit plans, including a credit card account under an open-end (not home-secured) consumer credit plan. The following five sample forms or clauses set forth an example of the maximum late fee amount of “Up to $35” under the heading “Late Payment”: (1) G-10(B); (2) G-10(C); (3) G-10(E); (4) G-17(B); and (5) G-17(C). The following two sample forms set forth an example of the maximum late fee amount of “Up to $35” under the heading “Late Payment Warning”: (1) G-18(D); and (2) G-18(F). Sample form G-21 sets forth an example of the maximum late fee amount of “Up to $35” under the heading “Late Payment Fee.” The following two sample forms or clauses set forth an example of the late fee amount ($35) a consumer may incur if the consumer does not pay the required amount by the due date under the heading “Late Payment Warning”: (1) G-18(B); and (2) G-18(G). The following three sample forms set forth an example of the late fee amount ($35) that the consumer was charged in the particular billing cycle under the heading “Fees”: (1) G-18(A); (2) G-18(F); and (3) G-18(G).
The CFPB solicited comment on whether the late fee amount of $35 in these sample forms or clauses, as applicable, should be revised to set forth a late fee amount of $8, and whether the maximum late fee amount of “Up to $35” in these sample forms or clauses, as applicable, should be revised to set forth a maximum late fee amount of “Up to $8” so that the late fee amount and maximum late fee amount in the examples are consistent with the proposed $8 late fee safe harbor amount set forth in proposed § 1026.52(b)(1)(ii). The CFPB noted that the 11 forms or clauses discussed above are just samples; card issuers would need to disclose the late fee amount that they charge or the maximum late fee amount on the account, as applicable, consistent with the restrictions in § 1026.52(b).
In addition, as discussed in the section-by-section analysis of § 1026.52(b)(2)(i), in the 2023 Proposal, the CFPB solicited comment on whether to restrict card issuers from imposing a late fee on a credit card account, unless the consumer has not made the required payment within 15 calendar days following the due date. The CFPB solicited comment on whether the following 10 sample forms or clauses that currently disclose an example of the late fee amount ($35) or maximum late fee amount (“Up to $35”) that could be incurred on the account should be revised to disclose that a late fee will only be charged if the consumer does not make the required payment within 15 calendar days of the due date: (1) G-10(B); (2) G-10(C); (3) G-10(E); (4) G-17(B); (5) G-17(C); (6) G-18(B); (7) G-
In addition, the CFPB noted that the following five samples forms also include disclosures about maximum penalty fee amounts of “Up to $35” for over-the-limit fees
The CFPB received no comments on the revisions to the relevant sample forms or clauses in appendix G on which it solicited comment and is adopting the revisions as discussed below. The final rule amends the applicable sample forms or clauses to include a late fee amount of $8 and a maximum late fee amount of “Up to $8” consistent with the late fee safe harbor amount set forth in § 1026.52(b)(1)(ii) applicable to Larger Card Issuers. Specifically, the final rule amends the following 11 sample forms or clauses: (1) G-10(B); (2) G-10(C); (3) G-10(E); (4) G-17(B); (5) G-17(C); (6) G-18(A); (7) G-18(B); (8) G-18(D); (9) G-18(F); (10) G-18(G); and (11) G-21.
Notwithstanding the changes to the late fee amount in the sample forms or clauses, Smaller Card Issuers as defined in § 1026.52(b)(3) are not subject to the $8 late fee safe harbor threshold adopted in this final rule and may use the relevant safe harbor thresholds set forth in § 1026.52(b)(1)(ii)(A) through (C). The 11 revised forms or clauses are samples and card issuers are required to disclose the late fee amounts, or maximum late fee amount, that it charges consistent with § 1026.52(b).
The CFPB did not receive comments regarding other changes to the sample forms or clauses on which it solicited comment, such as whether the 15-day courtesy period for imposing late fees or other penalty fees, if adopted, should be disclosed in the sample forms or clauses. As discussed in the section-by-section analysis of § 1026.52(b)(2), the CFPB is not adopting the 15-day courtesy period for late fees or other penalty fees. Therefore, the CFPB is not adopting any edits to the sample forms or clauses to disclose a courtesy period related to late fees or any other penalty fees. In addition, as discussed in the section-by-section analysis of § 1026.52(b)(1)(ii), this final rule does not adopt the $8 safe harbor threshold for penalty fees other than late fees imposed by Larger Card Issuers including over-the-limit fees and return payment fees, so this final rule does not adopt any changes to the sample forms or clauses for penalty fees other than late fees.
The CFPB proposed that the final rule, if adopted, would take effect 60 days after publication in the
Separately, under TILA section 105(d), CFPB regulations requiring any disclosure which differs from disclosures previously required by TILA part A, part D, or part E must have an effective date of October 1 which follows by at least six months the date of promulgation subject to certain exceptions.
The 2023 Proposal noted that, TILA section 105(d) only applies to any proposed changes requiring disclosures, if adopted, it would not necessitate the October 1 effective date for purposes of the late fee disclosure for two reasons. First, the 2023 Proposal noted that under Regulation Z, card issuers are currently required to disclose the late fees amounts, or maximum late fees amounts, as applicable, that apply to credit card accounts in certain disclosures, and the disclosure of those late fee amounts must reflect the terms of the legal obligation between the parties.
In addition, if the CFPB were to finalize the proposed 15-day courtesy period, as discussed in the 2023 Proposal, the CFPB solicited comment on whether the 15-day courtesy period and potential disclosure language should have an effective date of “October 1 which follows by at least six months the date of promulgation,” consistent with TILA section 105(d).
One credit union and several industry trade association commenters asserted that the proposed changes, if adopted, would require major adjustments to multiple disclosures, cost calculations and cost composition, and not just adjustments to the $8 late fee in the disclosures as stated in the CFPB's 2023 Proposal. These commenters indicated that issuers would also need to disclose and explain the proposed fee cap of 25 percent of the minimum required payment and how it relates to the proposed $8 late fee, eliminate disclosures for the higher late payment fee for recurring late payments within a six-month period and update their systems to reflect the changes as detailed in the CFPB's proposal. The commenters further asserted that the CFPB's proposed 60-day effective date ignores the full impact of the proposed revisions, if adopted, and the substantial changes to disclosures and systems that would be necessary to comply with the revised regulation. Furthermore, some of these commenters mentioned that the CFPB's assertion that card issuers are not mandated to use the safe harbor failed to take into account the fact that most card issuers rely on the existing safe harbor and would need to change their disclosures regardless of whether they continue to rely on the safe harbor or opt to disclose late fees calculated under the cost analysis provisions in § 1026.52(b)(1)(i). These commenters concluded that either option would require extensive changes to required disclosures and that the 60-day effective period is impracticable and unworkable.
One financial institution asserted that the CFPB's proposal for the 60-day effective date would be problematic for issuers whose portfolios significantly consist of private label and co-branded credit cards, due to existing contractual limitations that will need to be renegotiated with partners to effectuate changes in account-pricing terms. This commenter asserted that the 60-day effective date provides an unreasonably short amount of time to renegotiate existing contracts and implement new terms and the proposal, if finalized, would disproportionately affect private label and co-branded credit card issuers.
For the reasons discussed below, the CFPB has determined that this final rule will take effect 60 days after publication in the
The CFPB notes that several provisions proposed, and for which the CFPB sought comments, have not been adopted under this final rule. For example, the CFPB is not adopting the proposed provisions to restrict late fee amounts to 25 percent of the required minimum payment. In addition, this
With respect to commenters' assertions that card issuers would need to conduct a comprehensive cost analysis to determine whether the new safe harbor late fee adequately covers their cost, the CFPB maintains that this final rule does not mandate Larger Card Issuers to conduct any cost analysis. Due to safety and soundness regulation and general good corporate governance principles, the CFPB expects that Larger Card Issuers have more sophisticated cost accounting systems than Smaller Card Issuers and should be able to calculate a late fee amount based on the cost analysis provisions within 60 days. However, if Larger Card Issuers choose to use the cost analysis provisions as set forth in § 1026.52(b)(1)(i), including the requirement to exclude post-charge off collection costs from its analysis, they must do so and comply with the changes in this final rule by this final rule's effective date. Alternatively, Larger Card Issuers may choose to initially adopt the $8 late fee safe harbor amount while separately conducting a more extensive cost analysis.
With respect to comments on the impact of the 60-day effective date on private label and co-branded card issuers, the CFPB notes that many private label and co-branded card issuers are likely to be Larger Card Issuers (
With respect to the commenters' requests for a staggered implementation strategy and additional time to comply with the final rule by smaller issuers, the CFPB has determined that this request is not needed. The CFPB notes that Smaller Card Issuers as defined in § 1026.52(b)(3) are not subject to the safe harbor reduction.
Impact of TILA section 105(d) on the effective date. Under TILA section 105(d), CFPB regulations requiring any disclosure which differs from disclosures previously required by TILA part A, part D, or part E, or by any regulation of the Bureau promulgated thereunder must have an effective date of October 1 which follows by at least six months the date of promulgation subject to certain exceptions.
Second, while the CFPB recognizes that this rule will result in Larger Card Issuers changing the numerical value for late fees in their disclosures for consumers, the CFPB notes that such changes to the numerical amount of late fees are something that card issuers frequently do. For example, card issuers change the disclosure of late fee amounts after the CFPB adjusts the safe harbors for inflation without waiting until the next October 1. Third, the change in amount applies to the safe harbor, which is an amount that card issuers may elect but are not “required” to use.
This final rule is summarized in part I. In developing this final rule, the CFPB has considered this final rule's potential benefits, costs, and impacts in accordance with section 1022(b)(2)(A) of the CFPA.
The discussion below relies on information that the CFPB has obtained from industry, other regulatory agencies, and publicly available sources, including reports published by the CFPB. These sources form the basis for the CFPB's consideration of the likely impacts of this final rule. The CFPB provides estimates, to the extent possible, of the potential benefits and costs to consumers and covered persons of this final rule, given available data.
Specifically, this discussion relies on the CFPB's analysis of both portfolio and account data from the Y-14 collection, as described in part V above. The discussion also relies on data collected directly from a diverse set of credit card issuers to support the CFPB's biennial report on the state of the consumer credit card market as required by the CARD Act.
The CFPB acknowledges limitations that prevent an exhaustive determination of benefits, costs, and impacts. Quantifying the benefits, costs, and impacts requires quantifying future consumer and card issuer responses to the changes. It is impossible to predict these responses with certainty given
In light of these data limitations, the analysis below provides quantitative estimates where possible and a qualitative discussion of this final rule's benefits, costs, and impacts. General economic principles and the CFPB's expertise, together with the available data, provide insight into these benefits, costs, and impacts.
In evaluating this final rule's benefits, costs, and impacts, the CFPB considered the impacts against a baseline in which the CFPB takes no action. This baseline includes existing regulations and the current state of the market. In particular, it assumes (1) the continuation of the existing safe harbor amounts for credit card late fees, currently $30 generally and $41 for each subsequent late payment occurring in one of the next six billing cycles; and (2) that these amounts will be adjusted when there are changes to the CPI in accordance with the current provision in § 1026.52(b)(1)(ii)(D).
Several industry trade associations and one academic commenter generally asserted that the cost-benefit analysis for the 2023 Proposal was inadequate. The academic commenter asserted that the cost-benefit analysis was not based on academically vetted and scrutinized economic justifications for a specific safe harbor of $8 in distinction to another level, whether lower or higher than $30.
One credit union trade association commenter asserted that the 2023 Proposal lacked a sufficient cost-benefit analysis, and the proposal did not contain a comprehensive outline of potential effects. This commenter further asserted that the proposal did not contain a systematic economic analysis of a “but-for world” in which the rule is implemented. This commenter provided the views of a consulting firm hired by the commenter indicating that in the consultant's view, the CFPB did not provide a valid economic analysis of the impact of the 2023 Proposal on: (1) the increased frequency of late payments caused by lower late fees; (2) the changes in APRs, credit limits, minimum payments and other credit card terms caused by lower late fees; (3) the increased risk of charge-offs and losses faced by credit card issuers resulting from the increased frequency of late and skipped payments caused by lower late fees; (4) the much greater difficulty in adapting to lower late fees faced by Federal credit unions that cannot charge APRs of more than 18 percent; (5) which consumers will benefit from, and which consumers will be harmed by, the decrease in late fees and the resulting changes in other credit card terms; and (6) the decrease in access to credit, and the reduction in credit limits for consumers with lower credit scores caused by lower late fees.
The CFPB disagrees with the general assertion that its consideration of benefits and costs of the 2023 Proposal under section 1022(b) of the CFPA was inadequate. The CFPB in its 1022(b) analysis for the 2023 Proposal conducted a thorough analysis of the reasonably available data to estimate, quantify, and monetize benefits and costs to the extent possible. As noted above, the CFPB has limited evidence to predict fully how changes to late fees will affect late payments and delinquencies or the expected substitution effects across credit cards and between credit cards and other forms of credit. While some commenters assumed that such predictions can be made with a high degree of certainty, no commenter offered new and reliable evidence or research to corroborate their assertions. Given the difficulties of precisely foreseeing future impacts, the most viable approach involves a careful examination of the effects from analogous historical events. In developing this final rule, the CFPB undertook a thorough review of available research and data analyzing the impacts of comparable regulatory changes in recent decades that allow some reasonable extrapolation regarding potential outcomes.
One financial regulatory advocacy group asserted that reducing the amount of late fees charged would have a positive effect on the financial health of consumers especially those who carry over credit balances each month. This commenter asserted that the financial distress suffered by consumers due to the high cost of late fees was further compounded by the limited amount of a consumer's payment that is applied to the principal.
One trade association commenter asserted that the CFPB failed to properly quantify the benefits to consumers, and the commenter claimed that the 2023 Proposal would disproportionately benefit a small portion of consumers at the expense of others. This commenter also asserted that the CFPB's proposal (1) evinced a lack of understanding with respect to issuers' obligations to manage credit risk, which the commenter claimed would require issuers to take actions that may result in a reduction in access to credit, and (2) assumed that the proposed changes would incentivize issuers to do more to encourage on-time payments.
One credit union trade association claimed that the cost-benefit analysis in the 2023 Proposal indicated that there would be many possible negative consequences to consumers of the proposed changes, which the commenter stated would include higher interest rates on credit cards and negative changes to other terms and fee amounts. This commenter claimed that the CFPB indicated that many consumers will be “harmed” by these changes without experiencing any of the benefits. This commenter urged the CFPB to re-examine the cost/benefit balance of the proposal and recognize that it will ultimately cause more harm to more consumers than the benefits to those it will favor.
Several industry trade associations asserted that the CFPB did not adequately reflect the cost of the 2023 Proposal to consumers. These commenters claimed that the vast majority of consumer cardholders will be harmed by the proposal. These commenters also claimed that the proposal (1) would limit the ability of issuers to allocate the cost and risk of late payments to the late paying population and would require issuers to spread these costs across all consumer cardholders; (2) would increase late payments and associated costs; and (3) would cause the cost of credit to
One law firm representing several card issuers claimed that while the CFPB acknowledged various costs imposed by the 2023 Proposal, it did not provide adequate support for its assessment that the 2023 Proposal would result in a “net benefit for consumers.” This commenter asserted that the 2023 Proposal would benefit only the “very small subset” of the consumer population that regularly pays late fees and claimed that the 2023 Proposal acknowledges that cardholders who never make late payments “would not benefit and would be worse off” due to potential increases in maintenance fees and APRs. This commenter asserted that with respect to the population of consumers with subprime credit scores that regularly pay late fees, the proposal did not adequately consider that any benefits received “would ultimately be offset” by any of the possible outcomes articulated by the CFPB in the 2023 Proposal: increases in the APR; reduced access to credit; increased delinquencies and negative credit reporting; or increases in other credit card fees.
As an initial matter, this rule is intended to tailor the safe harbor to a more reasonable approximation of the existing statutory standard of “reasonable and proportional.” In other words, this rule brings the regulations closer in line with the statutory text. The requirement that penalty fees be reasonable and proportional to violations reflects Congress' judgment that penalty fees should not be higher, even if higher fees might have led to lower prices for consumers who do not incur penalties. The CFPB is not in a position to dispute Congress' conclusion that the benefits of the statutory scheme were worth the trade-offs. The CFPB's analysis of the costs, benefits, and impacts of this rule inform the agency's decision, but ultimately, the decision to finalize this rule is based on a conclusion that the rule is more closely aligned with the statute.
The CFPB disagrees with the assertion that its consideration of benefits and costs to consumers was inadequate in the 2023 Proposal. As noted by several commenters, the CFPB discussed in the 2023 Proposal not only the proposed rule's potential benefits to consumers who often incur late fees but also the potential costs to some consumers, in particular those who seldom incur late fees, from potential offsetting changes to the terms of credit card agreements, such as increases in the interest rate, increases in the amount of other fees, or changes in rewards.
The CFPB also notes that APRs and other prices reflect the issuer's assessment of individual consumers' likely usage and risk profiles, particularly at Larger Card Issuers. If an issuer prices its product knowing that a consumer is very unlikely to make late payments, then a reduction in late fees will make little difference to the optimal pricing for that consumer, and there is no reason to expect meaningful offsetting price changes for such a consumer. Any offsetting price changes are likely to be more significant for categories of consumers that issuers anticipate are more likely to pay late fees.
These expectations can be correct only as averages for broader groups based on factors the issuer can observe when setting prices for an account, meaning that the effects of the rule on consumers will still depend on whether they make more or fewer late payments relative to others who appear similar. Nonetheless, individualized pricing based on risk profiles limits the extent to which consumers who infrequently pay late are likely to pay more as a result of the rule.
In the 2023 Proposal, the CFPB also considered that for consumers who incur late fees the possibility that the dollar value of additional consumer costs from offsetting price changes could be equal to or greater than the savings to consumers from lower late fees. The CFPB explained that it was unlikely that the fee reductions would be fully offset because (1) offsetting price increases are most likely where markets are most competitive since, in competitive markets where profit margins are low, any reduction in revenue is likely to lead some firms to exit the market, limiting supply and driving prices up for consumers; and (2) recent evidence suggests that profits from credit card issuance are significant, making it unlikely that reduced fee revenue would lead to exit.
The CFPB considered the evidence that it deemed to be reliable and that was reasonably available, and commenters did not provide additional sources of reliable data about the effects of late fees on consumers and covered persons that materially alters the CFPB's assessment of the benefits and costs to consumers and covered persons of the 2023 Proposal.
In the 2023 Proposal, the CFPB also considered general economic principles in its analysis. For example, economic principles imply that private firms will weigh costs and benefits of different actions, and that if the benefit of an action is exogenously reduced, those firms will generally change their actions in response. Thus, for example, in the 2023 Proposal, the CFPB considered that firms considering investments in
One industry trade association asserted that the CFPB inadequately weighed the costs and reduced deterrent effect of the lower safe harbor described in the 2023 Proposal. In doing so, the commenter also claimed that the CFPB (1) underweighted the costs of compliance with a lower safe harbor regime; and (2) did not adequately quantify the various impacts that its $9 billion estimated reduction in fee revenue will have on the pricing and availability of credit cards. This commenter claimed that the CFPB's inadequate evaluation of the costs associated with the 2023 Proposal render the proposal arbitrary and capricious in violation of the APA.
One bank asserted that the CFPB in the 2023 Proposal did not adequately consider the reduction of access to consumer financial products in its cost-benefit analysis under 1022(b); rather, the bank claimed that the CFPB stated the 2023 Proposal is “likely to drive some firms out of the market.” This commenter also claimed that the CFPB in the 2023 Proposal did not adequately consider the impact on covered persons in rural areas.
One law firm representing several clients claimed that the 2023 Proposal's consideration of costs and burdens did not adequately consider the cost of compliance for card issuers. This commenter claimed that the 2023 Proposal would impose disproportionately high costs on credit card issuers that service borrowers with subprime credit scores, many of whom may need to exceed the $8 safe harbor, and such issuers would need to spend significant resources to build internal processes and procedures for calculating and documenting the costs of late fees if they want to use cost analysis provisions set forth in § 1026.52(b)(1)(i). This commenter also claimed that the 2023 Proposal would require such issuers to spend significant resources building out an evidentiary record in order to use the cost analysis provisions, particularly in light of the CFPB's continued public scrutiny of credit card late fees.
One individual commenter claimed that the CFPB has acted arbitrarily and capriciously in not adequately considering the potential costs to issuers. This commenter asserted that the CFPB did not adequately estimate the possible increase in compliance burden as more credit card issuers would find it necessary to prove their collection costs exceed the safe harbor limits.
One industry trade association questioned whether the CFPB had evidence to support the claim that card issuers could mitigate late payment using other steps. For example, this commenter claimed that the CFPB did not have adequate evidence for the CFPB's statement that card issuers can mitigate the lost revenue by launching additional programs to reduce the incidence of late payments, such as sending reminders and offering automatic or convenient payment options. The commenter asserted that its members report that such measures are common practice now and are not likely to be more effective if cardholders are contacted more frequently.
Two credit union trade associations asserted that the CFPB should not have suggested in the 2023 Proposal that issuers can mitigate the loss of revenue from late fees by taking other measures such as increasing interest rates. For example, these commenters indicated that credit unions face different compliance costs and challenges than larger card issuers particularly as related to use of the cost analysis provisions set forth in § 1026.52(b)(1)(i). Several credit union trade associations and credit union commenters further asserted that Federally chartered credit unions may be prohibited from raising interest rates because they are subject to a statutory interest rate cap so that may not be a feasible mechanism to recover lost revenue.
The CFPB disagrees with the claim that its analysis pursuant to section 1022(b)(2)(A) of the CFPA in the 2023 Proposal does not adequately address the costs to card issuers. As discussed in the 1022(b) analysis of the 2023 Proposal, the CFPB considered a range of potential costs to issuers of complying with the 2023 Proposal.
The CFPB also disagrees with the claim that it did not adequately consider in the 2023 Proposal the potential effects on the pricing and availability of credit cards, as it discussed a range of possible effects on the terms of credit cards and availability of credit cards as a result of reduced late fee revenue. For example, the 2023 Proposal explained that (1) issuers can mitigate the costs of the proposal to some extent by taking other measures (
With respect to the criticism by the two credit union trade associations that credit unions face different compliance costs and challenges than larger card issuers particularly as related to use of the cost analysis provisions set forth in § 1026.52(b)(1)(i), the CFPB notes that this final rule will not cover most credit unions because they are Smaller Card Issuers as defined in new § 1026.52(b)(3). As discussed in part VI, the CFPB recognizes that it relied on Y-14 data from certain Larger Card Issuers in the 2023 Proposal, and as discussed in that part, the CFPB also recognizes that smaller credit unions could face different challenges in using the cost analysis provisions in § 1026.52(b)(1)(i) because of economies of scale and other issues.
The CFPB acknowledges that at least four Federal credit unions are likely to be impacted by the final rule. The APR caps reduce these firms' ability to risk-price to certain customers, especially in an environment with higher inflation and prevailing nominal rates of interest. This fact will be heightened by the final rule, which will be a further constraint on credit card pricing for these firms, consistent with the intent of Congress to ensure that penalty fees are reasonable and proportional.
This section discusses the benefits and costs to consumers and covered persons of the following changes applicable to late fees charged by Larger Card Issuers: (1) the repeal of the current safe harbor threshold amounts, the adoption of a lower safe harbor dollar amount of $8, and the elimination of a higher safe harbor dollar amount for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles; and (2) the elimination of the annual adjustments for the safe harbor dollar amounts to reflect changes in the CPI set forth in current § 1026.52(b)(1)(ii)(D) to the $8 late fee safe harbor. These two amendments will only apply with respect to late fees charged by Larger Card Issuers (
Pursuant to the annual adjustments for safe harbor dollar amounts in § 1026.52(b)(1)(ii)(D), this final rule also revises the safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) to $32, except that it sets forth a safe harbor of $43 for each subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles. These revised safe harbor threshold amounts of $32 and $43 apply to penalty fees other than late fees for all card issuers (
This final rule also amends certain sample forms and clauses in, and commentary to, Regulation Z to clarify the application of the rule and make conforming adjustments. The CFPB does not separately discuss the benefits and costs of these other amendments but has determined that they will generally lower compliance costs for card issuers and facilitate consumer understanding of the rule. Finally, the discussion below also considers the benefits and costs of certain other alternatives that the CFPB considered.
The CFPB is amending § 1026.52(b)(1)(ii) to repeal the current safe harbor amounts for late fees charged by Larger Card Issuers—currently set at $30 and $41 for a first and subsequent violation, respectively—and to adopt a late fee amount of $8 for the first and subsequent violations.
As discussed in part VI, based on its review of both public and confidential data, the CFPB estimates that these revised provisions would apply to approximately the largest 30 to 35 issuers by outstanding balances (out of around 4,000 financial institutions that offer credit cards). This would cover over 95 percent of the total outstanding balances in the credit card market. Thus, these revised provisions would cover all of the Y-14+ issuers for which the CFPB has total collections and late fee revenue data, as well as about a dozen other similar issuers with large credit card portfolios.
In general, this final rule's lower safe harbor amount for late fees of $8 for first and subsequent violations will benefit consumers doing business with Larger Card Issuers who pay late by reducing their late fee amounts. This direct benefit may be offset to the extent that Larger Card Issuers respond to lost fee revenue from consumers in specific risk tiers with price increases elsewhere (like APR) to consumers in that same risk tier, and potentially if consumers respond to reduced late fees in ways that harm them in the long run. The discussion below begins with the direct benefits from lower late fees, then turns to the possibility that those benefits are offset through changes to other prices, and then addresses the potential effects on consumers of changes to late payment behavior.
The direct benefits to consumers who pay late could be as high as the fees saved with the $8 fee amount on violations without or with a recent prior violation—that is, the difference between fees currently charged and the lower $8 amount. For example, for a consumer who would incur a $31 late fee, the savings will be $23. Based on data considered in the 2023 Proposal, the CFPB estimates that aggregate late fees assessed for issuers in the Y-14+ data were $14 billion in 2019 and $12 billion in 2020 and that the average late fee charged was $31 in 2020.
To estimate the extent of the reduction, based on data considered in the 2023 Proposal, the CFPB examines Y-14 account-level data for the 12-month period from September 2021 to August 2022. The issuers in this sample represent an estimated 73 percent of aggregate credit card balances and reported collecting $5.688 billion in late fees during the period, and the CFPB estimates that the collected fees would have been $1.451 billion, or 74.6 percent lower, if fees had been $8 rather than the fees actually collected.
The benefits to consumers, however, will be lower if issuers choose to rely on the cost analysis provisions in § 1026.52(b)(1)(i) in order to set late fees at amounts higher than the $8 safe harbor. By using estimates of pre-charge-off collection costs per paid incident using the Y-14 data from September 2021 to August 2022 (consistent with the data used in the 2023 Proposal), the CFPB expected that fewer than four of the 12 issuers might use the cost analysis provisions to charge late fee amounts above $8 based on their reported pre-charge-off collection costs per paid violation. The CFPB's calculations suggested that if these major issuers rely on the cost analysis provisions in § 1026.52(b)(1)(i) while the others in the Y-14 data use the $8 safe harbor amount, it would lower the mechanical impact of the new safe harbor amounts by 3 percent relative to the case of all Y-14 issuers charging late fees of $8 (from an estimated fee reduction of $4.23 billion for these Y-14 issuers to an estimated $4.11 billion), representing a reduction in fees collected of 72.3 percent for these issuers.
After issuance of the 2023 Proposal, the CFPB collected quarterly data on Larger Card Issuers in the Y-14+ sample for 2021 and 2022. Thus, for a similar period, but from October 2021 to September 2022, the CFPB now can compare late fee revenue of the Y-14 analysis sample to the Y-14+ total. The Y-14 issuers whose account level data was used reported $5.8 billion in late fee revenue over this period, which is 53 percent of the $11 billion total for that time period in the Y-14+ data. These data are consistent with the CFPB's expectation as noted above and in the 2023 Proposal that the late fee revenue per account at these Y-14 issuers is less than for other issuers in the Y-14+.
Also, since the issuance of the 2023 Proposal, the CFPB published new estimates for late fee revenue at Larger Card Issuers in the Y-14+ from 2021 and 2022. These data are consistent with the consumer benefits discussed above and in the 2023 Proposal of the $8 safe harbor as applied to the Y-14+ issuers, and in fact, suggest that the consumer benefits may be higher than the $9 billion estimated in the 2023 Proposal. Based on the $14.5 billion estimated late fee revenue for the Y-14+ in 2022, the CFPB estimates that the total consumer benefits at Y-14+ issuers from the mechanical effect (based on a drop-in late fee revenue proportional to the simulated effects in the account-level data) would be $10.5 billion instead of the estimated consumer benefit of $9 billion based on the lower $12 billion total in 2020. In addition, total benefits for consumers holding cards of Larger Card Issuers will be even higher than the estimate based on the Y-14+ data, given that the CFPB estimates that there are about a dozen Larger Card Issuers that are not included in the Y-14+ data.
The above analysis is based on collection expenses as reported in the Y-14 data. Some commenters reported that some issuers that report Y-14 data have collection expenses that they do not account for in their Y-14 reporting of collection expenses. If some Larger Card Issuers have greater costs than they report in the Y-14 data and such costs can be included for purposes of the cost analysis provisions in § 1026.52(b)(1)(i), it is possible that more Y-14 issuers than reflected above would use the cost analysis provisions, reducing both potential benefits to cardholders and potential costs to issuers.
The above estimates do not consider potential responses by consumers to lower late fees—in particular, the possibility that consumers are more likely to miss a payment due date if the fee for doing so is reduced. If this occurs and more consumers make untimely payments, consumers could face costs for doing so, including costs like increased penalty interest rates or lower credit scores. Such a response will affect the estimates above, as well as the final incidence of the benefits and costs.
As discussed in part VII above concerning deterrence and in the 2023 Proposal's 1022(b) analysis, however, the available evidence leads the CFPB to expect that a $8 late fee will still have a deterrent effect on late payments, although that effect may be lessened by the change to some extent, and other factors may be more relevant (or may become more relevant) towards creating deterrence. Even with a late fee of $8 at Larger Card Issuers, consumers will have incentives to make their minimum payment on time to avoid the late fee and other potential consequences of paying late, such as the potential loss of the grace period, and potential credit reporting consequences. To the extent consumers are late in paying because they are inattentive to their account or because they are so cash-constrained that they are unable to make a minimum payment, the amount of the late fee may have little effect on whether they pay late.
To the extent consumers who pay on time when faced with current late fees will instead rationally choose to make a late payment in response to lower late fees that will result from this final rule, those consumers will benefit from the additional flexibility that a lower late fee will afford. For such consumers, the benefit of delaying the minimum payment past the due date, net of the perceived other financial consequences of missing the due date, must be less than their account's existing late fees but greater than the fees that will result from this final rule. Their benefit from this final rule will be less than the difference between the two fees, but it will still add to the total consumer gains from this final rule. More generally, all consumers will benefit from the option value of managing a potential episode of financial distress at lower costs if and when necessary.
Since this final rule will reduce Larger Card Issuers' revenue from late fees, these issuers may respond by adjusting interest rates or other card terms to offset the lost income. Issuers' responses will affect both the sum of consumer gains and their distribution across consumers within pricing tiers. Total consumer gains would be the lowest in the unlikely case that Larger Card Issuers made up for all lost revenue and any potential cost increase by changing other consumer prices. Any such offset could manifest in higher maintenance fees, lower rewards, or higher interest on interest-paying accounts.
Offsetting price increases are most likely where markets are most competitive since, in competitive markets, any reduction in revenue is likely to drive some firms out of the market, limiting supply and driving prices up for consumers. As the recent profitability of consumer credit card businesses suggests that these markets are imperfectly competitive, the CFPB expects less than full offset, with consumers gaining in total from reduced late fees.
To attempt to identify potential offsetting price changes, the authors develop a theoretical model of pricing offset under imperfect competition and imperfect salience (at the end of their appendix, extended in a separate publication
A third study that some commenters deemed relevant focuses on the effects of debit card interchange fee limits in the Durbin Amendment, which applied to large institutions, and found that less than half of lost interchange revenue was offset through increases to consumer checking account fees.
The CFPB reads this evidence as strongly suggesting less than full offset, if any. In considering offsetting changes, Larger Card Issuers will also face competitive pressures from Smaller Card Issuers, which will not be required by this final rule to reduce late fee amounts and therefore may not face similar pressure to increase other fees or APRs.
To illustrate a realistic level of the potential offsetting effect, consider the increase in interest income required to offset 19 percent lost late fee income, using the same calibration as in the academic study.
Economic theory also suggests the potential for a pass-through greater than what would be required to offset lost fee revenue, if the credit card market is sufficiently adversely selected on APRs.
This middle-of-the-road interest offset estimate for Larger Card Issuers, at least on one that reprices all accounts by the same percentage to recover all lost late fee revenue with higher finance charges, suggests that any losses to credit access will be limited. However, the CFPB acknowledges that late fee revenue has been concentrated on certain market segments, suggesting that any price responses are also likely to be focused in those segments. Risk-based pricing is likely to work by tiers. In particular, interest rates or other charges of subprime credit cards might increase more than for other cards, and some consumers might find these cards too expensive due to higher interest rate offers. Even if this were to happen, it would not result from a higher average consumer cost of using credit cards but from greater transparency about the cards' actual expected cost of ownership.
On the other hand, it is also possible that some consumers' access to credit could fall if Larger Card Issuers could adequately offset lost fee revenue expected from them only by increasing APRs to a point at which a particular card is not viable, for example, because the APR exceeds applicable legal limits.
Any offsetting changes, like the decrease in late fees, would affect different consumers differently depending, for example, on how often they pay late and whether they carry a balance. For example, within any market segment there will be some cardholders who never pay late; such consumers will not benefit from the reduction in late fees and could pay more for their account if maintenance fees in their market segment rise in response—or if interest rates increase in a segment in response and some on-time cardholders in that segment also carry a balance. Frequent late payers are likely to benefit monetarily from reduced late fees, even if higher interest rates or maintenance fees offset some of the benefits. Cardholders who do not regularly carry a balance but occasionally miss a payment will benefit from the changes so long as any increase in the cost of finance charges (including the result of late payments that eliminate their grace period) is smaller than the drop in fees.
Though the late fee changes most directly benefit those who make late payments, the CFPB notes that late fees are collected only from those delinquent cardholders who eventually pay at least the late fee amount. Some collection costs and charge-off losses are caused by delinquent customers who do not recover before account closure and charge-off. These cardholders will not receive any of the benefits of the lower fees they are nominally assessed but do not pay in practice.
As mentioned above in part II.E, consumers may not fully consider late fees when shopping for a credit card.
Recent studies in psychology and economics highlight some patterns likely to affect consumer welfare in the credit card market, depending on how accurately cardholders forecast the likelihood that they will incur late fees. A seminal theoretical study
The CFPB acknowledges the possibility that consumers who were more likely to pay attention to late fees than to other consequences of paying late, like interest charges, penalty rates, credit reporting, and the loss of a grace period, might be harmed in the short run if a reduction in late fees makes it more likely that they mistakenly miss payments. The CFPB has not quantified this effect but notes that reducing late fees may increase issuer incentives to find other approaches to make the consequences of late payment salient to consumers, including reminders or warnings.
Other studies in psychology and economics might suggest that penalties can serve as a valuable commitment device, for example helping them to make choices that they prefer in the long term despite the temptation to make different choices in the short term.
This final rule may benefit consumers indirectly by making late payments less profitable to Larger Card Issuers and thereby increasing Larger Card Issuer incentives to take steps that will encourage on-time payment. Consumers may benefit from issuer practices such as more effective reminders or convenient payment options. If issuers bear no net cost from late payments, or even profit from them, then they have no incentive to take even inexpensive steps to reduce the incidence of late payments. Even with this final rule changes, Larger Card Issuers will not have incentives to take all steps they could that would efficiently reduce the incidence of late payment since the late fees they do charge mean they do not bear the full cost of late payments. Nonetheless, by limiting Larger Card Issuer revenue from violations that exceeds cost, this final rule changes Larger Card Issuer incentives in a way that benefits consumers.
Relative to the 2023 Proposal, this final rule introduces an incentive for credit card issuers that together with their affiliates have close to one million open credit card accounts to stay or get below that threshold for the sake of higher late fee revenues as a Smaller Card Issuer than as a Larger Card Issuer. If this results in the closure of some accounts, maybe dormant accounts, those cardholders will have less liquidity immediately available as well as a potentially worse credit score. Similarly, consumers whose credit card applications are turned down, or who do not receive card offers, because of more stringent underwriting standards by issuers just below the size threshold could incur additional costs of shopping for an additional card and perhaps pay a slightly higher cost of applying for the next best credit card. The CFPB expects few issuers, if any, to be close to the threshold at any given time and change practices just because of this incentive.
Because this final rule will significantly reduce the aggregate value of late fees paid by consumers, this final rule will significantly reduce late fee revenue for Larger Card Issuers. As noted above in part II.F, late fee revenue constitutes over one-tenth of the $120 billion issuers in the Y-14+ charged to consumers in interest and fees in 2019, totaling over $14 billion in that year.
Larger Card Issuers' costs and revenue will also be affected by changes in consumer behavior in response to the reduced late fee amounts. In particular, lower late fees at Larger Card Issuers could make some consumers somewhat more likely to make late payments. As discussed above in the section-by-section analysis of § 1026.52(b)(1)(ii) in part VII, the CFPB expects that a $8 late fee will still have a deterrent effect on late payments, although that effect may be lessened by the lower late fee to some extent, and other factors may be more relevant (or may become more relevant) to creating deterrence. For example, as discussed in the 2023 Proposal, and in this final rule (the section-by-section of § 1026.52(b)(1)(ii)), the CFPB expects that consumers may be deterred by factors other than the fee amount, like higher interest rates and potential credit reporting.
As noted in the 2023 Proposal and this final rule, the CFPB also expects that any additional late payments due to the reduced late fee safe harbor amount will generate both additional fee income and additional collection costs relative to an outcome with lower fee amounts but no additional incidents. Even if more consumers pay late because of the decreased late fee amount, the cost of collecting any such additional late payments is unlikely to be greater, per incident, than the cost of collecting late payments under the existing safe harbor. Therefore, the CFPB expects that collection costs to Larger Card Issuers will not increase by more than fee income derived from any additional late payments.
The CFPB recognizes that an increased number of late payments could result in additional delinquencies and ultimately increase credit losses for Larger Card Issuers. But the CFPB is not aware of evidence showing that higher late fees prevent consumers from eventually defaulting on their accounts.
As discussed above, Larger Card Issuers could also increase other prices in a way that would offset some revenue lost from reduced late fees. In general, Larger Card Issuers will set the terms of credit cards to maximize profits, and it is not clear that limiting late fees will directly affect the existing profit-maximizing finance charge or account maintenance fee, for example. However, a reduction in late fee revenue could cause Larger Card Issuers to change other terms if the lost late fee revenue reduced the profitability of issuing credit cards to the point at which issuers are faced with a choice between raising new revenue by changing other card terms or exiting the market segment. As discussed above, such offsetting price increases are most likely where profit margins are low since any reduction in revenue is likely to drive risk-adjusted returns on capital below market expectations, limiting supply and driving prices up for consumers. The recent profitability of consumer credit card businesses makes the CFPB expect the market to see exceedingly few exits and no change in entries.
Larger Card Issuers' revenue loss from this final rule could be mitigated by the ability to use the cost analysis provisions in § 1026.52(b)(1)(i) rather than setting late fees at the safe harbor amount. Any Larger Card Issuer with costs greater than $8 per late payment will be able to set a higher fee using the cost analysis provisions, although doing so would likely involve some expense to conduct the relevant analysis, ensure that it complies with the existing rule's requirements and potential changes from this final rule, and ensure that the relevant data and analysis are documented in a way that would permit the issuer to demonstrate compliance to regulators. The CFPB understands that Larger Card Issuers already conduct sophisticated analyses of credit card operations, and the CFPB expects the cost of additional analyses to be small, with most additional costs to come from procedures needed to demonstrate compliance.
The $8 late fee safe harbor in this final rule will only apply to Larger Card Issuers, but changes to the terms of credit cards at these institutions could affect demand for similar products at financial institutions not covered by the $8 late fee safe harbor, and this could affect Smaller Card Issuers and their customers in turn. In general, Smaller Card Issuers will benefit from new limitations on the types of products that competing firms can offer. For example, if Larger Card Issuers were to increase account annual fees to offset some lost revenue from late fees, the credit cards of other issuers would become more attractive. The ability of consumers to switch to these products could mitigate any costs to consumers from offsetting interest or fee changes at Larger Card Issuers or from reduced access to credit cards. On the other hand, significant reductions in credit card late fees at Larger Card Issuers might create competitive pressure for Smaller Card Issuers to lower their own late fees, in which case their consumers could experience effects similar to those at Larger Card Issuers. Given the difficulty in predicting the market response of Larger Card Issuers to this final rule, it is uncertain whether cardholders of Smaller Card Issuers will experience net benefits or costs from this final rule, and whether Smaller Card Issuers will experience net benefits or costs from this final rule.
The CFPB will not apply the annual adjustments to reflect changes in the CPI to the $8 safe harbor amount for late fees imposed by Larger Card Issuers. Instead, the CFPB will continue to monitor the market and adjust the safe harbor amount as the CFPB determines is appropriate to reflect changes to pre-charge-off collection costs and other factors. The discussion below considers the effects of this change relative to a baseline in which the new $8 safe harbor amount applicable to late fees charged by Larger Card Issuers is adjusted to reflect changes in the CPI; however, the effects would be qualitatively similar at other safe harbor amounts.
The benefits and costs of this final rule to consumers and covered persons depend on whether future adjustments by the CFPB would be greater or less than the changes that would result from the CPI adjustments that are currently used. As discussed in the section-by-section analysis of § 1026.52(b)(1)(ii)(D) in part VII and illustrated in Figure 3, trends in collection costs for Larger Card Issuers and the CPI do not appear to be closely related.
Under this final rule, it is likely that the $8 late fee safe harbor amount applicable to late fees charged by Larger Card Issuers will be adjusted less frequently than under the current rule. Some consumers will benefit from the transparency and administrative ease of these late fee amounts changing less often. The cardholders who will benefit are those whose late fee amount is not
To the extent that some Larger Card Issuers experience increases in collection costs that would have been addressed through CPI-based adjustments, these issuers will retain the option under this final rule to use the cost analysis provisions in § 1026.52(b)(1)(i) and thus recover their higher costs with higher late fee amounts. Their cardholders will still benefit from the elimination of the annual adjustments to the $8 late fee safe harbor amount if the cost analysis provisions result in less substantial increase than would have been the case under the CPI adjustments. If a rise in a fee stemming from the cost analysis provision were faster, the consumer would have seen the same fee rise from this issuer determining the late fee using the cost analysis provisions in § 1026.52(b)(1)(i), irrespective of this provision.
Larger Card Issuers with decreasing costs will lose out on a mechanical increase in their revenue above cost to reflect CPI adjustments unless the late fee safe harbor amount is otherwise adjusted. As shown in Figure 3 above in part VII, recent collection cost totals from the Y-14 portfolio data suggest that some issuers have been experiencing decreasing nominal collection costs even in the inflationary period of 2021-2022.
This final rule revises the safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B) to $32, except that it sets forth a safe harbor of $43 for each subsequent violation of the same type that occurs during the same billing cycle or in one of the next six billing cycles. These revised safe harbor threshold amounts of $32 and $43 apply to penalty fees other than late fees for all card issuers as well as late fees imposed by Smaller Card Issuers.
Based on a 2023 survey of credit card agreements submitted to the CFPB's Credit Card Agreement Database as discussed in part II.E, the CFPB estimates that 1 percent of Smaller Card Issuers charge the current safe harbor threshold amounts for late fees, representing far less than 1 percent of balances of consumer credit cards. The cardholders of these issuers will pay 6.7 percent more in fees for late payments, and 4.9 percent more for each subsequent late payment in one of the next six billing cycles. These Smaller Card Issuers will collect correspondingly higher revenue from these late fees.
The CFPB does not have specific data on the percentage of Larger and Smaller Card Issuers that charge the safe harbor amount for penalty fees other than late fees. The cardholders of these issuers will pay 6.7 percent more in fees for violations.
Annual adjustments in the future will operate the same way as in the baseline and thus have no additional impact.
The CFPB considered whether to amend § 1026.52(b)(2)(i)(A) to limit the dollar amount associated with a late payment to 25 percent of the required minimum periodic payment due immediately before the assessment of the late fee. Currently, late fee amounts must not exceed 100 percent of the required payment. As discussed in part VII, the CFPB is not finalizing this proposed amendment for either Larger Card Issuers or Smaller Card Issuers because the CFPB determined the benefits the 25 percent limitation may have for consumers, such as requiring a more reasonable and proportional late fee for instances where the minimum payment due is small, do not outweigh considerations of card issuers' ability to recoup their pre-charge-off collection costs when they are using the $8 safe harbor threshold amount. The CFPB also determined not to adopt the 25 percent limitation proposal in order to minimize impacts to minimum balances due.
In the 2023 Proposal, the CFPB considered an alternative approach in which § 1026.52(b)(2) would be amended to provide for a courtesy period that would prohibit late fees imposed within 15 calendar days after the payment due date. Such a courtesy period could apply only to late fees assessed if the card issuer is using the late fee safe harbor amount or, alternatively, could be applicable generally (regardless of whether the card issuer assesses late fees according to the safe harbor amount set forth in § 1026.52(b)(1)(ii) or the cost analysis provisions in § 1026.52(b)(1)(i)). The CFPB is not finalizing this alternative.
The CFPB has determined that, absent additional evidence, the potential impacts to card issuers' costs and consumers outweigh the benefits of a mandatory 15-day courtesy period. While the CFPB acknowledges the possible benefits raised by commenters, such as helping consumers who mail in their late payments avoid a penalty fee for any mail delivery issues, the potential for card issuers to recoup costs at half the safe harbor amount per late payment combined with other concerns about consumer confusion outweighs the possible benefits to consumers.
As discussed in part VII, the CFPB solicited comment on the alternative of proposing to eliminate the safe harbor provisions for late fees in § 1026.52(b)(1)(ii) altogether, in which case card issuers could only impose late fees under the cost analysis provisions in § 1026.52(b)(1)(i). The CFPB is not finalizing this alternative to revoke the late fees for Larger Card Issuers without replacing it with another safe harbor amount and thus, requiring Larger Card issuers to use the cost analysis provisions to determine the amount of late fees. As discussed in part VII, the CFPB has determined that revoking the safe harbor and then adopting the $8 late fee safe harbor amount for Larger Card Issuers—as this final rule does—better achieves its goals.
The CFPB considered an alternative that would apply the $8 safe harbor to other penalty fees, such as over-the-limit fees, returned-payment fees, and declined access check fees. In particular, the CFPB considered whether the new $8 late safe harbor threshold should apply to other penalty fees and whether, alternatively, if the CFPB were to eliminate the safe harbor provisions in § 1026.52(b)(1)(ii) for late fees charged, the CFPB should also eliminate the safe harbor for other penalty fees charged. This final rule does not adopt this alternative.
As the lower $8 safe harbor amount in this final rule applies only to Larger Card Issuers (
Based on its review of both public and confidential data, the CFPB expects that there are approximately 30-35 Larger Card Issuers that together with their affiliates have one million or more open credit card accounts, and one dozen or fewer among them with $10 billion or less in assets.
As with other Larger Card Issuers, depository institutions and credit unions that together with their affiliates have one million or more open credit card accounts but the depository institutions and credit unions have $10 billion or less in total assets will generally lose fee revenue as a result of this final rule. The CFPB has no reason to believe that depository institutions and credit unions that are Larger Card Issuers and have $10 billion or less in total assets will experience effects qualitatively different from those discussed above in part IX.E.
Institutions with $10 billion or less in assets might experience indirect effects of the new $8 late fee safe harbor amount adopted in this final rule. As noted above, changes to the terms of credit cards at Larger Card Issuers could affect demand for similar products at financial institutions not covered by the new $8 late fee safe harbor amount adopted in this final rule. For example, if some Larger Card Issuers were to increase some account APRs to offset some lost revenue from late fees, the credit cards of other institutions could become more attractive. On the other hand, significant reductions in late fees at Larger Card Issuers might create competitive pressure for financial institutions not directly affected by this final rule to lower their own late fees, and thus lose revenue. Given the difficulty in predicting the market response of Larger Card Issuers, it is uncertain whether financial institutions not covered by the $8 safe harbor threshold adopted in this final rule will experience net benefits or costs from this final rule.
The CFPB is concerned about the geographic concentration of current late fees and that areas with higher incidence of late fees tend to also be areas with higher numbers of consumers from disadvantaged groups, as summarized in part II.F above. While the CFPB has not analyzed the incidence of late fees in rural areas specifically, as explained in the 2023 Proposal, CFPB research has found that consumers in rural areas are somewhat less likely than other Americans to have a credit card, and not significantly more likely than other Americans to have a credit card delinquency.
On the other hand, as discussed in the 2023 Proposal, consumers in rural areas have lower median household income, and lower median credit card balances, than consumers in non-rural areas.
As discussed above in part IX.D and in the 2023 Proposal, the CFPB acknowledges that late fee revenue has been concentrated in certain market segments, suggesting that any price responses to this final rule are also likely to be focused in those segments. In particular, interest rates or other terms could be less advantageous for subprime consumers or certain consumers in specific regions; for these consumers, some types of cards may become too expensive due to higher interest rates or less advantageous terms. Although, even if this were to happen, it would not result from a higher expected consumer cost of using credit cards but from greater transparency about the cards' actual anticipated cost of ownership. Lost credit to consumers consciously declining offers because the cards are too expensive is unlikely to harm and potentially may benefit consumers, particularly given the ability of consumers to shop and compare costs between cards.
The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis of any rule subject to notice-and-comment rulemaking requirements unless the agency certifies that the rule will not have a SISNOSE.
Small institutions, for the purposes of the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996, are defined by SBA. Effective March 17, 2023, depository institutions with less than $850 million in total assets are determined to be small for the period used in the subsequent analysis.
In the 2023 Proposal, the CFPB determined that an IRFA is not required for the proposal because it would not have a SISNOSE.
The 2023 Proposal would have affected small entities that issue credit cards most directly by reducing late fee revenue from credit cards. To assess
In the 2023 Proposal, the CFPB estimated that there were approximately 3,780 small banks, of which approximately 498 reported outstanding credit card debt on their balance sheets.
As discussed in the 2023 Proposal, credit cards represented a small fraction of both assets and revenue for small banks. Thus, for the vast majority of small banks, even a large reduction in credit card late fee revenue would have represented well below 1 percent of bank revenue and, therefore, would not have had a significant economic impact.
As discussed in the 2023 Proposal, the CFPB did not have equivalent data on credit card revenue for small credit unions because credit unions were not required to separately report income from their credit card business in the NCUA Call Reports. However, NCUA Call Reports provided information on credit card assets as a share of total assets.
To obtain a rough estimate of credit card revenue shares at small credit unions, in the 2023 Proposal, the CFPB extrapolated using the relationship between credit card revenue share and credit card asset share in bank call report data. As with small banks, the small share of revenue coming from credit cards, together with the fact that late fees made up only a fraction of credit card revenue, implied that even a significant drop-in late fee revenue would not have had a significant economic impact for the large majority of small credit unions.
Accordingly, the Director certified that the 2023 Proposal would not have had a significant economic impact on a substantial number of small entities. Thus, neither an IRFA nor a small business review panel was required for the proposal.
Many banks and credit unions, industry trade associations, and individuals on behalf of credit unions, the Office of Advocacy, an independent office within the SBA, and one law firm representing card issuers asserted that the 2023 Proposal, if adopted, would have a SISNOSE and thus the CFPB is required to hold a SBREFA panel under the RFA prior to finalizing the rulemaking. Many banks and credit unions, industry trade associations, and individuals on behalf of credit unions (1) expressed concern that the CFPB did not conduct a SBREFA panel to seek feedback from smaller issuers that would be significantly impacted by the proposal; (2) asserted that lowering the safe harbor as proposed would have a significant impact on small financial institutions; and (3) urged the CFPB to withdraw the proposal and convene a SBREFA panel in fulfillment of its statutory obligation under the SBREFA Act of 1996.
The agency that advocates for small businesses asserted that (1) the CFPB does not have the necessary data to develop an adequate factual basis for its SISNOSE certification and does not have sufficient information to indicate that small institutions contribute to the problem that is the target of the proposal; and (2) without a factual basis, the CFPB may not certify under section 605(b) and must publish an Initial Regulatory Flexibility Analysis under section 603 of the RFA.
One law firm representing card issuers asserted that CFPB's failure to convene a SBREFA panel renders the 2023 Proposal not only statutorily unsound, but also arbitrary and capricious under the APA.
In the 2023 Proposal, the CFPB determined that an IRFA was not needed because the 2023 Proposal would not have had a SISNOSE. As described in the analysis included in the 2023 Proposal, the CFPB estimated that credit card assets and revenue held by small banks and small credit unions represent a small fraction of both total assets and revenue for those small entities.
As discussed in more detail in part VI, the CFPB is not finalizing the following provisions in this final rule for Smaller Card Issuers: (1) the repeal of the current safe harbor threshold amounts in § 1026.52(b)(1)(ii)(A) and (B), adoption of $8 late fee safe harbor threshold amount, and elimination of a higher late fee safe harbor dollar amount for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles; and (2) the elimination of the annual adjustments for the safe harbor threshold dollar amounts set forth § 1026.52(b)(1)(ii)(D). This final rule defines the term “Smaller Card Issuer” in § 1026.52(b)(3) to mean a card issuer that together with its affiliates had fewer than one million open credit card accounts for the entire preceding calendar year.
Pursuant to the annual adjustments for safe harbor dollar amounts in § 1026.52(b)(1)(ii)(D), this final rule revises the safe harbor threshold
Small institutions, for the purposes of the SBREFA of 1996, are defined by SBA. Effective March 17, 2023, financial institutions with less than $850 million in total assets are determined to be small.
The CFPB has determined that nearly all small entities for purposes of the RFA will qualify as a “Smaller Card Issuer” as defined in this final rule, and therefore, the new, lower $8 late fee safe harbor amount and the elimination of the annual adjustments to the $8 late fee safe harbor amount will not apply to them. Accordingly, this final rule will not directly reduce revenue of a substantial number of small entities.
Accordingly, the Director hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities.
The CFPB notes that it is unconvinced by the comments related to the SISNOSE, and as explained in part VI, and that it appropriately certified in the 2023 Proposal that the 2023 Proposal would not have had a SISNOSE. As described above in the initial regulatory flexibility analysis included in the 2023 Proposal, the CFPB described the credit card market data that it used to develop an adequate basis for the Director's SISNOSE certification. Using this data, the CFPB estimated that credit card assets and revenue held by small banks and small credit unions (as defined by the RFA) represent a small fraction of both total assets and revenue for those small entities. Thus, pursuant to the RFA, the CFPB was not required to conduct a SBREFA panel prior to releasing the 2023 Proposal.
In fact, as discussed in part VI, the CFPB's determination that credit cards are not a significant revenue source for Smaller Card Issuers (in terms of total revenue for the institution) played a part in the CFPB's decision not to apply certain provisions of the 2023 Proposal to Smaller Card Issuers at this time.
The information collections contained within TILA and Regulation Z are approved under Office of Management and Budget (OMB) Control Number 3170-0015. The current expiration date for this approval is May 31, 2025. The CFPB has determined that this final rule would not impose any new information collections or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring approval by OMB under the Paperwork Reduction Act.
If any provision of this rule, or any application of a provision, is stayed or determined to be invalid, the remaining provisions or applications are severable and shall continue in effect. In particular, if the $8 safe harbor for Larger Card Issuers is stayed or determined to be invalid, the conclusion to repeal the existing safe harbor is severable and shall continue in effect.
Advertising, Banks, Banking, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth-in-lending.
For the reasons set forth above, the CFPB amends Regulation Z, 12 CFR part 1026, as set forth below:
12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601
(b) * * *
(1) * * *
(ii)
(A) $32;
(B) $43 if the card issuer previously imposed a fee pursuant to paragraph (b)(1)(ii)(A) of this section for a violation of the same type that occurred during the same billing cycle or one of the next six billing cycles; or
(C) Three percent of the delinquent balance on a charge card account that requires payment of outstanding balances in full at the end of each billing cycle if the card issuer has not received the required payment for two or more consecutive billing cycles, notwithstanding the limitation on the amount of a late payment fee in paragraph (b)(1)(ii) of this section.
(D) The amounts in paragraphs (b)(1)(ii)(A) and (B) of this section will be adjusted annually by the Bureau to reflect changes in the Consumer Price Index.
(E) A smaller card issuer, as defined in paragraph (b)(3) of this section, may impose a fee for a late payment on an account if the dollar amount of the fee does not exceed the amount in paragraph (b)(1)(ii)(A) or (B) of this section, as applicable, notwithstanding the limitation on the amount of a late payment fee in this paragraph (b)(1)(ii).
(3)
(ii) If a card issuer together with its affiliates had fewer than one million open credit card accounts for the entire preceding calendar year but meets or exceeds that number of open credit card accounts in the current calendar year, the card issuer will no longer be a smaller card issuer for purposes of paragraph (b)(1)(ii)(E) of this section as of 60 days after meeting or exceeding that number of open credit card accounts.
(b) * * *
(6)
(i) The cardholder can obtain extensions of credit on the account; or
(ii) There is an outstanding balance on the account that has not been charged off. An account that has been suspended temporarily (for example, due to a report by the cardholder of unauthorized use of the card) is considered an “open account” or “open credit card account.”
The revisions and additions read as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
1.
i. Assume that, under the terms of a credit card account, a consumer is required to pay $120 in fees for the issuance or availability of credit at account opening. The consumer is also required to pay a cash advance fee that is equal to five percent of the cash advance and a late payment fee of $8 if the required minimum periodic payment is not received by the payment due date (which is the twenty-fifth of the month). The card issuer is not a smaller card issuer as defined in § 1026.52(b)(3). At account opening on January 1 of year one, the credit limit for the account is $500. Section 1026.52(a)(1) permits the card issuer to charge to the account the $120 in fees for the issuance or availability of credit at account opening. On February 1 of year one, the consumer uses the account for a $100 cash advance. Section 1026.52(a)(1) permits the card issuer to charge a $5 cash-advance fee to the account. On March 26 of year one, the card issuer has not received the consumer's required minimum periodic payment. Section 1026.52(a)(2) permits the card issuer to charge a $8 late payment fee to the account. On July 15 of year one, the consumer uses the account for a $50 cash advance. Section 1026.52(a)(1) does not permit the card issuer to charge a $2.50 cash advance fee to the account. Furthermore, § 1026.52(a)(1) prohibits the card issuer from collecting the $2.50 cash advance fee from the consumer by other means.
ii. Assume that, under the terms of a credit card account, a consumer is required to pay $125 in fees for the issuance or availability of credit during the first year after account opening. At account opening on January 1 of year one, the credit limit for the account is $500. Section 1026.52(a)(1) permits the card issuer to charge the $125 in fees to the account. However, § 1026.52(a)(1) prohibits the card issuer from requiring the consumer to make payments to the card issuer for additional non-exempt fees with respect to the account during the first year after account opening. Section 1026.52(a)(1) also prohibits the card issuer from requiring the consumer to open a separate credit account with the card issuer to fund the payment of additional non-exempt fees during the first year after the credit card account is opened.
iii. Assume that a consumer opens a prepaid account accessed by a prepaid card on January 1 of year one and opens a covered separate credit feature accessible by a hybrid prepaid-credit card as defined by § 1026.61 that is a credit card account under an open-end (not home-secured) consumer credit plan on March 1 of year one. Assume that, under the terms of the covered separate credit feature accessible by the hybrid prepaid-credit card, a consumer is required to pay $50 in fees for the issuance or availability of credit at account opening. At credit account opening on March 1 of year one, the credit limit for the account is $200. Section 1026.52(a)(1) permits the card issuer to charge the $50 in fees to the credit account. However, § 1026.52(a)(1) prohibits the card issuer from requiring the consumer to make payments to the card issuer for additional non-exempt fees with respect to the credit account during the first year after account opening. Section 1026.52(a)(1) also prohibits
iv. Assume that a consumer opens a prepaid account accessed by a prepaid card on January 1 of year one and opens a covered separate credit feature accessible by a hybrid prepaid-credit card as defined in § 1026.61 that is a credit card account under an open-end (not home-secured) consumer credit plan on March 1 of year one. Assume that, under the terms of the covered separate credit feature accessible by the hybrid prepaid-credit card, a consumer is required to pay $120 in fees for the issuance or availability of credit at account opening. The consumer is also required to pay a cash advance fee that is equal to 5 percent of any cash advance and a late payment fee of $8 if the required minimum periodic payment is not received by the payment due date (which is the 25th of the month). The card issuer is not a smaller card issuer as defined in § 1026.52(b)(3). At credit account opening on March 1 of year one, the credit limit for the account is $500. Section 1026.52(a)(1) permits the card issuer to charge to the account the $120 in fees for the issuance or availability of credit at account opening. On April 1 of year one, the consumer uses the account for a $100 cash advance. Section 1026.52(a)(1) permits the card issuer to charge a $5 cash advance fee to the account. On April 26 of year one, the card issuer has not received the consumer's required minimum periodic payment. Section 1026.52(a)(2) permits the card issuer to charge a $8 late payment fee to the account. On July 15 of year one, the consumer uses the account for a $50 cash advance. Section 1026.52(a)(1) does not permit the card issuer to charge a $2.50 cash advance fee to the account, because the total amount of non-exempt fees reached the 25 percent limit with the $5 cash advance fee on April 1 (the $8 late fee on April 26 is exempt pursuant to § 1026.52(a)(2)(i)). Furthermore, § 1026.52(a)(1) prohibits the card issuer from collecting the $2.50 cash advance fee from the consumer by other means.
2.
3.
i.
ii.
4.
i.
A. The date the account is first used by the consumer for a transaction (such as when an account is established in connection with financing the purchase of goods or services).
B. The date the consumer complies with any reasonable activation procedures imposed by the card issuer for preventing fraud or unauthorized use of a new account (such as requiring the consumer to provide information that verifies his or her identity), provided that the account may be used for transactions on that date.
C. The date that is seven days after the card issuer mails or delivers to the consumer account-opening disclosures that comply with § 1026.6, provided that the consumer may use the account for transactions after complying with any reasonable activation procedures imposed by the card issuer for preventing fraud or unauthorized use of the new account (such as requiring the consumer to provide information that verifies his or her identity). If a card issuer has reasonable procedures designed to ensure that account-opening disclosures that comply with § 1026.6 are mailed or delivered to consumers no later than a certain number of days after the card issuer establishes the account, the card issuer may add that number of days to the seven-day period for purposes of determining the date on which the account was opened.
ii.
B. Assume that, on July 1 of year one, a card issuer approves a consumer's application for a credit card account under an open-end (not home-secured) consumer credit plan and establishes the account on its internal systems. On July 5, the card issuer mails or delivers to the consumer account-opening disclosures that comply with § 1026.6. If the consumer may use the account for transactions on the date the consumer complies with any reasonable procedures imposed by the card issuer for preventing fraud or unauthorized use, the card issuer may consider the account open on July 12 of year one for purposes of § 1026.52(a)(1). Accordingly, § 1026.52(a)(1) ceases to apply to the account on July 12 of year two.
C. Same facts as in comment 52(a)(1)-4.ii.B except that the card issuer has adopted reasonable procedures designed to ensure that account-opening disclosures that comply with § 1026.6 are mailed or delivered to consumers no later than three days after an account is established on its systems. If the consumer may use the account for transactions on the date the consumer complies with any reasonable procedures imposed by the card issuer for preventing fraud or unauthorized use, the card issuer may consider the account open on July 11 of year one for purposes of § 1026.52(a)(1). Accordingly, § 1026.52(a)(1) ceases to apply to the account on July 11 of year two. However, if the consumer uses the account for a transaction or complies with the card issuer's reasonable procedures for preventing fraud or unauthorized use on July 8 of year one, the card issuer may, at its option, consider the account open on that date for purposes of § 1026.52(a)(1), and therefore § 1026.52(a)(1) ceases to apply to the account on July 8 of year two.
1.
i. The following are examples of fees that are subject to the limitations in § 1026.52(b) or are prohibited by § 1026.52(b):
A. Late payment fees and any other fees imposed by a card issuer if an account becomes delinquent or if a payment is not received by a particular date. A late payment fee or late fee is any fee imposed for a late payment.
B. Returned payment fees and any other fees imposed by a card issuer if a payment received via check, automated clearing house, or other payment method is returned.
C. Any fee or charge for an over-the-limit transaction as defined in § 1026.56(a), to the extent the imposition of such a fee or charge is permitted by § 1026.56.
D. Any fee imposed by a card issuer if payment on a check that accesses a credit card account is declined.
E. Any fee or charge for a transaction that the card issuer declines to authorize.
F. Any fee imposed by a card issuer based on account inactivity (including the consumer's failure to use the account for a particular number or dollar amount of transactions or a particular type of transaction).
G. Any fee imposed by a card issuer based on the closure or termination of an account.
ii. The following are examples of fees to which § 1026.52(b) does not apply:
A. Balance transfer fees.
B. Cash advance fees.
C. Foreign transaction fees.
D. Annual fees and other fees for the issuance or availability of credit described in § 1026.60(b)(2), except to the extent that such fees are based on account inactivity.
E. Fees for insurance described in § 1026.4(b)(7) or debt cancellation or debt suspension coverage described in § 1026.4(b)(10) written in connection with a credit transaction, provided that such fees are not imposed as a result of a violation of the account terms or other requirements of an account.
F. Fees for making an expedited payment (to the extent permitted by § 1026.10(e)).
G. Fees for optional services (such as travel insurance).
H. Fees for reissuing a lost or stolen card.
2.
3.
4.
5.
1.
i.
A. A card issuer that complies with the safe harbors in § 1026.52(b)(1)(ii) is not required to determine that its fees represent a reasonable proportion of the total costs incurred by the card issuer as a result of a type of violation under § 1026.52(b)(1)(i).
B. A card issuer may impose a fee for one type of violation pursuant to § 1026.52(b)(1)(i) and may impose a fee for a different type of violation pursuant to § 1026.52(b)(1)(ii). For example, a card issuer may impose a late payment fee of $9 based on a cost determination pursuant to § 1026.52(b)(1)(i) but impose returned payment and over-the-limit fees of $25 or $35 pursuant to the safe harbors in § 1026.52(b)(1)(ii).
C. A card issuer that previously based the amount of a penalty fee for a particular type of violation on a cost determination pursuant to § 1026.52(b)(1)(i) may begin to impose a penalty fee for that type of violation that is consistent with § 1026.52(b)(1)(ii) at any time (subject to the notice requirements in § 1026.9), provided that the first fee imposed pursuant to § 1026.52(b)(1)(ii) is consistent with § 1026.52(b)(1)(ii)(A). For example, assume that consistent with § 1026.56, a consumer has affirmatively consented to the payment of transactions that exceed the credit limit. A transaction occurs on January 15 that causes the account balance to exceed the credit limit and, based on a cost determination pursuant to § 1026.52(b)(1)(i), the card issuer imposes a $30 over-the-limit fee. The consumer's next monthly payment brings the account balance below the credit limit. On July 15, another transaction causes the account balance to exceed the credit limit. The card issuer may impose another $30 over-the-limit fee pursuant to § 1026.52(b)(1)(i) or may impose a $25 over-the-limit fee pursuant to § 1026.52(b)(1)(ii)(A). However, the card issuer may not impose a $35 over-the-limit fee pursuant to § 1026.52(b)(1)(ii)(B). If the card issuer imposes a $25 fee pursuant to § 1026.52(b)(1)(ii)(A) for the July 15 over-the-limit transaction and on September 15 another transaction causes the account balance to exceed the credit limit, the card issuer may impose a $35 fee for the September 15 over-the-limit transaction pursuant to § 1026.52(b)(1)(ii)(B).
52(b)(1)(i) Fees Based on Costs
1.
i. The number of violations of a particular type experienced by the card issuer during a prior period of reasonable length (for example, a period of twelve months).
ii. The costs incurred by the card issuer during that period as a result of those violations.
iii. At the card issuer's option, the number of fees imposed by the card issuer as a result of those violations during that period that the card issuer reasonably estimates it will be unable to collect.
iv. At the card issuer's option, reasonable estimates for an upcoming period of changes in the number of violations of that type, the resulting costs, and the number of fees that the card issuer will be unable to collect.
2.
i. Losses and associated costs (including the cost of holding reserves against potential losses, the cost of funding delinquent accounts, and any collection costs that are incurred after an account is charged off in accordance with loan-loss provisions).
ii. Costs associated with evaluating whether consumers who have not violated the terms or other requirements of an account are likely to do so in the future (such as the costs associated with underwriting new accounts). However, once a violation of the terms or other requirements of an account has occurred, the costs associated with preventing additional violations for a reasonable period of time are costs incurred by a card issuer as a result of violations of the terms or other requirements of an account for purposes of § 1026.52(b)(1)(i).
3.
4.
5.
6.
i.
ii.
B.
C.
7.
i.
A. Costs associated with processing returned payments and reconciling the card issuer's systems and accounts to reflect returned payments;
B. Costs associated with investigating potential fraud with respect to returned payments; and
C. Costs associated with notifying the consumer of the returned payment and arranging for a new payment.
ii.
B.
C.
8.
i.
A. Costs associated with determining whether to authorize over-the-limit transactions; and
B. Costs associated with notifying the consumer that the credit limit has been exceeded and arranging for payments to reduce the balance below the credit limit.
ii.
iii.
B.
C.
9.
i.
A. Costs associated with determining whether to decline payment on access checks;
B. Costs associated with processing declined access checks and reconciling the card issuer's systems and accounts to reflect declined access checks;
C. Costs associated with investigating potential fraud with respect to declined access checks; and
D. Costs associated with notifying the consumer and the merchant or other party that accepted the access check that payment on the check has been declined.
ii.
1.
i.
A.
B.
C.
D.
ii.
iii.
A.
B.
C.
2.
i.
A. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $25 under § 1026.52(b)(1)(ii)(A) and $35 under § 1026.52(b)(1)(ii)(B), through December 31, 2013.
B. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $26 under § 1026.52(b)(1)(ii)(A) and $37 under § 1026.52(b)(1)(ii)(B), through December 31, 2014.
C. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A) and $38 under § 1026.52(b)(1)(ii)(B), through December 31, 2015.
D. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A), through December 31, 2016. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $37 under § 1026.52(b)(1)(ii)(B), through June 26, 2016, and $38 under § 1026.52(b)(1)(ii)(B) from June 27, 2016, through December 31, 2016.
E. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A) and $38 under § 1026.52(b)(1)(ii)(B), through December 31, 2017.
F. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A) and $38 under § 1026.52(b)(1)(ii)(B), through December 31, 2018.
G. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $28 under § 1026.52(b)(1)(ii)(A) and $39 under § 1026.52(b)(1)(ii)(B), through December 31, 2019.
H. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $29 under § 1026.52(b)(1)(ii)(A) and $40 under § 1026.52(b)(1)(ii)(B), through December 31, 2020.
I. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $29 under § 1026.52(b)(1)(ii)(A) and $40 under § 1026.52(b)(1)(ii)(B), through December 31, 2021.
J. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $30 under § 1026.52(b)(1)(ii)(A) and $41 under § 1026.52(b)(1)(ii)(B), through May 13, 2024.
3.
i. Assume that a charge card issuer requires payment of outstanding balances in full at the end of each billing cycle and that the billing cycles for the account begin on the first day of the month and end on the last day of the month. Also assume that the card issuer is not a smaller card issuer as defined in § 1026.52(b)(3). At the end of the June billing cycle, the account has a balance of $1,000. On July 5, the card issuer provides a periodic statement disclosing the $1,000 balance consistent with § 1026.7. During the July billing cycle, the account is used for $292 in transactions, increasing the balance to $1,292. At the end of the July billing cycle, no payment has been received and the card issuer imposes a $8 late payment fee consistent with § 1026.52(b)(1)(ii). On August 5, the card issuer provides a periodic statement disclosing the $1,300 balance consistent with § 1026.7. During the August billing cycle, the account is used for $200 in transactions, increasing the balance to $1,500. At the end of the August billing cycle, no payment has been received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $39, which is 3% of the $1,300 balance that was due at the end of the August billing cycle. Section 1026.52(b)(1)(ii)(C) does not permit the card issuer to include the $200 in transactions that occurred during the August billing cycle.
ii. Same facts as in comment 52(b)(1)(ii)-3.i except that, on August 25, a $100 payment is received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $36, which is 3% of the unpaid portion of the $1,300 balance that was due at the end of the August billing cycle ($1,200).
iii. Same facts as in comment 52(b)(1)(ii)-3.i except that, on August 25, a $200 payment is received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $33, which is 3% of the unpaid portion of the $1,300 balance that was due at the end of the August billing cycle ($1,100). In the alternative, the card issuer may impose a late payment fee of $8 consistent with § 1026.52(b)(1)(ii). However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees.
4.
1.
1.
i. Assume that a $15 required minimum periodic payment is due on September 25. The card issuer does not receive any payment on or before September 25. On September 26, the card issuer imposes a late payment fee. For purposes of § 1026.52(b)(2)(i), the dollar amount associated with the late payment is the amount of the required minimum periodic payment due on September 25 ($15). Thus, under § 1026.52(b)(2)(i)(A), the amount of that fee cannot exceed $15 (even if a higher fee would be permitted under § 1026.52(b)(1)).
ii. Same facts as in comment 52(b)(2)(i)-1.i except that, on September 25, the card issuer receives a $10 payment. No further payments are received. On September 26, the card issuer imposes a late payment fee. For purposes of § 1026.52(b)(2)(i), the dollar amount associated with the late payment is the full amount of the required minimum periodic payment due on September 25 ($15), rather than the unpaid portion of that payment ($5). Thus, under § 1026.52(b)(2)(i)(A), the amount of the late payment fee cannot exceed $15 (even if a higher fee would be permitted under § 1026.52(b)(1)).
iii. Assume that a $15 required minimum periodic payment is due on October 28 and the billing cycle for the account closes on October 31. The card issuer does not receive any payment on or before November 3. On November 3, the card issuer determines that the required minimum periodic payment due on November 28 is $50. On November 5, the card issuer imposes a late payment fee. For purposes of § 1026.52(b)(2)(i), the dollar amount associated with the late payment is the amount of the required minimum periodic payment due on October 28 ($15), rather than the amount of the required minimum periodic payment due on November 28 ($50). Thus, under § 1026.52(b)(2)(i)(A), the amount of that fee cannot exceed $15 (even if a higher fee would be permitted under § 1026.52(b)(1)).
2.
i. Assume that the billing cycles for an account begin on the first day of the month and end on the last day of the month and that the payment due date is the twenty-fifth day of the month. A minimum payment of $15 is due on March 25. The card issuer receives a check for $100 on March 23, which is returned to the card issuer for insufficient funds on March 26. For purposes of § 1026.52(b)(2)(i), the dollar amount associated with the returned payment is the amount of the required minimum periodic payment due on March 25 ($15). Thus, § 1026.52(b)(2)(i)(A) prohibits the card issuer from imposing a returned payment fee that exceeds $15 (even if a higher fee would be permitted under § 1026.52(b)(1)). Furthermore, § 1026.52(b)(2)(ii) prohibits the card issuer from assessing both a late payment fee and a returned payment fee in these circumstances.
ii. Same facts as in comment 52(b)(2)(i)-2.i except that the card issuer receives the $100 check on March 31 and the check is returned for insufficient funds on April 2. The minimum payment due on April 25 is $30. For purposes of § 1026.52(b)(2)(i), the dollar amount associated with the returned payment is the amount of the required minimum periodic payment due on March 25 ($15), rather than the amount of the required minimum periodic payment due on April 25 ($30). Thus, § 1026.52(b)(2)(i)(A) prohibits the card issuer from imposing a returned payment fee that exceeds $15 (even if a higher fee would be permitted under § 1026.52(b)(1)). Furthermore, § 1026.52(b)(2)(ii) prohibits the card issuer from assessing both a late payment fee and a returned payment fee in these circumstances.
iii. Same facts as in comment 52(b)(2)(i)-2.i except that, on March 28, the card issuer presents the $100 check for payment a second time. On April 1, the check is again returned for insufficient funds. Section 1026.52(b)(2)(i)(B) prohibits the card issuer from imposing a returned payment fee based on the return of the payment on April 1.
iv. Assume that the billing cycles for an account begin on the first day of the month and end on the last day of the month and that the payment due date is the twenty-fifth day of the month. A minimum payment of $15 is due on August 25. The card issuer receives a check for $15 on August 23, which is not returned. The card issuer receives a check for $50 on September 5, which is returned to the card issuer for insufficient funds on September 7. Section 1026.52(b)(2)(i)(B) does not prohibit the card issuer from imposing a returned payment fee in these circumstances. Instead, for purposes of § 1026.52(b)(2)(i), the dollar amount associated with the returned payment is the amount of the required minimum periodic payment due on August 25 ($15). Thus, § 1026.52(b)(2)(i)(A) prohibits the card issuer from imposing a returned payment fee that exceeds $15 (even if a higher fee would be permitted under § 1026.52(b)(1)).
3.
i. Assume that the billing cycles for a credit card account with a credit limit of $5,000 begin on the first day of the month and end on the last day of the month. Assume also that, consistent with § 1026.56, the consumer has affirmatively consented to the payment of transactions that exceed the credit limit. On March 1, the account has a $4,950 balance. On March 6, a $60 transaction is charged to the account, increasing the balance to $5,010. On March 25, a $5 transaction is charged to the account, increasing the balance to $5,015. On the last day of the billing cycle (March 31), the card issuer imposes an over-the-limit fee. For purposes of § 1026.52(b)(2)(i), the dollar amount associated with the extensions of credit in excess of the credit limit is the total amount of credit extended by the card issuer in excess of the credit limit during the March billing cycle ($15). Thus, § 1026.52(b)(2)(i)(A) prohibits the card issuer from imposing an over-the-limit fee that exceeds $15 (even if a higher fee would be permitted under § 1026.52(b)(1)).
ii. Same facts as in comment 52(b)(2)(i)-3.i except that, on March 26, the card issuer receives a payment of $20, reducing the balance below the credit limit to $4,995. Nevertheless, for purposes of § 1026.52(b)(2)(i), the dollar amount associated with the extensions of credit in excess of the credit limit is the total amount of credit extended by the card issuer in excess of the credit limit during the March billing cycle ($15). Thus, consistent with § 1026.52(b)(2)(i)(A), the card issuer may impose an over-the-limit fee of $15.
4.
5.
6.
i. Imposing a one-time fee to consumers who close their accounts.
ii. Imposing a periodic fee (such as an annual fee, a monthly maintenance fee, or a closed account fee) after an account is closed or terminated if that fee was not imposed prior to closure or termination. This prohibition applies even if the fee was disclosed prior to closure or termination.
iii. Increasing a periodic fee (such as an annual fee or a monthly maintenance fee) after an account is closed or terminated. However, a card issuer is not prohibited from continuing to impose a periodic fee that was imposed before the account was closed or terminated.
7.
1.
i. Assume that the required minimum periodic payment due on March 25 is $20 and the card issuer is not a smaller card issuer pursuant to § 1026.52(b)(3). On March 26, the card issuer has not received any payment and imposes a late payment fee. Consistent with § 1026.52(b)(1)(ii) and (b)(2)(i), the card issuer may impose an $8 late payment fee on March 26. However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing an additional late payment fee if the $20 minimum payment has not been received by a subsequent date (such as March 31).
A. On April 3, the card issuer provides a periodic statement disclosing that a $70 required minimum periodic payment is due on April 25. This minimum payment includes the $20 minimum payment due on March 25 and the $8 late payment fee imposed on March 26. On April 20, the card issuer receives a $20 payment. No additional payments are received during the April billing cycle. Section 1026.52(b)(2)(ii) does not prohibit the card issuer from imposing a late payment fee based on the consumer's failure to make the $70 required minimum periodic payment on or before April 25. Accordingly, consistent with § 1026.52(b)(1)(ii) and (b)(2)(i), the card issuer may impose an $8 late payment fee on April 26.
B. On April 3, the card issuer provides a periodic statement disclosing that a $20 required minimum periodic payment is due on April 25. This minimum payment does not include the $20 minimum payment due on March 25 or the $8 late payment fee imposed on March 26. On April 20, the card issuer receives a $20 payment. No additional payments are received during the April billing cycle. Because the card issuer has received the required minimum periodic payment due on April 25 and because § 1026.52(b)(2)(ii) prohibits the card issuer from imposing a second late payment fee based on the consumer's failure to make the $20 minimum payment due on March 25, the card issuer cannot impose a late payment fee in these circumstances.
ii. Assume that the required minimum periodic payment due on March 25 is $30 and the card issuer is not a smaller card issuer pursuant to § 1026.52(b)(3).
A. On March 25, the card issuer receives a check for $50, but the check is returned for insufficient funds on March 27. Consistent with § 1026.52(b)(1)(ii) introductory text, (b)(1)(ii)(A), and (b)(2)(i)(A), the card issuer may impose a late payment fee of $8 or a returned payment fee of $25. However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees because those fees would be based on a single event or transaction.
B. Same facts as in comment 52(b)(2)(ii)-1.ii.A except that that card issuer receives the $50 check on March 27 and the check is returned for insufficient funds on March 29. Consistent with § 1026.52(b)(1)(ii) introductory text, (b)(1)(ii)(A), and (b)(2)(i)(A), the card issuer may impose a late payment fee of $8 or a returned payment fee of $25. However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees because those fees would be based on a single event or transaction. If no payment is received on or before the next payment due date (April 25), § 1026.52(b)(2)(ii) does not prohibit the card issuer from imposing a late payment fee.
iii. Assume that the required minimum periodic payment due on July 25 is $30 and the card issuer is not a smaller card issuer pursuant to § 1026.52(b)(3). On July 10, the card issuer receives a $50 payment, which is not returned. On July 20, the card issuer receives a $100 payment, which is returned for insufficient funds on July 24. Consistent with § 1026.52(b)(1)(ii)(A) and (b)(2)(i)(A), the card issuer may impose a returned payment fee of $25. Nothing in § 1026.52(b)(2)(ii) prohibits the imposition of this fee.
iv. Assume that the card issuer is not a smaller card issuer pursuant to § 1026.52(b)(3) and the credit limit for an account is $1,000 and that, consistent with § 1026.56, the consumer has affirmatively consented to the payment of transactions that exceed the credit limit. On March 31, the
v. Assume that the credit limit for an account is $5,000 and that, consistent with § 1026.56, the consumer has affirmatively consented to the payment of transactions that exceed the credit limit. On July 23, the balance on the account is $4,950. On July 24, the card issuer receives the $100 required minimum periodic payment due on July 25, reducing the balance to $4,850. On July 26, a $75 transaction is charged to the account, which increases the balance to $4,925. On July 27, the $100 payment is returned for insufficient funds, increasing the balance to $5,025. Consistent with § 1026.52(b)(1)(ii)(A) and (b)(2)(i)(A), the card issuer may impose a returned payment fee of $25 or an over-the-limit fee of $25. However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees because those fees would be based on a single event or transaction.
vi. Assume that the required minimum periodic payment due on March 25 is $50 and the card issuer is not a smaller card issuer pursuant to § 1026.52(b)(3). On March 20, the card issuer receives a check for $50, but the check is returned for insufficient funds on March 22. Consistent with § 1026.52(b)(1)(ii)(A) and (b)(2)(i)(A), the card issuer may impose a returned payment fee of $25. On March 25, the card issuer receives a second check for $50, but the check is returned for insufficient funds on March 27. Consistent with § 1026.52(b)(1)(ii) introductory text, (b)(1)(ii)(A) and (B), and (b)(2)(i)(A), the card issuer may impose a late payment fee of $8 or a returned payment fee of $35. However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees because those fees would be based on a single event or transaction.
vii. Assume that the required minimum periodic payment due on February 25 is $100 and the card issuer is not a smaller card issuer pursuant to § 1026.52(b)(3). On February 25, the card issuer receives a check for $100. On March 3, the card issuer provides a periodic statement disclosing that a $120 required minimum periodic payment is due on March 25. On March 4, the $100 check is returned to the card issuer for insufficient funds. Consistent with § 1026.52(b)(1)(ii) introductory text, (b)(1)(ii)(A), and (b)(2)(i)(A), the card issuer may impose a late payment fee of $8 or a returned payment fee of $25 with respect to the $100 payment. However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees because those fees would be based on a single event or transaction. On March 20, the card issuer receives a $120 check, which is not returned. No additional payments are received during the March billing cycle. Because the card issuer has received the required minimum periodic payment due on March 25 and because § 1026.52(b)(2)(ii) prohibits the card issuer from imposing a second fee based on the $100 payment that was returned for insufficient funds, the card issuer cannot impose a late payment fee in these circumstances.
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A. The disclosures could automatically appear on the screen when the application or reply form appears;
B. The disclosures could be located on the same web page as the application or reply form (whether or not they appear on the initial screen), if the application or reply form contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable;
C. Card issuers could provide a link to the electronic disclosures on or with the application (or reply form) as long as consumers cannot bypass the disclosures before submitting the application or reply form. The link would take the consumer to the disclosures, but the consumer need not be required to scroll completely through the disclosures; or
D. The disclosures could be located on the same web page as the application or reply form without necessarily appearing on the initial screen, immediately preceding the button that the consumer will click to submit the application or reply.
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i. If a consumer accesses a credit card application or solicitation electronically (other than as described under comment 60(a)(2)-6.ii), such as online at a home computer, the card issuer must provide the disclosures in electronic form (such as with the application or solicitation on its website) in order to meet the requirement to provide disclosures in a timely manner on or with the application or solicitation. If the issuer instead mailed paper disclosures to the consumer, this requirement would not be met.
ii. In contrast, if a consumer is physically present in the card issuer's office, and accesses a credit card application or solicitation electronically, such as via a terminal or kiosk (or if the consumer uses a terminal or kiosk located on the premises of an affiliate or third party that has arranged with the card issuer to provide applications or solicitations to consumers), the issuer may provide disclosures in either electronic or paper form, provided the issuer complies with the timing and delivery (“on or with”) requirements of the regulation.
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