89
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Contents
Agency Health

Agency for Healthcare Research and Quality

NOTICES
Request for Information:
CDS Connect—Designing the Future of a National Hub for Clinical Decision Support,
47561-47563
2024-11878
Agriculture

Agriculture Department

See
Forest Service

See
Rural Housing Service
Centers Medicare

Centers for Medicare & Medicaid Services

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals,
47563-47565
2024-12122
Civil Rights

Civil Rights Commission

NOTICES
Meetings; Sunshine Act,
47515-47516
2024-12215
Coast Guard

Coast Guard

RULES
Safety Zone:
Annual Events in the Captain of the Port Eastern Great Lakes Zone,
47467
2024-12108
Annual Fireworks Displays within the Sector Columbia River Captain of the Port Zone,
47464-47467
2024-12047

PROPOSED RULES
Safety Zone:
Fireworks Display, Marina Park, Irrigon, OR,
47472-47474
2024-11994
Commerce

Commerce Department

See
International Trade Administration

See
National Oceanic and Atmospheric Administration
Commodity Futures

Commodity Futures Trading Commission

RULES
Large Trader Reporting Requirements,
47439-47460
2024-11798
Energy Department

Energy Department

See
Federal Energy Regulatory Commission
Environmental Protection

Environmental Protection Agency

RULES
Air Quality State Implementation Plans; Approvals and Promulgations:
Kentucky; Updates to Attainment Status Designations,
47468-47470
2024-12028

PROPOSED RULES
Air Quality State Implementation Plans; Approvals and Promulgations:
District of Columbia, Maryland, and Virginia; Update of the Motor Vehicle Emissions Budgets for the Washington-MD-VA 2008 8-Hour Ozone National Ambient Air Quality Standard Maintenance Area,
47474-47481
2024-11839
Georgia; Second Period Regional Haze Plan,
47481-47504
2024-12025
Nebraska; Revisions to Title 129 of the Nebraska Administrative Code; Nebraska Air Quality Regulations,
47504-47508
2024-11649
Federal Aviation

Federal Aviation Administration

NOTICES
Noise Compatibility Program:
Chicago Executive Airport, Cook County, IL,
47681-47682
2024-12032
Federal Communications

Federal Communications Commission

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals,
47560
2024-12124
Federal Election

Federal Election Commission

NOTICES
Meetings; Sunshine Act,
47560-47561
2024-12205
Federal Energy

Federal Energy Regulatory Commission

RULES
Applications for Permits to Site Interstate Electric Transmission Facilities,
47460
C1-2024-10879

NOTICES
Combined Filings,
47557-47559
2024-12093
2024-12094
Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations:
Keydet Solar Center, LLC,
47558-47559
2024-12092
Permits; Applications, Issuances, etc.:
Hybrid Renewables LLC,
47556-47557
2024-12091
Federal Highway

Federal Highway Administration

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals,
47682-47683
2024-12100
Final Federal Agency Actions:
Proposed Highway in California,
47683-47684
2024-12057
Fish

Fish and Wildlife Service

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals:
Electronic Federal Duck Stamp Program,
47587-47589
2024-12089
Urban Bird Treaty Program Requirements,
47590-47593
2024-12088
Permits; Applications, Issuances, etc.:
Foreign Endangered Species,
47585-47587
2024-12067
Incidental Take Amendment for the Great Pathfinder Habitat Conservation Plan, Hamilton and Boone Counties, IA; Categorical Exclusion,
47589-47590
2024-12123
Food and Drug

Food and Drug Administration

RULES
Laboratory Accreditation for Analyses of Foods:
Program Implementation; Determination of Sufficient Laboratory Capacity for Import-Related Food Testing Covered by the Regulation,
47463-47464
2024-12027

NOTICES
Final Debarment Order:
Michael Terry Little,
47576-47578
2024-12066
Shanif Abdul Punjani,
47565-47566
2024-12064
Statement of Organization, Functions, and Delegations of Authority,
47567-47576
2024-11893
Withdrawal of Approval of Drug Application:
Pfizer, Inc. et al.,
47566-47567
2024-12065
Foreign Assets

Foreign Assets Control Office

NOTICES
Sanctions Actions,
47684
2024-12026
Forest

Forest Service

NOTICES
Hearings, Meetings, Proceedings, etc.:
Alpine County Resource Advisory Committee,
47509
2024-09613
Southern Arizona Resource Advisory Committee,
47510
2024-10893
General Services

General Services Administration

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals:
Federal Funding Accountability and Transparency Act Sub-Award Reporting System Registration Requirements for Prime Grant Awardees,
47561
2024-12049
Health and Human

Health and Human Services Department

See
Agency for Healthcare Research and Quality

See
Centers for Medicare & Medicaid Services

See
Food and Drug Administration

See
Substance Abuse and Mental Health Services Administration

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals,
47578-47579
2024-12083
2024-12111
Homeland

Homeland Security Department

See
Coast Guard

See
U.S. Citizenship and Immigration Services

PROPOSED RULES
Cyber Incident Reporting for Critical Infrastructure Act Reporting Requirements; Correction,
47471-47472
2024-12084

NOTICES
Request for Membership Application:
Department of Homeland Security Data Privacy and Integrity Advisory Committee,
47581-47582
2024-12036
Housing

Housing and Urban Development Department

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals:
Local Appeals to Single-Family Mortgage Limits,
47584-47585
2024-12059
Multifamily Housing Mortgage and Housing Assistance Restructuring Program (Mark-to-Market),
47583-47584
2024-12095
Indian Affairs

Indian Affairs Bureau

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals:
Tribal Energy Development Capacity Program,
47593-47594
2024-12058
Hearings, Meetings, Proceedings, etc.:
Advisory Board of Exceptional Children,
47594
2024-12023
Interior

Interior Department

See
Fish and Wildlife Service

See
Indian Affairs Bureau

See
National Park Service

See
Reclamation Bureau
Internal Revenue

Internal Revenue Service

PROPOSED RULES
Clean Electricity Production Credit and Clean Electricity Investment Credit,
47792-47846
2024-11719
International Trade Adm

International Trade Administration

NOTICES
Antidumping or Countervailing Duty Investigations, Orders, or Reviews:
Advance Notification of Sunset Review,
47532-47533
2024-12098
Certain Carbon and Alloy Steel Cut-To-Length Plate from the Federal Republic of Germany,
47531-47532
2024-12061
Certain Glass Wine Bottles from the People's Republic of China,
47533-47536
2024-12114
Certain Welded Carbon Steel Standard Pipes and Tubes from India,
47527-47528
2024-12121
Initiation of Five-Year Sunset Reviews,
47525-47526
2024-12097
Large Diameter Welded Pipe from the Republic of Korea,
47523-47525
2024-12116
Mattresses from Indonesia,
47528-47531
2024-12115
Opportunity to Request Administrative Review and Join Annual Inquiry Service List,
47518-47522
2024-12086
Steel Racks from the People's Republic of China,
47526-47527
2024-12087
Thermal Paper from the Federal Republic of Germany,
47517-47518
2024-12060
Commerce Supply Chain Risk Assessment and Indo-Pacific Economic Framework for Prosperity Supply Chains,
47536-47539
2024-12240
Proposed Topics for U.S.-Brazil Commercial Dialogue Agenda,
47522
2024-12105
Sales at Less Than Fair Value; Determinations, Investigations, etc.:
Aluminum Lithographic Printing Plates from the People's Republic of China,
47516-47517
2024-12117
International Trade Com

International Trade Commission

NOTICES
Investigations; Determinations, Modifications, and Rulings, etc.:
Certain Soft Projectile Launching Devices, Components Thereof, Ammunition, and Products Containing Same,
47605-47607
2024-12118
Non-Malleable Cast Iron Pipe Fittings from China,
47610-47613
2024-11917
Paper Shopping Bags from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam,
47613
2024-12054
Quartz Surface Products from China,
47614-47616
2024-12090
Raw Flexible Magnets from China and Taiwan,
47607-47610
2024-12056
Justice Department

Justice Department

See
Justice Programs Office
Justice Programs

Justice Programs Office

NOTICES
Hearings, Meetings, Proceedings, etc.:
Coordinating Council on Juvenile Justice and Delinquency Prevention,
47616-47617
2024-12120
Legal

Legal Services Corporation

NOTICES
Meetings; Sunshine Act,
47617
2024-12158
National Archives

National Archives and Records Administration

RULES
Federal Records Management:
Government Accountability Office Concurrence; Correction,
47467-47468
2024-11915
National Oceanic

National Oceanic and Atmospheric Administration

PROPOSED RULES
Modify the Duration of Certain Permits and Letters of Confirmation under the Marine Mammal Protection Act; Extension of Public Comment Period,
47508
2024-12053

NOTICES
Requests for Nominations:
Hydrographic Services Review Panel,
47555-47556
2024-12106
Taking or Importing of Marine Mammals:
U.S. Navy Maintenance and Pile Replacement Project in Puget Sound, WA,
47539-47555
2024-12062
National Park

National Park Service

NOTICES
Inventory Completion:
Auburn University, Auburn, AL,
47597-47598
2024-12069
California State University, Sacramento, Sacramento, CA,
47603-47604
2024-12074
Field Museum, Chicago, IL,
47600-47601
2024-12076
2024-12077
Oregon Health and Sciences University, Portland, OR,
47595
2024-12075
Peabody Museum of Archaeology and Ethnology, Harvard University, Cambridge, MA,
47601-47602
2024-12080
San Diego State University, San Diego, CA,
47596-47597
2024-12068
University of New Hampshire, Durham, NH,
47602-47603
2024-12078
University of Southern California, Los Angeles, CA,
47598-47599
2024-12070
Repatriation of Cultural Items:
California State University, Sacramento, Sacramento, CA,
47599-47600
2024-12073
Minnesota Historical Society, St. Paul, MN,
47598
2024-12079
University of Nebraska State Museum, University of Nebraska-Lincoln, Lincoln, NE,
47595-47596, 47602
2024-12071
2024-12072
Nuclear Regulatory

Nuclear Regulatory Commission

RULES
List of Approved Spent Fuel Storage Casks:
FuelSolutions Spent Fuel Management System, Certificate of Compliance No. 1026, Renewal of Initial Certificate and Amendment Nos. 1 through 4,
47439
2024-12063
Postal Regulatory

Postal Regulatory Commission

NOTICES
New Postal Products,
47617-47618
2024-12107
Railroad Retirement

Railroad Retirement Board

RULES
Family Relationships,
47460-47461
2024-12050
Payment of Social Security Benefits by the Railroad Retirement Board,
47462-47463
2024-12052
Reclamation

Reclamation Bureau

NOTICES
Hearings, Meetings, Proceedings, etc.:
Glen Canyon Dam Adaptive Management Work Group,
47604-47605
2024-12082
Rural Housing Service

Rural Housing Service

NOTICES
Funding Opportunity:
Community Facilities Technical Assistance and Training Grant Program for Fiscal Year 2024,
47510-47515
2024-11714
Securities

Securities and Exchange Commission

RULES
Privacy of Consumer Financial Information and Safeguarding Customer Information (Regulation S-P),
47688-47789
2024-11116

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals,
47661
2024-12099
Application:
Eagle Point Enhanced Income Trust, Eagle Point Institutional Income Fund, Eagle Point Credit Management LLC, and Eagle Point Enhanced Income Management LLC,
47678-47679
2024-12024
Self-Regulatory Organizations; Proposed Rule Changes:
New York Stock Exchange LLC,
47650-47661, 47672-47678
2024-12039
2024-12041
NYSE American LLC,
47661-47672
2024-12040
NYSE Arca, Inc.,
47618-47650
2024-12042
2024-12044
The Nasdaq Stock Market LLC,
47679
2024-12043
Small Business

Small Business Administration

NOTICES
Disaster Declaration:
Maine; Public Assistance Only,
47679-47680
2024-12037
Nebraska; Public Assistance Only,
47680-47681
2024-12038
Oklahoma; Public Assistance Only,
47681
2024-12030
South Carolina,
47681
2024-12034
Texas,
47679
2024-12031
West Virginia; Public Assistance Only,
47680
2024-12033
Substance

Substance Abuse and Mental Health Services Administration

NOTICES
List of Certified Laboratories and Instrumented Initial Testing Facilities that Meet Minimum Standards to Engage in Urine Drug Testing for Federal Agencies,
47579-47581
2024-12104
Transportation Department

Transportation Department

See
Federal Aviation Administration

See
Federal Highway Administration
Treasury

Treasury Department

See
Foreign Assets Control Office

See
Internal Revenue Service
U.S. Citizenship

U.S. Citizenship and Immigration Services

NOTICES
Retirement of Forms by Mail Service,
47582-47583
2024-11986
Veteran Affairs

Veterans Affairs Department

NOTICES
Agency Information Collection Activities; Proposals, Submissions, and Approvals:
Health Benefits: Application, Update, Hardship Determination,
47684-47685
2024-12119
Loan Guaranty Servicing Procedures for Holders and Servicers of VA Guaranteed Loans,
47685
2024-12051

Separate Parts In This Issue

Part II
Securities and Exchange Commission,
47688-47789
2024-11116

Part III
Treasury Department, Internal Revenue Service,
47792-47846
2024-11719

Reader Aids
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription.
89
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Monday, June 3, 2024
Rules and Regulations
NUCLEAR REGULATORY COMMISSION
10 CFR Part 72
[NRC-2023-0220]
RIN 3150-AL05
List of Approved Spent Fuel Storage Casks: FuelSolutions ^{TM} Spent Fuel Management System, Certificate of Compliance No. 1026, Renewal of Initial Certificate and Amendment Nos. 1 Through 4

AGENCY:
Nuclear Regulatory Commission.

ACTION:
Direct final rule; confirmation of effective date.

SUMMARY:
The U.S. Nuclear Regulatory Commission (NRC) is confirming the effective date of July 3, 2024, for the direct final rule that was published in the Federal Register on April 19, 2024. This direct final rule amended the Westinghouse Electric Company LLC FuelSolutions TM Spent Fuel Management System listing within the “List of approved spent fuel storage casks” to renew the initial certificate and Amendment Nos. 1 through 4 to Certificate of Compliance No. 1026.

DATES:
Effective date: The effective date of July 3, 2024, for the direct final rule published April 19, 2024 (89 FR 28572), is confirmed.

ADDRESSES:
Please refer to Docket ID NRC-2023-0220 when contacting the NRC about the availability of information for this action. You may obtain publicly available information related to this action by any of the following methods:
• Federal Rulemaking Website: Go to https://www.regulations.gov and search for Docket ID NRC-2023-0220. Address questions about NRC dockets to Dawn Forder; telephone: 301-415-3407; email: Dawn.Forder@nrc.gov. For technical questions, contact the individuals listed in the FOR FURTHER INFORMATION CONTACT section of this document.
• NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly available documents online in the ADAMS Public Documents collection at https://www.nrc.gov/reading-rm/adams.html. To begin the search, select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, at 301-415-4737, or by email to PDR.Resource@nrc.gov. The proposed certificates of compliance, the proposed changes to the technical specifications, and the preliminary safety evaluation reports are available in ADAMS under Accession No. ML22354A263. The final certificates of compliance, the final changes to the technical specifications, and the final safety evaluation reports are available in ADAMS under Accession No. ML24141A254.
• NRC's PDR: The PDR, where you may examine and order copies of publicly available documents, is open by appointment. To make an appointment to visit the PDR, please send an email to PDR.Resource@nrc.gov or call 1-800-397-4209 or 301-415-4737, between 8 a.m. and 4 p.m. eastern time, Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:
George Tartal, Office of Nuclear Material Safety and Safeguards, telephone: 301-415-0016, email: george.tartal@nrc.gov and Yen-Ju Chen, Office of Nuclear Material Safety and Safeguards, telephone: 301-415-1018, email: yen-ju.chen@nrc.gov. Both are staff of the U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001.

SUPPLEMENTARY INFORMATION:
On April 19, 2024 (89 FR 28572), the NRC published a direct final rule amending its regulations in part 72 of title 10 of the Code of Federal Regulations to renew the initial certificate and Amendment Nos. 1 through 4 to Certificate of Compliance No. 1026 for 40 years and revise the certificate of compliance's conditions and technical specifications to address aging management activities related to the structures, systems, and components important to safety of the dry storage system to ensure that these will maintain their intended functions during the period of extended storage operations.
In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on July 3, 2024. The NRC did not receive any comments on the direct final rule. Therefore, this direct final rule will become effective as scheduled.
Dated: May 28, 2024.
For the Nuclear Regulatory Commission.
Cindy Bladey,

Chief, Regulatory Analysis and Rulemaking Support Branch, Division of Rulemaking, Environmental, and Financial Support Office of Nuclear Material Safety and Safeguards.
COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 17
RIN 3038-AF27
Large Trader Reporting Requirements

AGENCY:
Commodity Futures Trading Commission.

ACTION:
Final rule.

SUMMARY:
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is amending certain regulations setting forth large trader position reporting requirements for futures and options. The amendments, among other things, remove the 80-character submission standard and delegate authority to the Director of the Office of Data and Technology to designate a modern submission standard for reports required to be submitted, and replace certain data fields previously with an appendix specifying and adding certain applicable data elements.

DATES:
Effective date: The effective date for this final rule is August 2, 2024.
Compliance date: Futures commission merchants (“FCMs”), clearing members, foreign brokers, and designated contract markets (“DCMs”) required to submit reports under § 17.00(a) (collectively, “reporting firms”), must comply with the amendments to the rules by June 3, 2026.

FOR FURTHER INFORMATION CONTACT:
Owen Kopon, Associate Chief Counsel, at (202) 418-5360 or okopon@cftc.gov, Paul Chaffin, Assistant Chief Counsel, at (202) 418-5185 or pchaffin@cftc.gov, Chase Lindsey, Assistant Chief Counsel, at (202) 740-4833 or clindsey@cftc.gov, Jason Smith, Assistant Chief Counsel, at (202) 418-5698 or jsmith@cftc.gov, each of the Division of Market Oversight, James Fay, IT Specialist, at (202) 418-5293 or jfay@cftc.gov, Division of Data, or Daniel Prager, Research Economist, (202) 418-5801 or dprager@cftc.gov, Office of the Chief Economist, in each case at the Commodity Futures Trading Commission, 1155 21st Street NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION:

Table of Contents
I. Background
A. Introduction
B. Statutory and Regulatory Framework for Large Trader Position Reporting
II. Amendments to Part 17
A. Submission Standard—§§ 17.00(g), 17.00(h), 17.03(d)
B. Data Elements—Appendix C to Part 17 and § 17.03(d)
III. Compliance Period
IV. Frequency of Publication of COT Report
V. Related Matters
A. Cost-Benefit Considerations
B. Regulatory Flexibility Act
C. Paperwork Reduction Act
D. Antitrust Considerations

I. Background

A. Introduction
Part 17 of the Commission's regulations governs large trader position reporting for futures and options. Section 17.00(a) requires reporting firms to report daily position information for “special accounts” ^1 —accounts that represent the largest futures and options traders—to the Commission. ^2 Since the 1980s, Commission regulations have required reporting firms to submit § 17.00(a) large trader position reports in the highly-specified 80-character record format set out in § 17.00(g). ^3 Data reporting technology has evolved since that time, and it is no longer efficient for the Commission or market participants to report and maintain large trader position data in the traditional § 17.00(g) record format. For example, the § 17.00(g) data submission format is unique to § 17.00(a) reports and not easily integrated with other datasets submitted to the Commission. Additionally, because the current § 17.00(g) record format does not support automated data quality checks from Commission staff to reporting firms, the current error correction process puts the timeliness of publication of the Commitments of Traders (“COT”) report, which is built using § 17.00(a) data, in jeopardy. And, the current § 17.00(g) record format cannot accommodate reporting positions in various newer contracts, such as bounded options.
^1 17 CFR 15.00(r).
^2 17 CFR 17.00(a).
^3 17 CFR 17.00(g); see Final Rule, Reports Filed by Contract Markets, Futures Commission Merchants, Clearing Members, Foreign Brokers, and Large Traders, 51 FR 4712 (Feb. 7, 1986).
Accordingly, on June 27, 2023, the Commission published in the Federal Register a notice of proposed rulemaking (herein, the “Proposal”) ^4 that set out revisions to part 17 to modernize that record format and update the data elements required to be reported in § 17.00(a) reports. ^5 Specifically, the Commission proposed to remove the § 17.00(g) record format, which contains both a data submission standard and data elements to be reported. To implement a modern data submission standard, the Commission proposed to revise § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to permit or require one or more particular data submission standards. Contemporaneously with publication of the Proposal, the Commission also published a proposed Part 17 Guidebook (the “Proposed Part 17 Guidebook”), ^6 which would designate Financial Information eXchange Markup Language (“FIXML”) as the data submission standard for § 17.00(a) reports. To replace the data elements previously contained in the § 17.00(g) record format, the Commission proposed to add an appendix C to part 17 (“proposed appendix C”) enumerating and adding certain data elements to be reported in § 17.00(a) reports. Revised § 17.03(d) proposed to delegate authority to the Director of the Office of Data and Technology to determine the form and manner for reporting the data elements contained in the new appendix C to part 17. Combined, these proposed amendments to part 17 would modernize the data submission standard for § 17.00(a) reports, bringing that data submission standard in line with the extensible-markup-language-based data submission standards used for virtually all other Commission data reporting regimes, and would enable reporting of positions in certain futures and options contracts that cannot be represented in the current § 17.00(g) record format.
^4 Notice of Proposed Rulemaking, Large Trader Reporting Requirements, 88 FR 41522 (June 27, 2023).
^5 Id.
^6 See Proposed Part 17 Guidebook (May 30, 2023), available at https://www.cftc.gov/media/8701/GuidebookPart17_053123/download .
The public comment period for the Proposal ended August 28, 2023, ^7 and the Commission received 12 substantive public comment letters. ^8 After considering the comments, the Commission has determined to largely adopt the amendments as proposed, with certain non-substantive revisions for clarity. Additionally, in response to certain comments, the Proposed Part 17 Guidebook has been revised to enable reporting firms to submit certain of the product-related data elements enumerated in appendix C using a “Unique Instrument Code.” The Commission believes the amendments it is adopting herein will improve data quality and modernize the Commission's large trader position data reporting scheme for futures and options.
^7 88 FR at 41522.
^8 The following entities and persons submitted substantive comment letters: Better Markets (“Better Markets”); Bloomberg L.P. (“Bloomberg”); CBOE Global Markets, Inc. (“CBOE”); CME Group (“CME”); Martha Denkevitz (“Denkevitz”); Futures Industry Association (“FIA”); Global LEI Foundation (“GLEIF”); ICE Futures U.S. (“ICE”); International Standards Organization, Standards Advisory Group (“ISO”); National Grain and Feed Association (“NGFA”); The Options Clearing Corporation (“OCC”); and William Wood (“Wood”).

B. Statutory and Regulatory Framework for Large Trader Position Reporting
Sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange Act (“CEA”) provide the Commission with authority to promulgate large trader position reporting regulations. Section 4a of the CEA permits the Commission to set and approve exchange-set limits and enforce speculative position limits. ^9 Section 4c(b) of the CEA gives the Commission plenary authority to regulate transactions that involve commodity options. ^{10} Section 4g of the CEA imposes reporting and recordkeeping obligations on registered entities, and requires each registered entity to file such reports as the Commission may require on proprietary and customer transactions and positions in commodities for future delivery executed on any board of trade. ^{11} Additionally, section 4g of the CEA requires registered entities to maintain daily trading records as required by the Commission and permits the Commission to require that such daily trading records be made available to the Commission. ^{12} Section 4i of the CEA requires the filing of such reports as the Commission may require when positions made or obtained on DCMs equal or exceed Commission-set levels. ^{13}
^9 7 U.S.C. 6a.
^{10} 7 U.S.C. 6c(b).
^{11} 7 U.S.C. 6g.
^{12} Id.
^{13} 7 U.S.C. 6i.
The Commission has set out reporting requirements for futures and options in Parts 15, 16, 17, 18, 19, and 21 of the Commission's regulations. Part 16 requires contract markets to submit certain information to the Commission; Parts 17 and 21 require reporting firms to submit certain information to the Commission; and Parts 18 and 19 require individual traders to submit certain data to the Commission.
Within this framework, part 17 requires the submission of large trader position reports and certain account identifying information for accounts of large traders. Section 17.00(a) requires reporting firms to submit daily reports to the Commission providing positions in open contracts for “special accounts”—that is, futures and options trader accounts that exceed Commission-set reporting levels. ^{14} More specifically, § 17.00(a) requires reporting firms to submit a § 17.00(a) large trader position report—historically referred to as a “series '01 report”—that itemizes by special account certain positions, deliveries of futures, and exchanges of futures for related positions associated with each account that carries a reportable position. ^{15}
^{14} 17 CFR 17.00(a); 17 CFR 15.00(r).
^{15} Section 17.01 requires, separately, that reporting firms submit information, via Form 102, identifying the traders behind special accounts by name, address, and occupation, once an account accrues a reportable position. 17 CFR 17.01. Reporting firms, as appropriate, submit Form 102 to the Commission for each account when that account becomes reportable as a special account. By aggregating information from § 17.00(a) large trader reports and Form 102, the Commission can determine the size of each reportable trader's overall positions across special accounts held with multiple FCMs, clearing members, or foreign brokers.
Section 17.00(g) provides the data submission standard and data elements for the reportable positions by special accounts in the form of an 80-character record format. ^{16} Section 17.02(a) provides the time of filing of § 17.00(a) reports. ^{17} Section 17.03(a) delegates the authority to the Director of the Office of Data and Technology to determine whether reporting firms may submit § 17.00(a) reports using some other format than the required format, upon a determination that such person is unable to report the information using the format, coding structure, or electronic data transmission procedures otherwise required. ^{18} Section 17.03(d) delegates authority to the Director of the Office of Data and Technology to approve a format and coding structure other than that set forth in § 17.00(g). ^{19}
^{16} 17 CFR 17.00(g).
^{17} 17 CFR 17.02(a).
^{18} 17 CFR 17.03(a).
^{19} 17 CFR 17.03(d).

II. Amendments to Part 17

A. Submission Standard—§§ 17.00(g), 17.00(h), 17.03(d)

1. Background and Summary of the Final Rule
Currently, the § 17.00(g) record format contains an 80-character, Cobol-based ^{20} data submission standard. ^{21} The Proposal discussed several disadvantages of that data submission standard. ^{22} First, the data submission standard contained in the current § 17.00(g) record format is outdated and inconsistent with data submission standards required by other Commission reporting regulations. ^{23} Second, the current § 17.00(g) record format is also error-prone, and the manual error correction process currently employed puts the timeliness of the weekly COT report in jeopardy. Third, data received in the current § 17.00(g) record format is difficult to query outside of the Integrated Surveillance System (“ISS”) ^{24} and therefore difficult to integrate with other Commission datasets. Fourth, certain contract features, such as multiple strike prices, cannot be represented in the current § 17.00(g) record format.
^{20} “Cobol” refers to Common Business Oriented Language, a programming language.
^{21} See 17 CFR 17.00(g); 88 FR at 41532.
^{22} See 88 FR at 41524-25.
^{23} See, e.g., Final Rule, Ownership and Control Reports, Forms 102/102S, 40/40S, and 71, 78 FR 69178, 69188 (Nov. 18, 2013) (establishing a “web-based portal” and “an XML-based, secure FTP data feed” for reporting ownership and control information under § 17.01); Advanced Notice of Proposed Rulemaking, Account Ownership and Control Report, 74 FR 31642, 31644 (July 2, 2009) (section 16.02 data to be reported in FIXML); Large Trader Reporting for Physical Commodity Swaps: Division of Market Oversight Guidebook for Part 20 Reports (June 22, 2015), available at https://www.cftc.gov/idc/groups/public/@newsroom/documents/file/ltrguidebook062215.pdf (incorporating FpML and FIXML data standards for Part 20 reporting); CFTC Technical Specification, Parts 43 and 45 swap data reporting and public dissemination requirements, Version 3.2 (March 1, 2023), available at https://www.cftc.gov/media/8261/Part43_45TechnicalSpecification03012023CLEAN/download (incorporating FIXML data standard for parts 43 and 45 reporting).
^{24} The Commission's Integrated Surveillance System receives and stores end-of-day position reports submitted to the Commission, and allows the Commission's divisions and offices to monitor daily activities of large traders. See, e.g., 78 FR at 69180.
To address these shortcomings, the Commission proposed amendments to §§ 17.00(g), 17.00(h), and 17.03(d). The Commission proposed to remove the 80-character record format from § 17.00(g), and to instead provide in that regulation that § 17.00(a) reports be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03. Section 17.03 addresses, among other things, the delegation of certain authority to the Director of the Office of Data and Technology. The Commission proposed to revise § 17.03(d), which currently delegates the authority to the Director of the Office of Data and Technology to approve a format and coding structure other than that set forth in § 17.00(g), to provide instead that authority be delegated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C to part 17 and to determine whether to permit or require one or more particular data standards. These amendments would delegate authority to the Director of the Office of Data and Technology to designate a data submission standard for § 17.00(a) reports in a Guidebook.
Contemporaneously with the publication of the Proposal, the Commission published the Proposed Part 17 Guidebook, which designated FIXML as the data submission standard for § 17.00(a) reports. The Proposed Part 17 Guidebook would permit reporting firms to either submit § 17.00(a) reports in FIXML through a secure file transfer protocol (“FTP”) data feed, or through the CFTC Portal, which would in turn convert those reports into FIXML. The Commission believes that providing those two methods for submitting § 17.00(a) reports will accommodate varied technological capabilities of reporting firms. ^{25} Whereas it may be more efficient for a more sophisticated reporting firm with a large volume of reports to submit such reports in FIXML by secure FTP, it may be more efficient for a less sophisticated firm or a firm with a smaller volume of reports to manually submit such reports through the CFTC Portal.
^{25} See 88 FR at 41532 (addressing reporting firms that would automate submitting § 17.00(a) reports and firms that would manually submit § 17.00(a) reports through the CFTC Portal); see also 78 FR at 69188 (Nov. 18, 2013) (“The Commission is offering two filing methods [for ownership and control reports] for each form because it anticipates a wide range of technological capabilities among reporting parties (varying based on the relative size and experience of a given reporting party).”).
The Commission also proposed non-substantive edits to § 17.00(h), concerning correction of errors and omissions. Current § 17.00(h) provides that corrections of errors or omissions in § 17.00(a) reports be filed “on series '01 forms” or “in the format, coding structure and data transmission procedures approved in writing by the Commission or its designee.” ^{26} The Commission proposed to delete the reference to “series '01 forms” and to specify that the form and manner for submitting corrections of errors and omissions shall be published by the Commission or its designee pursuant to the delegation of authority in § 17.03. Pursuant to this provision, the form and manner for submitting corrections of errors and omissions would be set out in the Part 17 Guidebook published by the Office of Data and Technology.
^{26} 17 CFR 17.00(h).
In this final rule, the Commission is adopting the amendments to §§ 17.00(g), 17.00(h), and 17.03(d) as proposed.

2. Comments on the Proposed Rule
The Commission solicited comment concerning the advantages and disadvantages of designating a FIXML data submission standard for § 17.00(a) reports, the proposal to permit reporting firms to submit § 17.00(a) reports through the CFTC Portal in addition to submission by secure FTP, and the advantages and disadvantages of correcting errors in § 17.00(a) reports in the manner set forth in the Part 17 Guidebook. The Commission also requested comments on all aspects of the changes to the data submission standard described in the Proposal.
The Commission received ten comments that related to changes to the data submission standard for § 17.00(a) reports. Those comments generally concerned the appropriateness of a FIXML data submission standard, the scope of the delegation of authority in § 17.03(d), the process for updating the Part 17 Guidebook, and the process for correcting errors in § 17.00(a) data.

a. Comments Concerning the Part 17 Guidebook Designating a FIXML Data Submission Standard for § 17.00(a) Reports
The Proposal sought comment on whether the Part 17 Guidebook should designate FIXML as the data submission standard for § 17.00(a) large trader position reports. Commenters were generally supportive of, and did not oppose, a FIXML data submission standard, with the option to submit § 17.00(a) reports manually through the CFTC Portal. FIA stated that it supported the Commission's efforts to modernize the large trader reporting process and transition from the current § 17.00(g) record format to a FIXML data submission standard. ^{27} CME stated that it “wholeheartedly” supported the Commission's efforts to modernize and enhance large trader position reporting and that “the conversion from an 80-byte file to FIXML is warranted.” ^{28} Similarly, ICE was “generally supportive” of the Commission's efforts to modernize large trader reporting requirements, although ICE did not specifically reference the proposed transition to an XML-based data submission standard. ^{29}
^{27} FIA Letter at 1.
^{28} CME Letter at 1-2.
^{29} ICE Letter at 1.
The Commission also received several comments concerning the proposed revisions to § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to designate a data submission standard and the process by which Commission staff might update the designated data submission standard in the Part 17 Guidebook in the future. FIA stated that it supported delegating authority to the Director of the Office of Data and Technology to set out data submission standards in the Part 17 Guidebook, ^{30} and ICE stated that it appreciated the rationale for delegating authority to designate a data submission standard and that it generally supported FIA's comments related to the proposed delegation of authority. ^{31} No commenters opposed delegating authority to designate a data submission standard for § 17.00(a) reports to the Director of the Office of Data and Technology. However, some commenters requested clarification as to the scope of the delegation and proposed modifications related to the implementation of that delegated authority. ^{32}
^{30} FIA Letter at 7.
^{31} ICE Letter at 2.
^{32} See FIA Letter at 7; ICE Letter at 2; OCC Letter at 4.
Certain commenters suggested revisions to the Proposal providing that if, in the future, the Director of the Office of Data and Technology changed the designated data submission standard in some way, reporting firms be consulted or given advance notice. ^{33} For example, FIA suggested the Commission modify the Proposal or the Proposed Part 17 Guidebook to provide that, before changing the designated data submission standard, Commission staff consult with reporting firms, provide reasonable notice of changes, and provide a reasonable implementation period. ^{34} ICE suggested that the Commission modify the Proposal and Proposed Part 17 Guidebook to require that the Commission consult with reporting firms regarding any changes to the designated data submission standard. ^{35} OCC suggested the Commission modify the Proposal to provide that reasonable notice and implementation time be provided if at some point the Director of the Office of Data and Technology changes the designated data submission standard. ^{36}
^{33} The same commenters also expressed concerns about potential costs associated with hypothetical future changes in the designated data submission standard for § 17.00(a) reports. Specifically, FIA, ICE, and OCC each stated that future changes to the data submission standard set out in the Part 17 Guidebook could require costly technology and infrastructure changes for reporting firms. See, e.g., FIA Letter at 7; ICE Letter at 2; OCC Letter at 4.
^{34} FIA Letter at 7.
^{35} ICE Letter at 2.
^{36} OCC Letter at 4.
The Commission has determined to adopt the changes to § 17.03(d) as proposed. The Commission believes the revisions described in the comments may unduly constrain the Commission's ability to adjust the process by which it receives information. The Commission has considered similar comments in other reporting contexts and declined to specify in regulations particular implementation timelines applicable to possible future changes in exercises of delegated authority. ^{37}
^{37} See, e.g., Final Rule, Certain Swap Data Repository and Data Reporting Requirements, 85 FR 75601, 75625 (Nov. 25, 2020) (declining to revise proposed regulation to include provision that would state that compliance with changes in technical specifications need only be achieved “as soon as practicable”).
The Commission intends for staff to consult with reporting firms with respect to appropriate data submission standards in order to ensure that any changes in the designated data submission standards or standards for § 17.00(a) reports will be effective and suitable. As explained in the Proposal, the purpose of delegating the authority to designate a data submission standard or standards is to enable the Commission and Commission staff to quickly respond to changing market and technological conditions and to remain consistent with industry best practices. ^{38} Typically, updates to technical specifications and guidebooks issued pursuant to delegated authority are accompanied by implementation periods. ^{39} The Commission expects that when publishing any updates to the Part 17 Guidebook, staff will provide reasonable notice and an adequate implementation period.
^{38} 88 FR at 41526.
^{39} See, e.g., CFTC Press Release, CFTC Staff Announces Modifications to the Technical Specification for Parts 43 and 45, Release No. 8673-23 (Mar. 10, 2023), https://www.cftc.gov/PressRoom/PressReleases/8673-23 (announcing in March 2023 modifications to the Technical Specifications for Parts 43 and 45 to be implemented in January 2024); CFTC Press Release, CFTC's Division of Market Oversight Issues Updated Guidebook and Appendices for Part 20 Reports, Release No. 7189-15 (June 22, 2015), https://www.cftc.gov/PressRoom/PressReleases/7189-15 (“Commission staff will implement the improved validation rules in a test environment on July 6, 2015. Commission staff expects that the improved validation rules will go live in the production environment on August 31, 2015.”).

b. Comments Concerning Submitting § 17.00(a) Reports Through the CFTC Portal
As discussed, the Proposal requested comments on allowing reporting firms to submit § 17.00(a) reports either in the FIXML data submission standard designated in the Part 17 Guidebook, or through the CFTC Portal. ^{40} In its comment letter, FIA stated that it supported the continued operation of the CFTC Portal as a means of reporting. FIA also stated that it believed the Commission should (1) implement changes to the CFTC Portal simultaneously with the implementation of the final rule; (2) consult with industry concerning changes to the CFTC Portal; (3) provide a three-month testing period for the revised CFTC Portal; and (4) include certain specific features in the CFTC Portal, including automatic creation of a Report ID, search functionality for prior submissions by Report ID, a correction process, and a process to export filed reports from the CFTC Portal.
^{40} The CFTC Portal is also referred to as the “PERT Portal,” which abbreviates “Position Entry for Reportable Traders.” See Large Trader Reporting Program, https://www.cftc.gov/IndustryOversight/MarketSurveillance/LargeTraderReportingProgram/index.htm (last visited April 23, 2024).
As discussed below, in the final rule, the Commission is extending the compliance date to a date two years following publication of a final rule in the Federal Register . The Commission expects the updated CFTC Portal to become available for testing approximately six months after publication of the final rule. The Commission believes this should provide reporting firms with adequate time to test the new CFTC Portal prior to the final rule's compliance date.
With respect to the features FIA has described, the Commission expects that some of these features will be available in the CFTC Portal. For example, the Commission expects the CFTC Portal will include functionality for identifying specific reports, ^{41} a process for submitting changes or corrections to previously filed reports, and a process for exporting reports in FIXML format. The updated CFTC Portal may in the future include time-limited search functionality to query previously-filed reports.
^{41} See, e.g., Part 17 Guidebook section 3.10.1 (discussing Reference IDs).

c. Comments Concerning Error Corrections
Currently, § 17.00(h) provides that, unless otherwise approved by the Commission or its designee, corrections of errors and omissions in data required to be reported under § 17.00(a) shall be filed on series '01 forms or in the format, coding structure and data transmission procedures approved in writing by the Commission or its designee. ^{42} Given alterations to the § 17.00(g) record format—which provides the format for the “series '01 form” ^{43} —the Commission proposed to revise the data submission standard and form and manner for error corrections to be consistent with the new data submission standard and the form and manner for submitting § 17.00(a) reports. Significantly, the Proposal explained that implementing a modern data submission standard will allow Commission staff to use an automated process for notifying reporting firms of errors identified in reports during the ingest process on the same day those reports are submitted. ^{44} Currently, staff manually notifies reporting firms when it identifies errors in § 17.00(a) reports submitted by those firms. The Commission expects automating the process for sending notice of errors will facilitate more rapid corrections to reported data, which will improve the quality of the Commission's data.
^{42} 17 CFR 17.00(h).
^{43} As noted previously, these final rules remove this reference to the “series '01 form” as well.
^{44} See 88 FR at 41526.
The Commission received several comments concerning error corrections. First, NGFA voiced support for automating the process for notifying reporting firms of errors. ^{45} Second, Wood and Denkevitz speculated that reporting firms could “game” the error correction process ^{46} by submitting intentionally inaccurate reports and subsequently correcting those reports, and expressed a concern that the Commission might “delete records” following submission of error corrections, thereby making it difficult to detect such “gaming.” ^{47} Both respectively suggested that “[n]o deletions should ever be allowed” and “[d]eletions should not be allowed.” ^{48} The Proposal did not discuss “deleting records” and did not propose to delete any records. As discussed in the Proposal, the “Record Type” data element—both in the current § 17.00(g) record format and appendix C—identifies submissions that correct errors or omissions. ^{49}
^{45} See, e.g., NGFA Letter at 1.
^{46} Wood speculates about several other forms of “gaming” related to part 17 large trader position reporting, including the prospect that a trader might conceal ownership of accounts and submit optional § 17.00(a) reports that are anonymous and at the same time contain “misleading” data. See Wood Letter. These concerns speak more to the reporting of information pertaining to ownership and control under § 17.01 than to reporting of positions of special accounts under § 17.00(a). In any event, Wood does not propose any changes to the Proposal on the basis of these concerns.
^{47} See Wood Letter, Denkevitz Letter.
^{48} Id.
^{49} See 88 FR at 41526 n.60.

d. Comments Concerning Certain Late Claimed Give-ups and Transfers
The Commission also received comments from FIA concerning the filing of change updates to account for “certain late claimed give-ups and transfers.” ^{50} CBOE echoed these comments. ^{51}
^{50} FIA Letter at 6. To the extent CME and ICE's comment letters should be read to support or reiterate FIA's comment letter, those letters can be construed to raise this issue as well. See CME Letter at 2; ICE Letter at 1.
^{51} CBOE Letter at 2.
Specifically, FIA requested the Commission provide “guidance” that “change updates, corrections, or amendments to reports would not be required to account for certain “late claimed give-up” or certain transfer activity. ^{52} FIA states that filing change updates to account for “certain late claimed give-ups and transfers” would increase reporting firms' filings and increase complexity, and states that “recreating positions from a prior day in order to accurately file the change update” would be challenging for reporting firms. ^{53} FIA also included an appendix to its comment letter containing reporting hypotheticals drafted by FIA members. ^{54}
^{52} FIA Letter at 6.
^{53} Id.
^{54} See id. at 17-19.
The Commission did not propose to revise regulations that govern the time by which a position must be reported under § 17.00(a) or to revise the requirement that a reporting firm correct any errors in a position report. With respect to the activity to which FIA refers, the Commission would not expect the Proposal to affect whether reporting of positions impacted by give-up and transfer activity complies with the Commission's regulations. Therefore, FIA's request for guidance concerning “change updates, corrections, or amendments” relating to “certain late claimed give-ups and transfers” is outside the scope of this rulemaking.
The hypotheticals in FIA's letter do address a scenario where trades have been executed on a given day, but “have not been claimed yet in clearing” as of the close of market on that same day. ^{55} For purposes of populating the “Contracts Bought” and “Contracts Sold” data elements, which include contracts bought and sold via give-up transactions, a reporting firm should generally count contracts that have been claimed for clearing and therefore are in a special account as of the close of market on the day covered by the report. To clarify the definitions of “Contracts Bought” and “Contracts Sold,” the Commission has removed the reference to “give-ups processed beyond T+1” and replaced it with “contracts claimed for clearing as a result of trade allocations such as give-ups.” The “Contracts Bought” and “Contracts Sold” data elements, respectively, capture the gross number of contracts bought by a special account as of the close of the market for a covered day and the gross number of contracts sold from a special account as of the close of the market for a covered day, excluding contracts bought or sold from a special account in connection with exchanges of derivatives for related positions (“EDRPs”), transfers, option exercises, or deliveries.
^{55} Id. at 18-19.

3. Final Rule
As discussed, with respect to the Proposal's changes related to the data submission standard for § 17.00(a) reports, the Commission is adopting the Proposal as proposed.

B. Data Elements—Appendix C to Part 17 and § 17.03(d)

1. Background and Summary of the Proposed Rule
Because the current § 17.00(g) record format contained the data elements for § 17.00(a) reports and provided the form and manner for reporting those data elements, removal of that record format necessitates replacing those data elements in the regulations. The Proposal relocated the data elements for § 17.00(a) reports to appendix C to part 17, and delegated authority to the Director of the Office of Data and Technology to publish the form and manner for submitting those data elements in a Part 17 Guidebook. The Proposal also included several data elements not previously incorporated into the § 17.00(g) record format.
Organizing the data elements applicable to § 17.00(a) reports in an appendix to part 17 is consistent with the treatment of data elements required to be reported in other Commission reporting regimes. ^{56} Similarly, delegating authority to determine the form and manner for reporting a particular data element to the Director of the Office of Data and Technology should enable the Commission to address changing market and technological conditions, and to provide clarification on reporting of particular data elements as necessary.
^{56} See, e.g., 17 CFR part 45, appendix 1 (data elements for swap data required to be reported under part 45); 17 CFR part 43, appendix A (data elements for swap transaction and pricing data required to be reported under part 43); 17 CFR part 39, appendix C (“Daily Reporting Data Fields” for reporting required under part 39).
The Proposal organized the data elements in appendix C into four categories. First, proposed appendix C retained certain data elements that have been required to be reported under the current § 17.00(g) record format—for example, under the Proposal, a § 17.00(a) report would continue to require reporting long positions and short positions in options and futures contracts, delivery notices stopped and issued, and other information fundamental to a position report. ^{57} Second, proposed appendix C called for certain new data elements used to facilitate processing of data, including data elements typically used in FIXML reporting ^{58} —for example, for files submitted in FIXML, reporting firms would include a message count, a “Sender ID,” and information identifying the time of submission. ^{59} Third, proposed appendix C included new product-related data elements that, where applicable, would enable the Commission to identify and distinguish the futures or option contract pertaining to the reported position. ^{60} In some instances these data elements would allow the Commission to draw more granular distinctions between certain contracts for reportable positions, and in other instances, these data elements will enable reporting firms to accurately represent terms of particular contracts, such as bounded or barrier contracts, contracts with non-price or non-numeric strikes, and other innovative contracts, that are held in special accounts. Fourth, proposed appendix C included new data elements that concern the nature and quantity of day-to-day changes in positions. ^{61} That information would provide Commission staff with additional information to support the Commission's Surveillance Program, ^{62} and would assist Commission staff in linking position data reported at the special account level pursuant to § 17.00(a) with transaction data reported at the trading account level under § 16.02.
^{57} These data elements include (1) Data Element #7 Record Type (Action), (2) Data Element #8 Report Date, (3) Data Element #9 (Reporting Firm ID), (4) Data Element #11 Account ID, (5) Data Element #12 Exchange Indicator, (6) Data Element #15 Ticker Symbol, (7) Data Element #16 Maturity Month Year, (8) Data Element #20 Strike Level, (9) Data Element #26 Put or Call Indicator, (10) Data Element #27 Exercise Style, (11) Data Element #30 Underlying Contract ID, (12) Data Element #31 Underlying Maturity Month Year, (13) Data Element #32 Long Position, (14) Data Element #33 Short Position, (15) Data Element #38 Delivery Notices Stopped, and (16) Data Element #39 Delivery Notices Issued. The Part 17 Guidebook provides a mapping of data elements in the current § 17.00(g) record format to the data elements in appendix C.
^{58} These data elements include (1) Data Element #1 Total Message Count, (2) Data Element #2 Message Type, (3) Data Element #3 Sender ID, (4) Data Element #4 To ID, (5) Data Element #5 Message Transmit Datetime, (6) Data Element #6 Report ID, and (7) Data Element #10 Special Account Controller LEI.
^{59} The Commission notes that for reporting firms submitting § 17.00(a) reports through the CFTC Portal, certain of these data elements may be populated by the CFTC Portal software.
^{60} These data elements include (1) Data Element #14 Product Type, (2) Data Element #13 Commodity Clearing Code, (3) Data Element #17 Maturity Time, (4) Data Element #18 Listing Date, (5) Data Element #19 First Exercise Date, (6) Data Element #20 Strike Level, (7) Data Element #21 Alpha Strike, (8) Data Element #22 Cap Level, (9) Data Element #23 Floor Level, (10) Data Element #24 Bound or Barrier Type, (11) Data Element #25 Bound or Barrier Level, (12) Data Element #28 Payout Amount, (13) Data Element #29 Payout Type, and (14) Data Element #50 Product-Specific Terms.
^{61} These data elements include (1) Data Element #34 Contracts Bought, (2) Data Element #35 Contracts Sold, (3) Data Element #36 EDRPs Bought, (4) Data Element #37 EDRPs Sold, (5) Data Element #38 Delivery Notices Stopped, (6) Data Element #39 Delivery Notices Issued, (7) Data Element #40 Long Options Expired, (8) Data Element #41 Short Options Expired, (9) Data Element #42 Long Options Exercised, (10) Data Element #43 Short Options Exercised, (11) Data Element #44 Long Futures Assigned, (12) Data Element #45 Short Futures Assigned, (13) Data Element # 46 Long Transfers Sent, (14) Data Element #47 Long Transfers Received, (15) Data Element #48 Short Transfers Sent, and (16) Data Element #49 Short Transfers Received.
^{62} The Commission's Market Surveillance Program is responsible for collecting market data and position information from registrants and large traders, and for monitoring the daily activities of large traders, key price relationships, and relevant supply and demand factors in a continuous review for potential market problems. See Final Rule, Position Limits, 86 FR 3236, 3381 n.1134 (Jan. 14, 2021).
In this final rule, the Commission is adopting the amendments to §§ 17.00(g) and 17.03(d) as proposed. The Commission is also adopting appendix C to part 17 (the final appendix C to part 17 is referred to, herein, as “appendix C”), largely as proposed, but with non-substantive changes to the descriptions of certain data elements for clarity. In addition, the Office of Data and Technology has made corresponding non-substantive changes to the Proposed Part 17 Guidebook for clarity, and corresponding changes to the Part 17 Guidebook to remove certain data elements. And, the Part 17 Guidebook now has been revised to enable reporting firms to submit certain of the product-related data elements enumerated in appendix C using a “Unique Instrument Code.” A revised Part 17 Guidebook (the “Part 17 Guidebook”) has been published contemporaneously with this final rule.

2. Comments Received
The Commission solicited comment concerning any additional data elements not included in appendix C that may be necessary to obtain a complete and accurate picture of positions held by large traders, any transactions that would effect changes in positions that are not accounted for by the data elements in appendix C, and any data elements in appendix C that may not be necessary to obtain a complete and accurate picture of positions held by large traders. The Commission also requested comments on all aspects of the changes to data elements described in the Proposal.
The Commission received nine comments concerning changes to the data elements for § 17.00(a) reports. Those comments generally consisted of requests for clarification regarding certain data elements, comments stating that certain product-related data elements should be obtained from DCMs, comments concerning the special account legal entity identifier (“LEI”) data element, and comments concerning use of certain data submission standards for certain data elements. In particular, FIA provided an appendix to their comment letter containing comments on 23 of the data elements in appendix C. ^{63} ICE stated that it generally supported FIA's comments; ^{64} CME stated that “compliance . . . is dependent on how the CFTC defines some of the new data elements,” citing the FIA appendix; ^{65} CBOE stated that it was “supportive” of FIA's comments; ^{66} and OCC stated that it “associates itself with the contents of the FIA Comment Letter.” ^{67}
^{63} FIA Letter at 13-16.
^{64} ICE Letter at 1.
^{65} CME Letter at 2.
^{66} CBOE Letter at 2.
^{67} OCC at 2.

a. Comments Concerning Currently Reported Data Elements (“Category 1”) ^{68}
^{68} These data elements include (1) Data Element #7 Record Type (Action), (2) Data Element #8 Report Date, (3) Data Element #9 (Reporting Firm ID), (4) Data Element #11 Account ID, (5) Data Element #12 Exchange Indicator, (6) Data Element #15 Ticker Symbol, (7) Data Element #16 Maturity Month Year, (8) Data Element #20 Strike Level, (9) Data Element #26 Put or Call Indicator, (10) Data Element #27 Exercise Style, (11) Data Element #30 Underlying Contract ID, (12) Data Element #31 Underlying Maturity Month Year, (13) Data Element #32 Long Position, (14) Data Element #33 Short Position, (15) Data Element #38 Delivery Notices Stopped, and (16) Data Element #39 Delivery Notices Issued.
As discussed above, appendix C incorporates the data elements included in the current § 17.00(g) record format. That 80-character record format contains data elements that capture information necessary to process data, ^{69} information concerning the reporting firm and special account, ^{70} product-identifying information, ^{71} and information concerning the direction or nature of the trades underlying the position. ^{72} In some instances, appendix C calls for this information in a different format than that set out in current § 17.00(g). For example, whereas the current § 17.00(g) record format uses a single data element to identify whether a position is long or short, ^{73} appendix C captures long and short positions using separate data elements. ^{74} Similarly, whereas the current § 17.00(g) record format identifies EDRPs using a single “Report Type” field, appendix C captures more granular information concerning such exchanges through multiple data elements. ^{75}
^{69} For example, the “Record Type” data element indicates whether a report contains a new record, corrects a previously provided record, or deletes a previously provided record. 17 CFR 17.00(g)(2)(xiv).
^{70} For example, the “Reporting firm” data element identifies the reporting firm using a three-character alphanumeric identifier assigned by a DCM or Derivatives Clearing Organization, 17 CFR 17.00(g)(2)(ii), and the “Account Number” data element identifies the special account using a unique identifier assigned by the reporting firm, 17 CFR 17.00(g)(2)(iii).
^{71} For example, the “Commodity” data element is populated with an exchange-assigned commodity code for the futures or options contract. 17 CFR 17.00(g)(2)(vii).
^{72} For example, the “Report Type” data element indicates whether a report contains positions, delivery notices, or exchanges of futures for a commodity or for a derivatives position. 17 CFR 17.00(g)(2)(i).
^{73} Specifically, the “Long-Buy-Stopped (Short-Sell-Issued)” data element. See 17 CFR 17.00(g)(xi).
^{74} Specifically, Data Element #32 Long Position and Data Element #33 Short Position.
^{75} Specifically, Data Element #36 EDRPs Bought and Data Element #37 EDRPs Sold.
No commenter objected to continuing to report the data elements contained in the current § 17.00(g) record format. The appendix to FIA's comment letter does provide comment on several of these data elements. The Commission discusses those comments and data elements below in connection with new data elements to which those data elements correspond.

b. Comments Concerning Data Elements Related to FIXML Implementation and Data Processing (“Category 2”)
Appendix C contains certain new data elements to facilitate processing of data. ^{76} These include data elements concerning the submission of messages to the Commission, data elements identifying the sender and special account controller, ^{77} and data elements identifying the date and time of the report. This information is necessary to enable the Commission to track and manage reports received using a FIXML data submission standard. No commenter objected to the inclusion of any of these data elements in appendix C. FIA, however, requested clarification concerning some of these data elements.
^{76} These fields include (1) Data Element #1 Total Message Count, (2) Data Element #2 Message Type, (3) Data Element #3 Sender ID, (4) Data Element #4 To ID, (5) Data Element #5 Message Transmit Datetime, (6) Data Element #6 Report ID, and (7) Data Element #7 Record Type (Action).
^{77} The Commission separately discusses Data Element #10 Special Account Controller LEI below.
First, FIA requested clarification concerning the “Total Message Count,” “Report ID,” and “Record Type (Action)” data elements. ^{78} Specifically, FIA asked whether “Report ID” identifies “a position report on a given day as opposed to lines within a position report.” ^{79} The source of FIA's confusion appears to be the meaning of the term “position report” in appendix C. As used in appendix C, the terms “position report,” “record,” or “message” refer to a daily record of a position in a particular contract on a particular reporting market. As used in appendix C, a “file” represents a compilation of one or more “records” or “messages” submitted for a given day. Thus, “Total Message Count” refers to a count of all records or messages in a given file, “Report ID” refers to a unique identifier assigned to each record or message in a given file, and “Record Type (Action)” refers to the action that triggered each record or message in a given file. The Commission has made non-substantive, clarifying revisions to Data Elements #1, #5, and #7 to use the term “position report” consistently. The Commission believes these changes will provide clarity to reporting firms.
^{78} FIA Letter at 13.
^{79} Id.
Second, FIA requested clarification concerning the “Sender ID” data element. ^{80} Specifically, it asked the Commission to clarify the difference between “Sender ID” and “Reporting Firm ID.” ^{81} As FIA suggests in their comment, “Sender ID” is intended to identify the entity responsible for submitting a position report, whether or not that entity is also the “reporting firm,” as that term is used herein. “Reporting Firm ID” refers to the reporting firm, regardless of whether the reporting firm is also the submitter of the position report. The Commission has made non-substantive, clarifying revisions to Data Element #3 to specify that “Sender ID” should be populated with a unique identifier assigned to the “firm submitting the position report.” The Commission believes this change will provide clarity to reporting firms.
^{80} Id.
^{81} See id.

c. Comments Concerning Data Elements Related to Product Identification (“Category 3”)
Appendix C also contains certain new data elements to identify and characterize the product in which the special account holds a position. The current § 17.00(g) record format requires reporting an “Exchange Code,” an exchange-assigned “Commodity Code” for the contract, an exchange-assigned “Commodity Code” for the instrument that the contract exercises into, the “Expiration Date” for the contract and for the instrument that the contract exercises into, and a “Strike Price,” where applicable. ^{82} That narrowly-prescribed format cannot readily accommodate reporting of positions in contracts with bounds or barriers, contracts with non-price or non-numeric strikes, or other innovative contracts. Accordingly, appendix C includes data elements to capture such information, which will allow the Commission to distinguish among these positions in large trader data maintained in ISS.
^{82} 17 CFR 17.00(g).
FIA's comments concerning data elements related to product identification fall into two categories. First, FIA seeks clarification regarding certain data elements. Second, FIA proposes that the Commission eliminate certain data elements from appendix C that it deems to contain “static” product information—that is, data elements that seek information for which the value of the data element will not vary across position reports submitted to the Commission—on the grounds that it would be more efficient for the Commission to obtain such information directly from the DCMs that list such products. ^{83}
^{83} FIA Letter at 4-6. CME and CBOE also stated that they, as DCMs listing contracts, would provide so-called “static” data elements to the Commission in lieu of requiring reporting firms to include this data in § 17.00(a) reports. See CME Letter at 3; CBOE Letter at 2.
FIA seeks clarification concerning the “Commodity Clearing Code,” “Product Type,” “Ticker Symbol,” and “Underlying Contract ID” data elements.
With respect to “Commodity Clearing Code,” FIA requests that the Commission use different terminology—simply, “Clearing Code”—as this is “industry standard terminology.” ^{84} The “Commodity Clearing Code” data element captures a clearinghouse-assigned commodity code for the futures or options contract. Although certain clearinghouses use the “Clearing Code” terminology, some specifications use other terminology for this data, such as “Clearing Symbol.” The Commission believes that the definition of “Commodity Clearing Code” set out in appendix C, and the description in the Part 17 Guidebook, provide sufficient clarity for the term “Commodity Clearing Code” to be understood by reporting firms regardless of the naming convention used by a particular clearinghouse.
^{84} FIA Letter at 13. Alternatively, Denkevitz suggests instead that the Commission use “Commodity Code” on the basis that “Commodity Code” is “more clear.” See Denkevitz.
With respect to “Product Type,” FIA seeks “further specificity” regarding the terms “Commodity Swap” and “Options on Combos,” which are included as valid values in the Part 17 Guidebook. ^{85} The term “Commodity Swap” refers to a contract, based on a commodity, that meets the swap definition. ^{86} The term “Options on Combos,” or Options Combinations, refers to a multi-legged instrument made up of calls, puts, and/or futures.
^{85} FIA Letter at 14.
^{86} See 7 U.S.C. 1a(47)(A); 17 CFR 1.3; Final Rule, Further Definition of “Swap Dealer,” “Security-Based Swap Dealer,” “Major Swap Participant,” “Major Security-Based Swap Participant” and “Eligible Contract Participant,” 77 FR 30596 (May 23, 2012).
With respect to “Ticker Symbol,” FIA stated that “Ticker Symbol” is “not self-explanatory.” ^{87} The Part 17 Guidebook indicates that “Ticker Symbol” maps to the “Commodity Code (1)” data element in the current § 17.00(g) record format. The Commission believes that because reporting firms currently report this data element, the description in the Part 17 Guidebook, including the mapping to the current data element, is sufficiently clear.
^{87} FIA Letter at 14.
With respect to “Underlying Contract ID,” FIA commented a 20-character limitation set out in the Part 17 Guidebook could limit the ability of this data element to accommodate options that exercise into multiple futures contracts, such as a “crush option.” ^{88} FIA does not, however, indicate what alternative character limitation would be appropriate for the “Underlying Contract ID” data element or specify any crush option contract currently listed on a DCM that could not be reported due to the 20-character limitation for this data element in the Part 17 Guidebook. The Guidebook published contemporaneously with this final rule replaces the 20-character limitation with a 50-character limitation. If, in the future, a 50-character limitation becomes insufficient to capture complete and accurate data for certain contracts, the Commission expects that the form and manner for reporting the “Underlying Contract ID” data element would be adjusted as necessary by the Office of Data and Technology pursuant to the delegation of authority in § 17.03.
^{88} Id. at 15.
As discussed above, in addition to comments requesting clarification with respect to specific data elements, FIA also commented concerning the reporting of product-related data elements for which the value of the data element generally does not vary across § 17.00(a) reports. ^{89} According to FIA, these so-called “static” data elements include “Product Type,” “Listing Date,” “Exercise Style,” “Payout Amount,” “Payout Type,” “Underlying Contract ID,” and “Underlying Maturity Month Year.”
^{89} Id. at 4-6.
FIA requests that the Commission not require reporting firms to submit these data elements, but instead obtain this information from the DCMs listing products to which the data elements are applicable. ^{90} FIA argues that this static data should be obtained from one centralized source—the exchange that originates the data—and not multiple reporting firms because “the data should not vary from firm-to-firm” and “[i]mposing an obligation on reporting firms to submit this data increases the risk of error.” ^{91} As an alternative, FIA suggests that the CFTC “should impose an obligation on the exchanges to provide this information directly to each reporting firm in a readily digestible format.” ^{92}
^{90} FIA Letter at 2.
^{91} Id. at 4.
^{92} Id. at 6.
Certain entities which operate DCMs, specifically, CME and CBOE, also commented that “static” data elements would be best obtained from the DCMs that are the original source of the data. ^{93}
CME stated that it publishes this information on its website and “provides this information in FIXML format to the CFTC pursuant to part 16 regulations.” ^{94} CME proposed the CFTC “abandon” seeking product reference information in § 17.00(a) reports and instead seek that information directly from DCMs via a standardized product reference file submitted pursuant to part 16. ^{95}
^{93} CME Letter at 3; CBOE Letter at 2. CBOE categorized the following as “static” data elements: Data Element #14 Product Type, Data Element #18 Listing Date, Data Element #27 Exercise Style, Data Element #28 Payout Amount, Data Element #29 Payout Type, Data Element #30 Underlying Contract ID, and Data Element #31 Underlying Maturity Month Year).
^{94} CME Letter at 3.
^{95} Id.
As noted by CME, ^{96} Commission staff has developed a Product Reference File Guidebook (“PRF Guidebook”), which sets out a standardized format for DCMs to submit product reference information to the Commission pursuant to § 16.02. ^{97} The Commission believes that receiving product reference information from DCMs in a standardized format will improve data quality.
^{96} Id.
^{97} 17 CFR 16.02.
In addition to improving the quality of futures and options transaction data reported by DCMs under § 16.02, the Commission believes that the PRF Guidebook may also facilitate a simplified means of reporting product-related data in § 17.00(a) reports. If the Commission receives product reference data from a DCM and such data can be adequately linked to a § 17.00(a) report for a position in the relevant contract, then it would only be necessary for the reporting firm to include in that § 17.00(a) report information sufficient to link that position report to the relevant product reference data.
In order for the Commission to link product-related data in a product reference file to a § 17.00(a) report for a particular contract, reporting firms will need to provide, as part of each § 17.00(a) report, a code identifying the relevant product entry in a DCM's product reference file. The PRF Guidebook allows for DCMs to identify product references files with such codes, called “Unique Instrument Codes,” to particular futures and options contracts.
In light of the above, the Commission has revised the final Part 17 Guidebook to provide flexibility in the form and manner for submitting product-specific data elements. As provided in the Proposed Part 17 Guidebook, reporting firms may submit all of the data elements enumerated in appendix C. But, the Part 17 Guidebook also provides that reporting firms may submit certain product-specific data elements in appendix C by providing a “Unique Instrument Code” associated with a DCM's product reference file. Receiving a “Unique Instrument Code” will allow the Commission to obtain the related product-specific data from a DCM's product reference file. To effectuate this option, the Commission has revised the Part 17 Guidebook to indicate that certain data elements are not required to be populated in a § 17.00(a) report if a “Unique Instrument Code” is provided. ^{98} Conversely, if a reporting firm reports each of the product-related data elements enumerated in appendix C, they need not provide the relevant “Unique Instrument Code” from the DCM's product reference file.
^{98} The Part 17 Guidebook now includes a “Unique Instrument Code” data field, defined as “[a]n exchange-assigned code [that] serves as a primary key for the product reference file and uniquely identifies the derivative contract at the instrument level.”
Based on the comments received, the Commission expects that providing a “Unique Instrument Code” rather than certain product-related data elements required by appendix C will reduce the burden on reporting firms, reduce the risk of error in reporting, and simplify the reconciliation or error correction process for reporting firms and the Commission. ^{99} Providing this option to reporting firms will not increase the burden or complexity beyond that contemplated in the Proposal, as reporting firms retain the alternative to report the appendix C data elements as enumerated in the Proposal. ^{100}
^{99} See FIA Letter at 4.
^{100} FIA proposes that a “less optimal alternative” to wholesale deletion of their so-called “static” data elements would be “to impose an obligation on the exchanges to provide this information directly to each reporting firm in a readily digestible format.” FIA Letter at 6. The Commission believes that permitting reporting firms to submit a “Unique Instrument Code” to satisfy their obligation to provide the relevant data elements from appendix C is consistent with FIA's proposal. The Commission believes that submitting a single “Unique Instrument Code” rather than a set of data elements will be more efficient for reporting firms and for the Commission.
Certain commenters identified several specific data elements that they believe are “static” and best obtained directly from DCMs. ^{101} The Part 17 Guidebook indicates these data elements need not be included in a § 17.00(a) report if a “Unique Instrument Code” is provided—“Product Type,” “Listing Date,” “Exercise Style,” “Payout Amount,” “Payout Type,” “Underlying Contract ID,” and “Underlying Maturity Month Year.”
^{101} See FIA Letter at 4-6 (“Data Element #14 Product Type,” “Data Element #18 Listing Date,” “Data Element #27 Exercise Style,” “Data Element #28 Payout Amount,” “Data Element #29 Payout Type,” “Data Element #30 Underlying Contract ID,” and “Data Element #31 Underlying Maturity Month Year”); CBOE Letter at 2 (same).

d. Comments Concerning the “Special Account Controller LEI” Data Element
Appendix C includes a “Special Account Controller” data element. As discussed in the Proposal, an LEI is a unique code assigned to an entity in accordance with the standards set by the Global Legal Identifier System. ^{102} Among other things, the “Special Account Controller LEI” data element will allow the Commission to link data reports submitted under § 17.00(a) with other data reports concerning the same entity. The Commission notes that some special account controllers, such as natural persons, may be ineligible to receive an LEI. ^{103} Accordingly, the Part 17 Guidebook, as initially proposed, labelled the “Special Account Controller LEI” as conditional, and the Proposal explained that the data element must be reported for special accounts for which the special account controller is eligible to receive an LEI, but an LEI need not be reported for special accounts for which the special account controller is ineligible for an LEI. ^{104} For such accounts, the Commission will receive identifying information via Form 102A.
^{102} The Global Legal Identifier System was established by the finance ministers and the central bank governors of the Group of Twenty nations and the Financial Stability Board. See Charter of the Regulatory Oversight Committee For the Global Legal Entity Identifier System, available at https://www.leiroc.org/publications/gls/roc_20190130-1.pdf .
^{103} The Commission has elsewhere discussed this issue in regulations concerning reporting of swap data. See, e.g., Final Rule, Swap Data Recordkeeping and Reporting Requirements, 85 FR 75503, 75520 (Nov. 25, 2020).
^{104} 88 FR at 41528.
The Commission received comments from FIA, ICE, GLEIF, and ISO concerning the “Special Account Controller LEI” data element. No commenters opposed including “Special Account Controller LEI” as a data element, but some commenters opposed requiring LEI where a special account controller has not provided an LEI to the reporting firm, regardless of whether that special account controller is eligible to receive an LEI.
GLEIF and ISO each support using LEI to identify Special Account Controllers. GLEIF notes that other regulators have recently discussed or proposed rules to include LEI for different reporting regimes, and LEI adoption creates “a comprehensive and consistent identification scheme” across regulators. ^{105} ICE commented that it has “found LEIs to be a valuable data point for use in tracking the accuracy of data reporting and encourages the Commission to implement additional requirements regarding this data element, including the requirement that LEI must be reported in large trader submissions wherever possible.” ^{106}
^{105} GLEIF Letter at 2.
^{106} ICE Letter at 2.
FIA, however, does not believe that special account controller “eligibility” for an LEI is “the appropriate standard.” ^{107} FIA asserts that no other Commission regulations explicitly require eligible special account controllers to obtain LEIs, and suggests that absent a separate, independent requirement to provide an LEI, the “Special Account Controller LEI” data element should instead be conditioned on special account controllers “providing” an LEI to the reporting firm. ^{108}
^{107} FIA Letter at 8.
^{108} Id.
The Commission has determined to adopt the “Special Account Controller LEI” data element and to clarify that reporting the “Special Account Controller LEI” data element is conditional on the special account controller obtaining an LEI. Therefore, under the final rule, reporting firms must report an LEI if the special account controller is eligible to receive and has obtained an LEI. Reporting firms will not need to request that their LEI-eligible customers who have not obtained LEIs do so. But, reporting firms may need to request that customers who have obtained LEIs provide those LEIs, just as those customers provide various other identifying information that is required in regulatory reporting, such as their names and addresses. A reporting firm satisfies its obligation to report the Special Account Controller LEI data element by asking a customer if it has obtained an LEI and, if so, to provide that LEI to the reporting firm. If an LEI is provided by the customer, the reporting firm then reports the provided LEI.
However, receiving § 17.00(a) reports that do not identify eligible special account controllers with an LEI hinders the Commission's fulfillment of its regulatory mandates. The Commission understands FIA's concern that, in the absence of an express requirement that eligible special account controllers obtain an LEI, reporting firms might be faced with a choice between requiring their LEI-eligible customers to provide LEIs and declining to carry futures and options positions for such customers. The Commission will continue to evaluate whether to adopt an express requirement that certain special accounts eligible for an LEI be required to obtain an LEI. To the extent future Commission action introduces such a requirement, the Commission expects that reporting firms responsible for large trader reporting will report an LEI for all special account controllers.

e. Comments Concerning Data Elements Concerning Changes in Positions (“Category 4”)
Appendix C includes data elements ^{109} incorporating the current § 17.00(g) record format's requirement that reporting firms identify EDRPs ^{110} and identify delivery notices issued and stopped. ^{111} In addition, appendix C introduces data elements to capture information concerning the nature of changes in positions that is not fully-captured by the current § 17.00(g) record format. ^{112} Specifically, appendix C requires identification of changes in position due to contracts bought and sold; ^{113} due to option expirations, exercises, and assignments; and due to long and short transfers sent and received.
^{109} Specifically, Data Element #36 EDRPs Bought, Data Element #37 EDRPs Sold, Data Element #38 Delivery Notices Stopped, and Data Element #39 Delivery Notices Issued.
^{110} The Commission understands that, in practice, such transactions are often referred to as “exchanges of futures for related positions” or “EFRPs,” or sometimes simply “exchanges for related positions.” The Commission has used the terminology “exchanges of derivatives for related positions,” or “EDRPs,” because it believes this is a more accurate and descriptive term given it “include[s] transactions not limited to futures, such as swaps.” Notice of Proposed Rulemaking, Core Principles and Other Requirements for Designated Contract Markets, 75 FR 80572, 80593 (Dec. 22, 2010).
^{111} See 17 CFR 17.00(g)(i), (xi).
^{112} These fields would include (1) Data Element #34 Contracts Bought, (2) Data Element #35 Contracts Sold, (3) Data Element #36 EDRPs Bought, (4) Data Element #37 EDRPs Sold, (5) Data Element #38 Delivery Notices Stopped, (6) Data Element #39 Delivery Notices Issued, (7) Data Element #40 Long Options Expired, (8) Data Element #41 Short Options Expired, (9) Data Element #42 Long Options Exercised, (10) Data Element #43 Short Options Exercised, (11) Data Element #44 Long Futures Assigned, (12) Data Element #45 Short Futures Assigned, (13) Data Element # 46 Long Transfers Sent, (14) Data Element #47 Long Transfers Received, (15) Data Element #48 Short Transfers Sent, and (16) Data Element #49 Short Transfers Received.
^{113} Appendix C indicates that changes in position resulting from give-up transactions and allocations will be included in the totals of “Contracts Bought” and “Contracts Sold,” as such contracts would be treated as positions in the carrying accounts through which they are ultimately cleared rather than positions in the accounts that execute the transactions, if such accounts differ from the accounts through which such transactions are cleared.
Understanding the nature and quantity of transactions that resulted in day-to-day changes in positions of special accounts will provide Commission staff with additional information for surveillance purposes, and will allow Commission staff to link position data reported at the special account level pursuant to § 17.00(a) with transaction data reported at the trading account level under § 16.02. ^{114}
^{114} DCMs identify traders by account numbers, but certain DCMs do not routinely collect detailed trader-identifying data. See, e.g., Final Rule, Significant Price Discovery Contracts on Exempt Commercial Markets, 74 FR 12178, 12185 (Mar. 23, 2009). The Commission instead generally obtains such trader-identifying data from FCMs, clearing members, and foreign brokers through § 17.01. 17 CFR 17.01.
The Commission did not receive any comments objecting to the addition of these data elements. FIA, however, sought clarification with respect to the “Long Transfers Sent,” “Long Transfers Received,” “Short Transfers Sent,” and “Short Transfers Received” data elements. ^{115} FIA commented that the Part 17 Guidebook “does not provide guidance for a reporting firm to distinguish between a transfer and a give-up.” ^{116} FIA states that this distinction may affect the accuracy of reporting the “Transfers” data elements, as well as “Contracts Bought” and “Contracts Sold,” as those data elements include changes in positions resulting from give-up transactions but exclude changes in positions resulting from transfers. ^{117} The Commission notes that the inclusion of changes in positions resulting from give-up transactions in “Contracts Bought” and “Contracts Sold” reflects an intent to distinguish this activity from changes in position that merely move an existing position from one account to another, which may occur via transfers. ^{118} The Commission believes that the distinction between give-up transactions and transfers is sufficiently clear, and is adopting the regulations as proposed.
^{115} For several data elements, FIA provided comments that appear to simply provide context to the Commission regarding certain industry practices that may affect reporting. See FIA Letter at 15.
^{116} FIA Letter at 15.
^{117} Id.
^{118} Denkevitz also commented on the data elements concerning changes in positions. See Denkevitz. Denkevitz suggested that changes in position due to allocations and give-up transactions be reported in new, separate data elements rather than aggregated with changes in position due to other trading activity. The Commission takes Denkevitz's point to be definitional—that is, that a contract acquired due to an allocation may not literally be a contract “bought.” The Commission's objective is to capture the information necessary for surveillance purposes in the least burdensome way, and views this change as unnecessary.

f. Comments Concerning Use of Alternative Identifiers
The Commission sought comment on all aspects of the proposed Part 17 Guidebook. ^{119} Bloomberg requested that the Commission “consider the use of alternate identifiers based on open data licenses, such as the Financial Instrument Global Identifier (“FIGI”) where appropriate, in large trader position reporting and in the submission standards outlined in the Part 17 Guidebook.” ^{120}
^{119} 88 FR at 41527.
^{120} Bloomberg Letter at 2.
The Commission will adopt this proposal and “FIGI” has been added to the Part 17 Guidebook as an alternative identifier for underlying contracts, alongside CUSIP, SEDOL, QUIK, ISIN, and Bloomberg Symbol. FIGI is a free, open source identifier available to all market participants and accepted as a U.S. national standard by the Accredited Standards Committee X9 Inc. ^{121} Allowing FIGI as an alternative underlier identifier is consistent with its adoption as an alternative identifier for other reporting schemes. For example, FIGI is allowed as an alternative identifier in Form 13F reporting required by the Securities and Exchange Commission. ^{122} FIGI is also accepted by the Derivatives Services Bureau as an alternative underlier identifier for the creation of a Unique Product Identifier (“UPI”) for swap data repository reporting purposes. ^{123} The Commission supports providing reporting firms the option to choose among financial identifiers and believes it appropriate to allow FIGI as a value to be reported for the underlying contract data in the Part 17 Guidebook.
^{121} Id. at 2-3.
^{122} See Form 13F, Information Required of Institutional Investment Managers Pursuant to section 13(f) of the Securities Exchange Act of 1934 and Rules Thereunder, available at https://www.sec.gov/files/form13f.pdf.
^{123} See Derivatives Services Bureau, Alternative Identifiers for the UPI Service, available at https://www.anna-dsb.com/alternative-identifiers-as-an-underlier-for-the-upi/.

g. Comments Concerning Data Elements Applicable to Certain Contracts
As explained in the Proposal, certain of the product-related data elements in appendix C will only apply to reporting positions in certain types of contracts. ^{124} For example, a reporting firm would not report an “Alpha Strike” for a contract with a strike level that was a monetary value. Consistent with this principle, the Part 17 Guidebook identifies which data elements are “mandatory” and which data elements are “conditional.”
^{124} See, e.g., 88 FR at 41529 (discussing the fact reporting certain product-specific data elements would only be required to be reported for contracts to which those data elements pertain, such that reporting firms that are not involved in trading such products need not report those data elements).
FIA requested that the Part 17 Guidebook contain “written guidance . . . that certain fields only apply to specific markets.” ^{125} FIA stated that such guidance would “prevent inconsistent interpretations across reporting firms” and that “the CFTC should assume that smaller reporting firms and foreign brokers will struggle interpreting the instructions” in the Part 17 Guidebook. ^{126}
^{125} FIA Letter at 3.
^{126} Id.
The Commission declines to enumerate in the Part 17 Guidebook the applicability of data elements by “specific market.” Given FIA's reference to “event markets,” the Commission believes that FIA is using the term “market” to refer to a DCM, rather than to refer to the market for a particular contract. The Commission does not believe that it would be appropriate to categorically enumerate in the Part 17 Guidebook those exchanges to which certain conditional data elements apply. DCMs may list a variety of contracts, and some DCMs may list some contracts to which conditional appendix C data elements apply and some contracts to which conditional appendix C data elements do not apply. Alternatively, if FIA's reference to “market” is a reference to particular contracts, it is not practical for Commission staff to enumerate in the Part 17 Guidebook every contract to which each conditional appendix C data element applies. Among other things, such a practice could require constant updates of the Part 17 Guidebook to reflect the listing of new contracts.

h. Comments Concerning Delegation of Authority to the Director of the Office of Data and Technology To Determine the Form and Manner for Reporting the Data Elements in Appendix C
In connection with establishing appendix C, the Commission proposed revising § 17.00(g) to state that § 17.00(a) reports shall be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03 and revised § 17.03(d) to state that authority shall be designated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C. Thus, rather than specifying the form and manner for reporting the § 17.00(a) data elements in the regulation, as done in current § 17.00(g)(2), the form and manner for reporting a particular data element will be set out in the Part 17 Guidebook.
As discussed in the Proposal, specifying the form and manner for reporting through a Part 17 Guidebook will bring the § 17.00(a) reports in line with various other Commission reporting streams, for which, rather than embedding technical reporting details into regulation text, the Commission has delegated authority to staff to set the form and manner for reporting through a published technical specification or guidebook. ^{127} Implementing form and manner requirements through a Part 17 Guidebook will facilitate the Commission's ability to respond to changing market conventions and technological advances, ^{128} to harmonize the form and manner for reporting data elements in § 17.00(a) reports with other reporting streams as necessary, ^{129} and to accommodate the introduction of innovative products.
^{127} See, e.g., 17 CFR 16.07(c), (d) (delegating authority to staff to “approve the format, coding structure and electronic data transmission procedures used by reporting markets” and “to determine the specific content of any daily trade and supporting data report”); 17 CFR 20.8(d) (delegating authority to staff “for providing instructions or determining the format, coding structure, and electronic data transmission procedures for submitting data records and any other information required under this part”); 17 CFR 43.7(a) (delegating authority to staff “[t]o publish the technical specification providing the form and manner for reporting and publicly disseminating the swap transaction and pricing data elements in appendix A of [Part 43]”); 17 CFR 45.15(b)(1) (delegating authority to staff “to publish the technical specifications providing the form and manner for reporting the swap data elements in appendix 1 to [Part 45] to swap data repositories”).
^{128} See, e.g., Final Rule, Large Trader Reporting for Physical Commodity Swaps, 76 FR 43851, 43857 (Jul. 22, 2011) (the purpose of delegating authority to staff to provide “instructions for determining the format, coding structure, and electronic data transmission procedures for submitting data records and any other information required under [Part 20] . . . is to facilitate the ability of the Commission to respond to changing market and technological conditions for the purpose of ensuring timely and accurate data reporting”).
^{129} Final Rule, Swap Data Recordkeeping and Reporting Requirements, 85 FR 75503, 75535 (Nov. 25, 2020) (“The Commission . . . believes delegation to [the Division of Market Oversight] will benefit data element harmonization.”).
The Commission received two comments that relate to the delegation of authority to determine the form and manner for reporting data elements in appendix C. ^{130} First, FIA requested “confirm[ation]” “that the delegation of authority does not permit the Office of Data and Technology to change the data elements to be reported, as listed in appendix C to the Proposed Rule, or to modify the definitions or descriptions of the data elements to be reported as listed in the Proposed Rule or Proposed Guidebook.” ^{131} Second, ICE stated that “this delegation may allow the imposition of substantive changes . . . to required data elements” without an additional opportunity for notice and comment. ^{132} ICE appears to be concerned about in scenario in which the Office of Data and Technology might make “substantive changes” to the data elements for § 17.00(a) reports “that are difficult and/or costly for reporting firms to implement” without sufficient notice or an opportunity to comment. ^{133}
^{130} Comments concerning the delegation of authority to designate a data submission standard or standards are discussed separately above. See supra section II(A)(2)(a).
^{131} FIA Letter at 7.
^{132} ICE Letter at 2.
^{133} Id.
The Commission believes that § 17.03(d) is clear as proposed. That provision delegates to the Office of Data and Technology the authority to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C. Section 17.03(d) does not set forth substantive reporting requirements or delegate authority to the Director of the Office of Data and Technology to set forth substantive reporting requirements. Rather, § 17.00(a) and appendix C set out the substantive reporting requirement, including specifying the data elements to be reported. The Part 17 Guidebook, in turn, sets out the form, manner, coding structure, and electronic data transmission procedures for reporting those data elements enumerated in appendix C. The basis for FIA and ICE's concern that the Office of Data and Technology might “change the data elements to be reported” is not clear from their comments. ^{134} The Commission has specified the data elements for § 17.00(a) reports in appendix C to provide notice to reporting firms of those data elements. As discussed in the Proposal, ^{135} this structure is similar to the approach taken by the Commission in parts 39, 43, and 45. ^{136}
^{134} FIA Letter at 7; ICE Letter at 2.
^{135} See, e.g., 88 FR at 41527 (“Enumerating required data elements in an appendix is consistent with the approach taken for certain other Commission data reporting regulations.”).
^{136} Separately, Wood's comment letter could be construed to suggest that § 17.00(d) should delegate authority concerning part 17 data generally to either an individual in the Market Surveillance Branch of the Division of Enforcement or to the Director of the Division of Enforcement, rather than to the Director of the Office of Data and Technology. See Wood Letter (“Can you address why Market Surveillance leadership does not have delegated authority with respect to Part 17 data?”). As discussed in the Proposal, staff across several Divisions, including the Division of Enforcement, rely on position data loaded into ISS. The Office of Data and Technology is generally responsible for the ingest of data from registered entities pursuant to the CEA and Commission regulations, as well as integration of that data with other data sources. See, e.g., CFTC Organization, available at https://www.cftc.gov/About/CFTCOrganization/index.htm (discussing certain responsibilities of the Commission's Division of Data). The Office of Data and Technology typically maintains and manages technical specifications, guidebooks, and other staff guidance concerning data reporting, and at the same time collaborates with the other Divisions and Offices within the Commission concerning that data. Accordingly, the Commission has determined that the Office of Data and Technology should continue in that role with respect to § 17.00(a) data.

3. Final Rule
As discussed, the Commission is adopting the Proposal largely as proposed, with non-substantive revisions to descriptions of certain data elements in appendix C. The Commission has incorporated into the Part 17 Guidebook instructions to enable reporting firms to submit certain of the product-related data elements enumerated in appendix C using a “Unique Instrument Code.” The Commission has also made certain conforming changes to the Part 17 Guidebook, which has been published on the Commission's website contemporaneously with this final rule.

III. Compliance Period
In the Proposal, the Commission included a compliance date 365 days following publication of a final rule in the Federal Register . The Proposal explained that the 365-day compliance date was intended to provide reporting firms with sufficient time to revise or build infrastructure to submit § 17.00(a) reports using the FIXML data submission standard or the CFTC Portal, and with sufficient time to incorporate reporting of new data elements. The Proposal also noted that the Commission expected to enable reporting firms to begin submitting § 17.00(a) reports using the FIXML data submission standard or via the CFTC Portal, in parallel with submitting § 17.00(a) reports in the § 17.00(g) record format, in advance of that compliance date. This would allow reporting firms to test the new reporting requirements, and would allow early adopters to report using a modern data submission standard.
The Commission sought comment on whether 365 days after publication of this final rule is a sufficient implementation period. The Commission received five comments concerning the proposed 365-day compliance date. ^{137} All commenters expressed concern that 365 days was insufficient given the large number of firms that would be affected by the Proposal and recommended at least a 24-month compliance period. FIA stated that it believes that any compliance date should be at least 365 days following finalization of the CFTC Portal, and stated that it believes that the reporting firms should have three months to test the CFTC Portal before it is finalized. ^{138} Alternatively, FIA requested a 24-month compliance period from the date of publication of the final rule. ^{139} FIA did not tie these timelines to specific bases, but did list factors that it believes will inform how much time reporting firms need, including whether the Commission “provides clarity” concerning certain data elements, whether the CFTC removes so-called “static” data elements from the Proposal, when the CFTC Portal becomes available for testing, the timing of testing, and “whether imperceptible issues arise” during testing. ^{140} ICE stated that it supported the FIA's proposed timeline. ^{141} CME advocated for a compliance period of “at least 24 months,” stating that in its experience as a recipient of large trader position data, a 365-day compliance period is insufficient, as typically many reporting firms face unique scenarios and challenges that require one-on-one support when implementing reporting changes. ^{142} CME also observed that in undergoing “other significant reporting rule changes,” the time necessary to come into compliance is often underestimated. ^{143} CBOE stated that it believes a 24-month implementation period “would be more appropriate,” as additional time would provide reporting firms with “time to troubleshoot questions and complications that may arise.” ^{144} OCC stated that it believed “at least a 2-year compliance period would be appropriate” “in light of the extent of the proposed changes, the need to test the changes . . . , and registrants' need to balance competing priorities stemming from the Commission's recent rulemaking.” ^{145}
^{137} See FIA Letter at 9-10, CBOE Letter at 1-2, CME Letter at 1-2, ICE Letter at 2, OCC Letter at 3-4.
^{138} FIA Letter at 9, 9 n.23.
^{139} Id. at 9.
^{140} Id.
^{141} ICE Letter at 2.
^{142} CME Letter at 2.
^{143} Id.
^{144} CBOE Letter at 1.
^{145} OCC Letter at 3.
The Commission recognizes that reporting firms will require significant time to implement the changes set out in the Proposal. After considering the comments received, the Commission believes that a compliance date of June 3, 2026 is appropriate. Specifically, the Commission believes that providing a lengthy testing period will accommodate potential difficult-to-anticipate issues that several commentators stated would likely arise. This should also ensure higher quality data and a reduced error rate at the time of implementation.
In recognition of the importance of providing reporting firms with sufficient opportunity to test their reporting systems in advance of the compliance date, the Commission expects the updated CFTC Portal to become available for testing approximately six months after publication of this final rule. After the CFTC Portal becomes available, reporting firms should therefore have approximately 18 months to test submitting files in the format required by the final rule. After 24 months, all reporting firms will be required to submit files in compliance with the requirements of this final rule. For reporting firms that demonstrate the ability to submit § 17.00(a) reports compliant with the final rule before the compliance date, the Director of the Office of Data and Technology may approve the use of that revised format and permit such reporting firms to cease submitting files in the current § 17.00(g) record format. ^{146}
^{146} See 17 CFR 17.03(d) (Pursuant to § 17.00(a), the authority shall be designated to the Director of the Office of Data and Technology to approve a format and coding structure other than that set forth in § 17.00(g).).

IV. Frequency of Publication of COT Report
Although the Proposal did not discuss timing of the COT Report, the NGFA requested that the Commission publish the COT report on a daily basis. ^{147} This topic is outside the scope of the Proposal and is not addressed by this final rule.
^{147} NGFA Letter at 2.

V. Related Matters

A. Cost-Benefit Considerations

1. Introduction
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA. ^{148} Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations (collectively, the “section 15(a) factors”). In conducting its analysis, the Commission may, in its discretion, give greater weight to any one of the five enumerated areas of concern and may determine that, notwithstanding its costs, a particular rule is necessary or appropriate to protect the public interest or to effectuate any of the provisions or to accomplish any of the purposes of the CEA. Although the Commission believes these rules will create meaningful benefits for market participants and the public, the Commission also recognizes associated costs. The Commission has endeavored to enumerate these costs and, when possible, assign a quantitative value to the costs reporting firms might face given the changes. Where it is not possible to reasonably quantify costs and benefits, those costs and benefits are discussed qualitatively.
^{148} 7 U.S.C. 19(a).

2. Background
The data required to be reported under § 17.00(a) comprise core data used by many divisions within the Commission, including the Division of Market Oversight (“DMO”), the Office of the Chief Economist (“OCE”), and the Division of Enforcement (“DOE”). In addition, § 17.00(a) submissions are collated to produce the database from which public COT reports are created. COT reports are used by news media, researchers, academics, and industry professionals to describe current trends in futures trading, conduct analysis of past trading patterns, and inform current market strategies. The current § 17.00(g) record format, which instructs reporting firms to submit data in an 80-character, Cobol-based format, has been in effect since 1986 and was last revised in 2004. This current format limits the amount of descriptive data that can be included in any given field. This limits the Commission's ability to capture the economic characteristics of certain products in § 17.00(a) reports and, in some instances, prevents the Commission from distinguishing a position in one contract from a position in another contract. In addition, the current reporting fields do not allow for the granular reporting of EDRPs, of certain futures and options contracts, and for complete information reflecting day-to-day changes in position.

3. Request for Comment
The Commission requested comment on a variety of cost and benefit metrics in the Proposal. As a general matter, the Commission requested that commenters provide data and any other information to assist or otherwise inform the Commission's ability to quantify or qualitatively describe the costs and benefits of the proposed amendments; and substantiating data, statistics, and any other information to support positions posited by commenters with respect to the Commission's discussion. ^{149} The Commission also requested comment, including specific quantitative estimates, on the expected costs related to upgrading or obtaining systems to implement and comply with the Proposal, as well as the impact of the proposed rules on the section 15(a) factors. As noted above in section II(A)(2)(a), commenters were broadly supportive of amendments to transition to a FIXML data submission standard, and several emphasized the benefits to switching to a FIXML reporting format from the current 80-character reporting format. ^{150} Although several commenters asserted that the Proposal understated the total cost to the industry, certain commenters provided generalized estimates but did not provide specific quantitative estimates differing from the Commission's estimates. ^{151} Consequently, the Commission performed its own analysis in updating the Proposal's Cost-Benefit Considerations for these final rules. However, the Commission recognizes that commenters, who have the benefit of implementing similar rules in recent years, may incur costs above what was estimated in the Proposal. For instance, one comment letter claimed that actual costs would be several times what was estimated. ^{152} Additionally, the Commission has extended the implementation period from one year to two years, which may increase costs. For purposes of these final rules, the Commission has updated the cost estimates that appeared in the Proposal based on commenters' feedback and the most recent data and statistics available to the Commission.
^{149} 88 FR at 41534.
^{150} See, e.g., FIA Letter at 1; CME Letter at 1; ICE Letter at 1.
^{151} See FIA Letter at 11; OCC Letter at 3.
^{152} FIA submitted comments on behalf of a working group of reporting firm members and vendors. The FIA projected that “actual costs to implement changes . . . [would] be approximately 3 to 5 times the CFTC's estimated one-time implementation cost, and that ongoing annual costs should reflect approximately 15% of the one-time cost.” FIA Letter at 11.

4. Baselines
The costs and benefits considered herein use as a baseline the reporting provided by reporting firms under current part 17 regulations. In particular, reporting firms are currently required to report positions for special accounts by 9 a.m. on the business day following the trading day ^{153} and to correct errors ^{154} as they are found by either the Commission or the reporting firm. These elements of the rules do not change under the new reporting requirements.
^{153} 17 CFR 17.00(a)(1).
^{154} 17 CFR 17.00(h).
The Commission also notes that the discussion of Cost-Benefit Considerations set forth herein is based on its understanding that the derivatives market regulated by the Commission functions internationally with: (1) transactions that involve U.S. entities occurring across different international jurisdictions; (2) some entities organized outside of the United States that are registered with the Commission; and (3) some entities that typically operate both within and outside the United States and that follow substantially similar business practices wherever located. Where the Commission does not specifically refer to matters of location, the discussion of costs and benefits below refers to the effects of the regulations on all relevant derivatives activity, whether based on their actual occurrence in the United States or on their connection with activities in, or effect on, U.S. commerce.

5. Amendments to Part 17
The Commission is promulgating two categories of amendments to part 17. First, the Commission is removing current § 17.00(g)'s 80-character record format and amending § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to designate a data submission standard for reports required under § 17.00(a). That data submission standard will be published in a Part 17 Guidebook, to be published on the Commission's website. The Part 17 Guidebook designates a modern XML submission standard for submitting reports required under § 17.00(a). Second, the Commission is adding an appendix C to part 17 enumerating data elements to be included in § 17.00(a) reports. The data elements consist of (1) certain data elements currently required to be reported under § 17.00(g), (2) certain data elements to facilitate processing files submitted in XML, (3) certain data elements necessary to represent innovative contracts that cannot currently be represented using the § 17.00(g) format, and (4) data elements necessary to understand the transactions that resulted in day-to-day changes in positions of large traders. The form and manner for reporting these data elements in appendix C will be provided in the Part 17 Guidebook.

a. Change in Submission Standard From Current § 17.00(g) Record Format to a Modern Data Standard Designated in a Part 17 Guidebook
Currently, reporting firms submit § 17.00(a) reports using § 17.00(g)'s 80-character record format. These amendments require such reports to be submitted using a new submission standard, which will be designated in a Part 17 Guidebook published by the Office of Data and Technology on the Commission's website. The Part 17 Guidebook requires such submissions to be made using an XML format similar to that used in other reporting required by the Commission, including Trade Capture Reports submitted pursuant to § 16.02 and swap data reports submitted to swap data repositories pursuant to part 43 and 45. In order to collect and transmit these reports to the Commission, reporting firms must modify the systems they currently use to report part 17 data. The Commission estimates there are currently over 300 reporting firms submitting § 17.00(a) reports. Reporting firms are divided between DCMs, FCMs, clearing members, and foreign brokers, including some firms that are registered under multiple categories. Over a 30-day period in early 2023 there were 310 reporting firms submitting § 17.00(a) reports. The Commission estimates that approximately 74 of these reporting firms automate the creation of § 17.00(a) reports and 236 of these firms create and submit § 17.00(a) reports manually. The Commission believes that reporting firms that currently automate the creation of § 17.00(a) reports will continue to do so and will submit such reports formatted pursuant to FIXML standards in the Part 17 Guidebook by secure FTP, and that reporting firms that currently manually create § 17.00(a) reports will continue these practices rather than modifying their systems to facilitate reporting by secure FTP. Firms that currently manually create § 17.00(a) reports may need to update systems used to manually generate those reports. In addition, the Commission estimates that there are nine Derivatives Clearing Organizations (“DCOs”) that will need to update their systems to receive part 17 reporting data.

1. Benefits
The amendments concerning the data submission standard will facilitate more rapid data ingestion for the Commission and increased automation in ingesting data required to be reported under § 17.00(a), which will reduce staff time devoted to data ingestion. The amendments concerning the data submission standard should also enhance data quality. First, a modern data submission standard should be less error-prone than the current § 17.00(g) record format. Second, a modern data submission standard should facilitate automated, real-time error correction notifications, which will reduce the amount of manual staff intervention in the error correction process and should provide reporting firms with more efficient timelines for correcting errors. By improving data quality and enabling more rapid corrections of errors, the amendments concerning the data submission standard should ensure the timeliness of COT reports. The amendments concerning the data submission standard should simplify the error correction process for reporting firms by automating and accelerating feedback concerning errors. The amendments concerning the data submission standard should additionally enhance DMO's ability to monitor the markets, support the Commission's Surveillance Program, and facilitate OCE research projects.

2. Costs
The Commission believes that the changes to part 17 necessitate reporting firms modifying their systems to collect and submit data using the new data submission standard. The cost of such modifications is likely to vary from entity to entity. Under the Part 17 Guidebook, reporting firms will submit reports required under § 17.00(a) using an XML submission standard. The Commission expects more sophisticated reporting firms that submit a substantial number of daily reports, such as FCMs, will build systems to report using the XML submission standard designated in the Part 17 Guidebook, and will arrange to automate daily submissions using a secure FTP data feed. The Commission estimates that 74 entities will submit reports in this manner. The Commission estimates those entities would incur a one-time initial cost of approximately $65,200 for each entity (400 hours × $163/hour) to modify and test their systems, or an estimated aggregate dollar cost of $4,824,800 (74 entities × $65,200). ^{155} The Commission understands that some reporting firms today submit reports required under § 17.00(a) manually through the CFTC Portal, and believes that many of those firms would continue to do so under the new submission standard. The Commission estimates that 236 entities would continue to manually report through the CFTC Portal and would incur a one-time initial cost of approximately $2,780 to update their systems (20 hours × $139/hour) for each entity, or an estimated aggregate dollar cost of $656,080 (236 entities × $2,780). ^{156} On an ongoing basis, the Commission believes that the 310 estimated reporting firms would incur modest additional costs above the baseline once setup is complete. However, the Commission estimates that approximately 74 entities filing using secure FTP may incur an ongoing operation and maintenance cost of $7,824 per year (4 hours per month × $163 per hour) per entity to maintain their systems, or an estimated aggregate annual cost of $578,976 (74 entities × $7,824). In addition, the Commission estimates that 236 entities filing manually would incur ongoing additional costs of $3,336 per year (2 hours per month × $139 per hour) per entity to maintain their systems, or an estimated aggregate annual cost of $787,296 (236 entities × $3,336). However, the Commission believes that costs associated with correcting errors would be reduced due to improved data validation at the time of ingest. These cost estimates are based on a number of assumptions and cover a number of tasks required by reporting firms to design, test, and implement an updated data system based on an XML submission standard. ^{157} These tasks include defining requirements, developing an extraction query, developing an interim extraction format (such as a CSV, or “comma-separated values,” file), developing validations, developing formatting conversions, developing a framework to execute tasks on a repeatable basis, and finally, integration and testing.
^{155} For costs associated with upgrading reporting systems for secure FTP filers, the Commission estimates that modifications and testing will be undertaken by computer and information research scientists, database architects, software developers, programmers, and testers. The associated costs are taken from the U.S. Bureau of Labor Statistics' Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2022/may/oes_nat.htm, and adjusted with a multiple of 2.5 to account for benefits and overhead costs.
^{156} For costs associated with upgrading reporting systems for CFTC Portal filers, the Commission estimates that the necessary modifications will be undertaken by data scientists. The associated costs are taken from the U.S. Bureau of Labor Statistics' Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2022/may/oes_nat.htm, and adjusted with a multiple of 2.5 to account for benefits and overhead costs.
^{157} The OCC noted that in its role as an aggregator and submitter of information on behalf of a DCM and reporting firms, it needs to “design, maintain, and operate systems” to comply with this rule. OCC Letter at 3. Although the Commission believes that these costs are outside the scope of the Cost-Benefit Considerations, we can nevertheless provide an estimate based on their comment. The OCC estimated that changes to their system would include 5,000 hours of work for design, programming, project management and verification. At the hourly rate used in this analysis for FCMs ($163/hour), this totals $815,000. The OCC further noted that this may understate the true investment needed to work with reporting firms for testing, but did not include the anticipated additional hours needed.
In addition to information collection-related costs incurred by reporting firms, one commenter noted that DCOs will also need to update their systems in order to receive reports, and conduct daily surveillance. ^{158} The Commission recognizes this potential new compliance cost and estimates that nine DCOs may need to update their systems accordingly. The commenter provided no cost analyses or estimates. In the absence of any particular hours or cost estimates by market participants, the Commission has conducted its own analysis of the likely costs incurred by these entities. To update their systems and work with reporting firms to receive the data, the Commission estimates that DCOs would incur one-time costs of $51,200, with an investment of 320 hours of time split between software developers, database architects, and computer network architects. Across 9 DCOs, these investments sum to a total cost of $460,800. Although there may be ongoing costs with maintaining these systems, the Commission believes that entities will not incur additional costs, relative to the baseline.
^{158} See CME Letter at 2 n.2.

b. Changes in Data Elements Reported
As detailed above, the current 80-character § 17.00(g) format does not allow for flexibility in the reporting of certain types of futures, such as bounded futures, and certain types of options, such as capped or barrier options. The amendments will enable these products to be identified in § 17.00(a) reports, and therefore capture additional information reflecting changes in position, including reporting concerning numbers of transfers, reporting of numbers of expirations of contracts, and more granular reporting of EDRPs, including specifying the type of related product (physical, swap, or option). Additionally, the expanded reporting regime instills flexibility such that the Part 17 Guidebook can facilitate reporting of positions in products with innovative features.

1. Benefits
The additional fields necessary to identify certain contracts will facilitate collection of more robust market information for the Commission, including allowing the Commission to distinguish between positions in different contracts that may not currently be distinguishable. The additional fields necessary to identify changes in positions, including more granular information concerning types of EDRPs, will also allow the Commission to collect better market information. Additionally, obtaining accurate, granular information concerning daily changes in position should improve data quality. These data elements will enable reporting firms to perform an internal consistency check to confirm the accuracy of data, which should reduce reporting errors. ^{159} Obtaining accurate, granular information concerning daily changes in positions will also support the Commission's surveillance and monitoring programs. This data will provide the Commission with a more comprehensive understanding concerning the nature of changes in positions—as opposed to merely understanding the scope of positions—and should further facilitate linking position data reported under § 17.00(a) with transaction data reporting under § 16.02.
^{159} The inclusion in § 17.00(a) position reports of data elements reflecting counts of transactions that resulted in day-to-day changes in positions enables reporting firms to perform an internal consistency check on position reports by comparing the size of a reported position with the net value of contracts bought and sold, EDRPs bought and sold, expirations and assignments of contracts, and transfers.

2. Costs
The amendments will require reporting firms to report certain additional data elements to the Commission beyond those elements required by the current § 17.00(g) record format. CFTC staff experienced in designing data reporting, ingestion, and validation systems, estimate that for the 74 reporting firms that automate reporting through a secure file transfer protocol, the process of upgrading and testing systems to collect and report new fields will require them to incur on average 800 hours to update, test, and implement the additional data elements required by appendix C, for a total of 59,200 hours across all FTP filers at an hourly wage rate of $163. This would amount to total capital and start-up costs of $9,649,600 across all FTP filers (800 hours × 74 FTP filers × $163 = $9,649,600). In addition, the Commission estimates that these firms may each incur one-time costs of up to $1,000 for equipment modifications associated with these changes. The Commission estimates that the 236 reporting firms that manually input data required to be reported under § 17.00(a) into the CFTC Portal will incur on average 40 hours to implement additional data elements required by appendix C, or 9,440 total hours across all manual filers, at an hourly wage rate of $139 per hour (236 entities × 40 hours). The Commission estimates that in the aggregate manual filers will incur total capital and start-up costs associated with updating, testing and implementing new data elements of $1,312,160 (9,440 hours × $139/hour). On an ongoing basis, there would be minimal additional costs related to the addition of new data elements, since reporting firms would not be required to submit substantially more information than the baseline. For example, the Commission does not believe that the amendments are likely to affect the overall number of reports submitted annually under § 17.00(a). However, given the additional data elements required by the amendments, the Commission estimates that 74 entities who automate their reporting systems may each incur an ongoing operation and maintenance cost of $7,824 per year (4 hours per month × $163 per hour) per entity, or an estimated aggregate annual cost of $578,976 (74 entities × $7,824) related to implementation of the new data elements. In addition, the Commission estimates that 236 firms that manually file reports may incur ongoing operation and maintenance costs of $3,336 per year (2 hours per month × $139 per hour) per entity as a result of implementing the amendments implementing new data elements, or an estimated aggregate annual cost of $787,296 (236 entities × $3,336). These cost estimates are based on a number of assumptions and cover a number of tasks required by the reporting firms to design, test, and implement an updated data system based on an XML format. These tasks include defining requirements, developing an extraction query, developing an interim extraction format (such as a CSV, or “comma-separated values,” file), developing validations, developing formatting conversions, developing a framework to execute tasks on a repeatable basis, and finally, integration and testing. Additionally, these costs may be mitigated because certain of the data elements are conditional and will only be applicable to a subset of the reporting firms. For example, if a particular FCM is not a participant on an exchange that lists “bounded” or “barrier” contracts, that FCM will not be required to report data elements that are conditional and only applicable to positions in “bounded” or “barrier” contracts.

6. Section 15(a) Considerations
CEA section 15(a) requires the Commission to consider the costs and benefits of the amendments to part 17 with respect to the following factors: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. A discussion of these amendments in light of the CEA section 15(a) factors is set out immediately below.

a. Protection of Market Participants and the Public
The Commission expects that the changes to part 17 reporting will lead to improvements in the Commission's ability to collect data on large traders. The Commission expects better validation of data at ingest, leading to more efficient error corrections compared to the old reporting format. The Commission expects these enhancements will occur without sacrificing the Commission's ability to perform comprehensive oversight of the market.
Additionally, reducing the risk of errors and delays in the publication of the COT report will benefit the public by providing more accurate data on positions held by large traders. Furthermore, higher-quality and more granular position data from large traders will improve the Commission's oversight and surveillance capabilities and, in turn, will aid the Commission in protecting markets, participants, and the public in general.

b. Efficiency, Competitiveness, and Financial Integrity of Futures Markets
The Commission believes the amendments will improve the accuracy and completeness of futures and options position data available to the Commission by improving data quality and providing Commission staff with a more complete understanding of the products comprising certain positions. In particular, the rules will allow for more complete reporting of EDRPs and complex futures and options positions. Access to more accurate and complete data will in turn assist the Commission with, among other things, evaluating if certain traders are in violation of position limits, monitoring concentrations of risk exposures, and preventing fraud and market manipulation. In addition, as described above, the amendments are expected to improve the efficiency of data reporting and analysis by reducing the number of reporting errors and automating data validation and error corrections processes.

c. Price Discovery
The Commission does not believe the rules will have a significant impact on price discovery.

d. Sound Risk Management Practices
The Commission believes the rule changes will improve the data quality associated with futures and options position reporting required under § 17.00(a). The additional data elements will capture more complete product information for certain positions and more complete information concerning changes in position will provide the Commission with an expanded view of the marketplace that will enable the Commission to more effectively identify disruptive or manipulative trading activity. These improvements in the reporting will allow the Commission to evaluate risk throughout the futures and related markets. The Commission does not believe that the costs arising from the rules will threaten the ability of market participants to manage risks.

e. Other Public Interest Considerations
The Commission believes that the increased reliability and detail resulting from improvements to data reporting will further other public interest considerations, including transparency in the futures market to the public and detection of fraud or manipulation. Additionally, the reporting structure will provide additional flexibility to collect information on new products developed by exchanges, thereby allowing for those exchanges to innovate and respond to the demands of the marketplace while still providing traders' positions to the Commission.

7. Consideration of Alternatives
Certain commenters suggested alternatives to rule changes proposed in the Proposal for purposes of minimizing costs to market participants. In particular, as discussed above in section II(B)(2)(c), several commenters suggested that the Commission remove from appendix C data elements requiring certain product-specific data—so-called “static” data elements for which the values will not vary across § 17.00(a) reports reflecting positions for the same product—and obtain this information directly from DCMs rather than from reporting firms. ^{160} The final rules incorporate these alternative proposals in a manner that could reduce costs for some participants without sacrificing benefits. ^{161}
^{160} See FIA Letter at 4-6; CME Letter at 3; CBOE Letter at 2.
^{161} Note that, although the Commission has updated cost estimates that appeared in the Proposal to reflect comments and other data, the Commission has not reduced the cost estimates in the final rules to account for the incorporation of the potential cost-saving proposal described below. As a result, total reporting costs to the industry may be lower than the sum of the costs provided above.
To remove data elements from § 17.00(a) reports—and thus potentially reduce costs to reporting firms—without diminishing or compromising the dataset as set out in the Proposal, the Commission requires a method for linking each § 17.00(a) report to a product reference file for the contract in which the reportable position is held. The product reference file contains data elements for each contract that do not vary by reporting firm. Such a link can be achieved through a Unique Instrument Code—an exchange-assigned code that serves as a primary key to a product reference file for a particular instrument or contract. The Part 17 Guidebook published concurrently with the final rules permits reporting firms to provide the relevant Unique Instrument Code as an alternative to providing certain product-related data elements. Those product-related data elements are required to be included in a § 17.00(a) report if a Unique Instrument Code is not reported. However, if a reporting firm provides a Unique Instrument Code, it need not provide these product-related data elements in a § 17.00(a) report.
In providing this alternative method for reporting certain product-related data elements, the Commission intends to enable reporting firms to select the most efficient method for preparing their § 17.00(a) reports. As noted in the Proposal and discussed previously, one of the reasons the Commission has introduced additional data elements to § 17.00(a) reports is that the current § 17.00(g) format is incapable of distinguishing between certain products. ^{162} The Commission expects that providing this alternative approach will allow the Commission to obtain more comprehensive product data necessary to distinguish between products, but may also reduce costs to reporting firms by permitting firms to populate fewer data elements per report.
^{162} See, e.g., 88 FR at 41528-29.

B. Regulatory Flexibility Act
The Regulatory Flexibility Act (“RFA”) requires that agencies, in proposing rules, consider the impact of those rules on small business or, in the statute's parlance, “small entities.” ^{163} If a rule will have a significant economic impact on a substantial number of small entities, the agency must provide a regulatory flexibility analysis.
^{163} 5 U.S.C. 601 et seq.
The final rules modify the data submission standard and content of daily large trader position reports for futures and options required to be submitted to the Commission by FCMs, clearing members, foreign brokers, and certain reporting markets. The Commission has previously determined that FCMs, clearing members, foreign brokers, and reporting markets are not considered small entities for purposes of the RFA. ^{164} The Commission did not receive any comment stating that these rules would have a significant economic impact on the operations of a small entity. Accordingly, pursuant to 5 U.S.C. 605(b), the Chairman, on behalf of the Commission, certifies that these final rules will not have a significant economic impact on a substantial number of small entities. ^{165}
^{164} See Policy Statement and Establishment of Definition of “Small Entities” for Purposes of the Regulatory Flexibility Act, 47 FR 18618 (April 30, 1982) (reporting markets, FCMs, and large traders); Final Rule, Special Calls, 72 FR 34417, 34418 (June 22, 2007) (foreign brokers); Final Rule and Interim Final Rule, Position Limits for Futures and Swaps, 76 FR 71626, 71680 (November 18, 2011) (clearing members); Final Rule, Large Trader Reporting for Physical Commodity Swaps, 76 FR 43851, 43860 (July 22, 2011) (clearing members).
^{165} See 88 FR at 41535.

C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (“PRA”) imposes certain requirements on federal agencies, including the Commission, in connection with conducting or sponsoring any “collection of information,” as defined by the PRA. ^{166} 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 currently valid control number from the Office of Management and Budget (“OMB”). The PRA is intended, in part, to minimize the paperwork burden created for individuals, businesses, and other persons as a result of the collection of information by federal agencies, and to ensure the greatest possible benefit and utility of information created, collected, maintained, used, shared, and disseminated by or for the federal government. The PRA applies to all information, regardless of form or format, whenever the federal government is obtaining, causing to be obtained, or soliciting information, and includes required disclosure to third parties or the public, of facts or opinions, when the information collection calls for answers to identical questions posed to, or identical reporting or recordkeeping requirements imposed on, ten or more persons.
^{166} 44 U.S.C. 3501 et seq.
This final rulemaking modifies a collection of information previously approved by the OMB for which the Commission has received a control number: OMB control number 3038-0009, Large Trader Reports (“OMB Collection 3038-0009). ^{167} The Commission does not believe the final rule as adopted imposes any other new collections of information that require approval of OMB under the PRA. The Commission requests that OMB approve and revise OMB control number 3038-0009 in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11.
^{167} For the previously approved estimates, see ICR Reference No: 202303-3038-002, available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3038-002.
The Commission did not receive any comments regarding the PRA burden analysis contained in the Proposal. The Commission did, however, receive comments on certain aspects of the Cost-Benefit Considerations analysis. Certain of those comments relate to potential capital and start-up costs that may be incurred as a result of the changes proposed in the Proposal. Based on these comments, the Commission has modified its estimates of the capital and start-up and operations and maintenance costs reporting firms may incur as a result of the changes adopted in these final rules. These comments and the Commission's response are discussed in further detail in the analysis of Cost-Benefit Considerations above.
This final rulemaking modifies the existing annual burden estimates for complying with certain requirements of part 17. Specifically, the Commission is amending §§ 17.00(a), (g), (h), and 17.03(d), which set out (1) the data submission standard and (2) the data elements for large trader reports required to be filed under § 17.00(a), among other things. ^{168}
^{168} These final rules adopts two categories of amendments to part 17. First, the final rules remove current § 17.00(g)'s 80-character record format and amends § 17.03(d) to delegate authority to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C to part 17 and to determine whether to permit or require one or more particular data standards for reports required under § 17.00(a). That submission standard will be published in a Part 17 Guidebook. A Part 17 Guidebook has been published on the Commission's website concurrently with publication of the final rules. The Part 17 Guidebook designates a modern XML submission standard for submitting reports required under § 17.00(a). Second, the Commission is adding an appendix C to part 17 enumerating data elements to be included in § 17.00(a) reports. The data elements consist of (1) certain data elements currently required to be reported under § 17.00(g), (2) certain data elements to facilitate processing files submitted in XML, (3) certain data elements necessary to represent innovative contracts that cannot currently be represented using the § 17.00(g) format, and (4) data elements necessary to understand the transactions that resulted in day-to-day changes in positions of large traders. The form and manner for reporting these data elements in appendix C is provided in the Part 17 Guidebook. The burden estimates provided in this section take into account the burden associated with reporting using a modern XML submission standard and reporting the data elements as set out in appendix C, in compliance with the Part 17 Guidebook.
As discussed in the Proposal, the Commission has previously estimated that the reporting requirements associated with § 17.00 of the Commission's regulations entail an estimated 17,160 burden hours for all reporting firms. ^{169} The Commission is revising its total burden estimates for this clearance to reflect updated estimates of the number of respondents to the collection. The Commission is also estimating the total capital and start-up costs and ongoing operation and maintenance costs associated with the amendments to the part 17 regulations described herein. In this final rulemaking, the Commission has revised its estimates of total capital and start-up costs and ongoing operation and maintenance costs upward in response to public comment as described in the Cost-Benefit Considerations analysis.
^{169} See ICR Reference No: 202303-3038-002, available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3038-002.
The Commission expects that requiring reporting pursuant to a modern data standard will not require reporting firms to submit substantially more information than is currently required. Accordingly, as discussed in the Proposal, the Commission is retaining its previous estimated numbers of reports, burden hours per report, and average burden hour cost. Based on review of recent data from 2023, the Commission is reducing its estimate of the number of respondents from 330 to 310. Accordingly, the Commission is reducing its estimate from the previous 17,160 burden hours for all reporting firms ^{170} to 16,120 burden hours. In addition, the Commission anticipates that implementation of a modern submission standard in the final rules should reduce or eliminate manual corrections and resubmissions that occur under the current regulations. ^{171}
^{170} See ICR Reference No: 202303-3038-002, available at https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202303-3038-002.
^{171} As discussed previously, the Commission has also revised the Part 17 Guidebook to allow a reporting firm to submit a “Unique Instrument Code” from a DCM's product reference file in lieu of certain product-specific data elements. If a reporting firm includes a “Unique Instrument Code” from a DCM's product reference file in a § 17.00(a) report, then that reporting firm need not include certain product-related data elements identified in the Part 17 Guidebook. As noted previously, the Commission believes this alternative manner of reporting may reduce costs for reporting firms.
The aggregate annual estimate for the reporting burden associated with part 17, as amended by the final rules, ^{172} is as follows:
^{172} The previous burden estimates for 17 CFR 17.00 are available at Notice, Agency Information Collection Activities Under OMB Review, 88 FR 18127 (Mar. 27, 2023).
Estimated Number of Respondents: 310.
Estimated Average Burden Hours per Respondent: 52 hours.
Estimated Total Annual Burden on Respondents: 16,120 hours.
Frequency of Collection: Periodically.
In addition, the Commission anticipates that the final rules will result in annual capital and start-up costs as well as operating and maintenance costs, consisting of (1) start-up costs to implement the rule changes, (2) operating and maintenance costs to implement the rule changes, and (3) costs to modify equipment as necessary to comply with the rule changes. As previously discussed, the Commission estimates that some respondents may report by secure FTP (“FTP filers”) and some firms may report manually (“manual filers”), and that the total capital and start-up costs will vary based on whether a respondent is an FTP filer or a manual filer.
The Commission estimates that FTP filers would comprise 74 respondents. The Commission estimates that these respondents would incur one-time initial costs associated with (1) modifying systems to adopt a new data standard, (2) updating and testing systems to implement new data elements, and (3) modifying equipment to implement new data elements. First, the Commission estimates that such firms would incur a one-time initial burden of 400 hours per entity to modify their systems to adopt changes to the data submission standard described in this final rulemaking, for a total estimated 29,600 total hours. Second, the Commission estimates that FTP filers will incur total capital and start-up costs associated with updating, testing, and implementing new data elements of 800 hours, for a total estimated 59,200 hours. Third, the Commission also estimates that FTP filers would incur one-time costs of $1,000 to modify equipment to implement new data elements. This would amount to $14,548,400 (((400 + 800 hours) × 74 FTP filers × $163 ^{173} ) + (74 FTP filers × $1,000) = $14,548,400).
^{173} For the cost calculations for FTP filers, the Commission has used a composite (blended) wage rate by averaging the hour wages for (1) Computer Research Scientists, (2) Database Architects, (3) Software Developers, and (4) Developers, Programmers, and Testers. Per the U.S. Bureau of Labor Statistics, national industry-specific occupational employment and wage estimates from May 2022, the mean hourly wage for a computer research scientist is $74.94, database architect is $65.65, software developer is $63.91, and developers, programmers, and testers is $150.18. See U.S. Bureau of Labor Statistics' Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2022/may/oes_nat.htm. The average of those wages is $65.31. The Commission has applied a multiplier of 2.5 times to account for benefits and overhead. The Commission is therefore using an hourly wage rate of $163 for FTP filers.
In addition, the Commission estimates that as a result of implementing that new data submission standard, these 74 FTP filers may incur additional operating and maintenance costs of 48 hours per year, for 3,552 total hours, resulting in costs of $578,976 (48 hours × 74 FTP filers × $163 ^{174} = $578,976), and, as a result of implementing new data elements, these 74 FTP filers may incur additional operating and maintenance costs of 48 hours per year, for 3,552 total hours, resulting in costs of $578,976 (48 hours × 74 FTP filers × $163 ^{175} = $578,976). This yields additional annual operating and maintenance costs of $1,157,952 for FTP filers.
^{174} See id.
^{175} See id.
The Commission estimates that manual filers would comprise 236 reporting firms. The Commission estimates that these respondents would incur one-time initial costs associated with (1) modifying systems to adopt a new data standard and (2) updating and testing systems to implement new data elements. First, the Commission estimates such respondents would incur a one-time initial burden of 20 hours to modify their systems to implement a new data standard, for a total estimated 4,720 total hours. Second, the Commission estimates that manual filers will incur an average one-time cost of 40 hours to implement additional data elements required by new appendix C, for a total estimated 9,440 total hours. This would amount to aggregate one-time initial costs of $1,968,240 ((20 hours + 40 hours) × 236 manual filers × $139 ^{176} = $1,968,240).
^{176} For the cost calculations for manual filers, the Commission used the wage rate for Data Scientists. Per the U.S. Bureau of Labor Statistics, national industry-specific occupational employment and wage estimates from May 2021, the mean hourly wage for a data scientist is $55.40. See U.S. Bureau of Labor Statistics' Occupational Employment and Wage Statistics, available at https://www.bls.gov/oes/2022/may/oes_nat.htm. The Commission has applied a multiplier of 2.5 times to account for benefits and overhead. The Commission is therefore using an hourly wage rate of $139 for manual filers.
In addition, the Commission estimates that as a result of implementing that new data submission standard, these 236 manual filers may incur additional operating and maintenance costs of 24 hours per year, for 5,664 total hours, for an associated cost of $787,296 (24 hours × 236 manual filers × $139 ^{177} = $787,296), and, as a result of implementing new data elements, these 236 manual filers may incur additional operating and maintenance costs of 24 hours per year, for 5,664 total hours, for an associated cost of $787,296 (24 hours × 236 manual filers × $139 ^{178} = $787,296). This yields additional annual operating and maintenance costs of $1,574,592 for manual filers.
^{177} See id.
^{178} See id.
Accordingly, the total estimated capital and start-up costs across all 310 reporting firms is $16,516,640 ($14,548,400 + $1,968,240 = $16,516,640). Based on five-year, straight line depreciation, this amounts to annualized total capital and start-up costs for all reporting firms of $3,303,328. Based on five-year, straight line depreciation, the total estimated annual operating and maintenance costs across all entities is $2,732,544 ($1,157,952 for FTP filers + $1,574,592 for manual filers = $2,732,544). The Commission estimates that total annual capital and start-up costs and operation and maintenance costs for all reporting firms would be $6,035,872 ($3,303,328 + $2,732,544 = $6,035,872).

D. Antitrust Considerations
CEA section 15(b) requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the objectives of the CEA in issuing any order or adopting any Commission rule or regulation. ^{179}
^{179} 7 U.S.C. 19(b).
The Commission does not anticipate that the changes to part 17 contained in these final rules would result in anticompetitive behavior. The Commission did not receive any comments on antitrust considerations.

List of Subjects in 17 CFR Part 17
Brokers, Commodity futures, Reporting and recordkeeping requirements, Swaps.
For the reasons stated in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 17 to read as follows:

PART 17—REPORTS BY REPORTING MARKETS, FUTURES COMMISSION MERCHANTS, CLEARING MEMBERS, AND FOREIGN BROKERS
1. The authority citation for part 17 continues to read as follows:

Authority:
7 U.S.C. 2, 6a, 6c, 6d, 6f, 6g, 6i, 6t, 7, 7a, and 12a.
2. In § 17.00, revise paragraphs (a)(1), (g), and (h) to read as follows:
§ 17.00
Information to be furnished by futures commission merchants, clearing members, and foreign brokers.
(a) * * *
(1) Each futures commission merchant, clearing member and foreign broker shall submit a report to the Commission for each business day with respect to all special accounts carried by the futures commission merchant, clearing member or foreign broker, except for accounts carried on the books of another futures commission merchant or clearing member on a fully-disclosed basis. Except as otherwise authorized by the Commission or its designee, such report shall be made pursuant to paragraph (g) of this section. The report shall show each futures position, separately for each reporting market and for each future, and each put and call options position separately for each reporting market, expiration and strike price in each special account as of the close of market on the day covered by the report and, in addition, the number of futures and options contracts bought and sold, the quantity of exchanges of futures or options for commodities or for derivatives positions, the number of delivery notices issued for each such account by the clearing organization of a reporting market and the number stopped by the account, the number of long and short options expired and exercised, the number of long and short futures assigned, and the number of long and short transfers sent and received. The report shall also show all positions in all contract months and option expirations of that same commodity on the same reporting market for which the special account is reportable.
* * * * *
(g) Media and file characteristics. Except as otherwise approved by the Commission or its designee, all of the applicable data elements set forth in appendix C to this part shall be included in a report required by paragraph (a) of this section and shall be submitted together in a single file. The report shall be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03.
(h) Correction of errors and omissions. Except as otherwise approved by the Commission or its designee, corrections to errors and omissions in data provided pursuant to paragraph (a) of this section shall be submitted in the form and manner published by the Commission or its designee pursuant to § 17.03.
* * * * *
3. In § 17.03, revise paragraphs (a) and (d) to read as follows:
§ 17.03
Delegation of authority to the Director of the Office of Data and Technology or the Director of the Division of Market Oversight.
* * * * *
(a) Pursuant to § 17.00(a) and (h), the authority shall be designated to the Director of the Office of Data and Technology to determine whether futures commission merchants, clearing members, and foreign brokers may report the information required under § 17.00(a) and (h) using some format other than that required under § 17.00(g) upon a determination that such person is unable to report the information using the format, coding structure, or electronic data transmission procedures otherwise required.
* * * * *
(d) Pursuant to § 17.00(a), (g), and (h), the authority shall be designated to the Director of the Office of Data and Technology to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in appendix C to this part and to determine whether to permit or require one or more particular data standards.
* * * * *
4. Add appendix C to read as follows:
Appendix C to Part 17—Data Elements
| Data element name | Definition for data element
1 | Total Message Count | The total number of position reports included in the file.
2 | Message Type | Message report type.
3 | Sender ID | The CFTC-issued reporting firm identifier assigned to the firm submitting the position report.
4 | To ID | Indicates the position report was submitted to the CFTC.
5 | Message, Transmit, Datetime | The date and time the file was created.
6 | Report ID | A unique identifier assigned to each position report.
7 | Record Type (Action) | Indicates the action that triggered the position report.
8 | Report Date | The date of the information being reported.
9 | Reporting Firm ID | CFTC-assigned identifier for the reporting firm.
10 | Special Account Controller LEI | The Legal Entity Identifier (“LEI”) issued to the special account controller.
11 | Account ID | A unique account identifier, assigned by the reporting firm to each special account. Assignment of the account number is subject to the provisions of § 17.00(b) and appendix A of this part (Form 102).
12 | Exchange Indicator | The exchange where the contract is traded.
13 | Commodity Clearing Code | The clearinghouse-assigned commodity code for the futures or options contract.
14 | Product Type | Type of product.
15 | Ticker Symbol | Ticker symbol of the product traded.
16 | Maturity Month Year | Month and year of the delivery or maturity of the contract, as applicable. Day must be provided when necessary to characterize a contract.
17 | Maturity Time | The expiration time of an option or last trading time of a future.
18 | Listing Date | Product listing date.
19 | First Exercise Date | The earliest time at which notice of exercise can be given.
20 | Strike Level | Numeric option moneyness criterion.
21 | Alpha Strike | Non-numeric option moneyness criterion.
22 | Cap Level | Ceiling value of a capped option or bounded future.
23 | Floor Level | Floor value of a capped option or bounded future.
24 | Bound or Barrier Type | Behavior of the product when it hits the bound or barrier.
25 | Bound or Barrier Level | Bound or barrier level of a contingent option.
26 | Put or Call Indicator | Nature of the option exercise.
27 | Exercise Style | Type of exercise of an option.
28 | Payout Amount | Cash amount indicating the payout associated with the contract.
29 | Payout Type | The type of valuation method or payout trigger.
30 | Underlying Contract ID | The instrument that forms the basis of an option.
31 | Underlying Maturity Month Year | Underlying delivery year and month (and day where applicable).
32 | Long Position | The total of long open contracts carried at the end of the day.
33 | Short Position | The total of short open contracts carried at the end of the day.
34 | Contracts Bought | The total quantity of contracts bought (gross) during the day associated with a special account, including all block trades and contracts claimed for clearing as a result of trade allocations such as give-ups. Do not include exchanges of derivatives for related positions EDRPs (EFP, EFS or EFR, EOO) or transfers.
35 | Contracts Sold | The total quantity of contracts sold (gross) during the day associated with a special account, including all block trades and contracts claimed for clearing as a result of trade allocations such as give-ups. Do not include exchanges of derivatives for related positions EDRPs (EFP, EFS or EFR, EOO) or transfers.
36 | EDRPs Bought | The quantity of purchases of futures or options in connection with exchanges of futures or options for related positions (“EDRPs”) done pursuant to a DCM's rules, disaggregated into quantity of purchases of futures or options in connection with EDRPs by type of EDRP, including exchanges of futures for physical, exchanges of futures for risk, exchanges of options for options, and any other EDRP offered pursuant to a DCM's rules.
37 | EDRPs Sold | The quantity of sales of futures or options in connection with EDRPs done pursuant to a DCM's rules, disaggregated into quantity of sales of futures or options in connection with EDRPs by type of EDRP, including exchanges of futures for physical, exchanges of futures for risk, exchanges of options for options, and any other EDRP offered pursuant to a DCM's rules.
38 | Delivery Notices Stopped | The number of futures contracts for which delivery notices have been stopped during a day.
39 | Delivery Notices Issued | The number of futures contracts for which delivery notices have been issued during a day.
40 | Long Options Expired | Long options positions expired without being exercised.
41 | Short Options Expired | Short options positions expired without being exercised.
42 | Long Options Exercised | Long options positions exercised during the day.
43 | Short Options Exercised | Short options positions exercised during the day.
44 | Long Futures Assigned | Long futures assigned as the result of an option exercise.
45 | Short Futures Assigned | Short futures assigned as the result of an option exercise.
46 | Long Transfers Sent | Long positions sent through other transfers during the day. (Do not include give-ups).
47 | Long Transfers Received | Long positions received through other transfers during the day. (Do not include give-ups).
48 | Short Transfers Sent | Short positions sent through other transfers during the day. (Do not include give-ups).
49 | Short Transfers Received | Short positions received through other transfers during the day. (Do not include give-ups).
50 | Product-Specific Terms | Terms of the contract that are economically material to the contract, maintained in the ordinary course of business by the reporting market listing the contract, and not otherwise reported under the data elements in this appendix.
Issued in Washington, DC, on May 23, 2024, by the Commission.
Robert Sidman,

Deputy Secretary of the Commission.

Note:
The following appendices will not appear in the Code of Federal Regulations.

Appendices to Large Trader Reporting Requirements—Voting Summary and Chairman's and Commissioners' Statements

Appendix 1—Voting Summary
On this matter, Chairman Behnam and Commissioners Johnson, Goldsmith Romero, and Mersinger voted in the affirmative. Commissioner Pham voted in the negative.

Appendix 2—Statement of Chairman Rostin Behnam
I support the final rules to amend the Commission's large trader reporting regulations for futures and options. The rules modernize large trader data reporting under part 17 of the Commission's regulations, and create a path for efficient future modernization. In addition, the amendments align part 17 data and reporting with the reporting structure in other Commission regulations.
The large trader reports that result from this data are used for surveillance (detection and prevention of price manipulation) and enforcement of speculative limits. This particular data set can be crucial when it comes to exercising our enforcement authority in the cash markets. CFTC economists and analysts monitor the commodity markets on a daily, real-time basis, and can view the derivatives positions of large traders on a next-day basis. Large trader reports also provide the basis for the Commission's weekly Commitments of Traders report, which is used by a wide range of market participants. Modernizing and aligning these rules promotes transparency and efficiency as we carry out our regulatory and enforcement functions.
These final rules add one more segment to the Commission's data arc that now spans well over a decade since Congress set forth a new, more ambitious vision for how data could address some of the underlying causes of the 2008 financial crisis and instill greater resilience in the decades to come. I have prioritized the Commission's data and analytics capabilities—adjusting, harmonizing, prioritizing standardization without abandoning mission-critical functions, and generally keeping pace with the markets. We are still moving forward, bringing the arc full circle toward full cloud integration, zero-trust architecture, and data cataloging, as well as Commission-wide upskilling focused on enhanced analytics and integration and use of artificial intelligence.
I thank the staff for their hard work in producing these important rules, and I am proud to support them.

Appendix 3—Statement of Commissioner Kristin N. Johnson
Today, the Commodity Futures Trading Commission (Commission or CFTC) adopts amendments to large trader reports. Ensuring the integrity and transparency of these reports fosters sound derivatives markets by providing the Commission with critical information concerning the largest positional exposures in futures and options markets. I support adopting the final rule, which amends certain provisions of the Large Trader Reporting Requirements for futures and options under Commission Regulation 17.00(a) and (g) (Final Rule).
Sections 4a, 4c(b), 4g, and 4i of the Commodity Exchange Act (CEA) establish the Commission's authority to create regulation imposing large trader reporting and recordkeeping requirements on registrants. Part 17 sets out the obligations for reports that markets, futures commission merchants, clearing members, and foreign brokers must provide to the Commission. ^1 The Commission's large trader reporting system has been foundational to ensuring market integrity, fostering price discovery, and promoting hedging utility of futures and options contracts for commercial end-users. The large trader reporting framework has admirably supported the Commission's market surveillance efforts.
^1 7 U.S.C. 6; 17 CFR 17.00.
CFTC Regulation 17.00(a) requires reporting firms to report daily position information for special accounts—futures and options trader accounts that exceed certain Commission-prescribed levels—to the Commission, in accordance with the record format and data elements set forth in CFTC Regulation 17.00(g). ^2 Data reporting technology has advanced since the time of part 17's promulgation such that the current data record format is outdated.
^2 Id.
The Commission is adopting the Final Rule to modernize certain technical aspects of the reporting requirements and clarify aspects of the reporting requirements and instructions. The Final Rule will transition reporting format to the Financial Information eXchange Markup Language (FIXML). Additionally, the Commission is updating the data elements to be reported and delegating authority to the Director of the Division of Data to designate a data submission standard. Contemporaneously, the Commission will publish an updated Part 17 Guidebook.
The Commission issued a notice of proposed rulemaking on June 27, 2023 and received twelve substantive comment letters. The Final Rule is responsive to many of the comments received and reflects thoughtful engagement with market participants—an essential aspect of the notice-and-comment rulemaking process.
Access to more fulsome and reliable data will improve the Commission's understanding of how traders employ futures and options, enable the Commission to surveil for market integrity in a single market or across markets, and facilitate the Commission's detection and enforcement of abusive trading practices.
As I have previously stated:
Appropriately-tailored regulatory disclosure is a powerful tool in identifying vulnerabilities and trends in our markets, mitigating systemic risk, and addressing financial stability concerns. Disclosure of financial information to market regulators is critical to the regulatory oversight of our financial markets, particularly when such disclosure is accurate, timely, robust, and usable. ^3
^3 Kristin N. Johnson, Commissioner, CFTC, Statement on the Importance of Financial Market Transparency for Systemic Risk Management (Feb. 8, 2024), https://www.cftc.gov/PressRoom/SpeechesTestimony/johnsonstatement020824.
Today's Final Rule supports position reporting that meets these characteristics. Though facilitating effective supervision can engender costs, the important data reported to the Commission plays a crucial role in stemming broader market disruptions.
I commend the work of the staff of the Division of Market Oversight, including Owen Kopon, Paul Chaffin, Chase Lindsey, and Jason Smith, on the Final Rule.

Appendix 4—Statement of Commissioner Caroline D. Pham
I respectfully dissent from the Large Trader Reporting Rule primarily because it raises fair notice and due process issues for future regulatory changes. The Commission is also delegating its authority to a non-existent office, which I believe is not only impermissible, but makes no sense.
I would like to thank Owen Kopon, Paul Chaffin, Chase Lindsay, Jason Smith, Nora Flood, and Vince McGonagle in the Division of Market Oversight, as well as James Fay in the Division of Data and Daniel Prager in the Office of the Chief Economist, for their work on the Large Trader Reporting Rule. I appreciate the staff working with me to make revisions to address my concerns. While the revisions to the rulemaking preamble are intended to alleviate the fair notice concerns, they ultimately do not provide sufficient due process protections as required under the law because there were no associated revisions to the rule text.
Overall, I continue to support most of the rule amendments that would update the outdated large trader reporting submission standards in the part 17 regulations. ^1 The CFTC's Commitment of Traders (COT) Report, derived from part 17 data, provides transparency and aids in price discovery and risk management for market participants and end-users. I support improving the CFTC's preparation of the COT Report. I also believe that the two-year implementation period will help to minimize disruptions and ensure a seamless transition with enough time for adequate testing of firms' systems and processes for large trader reporting prior to the compliance date. I strongly encourage the Commission to include adequate implementation periods in all of our rulemakings, which will support compliance and risk management efforts that enhance market integrity.
^1 Statement of Commissioner Caroline D. Pham in Support of Notice of Proposed Rulemaking for Large Trader Reporting Requirements Under Part 17 (June 7, 2023), https://www.cftc.gov/PressRoom/SpeechesTestimony/phamstatement060723.
However, I have two significant concerns. First, the Commission will make a new delegation of authority to the Director of the Office of Data and Technology (ODT) in Regulation 17.03(d) to determine the form, manner, coding structure, and electronic data transmission procedures for reporting the data elements in part 17, appendix C and to determine whether to permit or require one or more particular data standards. I find it deeply troubling and against all common sense that the Commission is making a new delegation of authority to an office that no longer exists at the CFTC. ^2
^2 https://www.cftc.gov/About/CFTCOrganization/index.htm.
I find it insincere, or incongruous at best, for the Commission to state that it is dedicated to providing certainty to market participants—or even clarity, which the Final Rule asserts seven times—when the Commission is delegating authority to a ghost office to make decisions that may cost firms millions of dollars to implement.
Second, multiple commenters requested that the Commission include a notice standard under Regulation 17.03(d) if the ODT Director changes these standards in the future. ^3 Commenters raised concerns about potential costs associated with future changes, such as technology and infrastructure changes for reporting firms. Even seemingly minor changes to reporting requirements require firms to identify and allocate technology budget and resources; program and test reporting logic; and implement controls, among other things. Inexplicably, the Commission declined to adopt a reasonable notice standard in the regulation, even though fair notice is inherent to due process under the Administrative Procedure Act and other law.
^3 See Futures Industry Association, Large Trader Reporting Requirements (RIN 3038-AF27), 7 (Aug. 28, 2023), https://comments.cftc.gov/PublicComments/ViewComment.aspx?id=73056&SearchText=; ICE Futures U.S., Large Trader Reporting Requirements (RIN 3038-AF27), 2 (Aug. 28, 2023), https://comments.cftc.gov/PublicComments/ViewComment.aspx?id=73046&SearchText=; Options Clearing Corporation, RIN 3038-AF27 Large Trader Reporting Requirements, 4 (Aug. 28, 2023), https://comments.cftc.gov/PublicComments/ViewComment.aspx?id=73050&SearchText=.
Considering the CFTC's aggressive enforcement posture towards pursuing reporting violations with a strict liability standard and no materiality threshold, resulting in seven-figure penalties for anything less than 100% perfection, ^4 I am deeply concerned about using delegated authority to change reporting standards without reasonable notice requirements in the regulation. This would ensure that firms have adequate time for compliance and implementation of new requirements.
^4 See, e.g., CFTC Orders Morgan Stanley and Co. Incorporated to Pay $350,000 Penalty for Omitting Futures and Options Data from Part 17 Large Trader Reports (Nov. 2, 2017), https://www.cftc.gov/PressRoom/PressReleases/7638-17; see generally CFTC Releases FY 2023 Enforcement Results (Nov. 7, 2023), https://www.cftc.gov/PressRoom/PressReleases/8822-23; CFTC Releases Annual Enforcement Results (Oct. 20, 2022), https://www.cftc.gov/PressRoom/PressReleases/8613-22.
Accordingly, while I support most of the revisions to the Large Trader Reporting Final Rule, my outstanding concerns outweigh that support.
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
18 CFR Parts 50 and 380
[Docket No. RM22-7-000; Order No. 1977]
Applications for Permits to Site Interstate Electric Transmission Facilities
In rule document 2024-10879, beginning on page 46682 in the issue of Wednesday, May 29, 2024, make the following correction:
On page 46733, in the second column, in amendatory instruction 11. c., on the second line, “paragraph I” should read “paragraph (e)”.
RAILROAD RETIREMENT BOARD
20 CFR Part 222
RIN 3220-AB79
Family Relationships

AGENCY:
Railroad Retirement Board.

ACTION:
Direct final rule; request for comments.

SUMMARY:
The Railroad Retirement Board (RRB) amends its regulations to update who may qualify as an adopted child to be included in the computation of a railroad employee's annuity amount under section 3(f)(2) of the Railroad Retirement Act. The current regulation requires that a child adopted after the employee begins receiving an annuity must both live with the employee and receive one-half support from the employee. The amendment would eliminate this requirement for legally adopted children if the adoption proceedings commenced prior to the child attaining age 18. For adoptions commenced after the child attains age 18, the amendment would require only one of the above criteria to be met. This amendment is necessary to harmonize the RRB's regulations with the requirements of section 202(d)(8)(D) of the Social Security Act and section 3(f)(2) of the Railroad Retirement Act.

DATES:
This rule becomes effective September 3, 2024 without further action unless adverse comment is received by July 3, 2024. If adverse comment is received, the Railroad Retirement Board will publish a timely withdrawal of the rule in the Federal Register .

ADDRESSES:
You may submit comments, identified by RIN 3320-AB79, through any of the following methods:
1. Internet—Send inquiries via email to SecretarytotheBoard@rrb.gov.
2. Fax—(312) 751-7102.
3. Mail—Secretary to the Board, Railroad Retirement Board, 844 N Rush Street, Chicago, Illinois 60611-1275.
Do not submit the same comment multiple times or by more than one method. Regardless of which method you choose, please indicate that your comments refer to RIN number 3320-AB79.
Caution: You should be careful to include in your comments only information that you wish to make publicly available as comments are posted without change with any personal information provided. You are strongly urged not to include any personal information in your comments, such as Social Security numbers or medical information.

FOR FURTHER INFORMATION CONTACT:
Peter J. Orlowicz, Senior Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago, IL 60611-1275, (312) 751-4922.

SUPPLEMENTARY INFORMATION:

Background Information
The Railroad Retirement Act (RRA) provides monthly annuities for railroad employees based on age and years of service in the railroad industry. The RRA does not directly provide annuities for dependent children of living railroad employees. However, section 3(f)(2) of the RRA [45 U.S.C. 231b(f)(2)] guarantees that the annuity payable to an employee shall never be less than the amount which would have been payable to the employee under the Social Security Act (SS Act) if the employee's service was entirely covered by the SS Act. Because the SS Act does provide for annuities to dependent children of a wage earner under the SS Act, a railroad employee's annuity may be increased under section 3(f)(2) of the RRA when the employee has a dependent child who meets the definition of a child contained in section 216(e) of the SS Act [42 U.S.C. 416(e)]. The definition of “child” under section 216(e) of the SS Act includes adopted children and stepchildren of an individual, subject to certain limiting criteria.
Section 202(d)(1) of the SS Act [42 U.S.C. 402(d)(1)] provides that every child, as defined in section 216(e) of the SS Act, of an individual entitled to old-age or disability insurance benefits shall be entitled to a child's insurance benefit if the child was dependent upon the individual, the child has filed an application for child's insurance benefits, and at the time of application the child was unmarried and either had not attained the age of 18 (age 19 if a full-time elementary or secondary school student) or was under a disability which began before the child attained age 22. Prior to December 19, 1989, a child had to both live with and receive one-half support from an individual to qualify as a dependent child. The current version of the RRB's regulations at 20 CFR 222.53 and 222.54 reflect this dual requirement.
On December 19, 1989, section 10301 of the Miscellaneous and Technical Social Security Act Amendments of 1989 [Pub. L. 101-239, title X, section 10301] amended section 202(d)(8)(D) of the SS Act [42 U.S.C. 402(d)(8)(D)] to allow legally adopted children to be deemed dependent on an individual receiving old-age or disability insurance benefits, regardless of residence or support, if the adoption was decreed by a court of competent jurisdiction within the United States and the adoption proceeding was commenced prior to the child attaining age 18. In the case of a child whose adoption was commenced after the child attained age 18, section 202(d)(8)(D) was amended to state the child shall be considered dependent if the child was either living with or receiving at least one-half of the child's support from the individual. Current regulations of the Social Security Administration at 20 CFR 404.362(b) are consistent with this amended requirement.

Regulatory Changes
We are amending §§ 222.53 and 222.54 of the RRB's regulations to reflect the statutory elimination of the residency and support requirements for children legally adopted prior to attaining age 18 to qualify for increases in the employee's annuity amount under section 3(f)(2) of the RRA, and to remove provisions that treat grandchildren or stepgrandchildren adopted as the children of an annuitant differently than other adopted children. Because a child legally adopted prior to attaining age 18 is considered a dependent child and is eligible for child's insurance benefits under section 202(d)(8)(D) and section 216(e) of the SS Act, section 3(f)(2) of the RRA requires that an employee's annuity must be increased accordingly when an employee has adopted a child prior to that child attaining age 18. Furthermore, a child whose adoption was not commenced until after the child attained age 18 may still be considered dependent on an individual and qualify for child's insurance benefits if the child either lives with the individual or receives one-half support from the individual; the child need not meet both criteria. Accordingly, section 3(f)(2) of the RRA also requires that an employee's annuity must be increased when an employee has adopted a child after the child attains age 18 if the employee lives with the child or provides one-half of the child's support.
Prior to the Miscellaneous and Technical Social Security Act Amendments of 1989, the time period necessary for an adopted child to be dependent on an individual was different if the adopted child was also a grandchild or stepgrandchild of the individual than if the adopted child was not a grandchild or stepgrandchild of the individual. This distinction was eliminated in the Miscellaneous and Technical Social Security Act Amendments of 1989 because all adopted children whose adoptions were commenced prior to attaining age 18 were deemed dependent on the adoptive parents. Therefore, we are revising § 222.53 to reflect the absence of a residency or support requirement for children adopted prior to attaining age 18, to include a requirement of either residency or one-half support when a child's adoption proceedings were commenced after the child attained age 18 and removing § 222.54 entirely because we no longer have different rules for dependency when an adopted child is also a grandchild or stepgrandchild.

Regulatory Analysis

Executive Order 12866, as Supplemented by Executive Order 13563
The RRB, with the Office of Management and Budget, has determined that this is not a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, no regulatory impact analysis is required.

Regulatory Flexibility Act
The RRB certifies that this direct final rule will not have a significant economic impact on a substantial number of small entities because it only concerns benefit eligibility for individuals and does not regulate or impose burdens on small entities as defined by the Regulatory Flexibility Act.

Paperwork Reduction Act
This direct final rule imposes no reporting or recordkeeping requirements subject to Office of Management and Budget clearance.

List of Subjects in 20 CFR Part 222
Claims, Railroad retirement, Social security.
For the reasons set out in the preamble, the Railroad Retirement Board amends 20 CFR part 222 as follows:

PART 222—FAMILY RELATIONSHIPS
1. The authority citation for part 222 continues to read as follows:

Authority:
45 U.S.C. 231f.
2. Revise § 222.53 to read as follows:
§ 222.53
When a legally adopted child is dependent—child adopted after entitlement.
A child who is not the employee's natural child or stepchild, and who is adopted by the employee after the employee could become entitled to an old age or disability benefit under the Social Security Act (treating his or her railroad compensation as wages under that Act), is considered dependent on the employee during the employee's lifetime only if—
(a) The child had not attained age 18 when adoption proceedings were commenced, and the child's adoption was issued by a court of competent jurisdiction within the United States; or
(b) The child had attained age 18 before adoption proceedings were commenced, the child's adoption was issued by a court of competent jurisdiction within the United States, and the child was living with or receiving at least one-half of the child's support from the employee for the year immediately preceding the month in which the adoption was issued.
§ 222.54
[Removed and Reserved]
3. Remove and reserve § 222.54.
Dated: May 28, 2024.
By Authority of the Board.
Stephanie Hillyard,

Secretary to the Board.
RAILROAD RETIREMENT BOARD
20 CFR Part 235
RIN 3220-AB78
Payment of Social Security Benefits by the Railroad Retirement Board

AGENCY:
Railroad Retirement Board.

ACTION:
Direct final rule; request for comments.

SUMMARY:
The Railroad Retirement Board amends its regulations to add additional statutory conditions under which the Railroad Retirement Board will pay benefits certified to it by the Commissioner of Social Security. These updates are necessary to reflect the amendments to section 205(i) of the Social Security Act enacted by section 103(i)(3) of the Railroad Retirement and Survivors' Improvement Act of 2001 and section 843 of the Bipartisan Budget Act of 2015.

DATES:
This rule becomes effective September 3, 2024 without further action, unless adverse comment is received by July 3, 2024. If adverse comment is received, the Railroad Retirement Board will publish a timely withdrawal of the rule in the Federal Register .

ADDRESSES:
You may submit comments, identified by RIN 3320-AB78, through any of the following methods:
1. Internet—Send inquiries via email to SecretarytotheBoard@rrb.gov.
2. Fax—(312) 751-7102.
3. Mail—Secretary to the Board, Railroad Retirement Board, 844 N Rush Street, Chicago, Illinois 60611-1275.
Do not submit the same comment multiple times or by more than one method. Regardless of which method you choose, please indicate that your comments refer to RIN number 3320-AB78.
Caution: You should be careful to include in your comments only information that you wish to make publicly available as comments are posted without change, with any personal information provided. The Board strongly urges you not to include in your comments any personal information, such as Social Security numbers or medical information.

FOR FURTHER INFORMATION CONTACT:
Peter J. Orlowicz, Senior Counsel, Railroad Retirement Board, 844 North Rush Street, Chicago, IL 60611-1275, (312) 751-4922.

SUPPLEMENTARY INFORMATION:
Section 205(i) of the Social Security Act directs the Commissioner of Social Security, upon final decision of the Commissioner or upon final judgment of any court of competent jurisdiction that any person is entitled to payments under title II of the Social Security Act, to certify the name and address of the person entitled to payment, the amount of the payment, and the time at which payment should be made to the Managing Trustee of the Board of Trustees for the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund. The Managing Trustee is then directed to make the payments as certified by the Commissioner. 42 U.S.C. 405(i). However, for certain individuals defined in section 205(i), the Commissioner is instead directed to certify the payments to the Railroad Retirement Board, which shall provide for such payments to those individuals on behalf of the Managing Trustee in accordance with the provisions of the Railroad Retirement Act of 1974.
In the Railroad Retirement and Survivors' Improvement Act of 2001, Congress amended the Railroad Retirement Act to allow individuals with less than ten years of railroad service to qualify for annuities under the Act if they had at least five years of railroad service, all of which accrued after December 31, 1995. Public Law 107-90 (Dec. 21, 2001). Section 103(i) of the Railroad Retirement and Survivors' Improvement Act of 2001 was a conforming amendment to section 205(i) of the Social Security Act, directing the Commissioner of Social Security to certify title II benefit payments to the Railroad Retirement Board for payment with respect to individuals who had five or more years of railroad service, all of which accrued after December 31, 1995. Accordingly, the Railroad Retirement Board is amending its regulations at 20 CFR 235.3 to reflect the Board's statutory obligation to pay title II benefits for railroad employees with at least 60 months of railroad service after December 31, 1995, the wife or husband of such an employee, a survivor of such an employee, and any other person entitled to title II benefits based on the social security wages of the railroad employee except survivors where the employee lacked a current connection with the railroad industry at the time of the employee's death.
Congress amended section 205(i) of the Social Security Act again in section 843 of the Bipartisan Budget Act of 2015, Public Law 114-74 (Nov. 2, 2015). Before these amendments, the Commissioner would certify (and the Board would pay) title II benefits to a divorced wife or husband of a railroad employee only if the divorced wife or husband claimed social security benefits based on the railroad employee's social security wages. Section 843 of the Bipartisan Budget Act of 2015 amended section 205(i) to provide that all divorced spouses of railroad workers with at least ten years of railroad service (or five years of service after December 31, 1995) would have their social security benefits certified to the Board for payment. Accordingly, the Railroad Retirement Board is amending its regulations at 20 CFR 235.3 to reflect the Board's statutory obligation to pay title II benefits for divorced wives and husbands of railroad employees if the railroad employee has at least 120 months of railroad service (or 60 months of railroad service after December 31, 1995).
Finally, the authority citation for part 235 does not currently reflect that the statutory authority for the Board to pay benefits certified by the Commissioner flows from section 205(i) of the Social Security Act. Accordingly, the Railroad Retirement Board is amending the authority for part 235 to include 42 U.S.C. 405(i).
This direct final rule is being issued without prior public notice or opportunity for public comments. The Board does not anticipate this rule will generate adverse comment, and the effective date of the rule is conditional on the non-receipt of adverse comments. If the Board receives significant adverse comments prior to the effective date of this direct final rule, the Board will publish a timely notice in the Federal Register to withdraw the rule.

Regulatory Analysis

Executive Order 12866, as Supplemented by Executive Order 13563
The Board, with the Office of Management and Budget, has determined that this is not a significant regulatory action under Executive Order 12866, as supplemented by Executive Order 13563. Therefore, no regulatory impact analysis is required.

Regulatory Flexibility Act
The Board certifies that this direct final rule would not have a significant economic impact on a substantial number of small entities because it affects only a change in the disbursing agent for already-existing benefits.

Paperwork Reduction Act
This direct final rule imposes no reporting or recordkeeping requirements subject to Office of Management and Budget clearance.

List of Subjects in 20 CFR Part 235
Railroad retirement, Social security.
For the reasons set out in the preamble, the Railroad Retirement Board amends 20 CFR part 235 as follows:

PART 235—PAYMENT OF SOCIAL SECURITY BENEFITS BY THE RAILROAD RETIREMENT BOARD
1. The authority citation for part 235 is revised to read as follows:

Authority:
42 U.S.C. 405(i), 45 U.S.C. 231f.
2. Revise and republish § 235.3 to read as follows:
§ 235.3
Who is paid social security benefits by the Board.
The following individuals, if entitled to social security benefits, are paid such benefits by the Board:
(a) A railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995);
(b) A wife or husband of a railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995);
(c) A divorced wife or husband of a railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995);
(d) A survivor of a railroad employee, including a surviving divorced spouse, remarried widow(er), surviving divorced mother or father, who is entitled, or upon application would be entitled, to an annuity under the Railroad Retirement Act; and
(e) Any other person entitled to benefits under title II of the Social Security Act based on the social security wages of a railroad employee who has been credited with at least 120 months of railroad service (or at least 60 months of railroad service, all of which accrue after December 31, 1995), except survivors of a railroad employee when the Social Security Administration has jurisdiction for survivor benefits. See part 221 of this chapter.
Dated: May 28, 2024.
By Authority of the Board.
Stephanie Hillyard,

Secretary to the Board.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 1
[Docket No. FDA-2019-N-3325]
Laboratory Accreditation for Analyses of Foods; Program Implementation; Determination of Sufficient Laboratory Capacity for Import-Related Food Testing Covered by the Regulation

AGENCY:
Food and Drug Administration, HHS.

ACTION:
Notification.

SUMMARY:
The Food and Drug Administration (FDA or we) has determined that there is sufficient laboratory capacity in the Laboratory Accreditation for Analyses of Foods (LAAF) program for the import-related food testing covered by the LAAF regulation for mycotoxins. As sufficient capacity is reached for additional analytes covered under the import-related food testing provisions of the LAAF regulation, those specific analytes and compliance dates will be posted on the LAAF Dashboard. Owners and consignees of imported food subject to the LAAF regulation must use a LAAF-accredited laboratory to conduct covered import-related food testing starting on the applicable compliance date, which is 6 months from the date a specific analyte is listed on a public registry, based on FDA's determination that sufficient laboratory capacity has been achieved for such analyte. FDA has not yet made a capacity determination for the other food testing circumstances covered by the LAAF regulation.

DATES:
Compliance Dates: A LAAF-accredited laboratory must conduct certain import-related food testing covered by the LAAF regulation (21 CFR 1.1107(a)(4), (5)) beginning 6 months from the date a specific analyte is posted on the LAAF Dashboard.

FOR FURTHER INFORMATION CONTACT:
Stacie Hammack, Chemist, Food and Feed Laboratory Operations, Office of Regulatory Affairs, Food and Drug Administration, 60 8th St. NE, Atlanta, GA 30309, 301-796-5817; Stacie.Hammack@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

Background
In the Federal Register of December 3, 2021 (86 FR 68728), we issued the LAAF final rule ( https://www.fda.gov/food/food-safety-modernization-act-fsma/fsma-final-rule-laboratory-accreditation-analyses-foods-laaf ), which establishes the LAAF program for the testing of human and animal food in certain circumstances by accredited laboratories, as required under section 422 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 350k). The purpose of the LAAF program is to improve the safety of the U.S. food supply and protect U.S. consumers by helping to ensure that certain food testing of importance to public health is conducted subject to appropriate oversight and in accordance with appropriate model standards to produce reliable and valid test results. Under the LAAF regulation, which is codified at part 1 (21 CFR part 1), subpart R (§§ 1.1101 through 1.1201), FDA has been recognizing, and will continue to recognize, accreditation bodies that then assess laboratories to the standards established in the regulation (referred to as LAAF-accredited laboratories). Participation in the LAAF program is voluntary for accreditation bodies and laboratories.
The LAAF regulation defines food testing and testing of food to mean the analysis of food product samples or environmental samples (§ 1.1102). At § 1.1107(a), the LAAF regulation details five food testing circumstances in which owners and consignees must use a LAAF-accredited laboratory. This document relates to a determination of sufficient laboratory capacity for two of those circumstances related to import testing: in support of admission of an article of food under section 801(a) of the FD&C Act (§ 1.1107(a)(4)); and to support removal from an import alert through successful consecutive testing (§ 1.1107(a)(5)), for specific analyte(s) as listed on the LAAF Dashboard. For example, aflatoxin is a specific analyte within the analyte group of mycotoxins for which we have determined sufficient laboratory capacity has been met for the testing circumstances in this document.
In those testing circumstances covered by the LAAF regulation for which FDA has determined sufficient laboratory capacity has been met, persons with an ownership or consignment interest in the food product or environment that is the subject of the testing (owners and consignees) must use a laboratory that is LAAF-accredited for an analytical method for the appropriate analyte to conduct such testing. LAAF-accredited laboratories must comply with all applicable LAAF requirements, including the submission of results directly to FDA, in accordance with § 1.1152(b). FDA maintains on its website the LAAF Dashboard ( https://datadashboard.fda.gov/ora/fd/laaf.htm ), which identifies recognized accreditation bodies and LAAF-accredited laboratories and includes information on each laboratory's location, scope of LAAF-accreditation, analytes, and methods. The LAAF Dashboard also identifies analyte groups and specific analyte(s) with sufficient laboratory capacity for testing under the LAAF program with compliance dates established 6 months after each such specific analyte is posted on the LAAF Dashboard.
We explained in the LAAF final rule that implementation of the LAAF program will necessarily occur in a stepwise fashion. The first step was recognizing a sufficient number of accreditation bodies; we announced the completion of that step on July 12, 2022 ( https://fda.gov/food/cfsan-constituent-updates/fda-releases-public-registry-recognized-accreditation-bodies-under-laboratory-accreditation-analyses ). Laboratories interested in participating in the LAAF program have since been applying to the recognized accreditation bodies, and those recognized accreditation bodies have been assessing those laboratories and providing them with LAAF-accreditation as appropriate. We explained in the LAAF final rule that when a sufficient number of laboratories became LAAF-accredited, we would publish a document in the Federal Register giving owners and consignees 6 months' notice that they will be required to use a LAAF-accredited laboratory for food testing covered by the LAAF regulation. We stated in the final rule that, given the breadth of analytes, matrices, and methods covered by the LAAF regulation, it may be necessary for us to separately consider whether sufficient laboratory capacity has been attained for the variety of testing circumstances described in § 1.1107(a).
FDA has determined that the LAAF program has attained sufficient laboratory capacity for the food testing described in § 1.1107(a)(4) and (5) for the analyte group of mycotoxins and its specific analytes, including aflatoxin. In § 1.1107(a)(4), the LAAF regulation covers food testing in support of admission of an article of food under section 801(a) of the FD&C Act (21 U.S.C. 381(a)). Section 801(a) of the FD&C Act authorizes FDA to detain food at the border because it is, or appears to be, in violation of the FD&C Act or its implementing regulations. If FDA detains a food product imported or offered for import under section 801(a) of the FD&C Act, but FDA has not yet refused admission, the owner or consignee may introduce testimonial evidence that the food is admissible. Owners and consignees often engage laboratories to test the food and submit to FDA the results of the testing, as testimony to support admission of the food. If FDA determines that the food testing results are valid and that they overcome the appearance of a violation of the FD&C Act, then FDA will release the food from detention and allow it to proceed for entry into the United States. The testing of detained product at the direction of such owners and consignees is covered by the LAAF regulation at § 1.1107(a)(4).
Section 1.1107(a)(5) of the LAAF regulation also relates to detained food offered for import; it states that testing to support removal from an import alert through successful consecutive testing is covered by the LAAF regulation. An import alert informs FDA staff and the public that we have enough evidence to detain, without first physically examining (sampling), products offered for import that appear to violate the FD&C Act. Often, individual import alerts include specific information regarding removal from the import alert. Many current import alerts indicate that it would be helpful for owners or consignees to present to FDA evidence of at least five consecutive shipments to the United States that have been found to not be in violation. Owners and consignees often engage laboratories and submit to FDA the results of the testing as testimony to support removal from import alert; such testing is covered by the LAAF regulation at § 1.1107(a)(5).
Owners and consignees will be required to use a LAAF-accredited laboratory starting 6 months from the date a specific analyte is posted on the LAAF Dashboard. LAAF-accredited laboratories must comply with all applicable LAAF requirements, including the submission of results directly to FDA, in accordance with § 1.1152(b). The LAAF Dashboard includes a table of analyte groups and specific analytes with sufficient capacity and the compliance date for those analyses, in addition to the list of LAAF-accredited laboratories, their location, contact details, and the list of LAAF-accredited analytes and methods. As capacity for additional analytes is reached, those will be added to the LAAF Dashboard with a compliance date of 6 months after posting to the LAAF Dashboard. The LAAF Dashboard may be viewed at ( https://datadashboard.fda.gov/ora/fd/laaf.htm ).
We will continue stepwise implementation of the LAAF program for other food testing circumstances in which owners and consignees are required to use a LAAF-accredited laboratory. FDA has not yet made a capacity determination for the other food testing circumstances covered by the LAAF regulation. We will publish one or more additional notices in the Federal Register when the LAAF program attains sufficient laboratory capacity to support the food testing described in § 1.1107(a)(1) through (3).
Dated: May 23, 2024.
Lauren K. Roth,

Associate Commissioner for Policy.
DEPARTMENT OF HOMELAND SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG-2024-0253]
RIN 1625-AA00
Safety Zone; Annual Fireworks Displays Within the Sector Columbia River Captain of the Port Zone

AGENCY:
Coast Guard, DHS.

ACTION:
Final rule.

SUMMARY:
The Coast Guard is amending the regulations establishing safety zones for annual fireworks displays in the Captain of the Port Zone Columbia River. This action updates 12 existing safety zones, adding 2 safety zones for fireworks displays that were previously published under temporary regulations, and reordering the table alphabetically.

DATES:
This rule is effective July 3, 2024.

ADDRESSES:
To view documents mentioned in this preamble as being available in the docket, go to https://www.regulations.gov, type USCG-2024-0253 in the search box and click “Search.” Next, in the Document Type column, select “Supporting & Related Material.”

FOR FURTHER INFORMATION CONTACT:
If you have questions about this rule, call or email Lieutenant Carlie Gilligan, Sector Columbia River Waterways Management Division, U.S. Coast Guard; telephone 503-240-9319, email SCRWWM@uscg.mil.

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations
CFR Code of Federal Regulations
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code

II. Background Information and Regulatory History
On April 12, 2024, the Coast Guard published a notice of proposed rulemaking (NPRM) titled Safety Zone; Annual Fireworks Displays Within the Columbia River Captain of the Port Zone (89 FR 25835). There we stated why we issued the NPRM and invited comments on our proposed regulatory action related to this fireworks display. During the comment period that ended May 13, 2024, we received 1 comment.

III. Legal Authority and Need for Rule
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The Captain of the Port Sector Columbia River has determined that fireworks displays create hazardous conditions for the maritime public because of the large number of vessels near the displays, as well as the noise, falling debris, and explosions that occur during the events. Because firework discharge sites pose a potential hazard to the maritime public, these safety zones are necessary to restrict vessel movement and reduce vessel congregation near firework discharge sites.

IV. Discussion of Comments, Changes, and the Rule
As noted above, we received 1 comment on our NPRM published April 12, 2024. However, the concerns were unrelated to the proposed revisions and outside of the scope of Coast Guard authority. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.
This rule revises the safety zone regulations designated in the table in 33 CFR 165.1315(a). Specifically, this rule alphabetizes the events, makes minor updates to the names of 10 events, updates the location of 1 event (Newport 4th of July), updates the typical date of 1 event (The 4th of July at Pekin Ferry), and adds two events (Umatilla Landing Days and City of Richland Lighted Boat Parade Festival).
The Umatilla Landing Days safety zone was previously issued as a temporary final rule (88 FR 32966, May 23, 2023), and after conferring with the event sponsor, the Coast Guard has learned it will be a recurring fireworks display. This safety zone covers all navigable waters within a 400-foot radius of the fireworks launch site in Umatilla, OR, located at 45°55′37″ N, 119°19′47″ W.
On November 29, 2023, the Coast Guard issued a rulemaking creating a temporary safety zone for all navigable waters within a 600-foot radius of a fireworks display on the Columbia River for the City of Richland Christmas Fireworks display in Richland, WA. A copy of the rulemaking that ended December 2, 2023 is available in the Docket USCG-2024-0253, which can be found using instructions in the ADDRESSES section. After conferring with the event sponsor, the Coast Guard has learned it will become a recurring fireworks display. This new reoccurring safety zone covers all navigable waters within a 600-foot radius of the fireworks launch site in Richland, WA, located at 46°16′29″ N, 119°16′10″ W.
Finally, the Coast Guard is revising twelve existing fireworks display safety zones. These revisions include updating the date for 4th of July at Pekin Ferry to more precisely describe when the fireworks display will occur, updating the location for Newport 4th of July, and making minor name updates to the following events: Brookings, OR July 4th Celebration; Port of Cascade Locks 4th of July Fireworks; Bald Eagle Days; City of Coos Bay July 4th Celebration/Fireworks Over the Bay; The Dalles Area Fourth of July; Ilwaco July 4th Committee Fireworks/Independence Day at the Port; Tri-City Chamber of Commerce Fireworks/Kennewick River of Fire Festival; City of Rainier/Rainier Days; City of St. Helens 4th of July Fireworks; and Cedco Inc./The Mill Casino Independence Day. These updates are intended to eliminate confusion caused by the fireworks display safety zones listed in the 33 CFR 165.1315 table and any subsequently issued temporary safety zones resulting from changes to the dates or locations of the events. The regulatory text appears at the end of this document.

V. Regulatory Analyses
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.

A. Regulatory Planning and Review
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 section 3(f) of 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, duration, and time-of day of the events. Moreover, the Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM and the rule allow vessels to seek permission to enter the zone.

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

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

D. Federalism and Indian Tribal Governments
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

E. Unfunded Mandates Reform Act
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.

F. Environment
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969(42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves safety zones lasting various times that will prohibit entry within defined areas. Normally such actions are categorically excluded from further review under paragraph L60(a) of appendix A, table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble.

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

List of Subjects in 33 CFR Part 165
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:

PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS
1. The authority citation for part 165 continues to read as follows:

Authority:
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.
2. In § 165.1315, revise and republish paragraph (a) to read as follows:
§ 165.1315
Safety Zone; Annual Fireworks Displays within the Sector Columbia River Captain of the Port Zone.
(a) Safety zones. The following areas are designated safety zones: Waters of the Columbia River and its tributaries, waters of the Siuslaw River, Yaquina River, Umpqua River, Clatskanie River, Tillamook Bay and waters of the Washington and Oregon Coasts, within a 450-yard radius of the launch site at the approximate locations listed in the following table:
Event name (typically) | Event location | Date of event | Latitude | Longitude
Portland Rose Festival Fireworks | Portland, OR | One day in May or June | 45°30′58″ N | 122°40′12″ W
The 4th of July at Pekin Ferry | Ridgefield, WA | One day in June or July | 45°52′07″ N | 122°43′53″ W
Umatilla Landing Days | Umatilla, OR | One day in June | 45°55′37″ N | 119°19′47″ W
Astoria-Warrenton 4th of July Fireworks | Astoria, OR | One day in July | 46°11′34″ N | 123°49′28″ W
Bandon 4th of July | Bandon, OR | One day in July | 43°07′29″ N | 124°25′05″ W
Brookings July 4th Celebration | Brookings, OR | One day in July | 42°02′39″ N | 124°16′14″ W
Cascade Locks 4th of July Fireworks | Cascade Locks, OR | One day in July | 45°40′15″ N | 121°53′43″ W
Cathlamet Bald Eagle Days | Cathlamet, WA | One day in July | 46°12′14″ N | 123°23′17″ W
Clatskanie Heritage Days Fireworks | Clatskanie, OR | One day in July | 46°6′17″ N | 123°12′02″ W
Fireworks Over the Bay | Coos Bay, OR | One day in July | 43°22′06″ N | 124°12′24″ W
Florence Independence Day Celebration | Florence, OR | One day in July | 43°58′09″ N | 124°05′50″ W
Fort Dalles Fourth of July | The Dalles, OR | One day in July | 45°36′18″ N | 121°10′23″ W
Gardiner 4th of July | Gardiner, OR | One day in July | 43°43′55″ N | 124°06′48″ W
Garibaldi Days Fireworks | Garibaldi, OR | One day in July | 45°33′13″ N | 123°54′56″ W
Hood River 4th of July | Hood River, OR | One day in July | 45°42′58″ N | 121°30′32″ W
Huntington 4th of July | Huntington, OR | One day in July | 44°18′02″ N | 117°13′33″ W
Ilwaco Independence Day at the Port | Ilwaco, WA | One day in July | 46°18′17″ N | 124°02′00″ W
Independence Day at the Fort Vancouver | Vancouver, WA | One day in July | 45°36′57″ N | 122°40′09″ W
July 4th Party at the Port of Gold Beach | Gold Beach, OR | One day in July | 42°25′30″ N | 124°25′03″ W
Kennewick River of Fire Fireworks | Kennewick, WA | One day in July | 46°13′37″ N | 119°08′47″ W
Lincoln City 4th of July | Lincoln City, OR | One day in July | 44°55′28″ N | 124°01′31″ W
Newport 4th of July | Newport, OR | One day in July | 44°37′31″ N | 124°02′5″ W
Oaks Park Association 4th of July | Portland, OR | One day in July | 45°28′22″ N | 122°39′59″ W
Port Orford 4th of July Jubilee | Port Orford, OR | One day in July | 42°44′31″ N | 124°29′30″ W
Rainier Days in the Park | Rainier, OR | One day in July | 46°05′46″ N | 122°56′18″ W
Roseburg Hometown 4th of July | Roseburg, OR | One day in July | 43°12′58″ N | 123°22′10″ W
Splash Aberdeen Waterfront Festival | Aberdeen, WA | One day in July | 46°58′40″ N | 123°47′45″ W
St. Helens 4th of July Fireworks | St. Helens, OR | One day in July | 45°51′54″ N | 122°47′26″ W
| The Mill Casino Independence Day | North Bend, OR | One day in July | 43°23′42″ N | 124°12′55″ W
Toledo Summer Festival | Toledo, OR | One day in July | 44°37′08″ N | 123°56′24″ W
Waldport 4th of July | Waldport, OR | One day in July | 44°25′31″ N | 124°04′44″ W
Washougal 4th of July | Washougal, WA | One day in July | 45°34′32″ N | 122°22′53″ W
Waterfront Blues Festival Fireworks | Portland, OR | One day in July | 45°30′42″ N | 122°40′14″ W
Waverly Country Club 4th of July Fireworks | Milwaukie, OR | One day in July | 45°27′03″ N | 122°39′18″ W
Westport 4th of July | Westport, WA | One day in July | 46°54′17″ N | 124°05′59″ W
Winchester Bay 4th of July Fireworks | Winchester Bay, OR | One day in July | 43°40′56″ N | 124°11′13″ W
Yachats 4th of July | Yachats, OR | One day in July | 44°18′38″ N | 124°06′27″ W
Astoria Regatta | Astoria, OR | One day in August | 46°11′34″ N | 123°49′28″ W
Oregon Symphony Concert Fireworks | Portland, OR | One day in August or September | 45°30′42″ N | 122°40′14″ W
Leukemia and Lymphoma Light the Night Fireworks | Portland, OR | One day in October | 45°30′23″ N | 122°40′4″ W
Veterans Day Celebration | The Dalles, OR | One day in November | 45°36′18″ N | 121°10′34″ W
City of Richland Lighted Boat Parade Fireworks | Richland, WA | One weekend in December | 46°16′29″ N | 119°16′10″ W
* * * * *
Dated: May 23, 2024.
J.W. Noggle,

Captain, U.S. Coast Guard, Captain of the Port Sector Columbia River.
DEPARTMENT OF HOMELAND SECURITY
Coast Guard
33 CFR Part 165
[Docket No. USCG-2024-0230]
Safety Zones; Annual Events in the Captain of the Port Eastern Great Lakes Zone

AGENCY:
Coast Guard, DHS.

ACTION:
Notification of enforcement of regulation.

SUMMARY:
The Coast Guard will enforce a Safety Zone for the Boldt Castle 4th of July Fireworks on July 4th, 2024, to provide for the safety of life on navigable waterways during this event. Our regulation for marine events within the Ninth Coast Guard District identifies the regulated area for this event in Alexandria Bay, NY. During the enforcement periods, the operator of any vessel in the regulated area must comply with directions from the Patrol Commander or any Official Patrol displaying a Coast Guard ensign.

DATES:
The regulations in 33 CFR 165.939 will be enforced for the Boldt Castle 4th of July Fireworks regulated area listed in item b.13 in the table to § 165.939 from 9 p.m. through 10:30 p.m. on July 4, 2024.

FOR FURTHER INFORMATION CONTACT:
If you have questions about this notification of enforcement, call or email Marine Safety Unit Thousand Islands Marine Event Permit Coordinator, U.S. Coast Guard MSU Thousand Islands; telephone 315-774-8724, email SMB-MSDMassena-WaterwaysManagement@uscg.mil.

SUPPLEMENTARY INFORMATION:
The Coast Guard will enforce a safety zone in 33 CFR 165.939 for the Boldt Castle 4th of July Fireworks regulated area from 9 p.m. through 10:30 p.m. on July 4, 2024. This action is being taken to provide for the safety of life on navigable waterways during this event. Our regulation for marine events within the Ninth Coast Guard District, § 165.939, specifies the location of the regulated area for the Boldt Castle 4th of July Fireworks which encompasses portions of the St. Lawrence River. During the enforcement period as reflected in § 165.939, if you are the operator of a vessel in the regulated area you must comply with directions from the Patrol Commander or any Official Patrol displaying a Coast Guard ensign.
In addition to this notification of enforcement in the Federal Register , the Coast Guard plans to provide notification of this enforcement period via the Broadcast Notice to Mariners. This notification is being issued by Coast Guard Sector Eastern Great Lakes Prevention Department Head at the direction of the Captain of the Port.
Dated: May 24, 2024.
J.B. Bybee,

Commander, U.S. Coast Guard, Sector Eastern Great Lakes Prevention Department Head.
NATIONAL ARCHIVES AND RECORDS ADMINISTRATION
36 CFR Part 1225
[FDMS No. NARA-24-0008; NARA-2024-026]
RIN 3095-AC12
Federal Records Management: GAO Concurrence; Correction

AGENCY:
National Archives and Records Administration (NARA).

ACTION:
Direct final rule; correction.

SUMMARY:
NARA is correcting a direct final rule that appeared in the Federal Register on May 1, 2024, amending our records management regulations to limit the role of the Government Accountability Office (GAO) in approving certain deviations in agency records schedules. This document is correcting the DATES section to add the effective date of the rule, and it is correcting the amendatory instruction to the rule.

DATES:
Effective July 30, 2024.

FOR FURTHER INFORMATION CONTACT:
Edward Germino, Strategy and Performance Division, by email at regulation_comments@nara.gov, or by telephone at 301-837-3758. Contact rmstandards@nara.gov with any questions on records management standards and policy.

SUPPLEMENTARY INFORMATION:
In FR Doc. 2024-09396, appearing on page 35007 in the Federal Register of Wednesday, May 1, 2024, the following corrections are made:
1. On page 35007, in the first column, the ACTION caption is corrected to read as follows:
ACTION: Direct final rule.
2. On page 35007, in the first column, the DATES caption is corrected to read as follows: DATES. This rule is effective July 30, 2024, without further action, unless adverse comment is received by July 1, 2024. If adverse comment is received, NARA will publish a timely withdrawal of the rule in the Federal Register .
§ 1225.20
[Corrected]
3. On page 35008, in the first column, in part 1225, in amendment 2, the instruction “Amend § 1225.20 to read as follows:” is corrected to read “Revise § 1225.20 to read as follows:”
Laurence Brewer,

Chief Records Officer for the U.S. Government.
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R04-OAR-2023-0253; FRL-11850-02-R4]
Air Plan Approval; KY; Updates to Attainment Status Designations

AGENCY:
Environmental Protection Agency (EPA).

ACTION:
Final rule.

SUMMARY:
The Commonwealth of Kentucky, through the Kentucky Energy and Environment Cabinet (Cabinet), Kentucky Division for Air Quality (KDAQ), submitted a revision to the Kentucky State Implementation Plan (SIP) on November 29, 2022. The SIP revision updates, as of June 9, 2022, the geographical boundary description and attainment status designation for the Henderson-Webster SO 2 nonattainment area for the 2010 primary SO 2 National Ambient Air Quality Standards (NAAQS). The update is being made to conform Kentucky's attainment status tables with the Federal attainment status designations made for this area. The SIP revision also includes minor language changes in the attainment status designations provisions. EPA is approving Kentucky's SIP revision pursuant to the Clean Air Act (CAA or Act).

DATES:
This rule is effective July 3, 2024.

ADDRESSES:
EPA has established a docket for this action under Docket Identification No. EPA-R04-OAR-2023-0253. All documents in the docket are listed on the regulations.gov website. Although listed in the index, some information may not be publicly available, i.e. , Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. EPA requests that if at all possible, you contact the person listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office's official hours of business are Monday through Friday 8:30 a.m. to 4:30 p.m., excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT:
Josue Ortiz Borrero, Air Regulatory Management Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. Mr. Ortiz can be reached via phone number (404) 562-8085 or via electronic mail at ortizborrero.josue@epa.gov.

SUPPLEMENTARY INFORMATION:

I. Background
On November 29, 2022, the Cabinet submitted a SIP revision containing changes to 401 Kentucky Administrative Regulation (KAR) 51:010, Attainment status designations, State effective June 9, 2022, to be consistent with the SO 2 designation status codified by EPA at title 40 CFR part 81, subpart C as designated pursuant to section 107 of the CAA. Regulation 401 KAR 51:010 compiles the designation status for the entire Commonwealth for the following NAAQS: ozone (O 3 ), fine particulate matter (PM 2.5 ), lead (Pb), carbon monoxide (CO), nitrogen dioxide (NO 2 ), SO 2, and Total Suspended Particles (TSP) in a tabular format that identifies the area and the legal geographical boundary description consistent with the designation status codified at 40 CFR part 81. Specifically, Kentucky's SIP submission adds the attainment status and the legal geographical boundary description for the Henderson-Webster nonattainment area for the 2010 SO 2 NAAQS as determined by EPA in SO 2 designations effective on April 14, 2021. ^1 The nonattainment area is comprised of Henderson County (partial) and Webster County (partial) and was designated nonattainment based on the 2017-2019, 3-year design value at the Sebree ambient air quality monitor (AQS ID: 21-101-1011). ^2 This update is being made to ensure Kentucky's attainment designation tables are consistent with those codified at 40 CFR 81.318 for the Commonwealth. Kentucky's amendment to 401 KAR 51:010 also includes replacing the text “designates the status” with the phrase “establishes the designation status” in reference to the purpose of the rule. In section 2, paragraph (1), the phrase “shall be as listed” replaces “is listed” in reference to the NAAQS listed in sections 4 through 10 of 401 KAR 51:010. Subparagraph 3 is revised by replacing “defines” with “delineates” in the sentence “A road, junction, or intersection of two (2) or more roads as used in Section 7 of this administrative regulation that defines a nonattainment boundary for an area that is a portion of a county designated as nonattainment for ozone for any classification except marginal, shall include as nonattainment an area extending 750 feet from the center of the road, junction, or intersection.” Also, Kentucky removed the reference to section 7 in that sentence because section 7 specifies that it applies to ozone nonattainment areas.
^1 See 86 FR 16055. This round of designations for the 2010 1-hour SO 2 NAAQS was signed on December 21, 2020 (86 FR 16055 (March 26, 2021)) and April 8, 2021 (86 FR 19576 (April 14, 2021)). These designations were signed by former EPA Administrator Andrew Wheeler on December 21, 2020, pursuant to a court-ordered deadline of December 31, 2020. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, former Acting Administrator Jane Nishida re-signed the same action on March 10, 2021, for publication in the Federal Register . EPA and State documents and public comments related to these final designations are in the docket at regulations.gov with Docket ID No. EPA-HQ-OAR-2020-0037 and at EPA's website for SO 2 designations at https://www.epa.gov/sulfur-dioxide-designations.
^2 See EPA, Technical Support Document: Chapter 3 Intended Round 4 Area Designations for the 2010 1-Hour SO 2 Primary National Ambient Air Quality Standard for Kentucky, available at https://www.epa.gov/sites/default/files/2020-08/documents/03-ky-rd4_intended_so2_designations_tsd.pdf.
Through a notice of proposed rulemaking (NPRM), published on April 11, 2024 (89 FR 25555), EPA proposed to approve the November 29, 2022, revision which amends the attainment status designations for the Henderson-Webster SO 2 nonattainment area for the 2010 primary SO 2 NAAQS. EPA's rationale for approving the changes is described in the April 11, 2024, NPRM. Comments on the April 11, 2024, NPRM were due on or before May 13, 2024. EPA received two comments on the April 11, 2024, NPRM that are not relevant to this action. The comments are available in the docket for this action.

II. Incorporation by Reference
In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, and as discussed in Section I of this preamble, EPA is finalizing the incorporation by reference of Kentucky regulation 401 KAR 51:010, Attainment status designations, State effective June 9, 2022, which was revised to be consistent with Federal attainment status designation for the areas within the Commonwealth. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 4 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by EPA for inclusion in the State implementation plan, have been incorporated by reference by EPA into that plan, are fully Federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. ^3
^3 See 62 FR 27968 (May 22, 1997).

III. Final Action
EPA is finalizing approval of Kentucky's November 29, 2022, SIP revision, which updates regulation 401 KAR 51:010 to amend the attainment status designation for the Henderson-Webster SO 2 nonattainment area for the 2010 primary SO 2 NAAQS in accordance with the designations codified in 40 CFR 81.318. This revision also includes minor language changes in 401 KAR 51:010. EPA is approving these changes because they are consistent with the CAA and its implementing regulations.

IV. Statutory and Executive Order Reviews
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a State program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The Cabinet did not evaluate EJ considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Due to the nature of the action being taken here, this action is expected to have a neutral to positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving EJ for people of color, low-income populations, and Indigenous peoples.
This action is subject to the Congressional Review Act, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).
Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 2, 2024. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2).)

List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.
Dated: May 28, 2024.
Jeaneanne Gettle,

Acting Regional Administrator, Region 4.
For the reasons stated in the preamble, EPA amends 40 CFR part 52 as follows:

PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS
1. The authority citation for part 52 continues to read as follows:

Authority:
42 U.S.C. 7401 et seq.

Subpart S—Kentucky
2. In § 52.920(c), amend Table 1 under the center heading “Chapter 51 Attainment and Maintenance of the National Ambient Air Quality Standards” by revising the entry for “401 KAR 51:010 ” to read as follows:
§ 52.920
Identification of plan.
* * * * *
(c) * * *
Table 1 to Paragraph (c) —EPA-Approved Kentucky Laws and Regulations
State citation | Title/subject | State effective date | EPA approval date | Explanation
* * * * * * *
Chapter 51 Attainment and Maintenance of the National Ambient Air Quality Standards
* * * * * * *
401 KAR 51:010 | Attainment status designations | 6/9/2022 | 6/3/2024, [Insert first page of Federal Register citation] |
* * * * * * *
* * * * *
89
107
Monday, June 3, 2024
Proposed Rules
DEPARTMENT OF HOMELAND SECURITY
6 CFR Part 226
[Docket No. CISA-2022-0010]
RIN 1670-AA04
Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) Reporting Requirements; Correction

AGENCY:
Cybersecurity and Infrastructure Security Agency, DHS.

ACTION:
Proposed rule; correction.

SUMMARY:
On April 4, 2024, the Cybersecurity and Infrastructure Security Agency (CISA) published, in the Federal Register , the Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) Reporting Requirements notice of proposed rulemaking (NPRM). The NPRM proposes regulations to implement CIRCIA's covered cyber incident and ransom payment reporting requirements for covered entities. In the section describing covered entities, the NPRM included information and references in the applicability criteria for transportation system entities that were based on a proposed rule that has not yet been published by the Transportation Security Administration (TSA). This document clarifies and corrects the proposed applicability criteria for pipeline facilities and systems in the sector-based criteria discussion for transportation systems sector entities.

DATES:
Comments to the NPRM published at 89 FR 23644 on April 4, 2024, and related material must be submitted on or before July 3, 2024.

ADDRESSES:
You may send comments, identified by docket number CISA-2022-0010, through the Federal eRulemaking Portal available at https://www.regulations.gov.
Instructions: All comments received must include the docket number for this rulemaking. All comments received will be posted to https://www.regulations.gov, including any personal information provided. If you cannot submit your comment using https://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions. For detailed instructions on sending comments and additional information on the types of comments that are of particular interest to CISA for this proposed rulemaking, see the SUPPLEMENTARY INFORMATION section of the proposed rulemaking document at 89 FR 23644 (Apr. 4, 2024).
Docket: For access to the docket and to read background documents mentioned in this proposed rule and comments received, go to https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT:
Todd Klessman, CIRCIA Rulemaking Team Lead, Cybersecurity and Infrastructure Security Agency, circia@cisa.dhs.gov, 202-964-6869.

SUPPLEMENTARY INFORMATION:

Background and Discussion
On April 4, 2024, CISA published a NPRM, “Cyber Incident Reporting for Critical Infrastructure Act Reporting Requirements,” 89 FR 23644, that was required by the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (CIRCIA). ^1 CIRCIA requires covered entities to report to CISA within certain prescribed timeframes any covered cyber incidents, ransom payments made in response to a ransomware attack, and any substantial new or different information discovered related to a previously submitted report. ^2 CIRCIA further requires the Director of CISA to implement these new reporting requirements through rulemaking. The NPRM solicits public comment on proposed regulations that would codify these reporting requirements.
^1 See 6 U.S.C. 681-681g; Public Law 117-103, as amended by Public Law 117-263 (Dec. 23, 2022).
^2 6 U.S.C. 681b(a)(1)-(3).
In proposed 6 CFR 226.2, Applicability, CISA proposed a list of entities that would be required to report under the proposed regulation. ^3 Specifically, in § 226.2(b)(14), CISA proposed sector-based criteria for “Transportation system entities” that would be considered covered entities. ^4 As noted in the NPRM, CISA aligned the aforementioned sector-based criteria's description of a covered entity to include those entities identified by TSA as requiring cyber incident reporting and, in some cases, enhanced cybersecurity measures. ^5 To facilitate this alignment, CISA's NPRM proposed § 226.2(b)(14) that an “entity required by the Transportation Security Administration to report cyber incidents” or otherwise meets one or more criteria related to owners and operators of various non-maritime transportation system infrastructure, such as freight railroad, public transportation and passenger railroads (PTPR), pipeline facilities and systems, over-the-road bus (OTRB) operations, passenger and all-cargo aircraft, indirect air carriers, airports, and Certified Cargo Screening Facilities, would be considered a covered entity. ^6 Each of these proposed criteria included specific references to where these entities are identified in TSA's current regulations. ^7 However, for the sector-based criteria that would be applicable to pipeline facilities or systems, the proposed criterion references a section, 49 CFR 1586.101, that TSA intends to include in TSA's forthcoming Enhancing Surface Cyber Risk Management NPRM, which has not yet been published in the Federal Register . ^8 Until that rule is finalized, the section related to pipeline facilities or systems does not exist in the CFR. Because the CIRCIA NPRM does not specifically describe which pipeline facilities or systems that CISA proposes as covered entities until TSA's rulemaking is finalized, CISA's intent through this notice is to clarify and correct this point.
^3 89 FR 23768 (Apr. 4, 2024).
^4 89 FR 23768.
^5 See 89 FR 23699-23701.
^6 89 FR 23768.
^7 See 89 FR 23768.
^8 See 89 FR 23768 and TSA, Fall 2023 Unified Agenda, RIN 1652-AA74: Enhancing Surface Cyber Risk Management, https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310RIN=1652-AA74 (accessed May 14, 2024).
As stated in the CIRCIA NPRM, CISA's intent is to align CIRCIA requirements applicable to aviation and surface transportation entities with TSA's requirements to support reduction of duplication and to avoid unintended gaps in cyber incident reporting. As such, CISA proposed applicability criteria describing covered entities in 6 CFR 226.2(b)(14) that include entities that are currently required, or will be required, to report cyber incidents to TSA. ^9 It is for this reason that CISA specifically proposed describing a covered entity as an “entity [that] is required by the Transportation Security Administration to report cyber incidents” in proposed 6 CFR 226.2(b)(14), so that any entities, such as pipeline facilities or systems, that are required to currently report cyber incidents to TSA under Security Directives would also be considered covered entities that are required to report under CIRCIA.
^9 89 FR 23768.
For the surface transportation sector, TSA currently requires reporting of cyber incidents to CISA by owner/operators of certain freight railroads, passenger railroads, rail transit systems, and hazardous and natural gas pipeline facilities and systems pursuant to Security Directives issued under the authority of 49 U.S.C. 114( l )(2). ^{10} Under these Security Directives, TSA notifies owner/operators of pipeline facilities or systems directly if the requirements in the Security Directive are applicable to them. Using a risk-based approach, a small percentage within each mode of transportation are required to report cybersecurity incidents, but these entities represent a significant portion of capacity, throughput, and ridership for each of these modes. As indicated in the CIRCIA NPRM, and as described in this notice, CISA proposes that all such owners/operators of pipeline facilities and systems identified by TSA and required to report cybersecurity incidents pursuant to TSA Security Directives are considered covered entities under 6 CFR 226.2(b)(14) until TSA finalizes its Enhancing Surface Cyber Risk Management rule.
^{10} See 89 FR 23651.
To address the concern regarding cross-referencing a regulatory section that does not currently exist, CISA is issuing this correction to remove the reference to that specific regulatory section and, instead, propose criterion to make clear that CIRCIA's description of a covered entity for pipeline facilities or systems includes any entity that is currently required by TSA to report cyber incidents under a Security Directive or is otherwise identified as required to report under TSA's final regulations. For owner/operators of pipeline facilities or systems not currently subject to reporting requirements under TSA's Security Directives, it is CISA's understanding, through consultation with TSA, that TSA intends to continue using a risk-based approach in determining entities subject to its regulations, similar to its Security Directive approach and that applicability of cyber incident reporting requirements beyond the existing Security Directives will not be substantially expanded. TSA's Security Directives indicate that approximately 100 pipeline systems are considered the most critical. ^{11} CISA acknowledges the total number of owner/operators may slightly change consistent with an updated risk analysis developed for purposes of TSA's proposed rule. However, CISA continues to believe the Regulatory Impact Analysis for the CIRCIA rulemaking is an accurate estimate insomuch that the applicability of the TSA covered entities will continue to be approximately 115 entities. ^{12}
^{11} See TSA Security Directive Pipeline-2021-02D, at 4 n.9 (citing section 1557(b) of the Implementing Recommendations of the 9/11 Commission Act of 2007, Public Law 110-53 121 Stat. 266, 475 (codified at 6 U.S.C. 1207(b)).
^{12} See Section 2.2.14 of the Preliminary RIA, which estimates 115 pipeline entities would be affected by the proposed criteria for pipeline facilities or systems.
As mentioned in the CIRCIA NPRM, CISA believes that aligning CIRCIA's Applicability section with the population of entities from which TSA requires cyber incident reporting or at which TSA requires the implementation of enhanced cybersecurity measures is appropriate for CIRCIA and consistent with the factors contained in 6 U.S.C. 681b(c)(1). CISA will continue to coordinate with TSA throughout the rulemaking process to harmonize CIRCIA's Applicability section with TSA, to the maximum extent practicable.
Comments on the NPRM and related material must be submitted on or before July 3, 2024. See Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) Reporting Requirements; Extension of Comment Period at 89 FR 37141. DHS believes this correction does not warrant extending the current 90-day comment period for the NPRM.

Correction
In FR Doc. 2024-06526, published at 89 FR 23644 in the issue of April 4, 2024, on page 23768, in the third column, in § 226.2, correct paragraph (b)(14)(iv) to read as follows:
§ 226.2
[Corrected]
* * * * *
(b) * * *
(14) * * *
(iv) A pipeline facility or system owner or operator required to report cyber incidents by the Transportation Security Administration;
* * * * *
Jennie M. Easterly,

Director, Cybersecurity and Infrastructure Security Agency, Department of Homeland Security.
DEPARTMENT OF HOMELAND SECURITY
Coast Guard
33 CFR Part 165
[Docket Number USCG-2024-0449]
RIN 1625-AA00
Safety Zone; Fireworks Display, Marina Park, Irrigon, OR

AGENCY:
Coast Guard, DHS.

ACTION:
Notice of proposed rulemaking.

SUMMARY:
The Coast Guard is proposing to establish a temporary safety zone for certain waters of Umatilla Marina. This action is necessary to provide for the safety of life on these navigable waters near Irrigon, OR, during a fireworks display on July 27, 2024. This proposed rulemaking would prohibit persons and vessels from entering the safety zone unless authorized by the Captain of the Port Columbia River or a designated representative. We invite your comments on this proposed rulemaking.

DATES:
Comments and related material must be received by the Coast Guard on or before July 3, 2024.

ADDRESSES:
You may submit comments identified by docket number USCG-2024-0449 using the Federal Decision-Making Portal at https://www.regulations.gov. See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section for further instructions on submitting comments. This notice of proposed rulemaking with its plain-language, 100-word-or-less proposed rule summary will be available in this same docket.

FOR FURTHER INFORMATION CONTACT:
If you have questions about this proposed rulemaking, call or email Lieutenant Carlie Gilligan, Waterways Management Division, Marine Safety Unit Portland, Coast Guard; telephone 503-240-9319, email SCRWWM@USCG.MIL.

SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations
CFR Code of Federal Regulations
COTP Captain of the Port
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
§ Section
U.S.C. United States Code

II. Background, Purpose, and Legal Basis
On March 6, 2024, Western Display Fireworks, LTD notified the Coast Guard that it will be conducting a fireworks display from 9:30 to 11:00 p.m. on July 27, 2024. The fireworks are to be launched from a site on land at Marina Park in Irrigon, OR. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The Captain of the Port Columbia River (COTP) has determined that potential hazards associated with the fireworks would be a safety concern for anyone within a 550-foot radius of the launch site before, during, or after the fireworks display.
The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within a 550-foot radius of the fireworks discharge site before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority in 46 U.S.C. 70034.

III. Discussion of Proposed Rule
The COTP is proposing to establish a safety zone from 9:30 to 11:00 p.m. on July 27, 2024. The safety zone would cover all navigable waters within 550 feet of the launch site located at approximately 45°54′3.72″ N 119°29′15.36″ W at Marina Park in Irrigon, Oregon. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 9:30 to 11:00 p.m. fireworks display. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

IV. Regulatory Analyses
We developed this proposed 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.

A. Regulatory Planning and Review
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 NPRM has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (Modernizing Regulatory Review). Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB).
This regulatory action determination is based on the size, location, and duration of the safety zone. The safety zone created by this proposed rule is designed to minimize its impact on navigable waters. The safety zone would impact approximately a 550-foot area of Marina Park and is not anticipated to exceed 1.5 hours in duration. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Moreover, under certain conditions vessels may still transit through the safety zone when permitted by the COTP. The Coast Guard would issue a Notice to Mariners about the zone, and the rule would allow vessels to seek permission to enter the zone.

B. Impact on Small Entities
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would 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 IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.
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 proposed rule. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

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

D. Federalism and Indian Tribal Governments
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 proposed 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 proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

E. Unfunded Mandates Reform Act
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 proposed rule would not result in such an expenditure, we do discuss the potential effects of this proposed rule elsewhere in this preamble.

F. Environment
We have analyzed this proposed 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 made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone lasting 1.5 hours that would prohibit entry within 550 feet of a launch point located at Marina Park. Normally such actions are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

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

V. Public Participation and Request for Comments
We view public participation as essential to effective rulemaking and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
Submitting comments. We encourage you to submit comments through the Federal Decision-Making Portal at https://www.regulations.gov. To do so, go to https://www.regulations.gov, type USCG-2024-0449 in the search box and click “Search.” Next, look for this document in the Search Results column, and click on it. Then click on the Comment option. If you cannot submit your material by using https://www.regulations.gov, call or email the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions.
Viewing material in docket. To view documents mentioned in this proposed rule as being available in the docket, find the docket as described in the previous paragraph, and then select “Supporting & Related Material” in the Document Type column. Public comments will also be placed in our online docket and can be viewed by following instructions on the https://www.regulations.gov Frequently Asked Questions web page. Also, if you click on the Dockets tab and then the proposed rule, you should see a “Subscribe” option for email alerts. The option will notify you when comments are posted, or a final rule is published.
We review all comments received, but we will only post comments that address the topic of the proposed rule. We may choose not to post off-topic, inappropriate, or duplicate comments that we receive.
Personal information. We accept anonymous comments. Comments we post to https://www.regulations.gov will include any personal information you have provided. For more about privacy and submissions to the docket in response to this document, see DHS's eRulemaking System of Records notice (85 FR 14226, March 11, 2020).

List of Subjects in 33 CFR Part 165
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:

PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS
1. The authority citation for part 165 continues to read as follows:

Authority:
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.
2. Add § 165.T13-0449 to read as follows:
§ 165.T13-0449
Safety Zone; Fireworks Display, Marina Park, Irrigon, OR
(a) Location. The following area is a safety zone: All navigable waters within 550 feet of a fireworks launch site in Irrigon, OR. The fireworks launch site will be at the approximate point of 45°54′3.72″ N 119°29′15.36″ W.
(b) Definitions. As used in this section—
Designated representative means a Coast Guard Patrol Commander, including a Coast Guard coxswain, petty officer, or other officer operating a Coast Guard vessel and a Federal, State, and local officer designated by or assisting the Captain of the Port Columbia River (COTP) in the enforcement of the safety zone.
Participant means all persons and vessels registered with the event sponsor as a participant in the fireworks display.
(c) Regulations. (1) Under the general safety zone regulations in subpart C of this part, all non-participants may not enter the safety zone described in paragraph (a) of this section unless authorized by the COTP or the COTP's designated representative.
(2) To seek permission to enter, contact the COTP or the COTP's representative by calling (503) 247-4038 or the Sector Columbia River Command Center on Channel 16 VHF-FM. Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.
(3) The COTP will provide notice of the regulated area through advanced notice via broadcast notice to mariners and by on-scene designated representatives.
(d) Enforcement period. This section will be subject to enforcement from 9:30 to 11 p.m. on July 27, 2024. It will be subject to enforcement this entire period unless the COTP determines it is no longer needed, in which case the Coast Guard will inform mariners via Notice to Mariners.
Dated: May 23, 2024.
J.W. Noggle,

Captain, U.S. Coast Guard, Captain of the Port Sector Columbia River.
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R03-OAR-2024-0162; FRL-11869-01-R3]
Air Plan Approval; District of Columbia, Maryland, and Virginia; Update of the Motor Vehicle Emissions Budgets for the Washington-MD-VA 2008 8-Hour Ozone National Ambient Air Quality Standard Maintenance Area

AGENCY:
Environmental Protection Agency (EPA).

ACTION:
Proposed rule.

SUMMARY:
The Environmental Protection Agency (EPA) is proposing to approve state implementation plan (SIP) revisions submitted by the District of Columbia (the District), State of Maryland (MD), and Commonwealth of Virginia (VA). The revisions update the motor vehicle emissions budgets (MVEBs) and the onroad and nonroad (except for marine, airport, and railroad) mobile emissions for volatile organic compounds (VOC) and nitrogen oxides (NO X ) for the years 2025 and 2030. EPA proposes to approve the updated MVEBs and updates to the applicable onroad and nonroad mobile emissions for VOC and NO X for the years 2025 and 2030. EPA is also approving the allocation of a portion of the safety margins for VOC and NO X in the ozone maintenance plan to the 2025 and 2030 MVEBs. The MVEBs will be available for transportation conformity purposes, in accordance with the requirements of the Clean Air Act (CAA).

DATES:
Written comments must be received on or before July 3, 2024.

ADDRESSES:
Submit your comments, identified by Docket ID No. EPA-R03-OAR-2024-0162 at www.regulations.gov, or via email to Goold.Megan@epa.gov. For comments submitted at Regulations.gov, follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. For either manner of submission, EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be confidential business information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). For additional submission methods, please contact the person identified in the FOR FURTHER INFORMATION CONTACT section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT:
Gregory Becoat, Planning & Implementation Branch (3AD30), Air & Radiation Division, U.S. Environmental Protection Agency, Region III, 1600 John F Kennedy Boulevard, Philadelphia, Pennsylvania 19103. The telephone number is (215) 814-2053. Mr. Becoat can also be reached via electronic mail at Becoat.Gregory@epa.gov.

SUPPLEMENTARY INFORMATION:
On November 14, 2023, September 6, 2023, and October 11, 2023, the District, Maryland, and Virginia, respectively, formally submitted requests to update the 2008 8-Hour Ozone national ambient air quality standard (NAAQS) maintenance plan for the Washington DC-MD-VA 2008 8-Hour Ozone NAAQS Maintenance Area (hereafter “the Washington Area” or “the Area”). These revisions update the Area's maintenance plan to include revised onroad and nonroad MVEBs for VOCs and NO X that reflect the updated EPA Motor Vehicle Emission Simulator (MOVES3.04) model and increased onroad vehicle emission rates.

I. Background
On April 15, 2019 (84 FR 15108), EPA approved Maryland and Virginia's requests to redesignate to attainment their portions of the Washington Area from marginal nonattainment to attainment of the 2008 8-Hour Ozone NAAQS, as well as the VOC and NO X MVEBs for the years 2014, 2025, and 2030 for the entire Area. On July 16, 2019 (84 FR 33855), EPA approved the District's request to redesignate to attainment its portion of the Washington Area from marginal nonattainment to attainment of the 2008 8-Hour Ozone NAAQS.
Motor vehicle budgets are the projected levels of controlled emissions from the transportation sector (mobile sources) that are estimated in the SIP to provide for maintenance of the ozone standard. The transportation conformity rule (40 CFR part 93, subpart A) allows States to update existing SIP-approved MVEBs from older emissions models ( e.g., MOVES2014 or MOVES2010), if it is determined that it is appropriate to update the MVEBs with a new emissions model for future conformity determinations (in this case MOVES3.04).
The current SIP-approved MVEBs for the Area were developed using the Highway Mobile Source Emission Factor Model (MOVES2014a) to generate onroad estimates and projections. On January 7, 2021 (86 FR 1106), EPA published an updated MOVES3 model, which became mandatory for use in transportation conformity analyses effective January 10, 2023.

II. Summary of SIP Revision and EPA Analysis

A. Requirements for Revising Maintenance Plans
EPA's MOVES3 guidance document describes how and when to use the latest version of the MOVES emissions model for SIP development, transportation conformity determinations, general conformity determinations, and other purposes. ^1 The Area submitted a SIP revision that included an update to the MVEBs for VOCs and NO X , that were initially developed using the MOVES2014a model, for the years 2025 and 2030. The revised MVEBs for the onroad MVEBs were developed using the MOVES3.04 emissions model and followed the requirements described in EPA's MOVES3 Technical Guidance.
^1 EPA's MOVES3 Technical Guidance: Using MOVES to Prepare Emission Inventories for State Implementation Plans and Transportation Conformity is located in the EPA's guidance portal at www.epa.gov/state-and-local-transportation/policy-and-technical-guidance-state-and-local-transportation.
If a state revises an existing SIP with MOVES3, it must show that the SIP continues to meet applicable requirements with the new level of motor vehicle emissions calculated by the new model. EPA's MOVES3 Policy Guidance provides the following description on how to meet the applicable requirements for existing SIPs that are revised with MOVES3, including ideas for how to streamline these revisions whenever possible: (1) use of latest planning assumptions: the motor vehicle emissions inventories for base year, milestone year and attainment/maintenance year will need to be recalculated with the latest available planning assumptions; (2) states will need to consider and evaluate whether growth and control strategy assumptions for non-motor vehicle sources ( i.e., stationary, area, and nonroad mobile sources) are still accurate at the time that the MOVES3 SIP revision is developed to ensure the revised emissions inventories are consistent with the relevant applicable requirement ( e.g., reasonable further progress, attainment, or maintenance); and (3) if these assumptions have not changed, the state can explain this and re-submit the original SIP with the revised motor vehicle emissions inventories and budgets to meet the remaining applicable requirements as described in the guidance document. ^2
^2 EPA's MOVES3 Policy Guidance (pp. 9-10) located in the EPA's guidance portal at www.epa.gov/sites/default/files/2020-11/documents/420b20044_0.pdf.
Areas may be able to revise their motor vehicle emissions inventories and budgets using MOVES3 without revising the entire SIP or completing additional modeling if: (1) the SIP meets applicable requirements when the previous motor vehicle emissions inventories are replaced with MOVES3 inventories; and (2) the state can document that the growth and control strategy assumptions for non-motor vehicle sources continue to be valid and any minor updates do not change the overall conclusions of the SIP. ^3
^3 Id.
The Area did not meet both required criteria for nonroad model source emissions. Consequently, the SIP revision included information addressing the recommendations described in the MOVES3 Policy Guidance. The SIP revision includes the following: (1) a demonstration that the 2008 8-Hour Ozone NAAQS maintenance plan continues to meet applicable requirements with the revised motor vehicle emissions inventories, as calculated by the MOVES3.0.4 model; (2) a review of the point, nonpoint (area), and marine, airport, and railroad (MAR) source missions inventories for the interim and maintenance years to determine if growth and control strategy assumptions have changed; and (3) an assessment to confirm that excess emissions exist and the quantification of these excess emissions for use in the safety margin applied to the MVEBs.

B. Retaining the 2014 Attainment Year Inventories
The Area's maintenance demonstration must show that emissions of VOC and NO X do not increase in future years beyond the actual estimated emissions in the 2014 attainment year in order to maintain compliance with the 2008 8-Hour Ozone NAAQS. The SIP revision describes the revisions to the interim year and the outyear inventories, which reflect changes in the onroad and nonroad mobile sectors. The Area's comparative analysis of the two models showed that NO X onroad emissions estimates generated using MOVES3.0.4 were higher than those generated by MOVES2014b for years 2021, 2023, 2025, 2030, 2040, and 2045 by 1%, 4%, 9%, 26%, 52%, and 54%, respectively. The same analysis showed VOC onroad emissions generated using MOVES3.0.4 were lower than those generated by MOVES2014b for years 2021, 2023, 2025, 2030, 2040, and 2045 by 17%, 17%, 18%, 14%, 8%, and 7%, respectively. The negligible increase in onroad NO X emissions when comparing MOVES2014b to MOVES3.04 for the year 2021 (1%), resulted in the Area only updating 2025 and 2030 onroad emissions while retaining the attainment year 2014 onroad emissions developed using MOVES2014a.
The Area also compared the nonroad mobile emissions using MOVES3.0.4 and MOVES2014a. This comparative analysis showed that the MOVES3.0.4 nonroad model emissions were much lower compared to MOVES2014a nonroad model emissions for 2025 and 2030. Tables 1 and 2 in this document, show that even with the estimated lower 2014 MOVES3.0.4 nonroad model emissions, total VOC and NO X emissions from all four sectors (point, nonpoint, nonroad, and onroad) remained higher in 2014 compared to total emissions in 2025 and 2030. The fact that the revised total emissions from all four sectors in 2014 was still higher when compared to the revised total emissions in 2025 and 2030, provides the reasoning for the Area not having to update the 2014 nonroad model emissions using MOVES3.0.4. ^4 This is one of the most important criteria for approval of a maintenance plan, as maintenance is demonstrated when the emissions in the final year of the maintenance plan are less than the emissions in the baseline attainment year. In the current SIP-approved inventories, the attainment year is 2014 and the maintenance year is 2030.
^4 Tables 1 and 2 of this document, show a comparative analysis of the emissions inventories for the years 2014, 2025, and 2030 in the 2017 and revised maintenance plans using both MOVES3.0.4 and MOVES2014a. The total inventories from all sources together for 2014 are higher compared to the total inventories for 2025 and 2030 in the revised maintenance plan.
^5 MOVES3.0.4 nonroad model emissions for 2014 were derived by reducing MOVES2014a nonroad model emissions for VOC and NO X in the 2017 plan by 16.3% and 35.1% respectively in that year.
^6 The comparative analysis showed that while NO X emission generated by both models are expected to be essentially the same for 2014, VOC emission is expected to be much lower for MOVES3.0.4 compared to MOVES2014b in that year. In this case, both VOC and NO X emissions generated by MOVES3.0.4 are assumed to be the same as MOVES2014a for 2014.
Table 1—2008 8-Hour Ozone NAAQS VOC Emissions Inventories for the Area in Tons per Day
Year | Point | Nonpoint | MAR * | Nonroad MOVES2014a | Nonroad MOVES3.0.4 | Onroad MOVES2014a | Onroad MOVES3.0.4 | 2017 Plan total | Revised maintenance plan total
2014 | 8.95 | 139.29 | 2.37 | 47.48 | ^5 39.72 | 61.25 | ^6 61.25 | 259.34 | 251.58
2025 | 10.08 | 153.70 | 2.55 | 44.88 | 37.55 | 33.18 | 27.92 | 244.39 | 231.80
Δ(2014-2025) | −1.13 | −14.41 | −0.18 | 2.60 | 2.17 | 28.07 | 33.33 | 14.95 | 19.78
2030 | 10.66 | 160.31 | 2.64 | 47.15 | 37.61 | 24.06 | 21.75 | 244.81 | 232.97
Δ(2014-2030) | −1.71 | −21.01 | −0.27 | 0.33 | 2.11 | 37.19 | 39.50 | 14.53 | 18.61
* MAR sources are marine, airport, and railroad.
Table 2—2008 8-Hour Ozone NAAQS NO X Emissions Inventories for the Area in Tons per Day
Year | Point | Nonpoint | MAR * | Nonroad MOVES2014a | Nonroad MOVES3.0.4 | Onroad MOVES2014a | Onroad MOVES3.0.4 | 2017 plan total | Revised maintenance plan total
2014 | 79.22 | 9.62 | 19.21 | 51.99 | ^4 33.74 | 136.84 | ^5 136.84 | 296.88 | 278.63
2025 | 80.40 | 9.85 | 21.41 | 29.62 | 19.23 | 40.68 | 46.52 | 181.96 | 177.41
Δ(2014-2025) | −1.18 | −0.23 | −2.19 | 22.36 | 14.51 | 96.16 | 90.32 | 114.92 | 101.22
2030 | 82.87 | 9.96 | 22.36 | 27.80 | 16.94 | 27.39 | 34.26 | 170.38 | 166.39
Δ(2014-2030) | −3.65 | −0.34 | −3.14 | 24.19 | 16.80 | 109.45 | 102.58 | 126.51 | 112.24

C. Inventories for Point Sources
EPA requires areas to demonstrate how the area will remain in compliance with the 8-Hour Ozone NAAQS for the 10-year period following the effective date of redesignation. One method that areas use to demonstrate that the area will maintain the 8-Hour Ozone NAAQS is to identify the level of ozone precursor emissions in the area which is sufficient to attain the NAAQS (attainment year 2014 inventory) and to show that future emissions of ozone precursors will not exceed the attainment levels. The comparison of emissions inventories includes ozone precursors from all source categories, not only point sources.
The District, the State of Maryland, and the Commonwealth of Virginia, separately reviewed their point source emission inventories, growth assumptions, and control assumptions, as well as emissions inventory data from more current actual inventories. The Area retained the 2025 and 2030 emissions inventories for point and nonpoint sources based on analyses of more current emissions inventory data as well as the latest growth rates for economic indicators.
The District's analysis of the point source emissions inventory for the 2014 attainment year for VOC and NO X was based on the 2014 National Emissions Inventory (NEI). The 2014 inventory was used as the basis for the projection year inventories of the 2025 interim year inventory and the 2030 outyear/maintenance year inventory. Table 3 in this document, summarizes the 2014, 2025, and 2030 emission estimates for the District's point sources as well as the reported VOC and NO X emissions for 2020 and 2021 Title V sources. The data show that the 2020 and 2021 emission estimates are below the 2014 attainment year emission estimates used in the maintenance plan. In addition, emission projections for 2025 and 2030 are above the actual estimates for 2020 and 2021. Based on these data, updates to the point source inventories the District used in the 2017 plan are not necessary to ensure continued maintenance of the 2008 8-Hour Ozone NAAQS.
Table 3—District of Columbia Point Source Inventory in Tons per Day
Data Description | NO X | VOC
2014 attainment year emissions | 1.22 | 0.45
2025 projected interim year emissions | 1.22 | 0.45
2030 projected outyear emissions | 1.22 | 0.45
2020 actual reported emissions | 1.02 | 0.24
2021 actual reported emissions | 1.03 | 0.24
The State of Maryland's analysis of the point source emissions inventory for the 2014 attainment year for VOC and NO X was based on the 2014 NEI and partially based on the 2014 Clean Air Markets Division (CAMD) data. The 2014 inventory was used as the basis for the projection year inventories of the 2025 interim year inventory and the 2030 outyear/maintenance year inventory. Table 4 in this document, shows that the 2017 and 2020 actual emission estimates are well beneath the 2025 and 2030 projected future year emission estimates used in the maintenance plan. Therefore, when comparing the actual point source emissions to the grown future year point source emissions that demonstrate maintenance of the standard, the actual point source emissions provide a buffer for other source categories such as onroad mobile, nonroad mobile and nonpoint emissions sources. Based on these data, updates to the point source inventories for the State of Maryland used in the 2017 plan are not necessary to ensure continued maintenance of the 2008 8-Hour Ozone NAAQS.
Table 4—Maryland Point Source Inventory in Tons per Day ^7
Data description | NO X | VOC
2014 attainment year emissions | 47.81 | 5.27
2025 projected interim year emissions | 53.04 | 6.48
2030 projected outyear emissions | 55.18 | 7.02
2017 actual reported emissions | 49.72 | 2.52
2020 actual reported emissions | 48.18 | 2.71
The Commonwealth of Virginia's analysis of the point source emissions inventory for the 2014 attainment year for VOC and NO X was based on the 2014 NEI and partially based on 2014 Community Emissions Data Systems (CEDS) data. The Commonwealth of Virginia provided data for the electric generating units (EGUs) at the only EGU in the Northern Virginia area that operated in 2014, Possum Point Power Station. The data provided estimates of the Possum Point Power Station's projected emissions in 2025 and 2030. In addition, the Commonwealth of Virginia provided data for all non-EGU point sources in the Northern Virginia area. For all non-EGU point sources except data centers, Virginia used a “no growth” scenario in the 2017 plan, assuming that future-year point-source emissions would be equivalent to the 2014 emissions estimates. Emissions from data centers in Northern Virginia were grown based on the estimated employment growth rate derived from the Council of Governments (COG) Cooperative Forecasts for each county in which each data center is located.
^7 Maryland's point source emission typically consists of three different components—Electric Generating Units (EGUs), Non-Electric Generating Units (NEGUs), and Quasi-Point Sources. The data in Table 4 in this document, does not reflect the total point source emission inventory in Tables 1 and 2 in this document, because it includes total VOC and NO X emissions from EGUs and Non-EGUs only (excludes quasi-point sources).
The 2014, 2025, and 2030 emission estimates for point sources, as well as the reported VOC and NO X emissions for 2019, 2020, and 2021 for sources required to provide emission statements are summarized in Table 5 in this document. The data show that the 2021 emission estimates are well beneath the attainment year 2014 emission estimates used in the 2017 plan. The data also show that emission projections for 2025 and 2030 are above the actual estimates for 2021. In addition, the data show that there is generally a downward trend in actual emissions estimates from 2014, 2019, 2020, and 2021. Based on these data, updates to the point source inventories for Northern Virginia in the 2017 plan are not necessary to ensure continued maintenance of the 2008 8-Hour Ozone NAAQS.
Table 5—Virginia Point Source Inventory in Tons per Day
Data description | NO X | VOC
2014 attainment year emissions | 15.83 | 1.99
2025 projected interim year emissions | 11.78 | 1.90
2030 projected outyear emissions | 12.11 | 1.94
2019 actual reported emissions | 13.00 | 1.60
2020 actual reported emissions | 11.21 | 1.37
2021 actual reported emissions | 7.93 | 1.29

D. Nonpoint & MAR Source Emission Growth and Control Assumptions
The Area compared growth factors used to project nonpoint and MAR emissions from 2014 to 2025 and 2030 in the 2017 plan with current estimates from its' Cooperative Forecasts Round 9.2 and the Constrained Element of the Long-Range Transportation Plan (CE LRTP). ^8 The comparative analysis of the data in Table 6 in this document, shows relatively minor changes to the nonpoint and MAR emissions growth factors. The data shows a slight increase in population growth factors for 2025 and 2030 and the household growth factor for 2030 (approximately 1%). ^9 Employment, households (for 2025), and vehicle miles traveled (VMT) or lane-miles, either remain at the same level or decrease (approximately 1% to 2%). Based on the data, EPA agrees that the comparative analysis demonstrates that the emission estimates and projections from nonpoint and MAR sources in the 2017 plan continue to be valid and continue to demonstrate that the area's air quality will remain compliant with the 2008 ozone NAAQS.
^8 The CE LRTP, which was updated in both 2020 and 2022, is also known as Visualize 2045, and is the source for vehicle miles traveled (VMT) estimates and lane-miles estimates.
^9 Although emission sources from population growth factors contribute about 60% and 26% of total VOC and NO X emissions, respectively, in the 2017 plan, a 1% increase in population growth factors, together with some amount of decrease in other growth factors, should ensure that the overall change in nonpoint and MAR source emissions in 2025 and 2030 would be relatively insignificant.
Table 6—Comparison of Growth Factors in Tons per Day
Growth factor description | 2017 Plan | Current factor | Current factor source
Employment (2025/2014) | 1.14 | 1.14 | COG Cooperative Forecasts 9.2 (Final).
Employment (2030/2014) | 1.21 | 1.21 | COG Cooperative Forecasts 9.2 (Final).
Population (2025/2014) | 1.12 | 1.13 | COG Cooperative Forecasts 9.2 (Final).
Population (2030/2014) | 1.17 | 1.18 | COG Cooperative Forecasts 9.2 (Final).
Household (2025/2014) | 1.14 | 1.13 | COG Cooperative Forecasts 9.2 (Final).
Household (2030/2014) | 1.19 | 1.20 | COG Cooperative Forecasts 9.2 (Final).
VMT (2025/2014) | 1.12 | 1.12 | 2020 & 2022 Amendments to Visualize 2045 (CLRP).
VMT (2030/2014) | 1.17 | 1.16 | 2020 & 2022 Amendments to Visualize 2045 (CLRP).
Lane-Miles (2025/2014) | 1.06 | 1.04 | 2020 & 2022 Amendments to Visualize 2045 (CLRP).
Lane-Miles (2030/2014) | 1.06 | 1.06 | 2020 & 2022 Amendments to Visualize 2045 (CLRP).

E. Onroad and Nonroad Mobile Model Sources
The Area updated the projection inventories for NO X and VOC for the interim year 2025 and the outyear 2030. The current SIP-approved NO X and VOC inventories for onroad and nonroad (except for MAR) mobile sources for 2014, 2025 and 2030 were developed using the MOVES2014a model in the 2017 plan. EPA's MOVES3.0.4 model incorporates the latest emissions data and allows users to model the benefits from new regulations promulgated since MOVES2014a. In particular, the MOVES3.0.4 model contains nonroad equipment population growth rates and diesel Tier 4 emission rates that have been updated since MOVES2014a. As a result, MOVES3.0.4 generates different nonroad and onroad mobile emissions estimates than MOVES2014a. For this reason, the Area is updating its 2025 and 2030 onroad and nonroad (except for MAR) mobile emissions in this revised plan using the MOVES3.0.4 model. The Area did not update the inventories for the attainment year 2014 as discussed in detail in section II.B. in this document.
Based on the onroad mobile emissions trend shown in this SIP revision and the most recent air quality conformity analysis for the Area, onroad mobile source emissions are decreasing due to the implementation of the National Low Emission Vehicle Program (NLEV), the Heavy-Duty Engine and Vehicle Standards (HDDV), Tier 3, and Safer Affordable Fuel Efficient (SAFE) Vehicles and Corporate Average Fuel Economy (CAFE) rules, Stage II, and Maryland's LEV/ZEV (Low Emission Vehicle/Zero Emission Vehicle) programs. These emission reductions occur even as VMT estimates continue to grow. This trend and onroad mobile source emission reductions ensures continued maintenance of the 2008 8-Hour Ozone NAAQS.

F. Motor Vehicle Emissions Budgets and Safety Margins
The Area's maintenance plan includes NO X and VOC MVEBs for 2025 and 2030, an interim year and an outyear of the maintenance period, respectively. The budgets were developed as part of an interagency consultation process which includes Federal, state, and local agencies. The budgets were clearly identified and precisely quantified. This process was consistent with the aforementioned requirements of 40 CFR part 93. These budgets, when considered together with all other emissions sources, are consistent with maintenance of the 2008 ozone NAAQS.
This rulemaking revises the budgets for mobile sources in the Washington Area. The maintenance plan is designed to provide for future growth while still maintaining the 2008 ozone NAAQS. Growth in industries, population, and traffic is offset by reductions from cleaner cars and other emission reduction programs. Through the maintenance plan, the state and local agencies can manage and maintain clean air quality while providing for growth.
The Area updated the 2025 and 2030 MVEBs, for NO X and VOC, using MOVES3.0.4 and updated planning assumptions. These MVEBs will ensure that transportation emissions conform with each state's SIP. Table 7 in this document, presents the revised MVEBs for 2025 and 2030 along with the retained 2014 MVEBs from the 2017 plan (using MOVES2014a). The Area added safety margins for the projected onroad mobile VOC and NO X emissions when developing the MVEBs for 2025 and 2030. A “safety margin,” as defined in the transportation conformity rule (40 CFR part 93, subpart A), is the amount by which the total projected emissions from all sources of a given pollutant are less than the total emissions that would satisfy the applicable requirement for reasonable further progress, attainment, or maintenance. The attainment level of emissions is the level of emissions during one of the years (2014) in which the Area met the NAAQS.
The 2017 plan demonstrated that the Area attained the 2008 8-Hour Ozone NAAQS and could therefore emit up to the attainment year 2014 emission level. Table 7 in this document, gives detailed information on the safety margin for the Area. Table 7 in this document, shows the differences in total emissions for VOC and NO X from all sources between the attainment year 2014 and the intermediate year 2025 and the attainment year 2014 and the final maintenance year 2030. The differences between the projected emissions in the years 2025 and 2030 and the actual emissions in the year 2014 are referred to as the “safety margin” or the amount of excess emission reductions. ^{10} All or a portion of these safety margins can be allotted to onroad mobile source inventories to develop MVEBs. The Area allotted only portions of the total available safety margins for VOC and NO X when developing the revised MVEBs for 2025 and 2030.
^{10} The differences in emissions provide estimates of the total available safety margins in tons per day (tpd) for VOC for 2025 (27.7 tpd) and 2030 (44.9 tpd) and for NO X for 2025 (101.1 tpd) and 2030 (130.4 tpd).
Table 7—Revised Onroad Motor Vehicle Emissions Budgets Using MOVES3.0.4
Year | VOC onroad emissions (tpd) | NO X onroad emissions (tpd)
2014 Attainment Year | 61.25 | 136.84
2025 Predicted Emissions without Safety Margin | 27.92 | 46.52
2025 Safety Margin | 5.58 | 9.30
2025 Interim Budget with Safety Margin | 33.50 | 55.82
2030 Predicted Emissions without Safety Margin | 21.75 | 34.26
2030 Safety Margin | 4.35 | 6.85
2030 Final Budget with Safety Margin | 26.10 | 41.11
The Area has requested a partial allocation of the safety margin to the onroad mobile emissions inventory projections for VOC and NO X in 2025 and 2030. The allocation will add 5.58 tpd of VOC and 9.30 tpd of NO X from the safety margins to the 2025 emission inventories, and 4.35 tpd of VOC and 6.85 tpd of NO X from the safety margins to the 2030 emission inventories. Tables 8 and 9 in this document, show that the 2025 and the 2030 projected emissions, even with this allocation, will be below the 2014 attainment year emissions for both VOC and NO X , respectively.
Table 8—The Area Revised Maintenance Plan VOC Emissions, 2014 to 2030, Including MVEBs With Safety Margins
[tpd]
Source category | 2014 W/o safety margins | 2014 With safety margins | 2025 W/o safety margins | 2025 With safety margins | 2030 W/o safety margins | 2030 With safety margins
Point | 7.71 | 7.71 | 8.83 | 8.83 | 9.41 | 9.41
Nonpoint | 139.29 | 139.29 | 153.70 | 153.70 | 160.31 | 160.31
MAR | 2.37 | 2.37 | 2.55 | 2.55 | 2.64 | 2.64
Nonroad | 47.48 | 47.48 | 37.55 | 37.55 | 37.61 | 37.61
On-road MVEBs | 61.25 | 61.25 | 27.92 | 33.50 | 21.75 | 26.10
Quasi-Point | 1.24 | 1.24 | 1.24 | 1.24 | 1.24 | 1.24
Total | 259.34 | 259.34 | 231.80 | 237.37 | 232.97 | 237.31
Change from 2014 | n/a | n/a | 27.54 | 21.97 | 26.37 | 22.03
Table 9—The Area Revised Maintenance Plan NO X Emissions, 2014 to 2030, Including MVEBs With Safety Margins
[tpd]
Source category | 2014 W/o safety margins | 2014 With safety margins | 2025 W/o safety margins | 2025 With safety margins | 2030 W/o safety margins | 2030 With safety margins
Point | 64.85 | 64.85 | 66.03 | 66.03 | 68.50 | 68.50
Nonpoint | 9.62 | 9.62 | 9.85 | 9.85 | 9.96 | 9.96
MAR | 19.21 | 19.21 | 21.41 | 21.41 | 22.36 | 22.36
| Nonroad | 51.99 | 51.99 | 19.23 | 19.23 | 16.94 | 16.94
On-road MVEBs | 136.84 | 136.84 | 46.52 | 55.82 | 34.26 | 41.11
Quasi-Point | 14.37 | 14.37 | 14.37 | 14.37 | 14.37 | 14.37
Total | 296.88 | 296.88 | 177.41 | 186.71 | 166.40 | 173.24
Change from 2014 | n/a | n/a | 119.47 | 110.17 | 130.48 | 123.64
The Area has demonstrated that it will continue to maintain the 2008 8-Hour Ozone NAAQS, even after updating the onroad emissions estimates using the MOVES3.0.4 model. For this reason, EPA finds that the updated MVEBs and the allocation of the safety margins to the 2025 and 2030 budgets for the Area, meet the requirements of the transportation conformity regulations at 40 CFR part 93 and are approvable.

III. Proposed Action
EPA is proposing to approve the Washington Area's SIP revision updating the MVEBs and the onroad and nonroad (except for marine, airport, and railroad) mobile emissions for VOC and NO X for the years 2025 and 2030. Additionally, EPA is proposing to approve the allocation of a portion of the safety margins for VOC and NO X in the ozone maintenance plan to the 2025 and 2030 budgets. EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action.

IV. General Information Pertaining to SIP Submittals From the Commonwealth of Virginia
In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information that: (1) are generated or developed before the commencement of a voluntary environmental assessment; (2) are prepared independently of the assessment process; (3) demonstrate a clear, imminent, and substantial danger to the public health or environment; or (4) are required by law.
On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege Law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts. . . .” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.”
Virginia's Immunity Law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any Federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.”
Therefore, the EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its program consistent with the Federal requirements. In any event, because the EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, the EPA may at any time invoke its authority under the CAA, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the CAA is likewise unaffected by this, or any, state audit privilege or immunity law.

V. Statutory and Executive Order Reviews
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this proposed action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act;
This action does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because this action is not approved to apply in Indian country located in the Commonwealth of Virginia, State of Maryland, or District of Columbia, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.
Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. The EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” The EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The District of Columbia, State of Maryland, and Commonwealth of Virginia did not evaluate environmental justice considerations as part of the SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. The EPA did not perform an EJ analysis and did not consider EJ in this action. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.

List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Volatile organic compounds.
Adam Ortiz,

Regional Administrator, Region III.
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R04-OAR-2023-0220; FRL-10407-01-R4]
Air Plan Approval; Georgia; Second Period Regional Haze Plan

AGENCY:
Environmental Protection Agency (EPA).

ACTION:
Proposed rule.

SUMMARY:
The Environmental Protection Agency (EPA) is proposing to approve a regional haze State Implementation Plan (SIP) revision submitted by the Georgia Department of Natural Resources, Environmental Protection Division (GA EPD), dated August 11, 2022 (“Haze Plan” or “2022 Plan”), as satisfying applicable requirements under the Clean Air Act (CAA or Act) and EPA's Regional Haze Rule (RHR) for the regional haze program's second planning period. Georgia's SIP submission addresses the requirement that States must periodically revise their long-term strategies for making reasonable progress toward the national goal of preventing any future, and remedying any existing, anthropogenic impairment of visibility, including regional haze, in mandatory Class I Federal areas. The SIP submission also addresses other applicable requirements for the second planning period of the regional haze program. EPA is taking this action pursuant to sections 110 and 169A of the Act.

DATES:
Written comments must be received on or before July 3, 2024.

ADDRESSES:
Submit your comments, identified by Docket ID No. EPA-R04-OAR-2023-0220, at http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov . EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT:
Estelle Bae, Air Permits Section, Air Planning and Implementation Branch, Air and Radiation Division, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960. Ms. Bae can be reached via telephone at (404) 562-9143 or electronic mail at bae.estelle@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents
I. What action is EPA proposing?
II. Background and Requirements for Regional Haze Plans
A. Regional Haze Background
B. Roles of Agencies in Addressing Regional Haze
III. Requirements for Regional Haze Plans for the Second Planning Period
A. Identification of Class I Areas
B. Calculations of Baseline, Current, and Natural Visibility Conditions; Progress to Date; and the Uniform Rate of Progress
C. Long-Term Strategy for Regional Haze
D. Reasonable Progress Goals
E. Monitoring Strategy and Other State Implementation Plan Requirements
F. Requirements for Periodic Reports Describing Progress Toward the Reasonable Progress Goals
G. Requirements for State and Federal Land Manager Coordination
IV. EPA's Evaluation of Georgia's Haze Submission for Second Planning Period
A. Identification of Class I Areas
B. Calculations of Baseline, Current, and Natural Visibility Conditions; Progress to Date; and the Uniform Rate of Progress
C. Long-Term Strategy for Regional Haze
D. Reasonable Progress Goals
E. Monitoring Strategy and Other State Implementation Plan Requirements
F. Requirements for Periodic Reports Describing Progress Toward the Reasonable Progress Goals
G. Requirements for State and Federal Land Manager Coordination
H. Environmental Justice Considerations
V. Incorporation by Reference
VI. Proposed Action
VII. Statutory and Executive Order Reviews

I. What action is EPA proposing?
On August 11, 2022, GA EPD submitted a revision to its SIP to address regional haze for the second planning period. 1 2 GA EPD made this SIP submission to satisfy the requirements of the CAA's regional haze program pursuant to CAA sections 169A and 169B and 40 CFR 51.308. EPA is proposing to find that Haze Plan meets the applicable statutory and regulatory requirements. Thus, EPA is proposing to approve Georgia's Haze Plan into its SIP. ^3
^1 The August 11, 2022, SIP submission, with exception of the supporting modeling files, is included in the docket for this action. Due to size and compatibility limitations of the Federal Docket Management System, the supporting modeling files for Georgia's Regional Haze Plan are instead available at the EPA Region 4 office. To request these files, please contact the person listed in this Notice of Proposed Rulemaking (NPRM) under the section titled FOR FURTHER INFORMATION CONTACT .
^2 On November 1, 2023, Georgia supplemented its August 11, 2022, Haze Plan by submitting the final permits for each of the three sources selected for an emissions control analysis. This supplemental submission, received November 1, 2023, along with GA EPD's November 17, 2023, clarification email, is included in the docket for this proposed action.
^3 In a letter dated August 15, 2022, EPA found that Georgia's Haze Plan meets the completeness criteria outlined in 40 CFR part 51, Appendix V. A completeness determination does not constitute a finding on the merits of the submission or whether it meets the relevant criteria for SIP approval. The August 15, 2022, letter is included in the docket for this rulemaking.

II. Background and Requirements for Regional Haze Plans

A. Regional Haze Background
In the 1977 CAA Amendments, Congress created a program for protecting visibility in the nation's mandatory Class I Federal areas, which include certain national parks and wilderness areas. ^4 CAA 169A. The CAA establishes as a national goal the “prevention of any future, and the remedying of any existing, impairment of visibility in mandatory class I Federal areas which impairment results from manmade air pollution.” See CAA 169A(a)(1). The CAA further directs EPA to promulgate regulations to assure reasonable progress toward meeting this national goal. See CAA 169A(a)(4). On December 2, 1980, EPA promulgated regulations to address visibility impairment in mandatory Class I Federal areas (hereinafter referred to as “Class I areas”) that is “reasonably attributable” to a single source or small group of sources. See 45 FR 80084 (December 2, 1980). These regulations, codified at 40 CFR 51.300 through 51.307, represented the first phase of EPA's efforts to address visibility impairment. In 1990, Congress added section 169B to the CAA to further address visibility impairment, specifically, impairment from regional haze. See CAA 169B. EPA promulgated the RHR, codified at 40 CFR 51.308, ^5 on July 1, 1999. See 64 FR 35714 (July 1, 1999). These regional haze regulations are a central component of EPA's comprehensive visibility protection program for Class I areas.
^4 Areas statutorily designated as mandatory Class I Federal areas consist of national parks exceeding 6,000 acres, wilderness areas and national memorial parks exceeding 5,000 acres, and all international parks that were in existence on August 7, 1977. CAA 162(a). There are 156 mandatory Class I areas. The list of areas to which the requirements of the visibility protection program apply is in 40 CFR part 81, subpart D.
^5 In addition to the generally applicable regional haze provisions at 40 CFR 51.308, EPA also promulgated regulations specific to addressing regional haze visibility impairment in Class I areas on the Colorado Plateau at 40 CFR 51.309. The latter regulations are applicable only for specific jurisdictions' regional haze plans submitted no later than December 17, 2007, and thus, are not relevant here.
Regional haze is visibility impairment that is produced by a multitude of anthropogenic sources and activities which are located across a broad geographic area and that emit pollutants that impair visibility. Visibility impairing pollutants include fine and coarse particulate matter (PM) ( e.g., sulfates, nitrates, organic carbon, elemental carbon, and soil dust) and their precursors ( e.g., sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and, in some cases, volatile organic compounds (VOC) and ammonia (NH 3 )). Precursor pollutants react in the atmosphere to form fine particulate matter (particles less than or equal to 2.5 micrometers (µm) in diameter, PM 2.5 ), which impairs visibility by scattering and absorbing light. Visibility impairment reduces the perception of clarity and color, as well as visible distance. ^6
^6 There are several ways to measure the amount of visibility impairment, i.e., haze. One such measurement is the deciview, which is the principal metric defined and used by the RHR. Under many circumstances, a change in one deciview will be perceived by the human eye to be the same on both clear and hazy days. The deciview is unitless. It is proportional to the logarithm of the atmospheric extinction of light, which is the perceived dimming of light due to its being scattered and absorbed as it passes through the atmosphere. Atmospheric light extinction (b ^{ext} ) is a metric used for expressing visibility and is measured in inverse megameters (Mm − ^1 ). EPA's “Guidance on Regional Haze State Implementation Plans for the Second Implementation Period” (“2019 Guidance”) offers the flexibility for the use of light extinction in certain cases. Light extinction can be simpler to use in calculations than deciviews since it is not a logarithmic function. See, e.g., 2019 Guidance at 16, 19, https://www.epa.gov/visibility/guidance-regional-haze-state-implementation-plans-second-implementation-period, EPA Office of Air Quality Planning and Standards, Research Triangle Park (August 20, 2019). The formula for the deciview is 10 ln (b ^{ext} )/10 Mm − ^1 ). See 40 CFR 51.301.
To address regional haze visibility impairment, the 1999 RHR established an iterative planning process that requires both States in which Class I areas are located and States “the emissions from which may reasonably be anticipated to cause or contribute to any impairment of visibility” in a Class I area to periodically submit SIP revisions to address such impairment. See CAA 169A(b)(2); ^7
see also 40 CFR 51.308(b), (f) (establishing submission dates for iterative regional haze SIP revisions); 64 FR at 35768. Under the CAA, each SIP submission must contain “a long-term (ten to fifteen years) strategy for making reasonable progress toward meeting the national goal,” CAA 169A(b)(2)(B); the initial round of SIP submissions also had to address the statutory requirement that certain older, larger sources of visibility impairing pollutants install and operate the best available retrofit technology (BART). See CAA 169A(b)(2)(A); 40 CFR 51.308(d), (e). States' first regional haze SIPs were due by December 17, 2007, 40 CFR 51.308(b), with subsequent SIP submissions containing updated long-term strategies (LTSs) originally due July 31, 2018, and every ten years thereafter. See 64 FR at 35768. EPA established in the 1999 RHR that all States either have Class I areas within their borders or “contain sources whose emissions are reasonably anticipated to contribute to regional haze in a Class I area”; therefore, all States must submit regional haze SIPs. ^8
Id. at 35721.
^7 The RHR expresses the statutory requirement for States to submit plans addressing out-of-State Class I areas by providing that States must address visibility impairment “in each mandatory Class I Federal area located outside the State that may be affected by emissions from within the State.” See 40 CFR 51.308(d), (f).
^8 In addition to each of the 50 States, EPA also concluded that the Virgin Islands and District of Columbia must also submit regional haze SIPs because they either contain a Class I area or contain sources whose emissions are reasonably anticipated to contribute regional haze in a Class I area. See 40 CFR 51.300(b), (d)(3).
Much of the focus in the first planning period of the regional haze program, which ran from 2007 through 2018, was on satisfying States' BART obligations. First planning period SIPs were additionally required to contain LTSs for making reasonable progress toward the national visibility goal, of which BART is one component. The core required elements for the first planning period SIPs (other than BART) are laid out in 40 CFR 51.308(d). Those provisions require that States containing Class I areas establish “reasonable progress goals” (“RPGs”) that are measured in deciviews and reflect the anticipated visibility conditions at the end of the planning period including from implementation of States' LTSs. The first planning period RPGs were required to provide for an improvement in visibility for the most impaired days over the period of the implementation plan and ensure no degradation in visibility for the least impaired days over the same period. In establishing the RPGs for any Class I area in a State, the State was required to consider four statutory factors (also referenced herein as “the four factors”): the costs of compliance, the time necessary for compliance, the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any potentially affected sources. See CAA 169A(g)(1); 40 CFR 51.308(d)(1).
States were also required to calculate baseline (using the five year period of 2000-2004) and natural visibility conditions ( i.e., visibility conditions without anthropogenic visibility impairment) for each Class I area, and to calculate the linear rate of progress needed to attain natural visibility conditions, assuming a starting point of baseline visibility conditions in 2004 and ending with natural conditions in 2064. This linear interpolation is known as the uniform rate of progress (URP) and is used as a tracking metric to help States assess the amount of progress they are making toward the national visibility goal over time in each Class I area. ^9
See 40 CFR 51.308(d)(1)(i)(B), (d)(2). The 1999 RHR also provided that States' LTSs must include the “enforceable emissions limitations, compliance, schedules, and other measures as necessary to achieve the reasonable progress goals.” See 40 CFR 51.308(d)(3). In establishing their LTSs, States are required to consult with other States that also contribute to visibility impairment in a given Class I area and include all measures necessary to obtain their shares of the emission reductions needed to meet the RPGs. See 40 CFR 51.308(d)(3)(i), (ii). Section 51.308(d) also contains seven additional factors States must consider in formulating their LTSs, 40 CFR 51.308(d)(3)(v), as well as provisions governing monitoring and other implementation plan requirements. See 40 CFR 51.308(d)(4). Finally, the 1999 RHR required States to submit periodic progress reports—SIP revisions due every five years that contain information on States' implementation of their regional haze plans and an assessment of whether anything additional is needed to make reasonable progress, see 40 CFR 51.308(g), (h)—and to consult with the Federal Land Manager(s) ^{10} (FLMs) responsible for each Class I area according to the requirements in CAA 169A(d) and 40 CFR 51.308(i).
^9 EPA established the URP framework in the 1999 RHR to provide “an equitable analytical approach” to assessing the rate of visibility improvement at Class I areas across the country. The start point for the URP analysis is 2004 and the endpoint was calculated based on the amount of visibility improvement that was anticipated to result from implementation of existing CAA programs over the period from the mid-1990s to approximately 2005. Assuming this rate of progress would continue into the future, EPA determined that natural visibility conditions would be reached in 60 years, or 2064 (60 years from the baseline starting point of 2004). However, EPA did not establish 2064 as the year by which the national goal must be reached. 64 FR at 35731-32. That is, the URP and the 2064 date are not enforceable targets but are rather tools that “allow for analytical comparisons between the rate of progress that would be achieved by the State's chosen set of control measures and the URP.” See 82 FR 3078, 3084, January 10, 2017.
^{10} EPA's regulations define “Federal Land Manager” as “the Secretary of the department with authority over the Federal Class I area (or the Secretary's designee) or, with respect to Roosevelt-Campobello International Park, the Chairman of the Roosevelt-Campobello International Park Commission.” See 40 CFR 51.301.
On January 10, 2017, EPA promulgated revisions to the RHR (82 FR 3078) that apply for the second and subsequent planning periods. The 2017 rulemaking made several changes to the requirements for regional haze SIPs to clarify States' obligations and streamline certain regional haze requirements. The revisions to the regional haze program for the second and subsequent planning periods focused on the requirement that States' implementation plans contain LTSs for making reasonable progress toward the national visibility goal. The reasonable progress requirements as revised in the 2017 rulemaking (referred to here as the 2017 RHR Revisions) are codified at 40 CFR 51.308(f). Among other changes, the 2017 RHR Revisions adjusted the deadline for States to submit their second planning period SIPs from July 31, 2018, to July 31, 2021, clarified the order of analysis and the relationship between RPGs and the LTSs, and focused on making visibility improvements on the days with the most anthropogenic visibility impairment, as opposed to the days with the most visibility impairment overall. EPA also revised requirements of the visibility protection program related to periodic progress reports and FLM consultation. The specific requirements applicable to second planning period regional haze SIP submissions are addressed in detail below.
EPA provided guidance to the States for their second planning period SIP submissions in the preamble to the 2017 RHR Revisions as well as in subsequent stand-alone guidance documents. In August 2019, EPA issued its 2019 Guidance. ^{11} On July 8, 2021, EPA issued a memorandum containing “Clarifications Regarding Regional Haze State Implementation Plans for the Second Implementation Period” (“2021 Clarifications Memo”). ^{12} Additionally, EPA had clarified the recommended procedures for processing ambient visibility data and optionally adjusting the URP to account for international anthropogenic and prescribed fire impacts in two technical guidance documents: the December 2018 “Technical Guidance on Tracking Visibility Progress for the Second Implementation Period of the Regional Haze Program” (“2018 Visibility Tracking Guidance”), ^{13} and the June 2020 “Recommendation for the Use of Patched and Substituted Data and Clarification of Data Completeness for Tracking Visibility Progress for the Second Implementation Period of the Regional Haze Program” and associated Technical Addendum (“2020 Data Completeness Memo”). ^{14}
^{11} See footnote 6.
^{12} “Clarifications Regarding Regional Haze State Implementation Plans for the Second Implementation Period.” https://www.epa.gov/system/files/documents/2021-07/clarifications-regarding-regional-haze-state-implementation-plans-for-the-second-implementation-period.pdf. EPA Office of Air Quality Planning and Standards, Research Triangle Park (July 8, 2021).
^{13} “Technical Guidance on Tracking Visibility Progress for the Second Implementation Period of the Regional Haze Program.” https://www.epa.gov/visibility/technical-guidance-tracking-visibility-progress-second-implementation-period-regional. EPA Office of Air Quality Planning and Standards, Research Triangle Park. (December 20, 2018).
^{14} “Recommendation for the Use of Patched and Substituted Data and Clarification of Data Completeness for Tracking Visibility Progress for the Second Implementation Period of the Regional Haze Program.” https://www.epa.gov/visibility/memo-and-technical-addendum-ambient-data-usage-and-completeness-regional-haze-program. EPA Office of Air Quality Planning and Standards, Research Triangle Park (June 3, 2020).
As previously explained in the 2021 Clarifications Memo, EPA intends the second planning period of the regional haze program to secure meaningful reductions in visibility impairing pollutants that build on the significant progress States have achieved to date. The Agency also recognizes that analyses regarding reasonable progress are state-specific and that, based on States' and sources' individual circumstances, what constitutes reasonable reductions in visibility impairing pollutants will vary from State to State. While there exist many opportunities for States to leverage both ongoing and upcoming emission reductions under other CAA programs, the Agency expects States to undertake rigorous reasonable progress analyses that identify further opportunities to advance the national visibility goal consistent with the statutory and regulatory requirements. See, generally, 2021 Clarifications Memo. This is consistent with Congress's determination that a visibility protection program is needed in addition to the CAA's National Ambient Air Quality Standards (NAAQS) and Prevention of Significant Deterioration (PSD) programs, as further emission reductions may be necessary to adequately protect visibility in Class I areas throughout the country. ^{15}
^{15} See, e.g., H.R. Rep No. 95-294 at 205 (“In determining how to best remedy the growing visibility problem in these areas of great scenic importance, the committee realizes that as a matter of equity, the national ambient air quality standards cannot be revised to adequately protect visibility in all areas of the country.”), (“the mandatory class I increments of [the PSD program] do not adequately protect visibility in class I areas”).

B. Roles of Agencies in Addressing Regional Haze
Because the air pollutants affecting visibility in Class I areas can be transported over long distances, successful implementation of the regional haze program requires long-term, regional coordination among multiple jurisdictions and agencies that have responsibility for Class I areas and the emissions that impact visibility in those areas. In order to address regional haze, States need to develop strategies in coordination with one another, considering the effect of emissions from one jurisdiction on the air quality in another. Five regional planning organizations (RPOs), ^{16} which include representation from State and Tribal governments, EPA, and FLMs, were developed in the lead-up to the first planning period to address regional haze. RPOs evaluate technical information to better understand how emissions from State and Tribal land impact Class I areas across the country, pursue the development of regional strategies to reduce emissions of PM and other pollutants leading to regional haze, and help States meet the consultation requirements of the RHR.
^{16} RPOs are sometimes also referred to as “multi-jurisdictional organizations,” or MJOs. For the purposes of this notice, the terms RPO and MJO are synonymous.
The Southeastern States Air Resource Managers, Inc. (SESARM), one of the five RPOs described above, is a collaborative effort of State and local agencies and Tribal governments established to initiate and coordinate activities associated with the management of regional haze, visibility, and other air quality issues in the Southeast. SESARM's coalition to conduct regional haze work is referred to as Visibility Improvement State and Tribal Association of the Southeast (VISTAS). ^{17} The member States, local air agencies, and Tribal governments of VISTAS are Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia; the local air agencies, represented by the President of Metro 4 or designee; ^{18} and the Tribes located within the VISTAS region, represented by the Eastern Band of the Cherokee Indians. The Federal partner members of VISTAS are EPA, U.S. National Park Service (NPS), U.S. Fish and Wildlife Service (FWS), and U.S. Forest Service (USFS). ^{19}
^{17} The VISTAS technical work under SESARM is described at this website: https://www.metro4-sesarm.org/content/vistas-regional-haze-program.
^{18} Metro 4 is a Tennessee corporation which represents the local air pollution control agencies in EPA's Region 4 in the Southeast. See https://www.metro4-sesarm.org/content/metro-4-about-us.
^{19} The NPS, FWS, and USFS are collectively referred to as the “Federal Land Managers” or “FLMs” throughout this document.

III. Requirements for Regional Haze Plans for the Second Planning Period
Under the CAA and EPA's regulations, all 50 States, the District of Columbia, and the U.S. Virgin Islands are required to submit regional haze SIPs satisfying the applicable requirements for the second planning period of the regional haze program by July 31, 2021. Each State's implementation plan must contain a LTS for making reasonable progress toward meeting the national goal of remedying any existing and preventing any future anthropogenic visibility impairment in Class I areas. See CAA 169A(b)(2)(B). To this end, 40 CFR 51.308(f) lays out the process by which States determine what constitutes their LTSs, with the order of the requirements in 40 CFR 51.308(f)(1) through (3) generally mirroring the order of the steps in the reasonable progress analysis ^{20} and (f)(4) through (6) containing additional related requirements.
^{20} EPA explained in the 2017 RHR Revisions that the Agency was adopting new regulatory language in 40 CFR 51.308(f) that, unlike the structure in 51.308(d), “tracked the actual planning sequence.” See 82 FR 3091, January 10, 2017.
Broadly speaking, a State first must identify the Class I areas within the State and determine the Class I areas outside the State in which visibility may be affected by emissions from the State. These are the Class I areas that must be addressed in the State's LTS. See 40 CFR 51.308(f), (f)(2). For each Class I area within its borders, a State must then calculate the baseline, current, and natural visibility conditions for that area, as well as the visibility improvement made to date and the URP. See 40 CFR 51.308(f)(1). Each State having a Class I area and/or emissions that may affect visibility in a Class I area must then develop a LTS that includes the enforceable emission limitations, compliance schedules, and other measures that are necessary to make reasonable progress in such areas. A reasonable progress determination is based on applying the four factors in CAA section 169A(g)(1) to sources of visibility impairing pollutants that the State has selected to assess for controls for the second planning period.
Additionally, as further explained below, the RHR at 40 CFR 51.3108(f)(2)(iv) separately provides five “additional factors” ^{21} that States must consider in developing their long-term strategies. See 40 CFR 51.308(f)(2). A State evaluates potential emission reduction measures for those selected sources and determines which are necessary to make reasonable progress. Those measures are then incorporated into the State's LTS. After a State has developed its LTS, it then establishes RPGs for each Class I area within its borders by modeling the visibility impacts of all reasonable progress controls at the end of the second planning period, i.e., in 2028, as well as the impacts of other requirements of the CAA. The RPGs include reasonable progress controls not only for sources in the State in which the Class I area is located, but also for sources in other States that contribute to visibility impairment in that area. The RPGs are then compared to the baseline visibility conditions and the URP to ensure that progress is being made toward the statutory goal of preventing any future and remedying any existing anthropogenic visibility impairment in Class I areas. See 40 CFR 51.308(f)(2)-(3).
^{21} The five “additional factors” for consideration in section 51.308(f)(2)(iv) are distinct from the four factors listed in CAA section 169A(g)(1) and 40 CFR 51.308(f)(2)(i) that States must consider and apply to sources in determining reasonable progress.
In addition to satisfying the requirements at 40 CFR 51.308(f) related to reasonable progress, the regional haze SIP revisions for the second planning period must address the requirements in 40 CFR 51.308(g)(1) through (5) pertaining to periodic reports describing progress toward the RPGs, 40 CFR 51.308(f)(5), as well as requirements for FLM consultation that apply to all visibility protection SIPs and SIP revisions. See 40 CFR 51.308(i).
A State must submit its regional haze SIP and subsequent SIP revisions to EPA according to the requirements applicable to all SIP revisions under the CAA and EPA's regulations. See CAA 169A(b)(2); CAA 110(a). Upon EPA approval, a SIP is enforceable by the Agency and the public under the CAA. If EPA finds that a State fails to make a required SIP revision, or if EPA finds that a State's SIP is incomplete or disapproves the SIP, the Agency must promulgate a Federal Implementation Plan (FIP) that satisfies the applicable requirements. See CAA 110(c)(1).

A. Identification of Class I Areas
The first step in developing a regional haze SIP is for a State to determine which Class I areas, in addition to those within its borders, “may be affected” by emissions from within the State. In the 1999 RHR, EPA determined that all States contribute to visibility impairment in at least one Class I area, 64 FR at 35720-22, and explained that the statute and regulations lay out an “extremely low triggering threshold” for determining “whether States should be required to engage in air quality planning and analysis as a prerequisite to determining the need for control of emissions from sources within their State.” Id. at 35721.
A State must determine which Class I areas must be addressed by its SIP by evaluating the total emissions of visibility impairing pollutants from all sources within the State. While the RHR does not require this evaluation to be conducted in any particular manner, EPA's 2019 Guidance provides recommendations for how such an assessment might be accomplished, including by, where appropriate, using the determinations previously made for the first planning period. 2019 Guidance at 8-9. In addition, the determination of which Class I areas may be affected by a State's emissions is subject to the requirement in 40 CFR 51.308(f)(2)(iii) to “document the technical basis, including modeling, monitoring, cost, engineering, and emissions information, on which the State is relying to determine the emission reduction measures that are necessary to make reasonable progress in each mandatory Class I Federal area it affects.”

B. Calculations of Baseline, Current, and Natural Visibility Conditions; Progress to Date; and the Uniform Rate of Progress
As part of assessing whether a SIP submission for the second planning period is providing for reasonable progress toward the national visibility goal, the RHR contains requirements in 40 CFR 51.308(f)(1) related to tracking visibility improvement over time. The requirements of this subsection apply only to States having Class I areas within their borders; the required calculations must be made for each such Class I area. EPA's 2018 Visibility Tracking Guidance ^{22} provides recommendations to assist States in satisfying their obligations under section 51.308(f)(1); specifically, in developing information on baseline, current, and natural visibility conditions, and in making optional adjustments to the URP to account for the impacts of international anthropogenic emissions and prescribed fires. See 82 FR at 3103-05.
^{22} The 2018 Visibility Tracking Guidance references and relies on parts of the 2003 Tracking Guidance: “Guidance for Tracking Progress Under the Regional Haze Rule” which can be found at https://www.epa.gov/sites/default/files/2021-03/documents/tracking.pdf. EPA Office of Air Quality Planning and Standards, Research Triangle Park (September 2003).
The RHR requires tracking of visibility conditions on two sets of days: the clearest and the most impaired days. Visibility conditions for both sets of days are expressed as the average deciview index for the relevant five-year period (the period representing baseline or current visibility conditions). ^{23} The RHR provides that the relevant sets of days for visibility tracking purposes are the 20 percent clearest days (the 20 percent of monitored days in a calendar year with the lowest values of the deciview index) and 20 percent most impaired days (the 20 percent of monitored days in a calendar year with the highest amounts of anthropogenic visibility impairment). ^{24}
See 40 CFR 51.301. A State must calculate visibility conditions for both the 20 percent clearest days and 20 percent most impaired days for the baseline period of 2000-2004 and the most recent five-year period for which visibility monitoring data are available (representing current visibility conditions). See 40 CFR 51.308(f)(1)(i), (iii). States must also calculate natural visibility conditions for the clearest days and most impaired days ^{25} by estimating the conditions that would exist on those two sets of days absent anthropogenic visibility impairment. See 40 CFR 51.308(f)(1)(ii). Using all these data, States must then calculate, for each Class I area, the amount of progress made since the baseline period (2000-2004) and how much improvement is left to achieve to reach natural visibility conditions.
^{23} The “deciview index” means a value for a day that is derived from calculated or measured light extinction, such that uniform increments of the index correspond to uniform incremental changes in perception across the entire range of conditions, from pristine to very obscured. The deciview index is calculated using Interagency Monitoring of Protected Visual Environments (IMPROVE) aerosol measurements. See 40 CFR 51.301.
^{24} This notice also refers to the 20 percent clearest and 20 percent most anthropogenically impaired days as the “clearest” and “most impaired” or “most anthropogenically impaired” days, respectively.
^{25} The RHR at 40 CFR 51.308(f)(1)(ii) contains an error related to the requirement for calculating two sets of natural conditions values. The rule says “most impaired days or the clearest days” where it should say “most impaired days and clearest days.” This is an error that was intended to be corrected in the 2017 RHR Revisions but did not get corrected in the final rule language. This is supported by the preamble text at 82 FR 3098: “In the final version of 40 CFR 51.308(f)(1)(ii), an occurrence of “or” has been corrected to “and” to indicate that natural visibility conditions for both the most impaired days and the clearest days must be based on available monitoring information.”
Using the data for the set of most impaired days only, States must plot a line between visibility conditions in the baseline period and natural visibility conditions for each Class I area to determine the URP—the amount of visibility improvement, measured in deciviews, that would need to be achieved during each planning period to achieve natural visibility conditions by the end of 2064. The URP is used in later steps of the reasonable progress analysis for informational purposes and to provide a non-enforceable benchmark against which to assess a Class I area's rate of visibility improvement. ^{26} Additionally, in the 2017 RHR Revisions, EPA provided States the option of proposing to adjust the endpoint of the URP to account for impacts of anthropogenic sources outside the United States and/or impacts of certain types of wildland prescribed fires. These adjustments, which must be approved by EPA, are intended to avoid any perception that States should compensate for impacts from international anthropogenic sources and to give States the flexibility to determine that limiting the use of wildland prescribed fire is not necessary for reasonable progress. See 82 FR 3107, footnote 116.
^{26} Being on or below the URP is not a “safe harbor”; i.e., achieving the URP does not mean that a Class I area is making “reasonable progress” and does not relieve a State from using the four statutory factors to determine what level of control is needed to achieve such progress. See, e.g., 82 FR at 3093.
EPA's 2018 Visibility Tracking Guidance can be used to help satisfy the 40 CFR 51.308(f)(1) requirements, including in developing information on baseline, current, and natural visibility conditions, and in making optional adjustments to the URP. In addition, the 2020 Data Completeness Memo provides recommendations on the data completeness language referenced in 40 CFR 51.308(f)(1)(i) and provides updated natural conditions estimates for each Class I area.

C. Long-Term Strategy for Regional Haze
The core component of a regional haze SIP submission is a LTS that addresses regional haze in each Class I area within a State's borders and each Class I area that may be affected by emissions from the State. The LTS “must include the enforceable emissions limitations, compliance schedules, and other measures that are necessary to make reasonable progress, as determined pursuant to (f)(2)(i) through (iv).” See 40 CFR 51.308(f)(2). The amount of progress that is “reasonable progress” is based on applying the four statutory factors in CAA section 169A(g)(1) in an evaluation of potential control options for sources of visibility impairing pollutants, which is referred to as a “four-factor” analysis (FFA). The outcome of that analysis is the emission reduction measures that a particular source or group of sources needs to implement in order to make reasonable progress toward the national visibility goal. See 40 CFR 51.308(f)(2)(i). Emission reduction measures that are necessary to make reasonable progress may be either new, additional control measures for a source or the existing emission reduction measures that a source is already implementing. See 2019 Guidance at 43; 2021 Clarifications Memo at 8-10. Such measures must be represented by “enforceable emissions limitations, compliance schedules, and other measures” ( i.e., any additional compliance tools) in a State's LTS in its SIP. See 40 CFR 51.308(f)(2).
Section 51.308(f)(2)(i) provides the requirements for the FFA. The first step of this analysis entails selecting the sources to be evaluated for emission reduction measures; to this end, States should consider “major and minor stationary sources or groups of sources, mobile sources, and area sources” of visibility impairing pollutants for potential control analysis ( i.e., FFA). 40 CFR 51.308(f)(2)(i). A threshold question at this step is which visibility impairing pollutants will be analyzed. As EPA previously explained, consistent with the first planning period, EPA generally expects that each State will analyze at least SO 2 and NOx in selecting sources and determining control measures. See 2019 Guidance at 12 and 2021 Clarifications Memo at 4. A State that chooses not to consider at least these two pollutants should demonstrate why such consideration would be unreasonable. See 2021 Clarifications Memo at 4.
While States have the option to analyze all sources, the 2019 Guidance explains that “an analysis of control measures is not required for every source in each implementation period,” and that “[s]electing a set of sources for analysis of control measures in each implementation period is consistent with the Regional Haze Rule, which sets up an iterative planning process and anticipates that a State may not need to analyze control measures for all its sources in a given SIP revision.” 2019 Guidance at 9. However, given that source selection is the basis of all subsequent control determinations, a reasonable source selection process “should be designed and conducted to ensure that source selection results in a set of pollutants and sources the evaluation of which has the potential to meaningfully reduce their contributions to visibility impairment.” See 2021 Clarifications Memo at 3.
EPA explained in the 2021 Clarifications Memo that each State has an obligation to submit a LTS that addresses the regional haze visibility impairment that results from emissions from within that State. Thus, source selection should focus on the in-State contribution to visibility impairment and be designed to capture a meaningful portion of the State's total contribution to visibility impairment in Class I areas. A State should not decline to select its largest in-state sources on the basis that there are even larger out-of-state contributors. See 2021 Clarifications Memo at 4. ^{27}
^{27} Similarly, in responding to comments on the 2017 RHR Revisions EPA explained that “[a] state should not fail to address its many relatively low-impact sources merely because it only has such sources and another state has even more low-impact sources and/or some high impact sources.” Responses to Comments on Protection of Visibility: Amendments to Requirements for State Plans; Proposed Rule (81 FR 26942, May 4, 2016) (December 2016), Docket Number EPA-HQ-OAR-2015-0531, U.S. Environmental Protection Agency at 87-88, available at www.regulations.gov.
Thus, while States have discretion to choose any source selection methodology that is reasonable, whatever choices they make should be reasonably explained. To this end, 40 CFR 51.308(f)(2)(i) requires that a State's implementation plan submission include “a description of the criteria it used to determine which sources or groups of sources it evaluated.” The technical basis for source selection, which may include methods for quantifying potential visibility impacts such as emissions divided by distance metrics, trajectory analyses, residence time analyses, and/or photochemical modeling, must also be appropriately documented, as required by 40 CFR 51.308(f)(2)(iii).
Once a State has selected the set of sources, the next step is to determine the emissions reduction measures for those sources that are necessary to make reasonable progress for the second planning period. ^{28} This is accomplished by considering the four factors—“the costs of compliance, the time necessary for compliance, and the energy and non-air quality environmental impacts of compliance, and the remaining useful life of any existing source subject to such requirements.” See CAA 169A(g)(1). EPA has explained that the FFA is an assessment of potential emission reduction measures ( i.e., control options) for sources; “use of the terms `compliance' and `subject to such requirements' in section 169A(g)(1) strongly indicates that Congress intended the relevant determination to be the requirements with which sources would have to comply in order to satisfy the CAA's reasonable progress mandate.” See 82 FR at 3091. Thus, for each source a State has selected for a FFA, ^{29} it must consider a “meaningful set” of technically feasible control options for reducing emissions of visibility impairing pollutants. Id. at 3088. The 2019 Guidance provides that “[a] state must reasonably pick and justify the measures that it will consider, recognizing that there is no statutory or regulatory requirement to consider all technically feasible measures or any particular measures. A range of technically feasible measures available to reduce emissions would be one way to justify a reasonable set.” See 2019 Guidance at 29.
^{28} The CAA provides that “[i]n determining reasonable progress there shall be taken into consideration” the four statutory factors. CAA 169A(g)(1). However, in addition to four-factor analyses for selected sources, groups of sources, or source categories, a State may also consider additional emission reduction measures for inclusion in its long-term strategy, e.g., from other newly adopted, on-the-books, or on-the-way rules and measures for sources not selected for four-factor analysis for the second planning period.
^{29} “Each source” or “particular source” is used here as shorthand. While a source-specific analysis is one way of applying the four factors, neither the statute nor the RHR requires States to evaluate individual sources. Rather, States have “the flexibility to conduct four-factor analyses for specific sources, groups of sources or even entire source categories, depending on state policy preferences and the specific circumstances of each state.” See 82 FR at 3088. However, not all approaches to grouping sources for four-factor analysis are necessarily reasonable; the reasonableness of grouping sources in any particular instance will depend on the circumstances and the manner in which grouping is conducted. If it is feasible to establish and enforce different requirements for sources or subgroups of sources, and if relevant factors can be quantified for those sources or subgroups, then States should make a separate reasonable progress determination for each source or subgroup. See 2021 Clarifications Memo at 7-8.
EPA's 2021 Clarifications Memo provides further guidance on what constitutes a reasonable set of control options for consideration: “A reasonable four-factor analysis will consider the full range of potentially reasonable options for reducing emissions.” See 2021 Clarifications Memo at 7. In addition to add-on controls and other retrofits ( i.e., new emission reduction measures for sources), EPA explained that States should generally analyze efficiency improvements for sources' existing measures as control options in their FFAs, as in many cases such improvements are reasonable given that they typically involve only additional operation and maintenance costs. Additionally, the 2021 Clarifications Memo provides that States that have assumed a higher emission rate than a source has achieved or could potentially achieve using its existing measures should also consider lower emission rates as potential control options. That is, a State should consider a source's recent actual and projected emission rates to determine if it could reasonably attain lower emission rates with its existing measures. If so, the State should analyze the lower emission rate as a control option for reducing emissions. See 2021 Clarifications Memo at 7. EPA's recommendations to analyze potential efficiency improvements and achievable lower emission rates apply to both sources that have been selected for FFA and those that have forgone a FFA on the basis of existing “effective controls.” See 2021 Clarifications Memo at 5, 10.
After identifying a reasonable set of potential control options for the sources it has selected, a State then collects information on the four factors with regard to each option identified. EPA has also explained that, in addition to the four statutory factors, States have flexibility under the CAA and RHR to reasonably consider visibility benefits as an additional factor alongside the four statutory factors. ^{30} The 2019 Guidance provides recommendations for the types of information that can be used to characterize the four factors (with or without visibility), as well as ways in which States might reasonably consider and balance that information to determine which of the potential control options is necessary to make reasonable progress. See 2019 Guidance at 30-36. The 2021 Clarifications Memo contains further guidance on how States can reasonably consider modeled visibility impacts or benefits in the context of a FFA. See 2021 Clarifications Memo at 12-13, 14-15. Specifically, EPA explained that while visibility can reasonably be used when comparing and choosing between multiple reasonable control options, it should not be used to summarily reject controls that are reasonable given the four statutory factors. See 2021 Clarifications Memo at 13. Ultimately, while States have discretion to reasonably weigh the factors and to determine what level of control is needed, 40 CFR 51.308(f)(2)(i) provides that a State “must include in its implementation plan a description” of how the four factors were taken into consideration in selecting the measure for inclusion in its long-term strategy.
^{30} See, e.g., Responses to Comments on Protection of Visibility: Amendments to Requirements for State Plans; Proposed Rule (81 FR 26942, May 4, 2016) (December 2016), Docket Number EPA-HQ-OAR-2015-0531, U.S. Environmental Protection Agency at 186, available at www.regulations.gov; 2019 Guidance at 36-37.
As explained above, section 51.308(f)(2)(i) requires States to determine the emission reduction measures for sources that are necessary to make reasonable progress by considering the four factors. Pursuant to section 51.308(f)(2), measures that are necessary to make reasonable progress toward the national visibility goal must be included in a State's LTS and in its SIP. ^{31} If the outcome of a FFA is a new, additional emission reduction measure for a source, that new measure is necessary to make reasonable progress toward remedying existing anthropogenic visibility impairment and must be included in the SIP. If the outcome of a FFA is that no new measures are reasonable for a source, continued implementation of the source's existing measures is generally necessary to prevent future emission increases and thus to make reasonable progress toward the second part of the national visibility goal: preventing future anthropogenic visibility impairment. See CAA 169A(a)(1). That is, when the result of a FFA is that no new measures are necessary to make reasonable progress, the source's existing measures are generally necessary to make reasonable progress and must be included in the SIP. However, there may be circumstances in which a State can demonstrate that a source's existing measures are not necessary to make reasonable progress. Specifically, if a State can demonstrate that a source will continue to implement its existing measures and will not increase its emission rate, it may not be necessary to have those measures in the LTS in order to prevent future emission increases and future visibility impairment. EPA's 2021 Clarifications Memo provides further explanation and guidance on how States may demonstrate that a source's existing measures are not necessary to make reasonable progress. See 2021 Clarifications Memo at 8-10. If the State can make such a demonstration, it need not include a source's existing measures in the LTS or its SIP.
^{31} States may choose to, but are not required to, include measures in their long-term strategies beyond just the emission reduction measures that are necessary for reasonable progress. See 2021 Clarifications Memo at 16. For example, States with smoke management programs may choose to submit their smoke management plans to EPA for inclusion in their SIPs but are not required to do so. See, e.g., 82 FR at 3108-09 (requirement to consider smoke management practices and smoke management programs under 40 CFR 51.308(f)(2)(iv) does not require States to adopt such practices or programs into their SIPs, although they may elect to do so).
As with source selection, the characterization of information on each of the factors is also subject to the documentation requirement in section 51.308(f)(2)(iii). The reasonable progress analysis, including source selection, information gathering, characterization of the four statutory factors (and potentially visibility), balancing of the four factors, and selection of the emission reduction measures that represent reasonable progress, is a technically complex exercise, but also a flexible one that provides States with bounded discretion to design and implement approaches appropriate to their circumstances. Given this flexibility, section 51.308(f)(2)(iii) plays an important function in requiring a State to document the technical basis for its decision making so that the public and EPA can comprehend and evaluate the information and analysis the State relied upon to determine what emission reduction measures must be in place to make reasonable progress. The technical documentation must include the modeling, monitoring, cost, engineering, and emissions information on which the State relied to determine the measures necessary to make reasonable progress. This documentation requirement can be met through the provision of and reliance on technical analyses developed through a regional planning process, so long as that process and its output has been approved by all State participants. In addition to the explicit regulatory requirement to document the technical basis of their reasonable progress determinations, States are also subject to the general principle that those determinations must be reasonably moored to the statute. ^{32} That is, a State's decisions about the emission reduction measures that are necessary to make reasonable progress must be consistent with the statutory goal of remedying existing and preventing future visibility impairment.
^{32} See Arizona ex rel. Darwin v. U.S. EPA , 815 F.3d 519, 531 (9th Cir. 2016); Nebraska v. U.S. EPA , 812 F.3d 662, 668 (8th Cir. 2016); North Dakota v. EPA, 730 F.3d 750, 761 (8th Cir. 2013); Oklahoma v. EPA , 723 F.3d 1201, 1206, 1208-10 (10th Cir. 2013); cf. also Nat'l Parks Conservation Ass'n v. EPA , 803 F.3d 151, 165 (3d Cir. 2015); Alaska Dep't of Envtl. Conservation v. EPA , 540 U.S. 461, 485, 490 (2004).
The four statutory factors (and potentially visibility) are used to determine what emission reduction measures for selected sources must be included in a State's LTS for making reasonable progress. Additionally, the RHR at 40 CFR 51.3108(f)(2)(iv) separately provides five “additional factors” ^{33} that States must consider in developing their LTSs: (1) Emission reductions due to ongoing air pollution control programs, including measures to address reasonably attributable visibility impairment; (2) measures to reduce the impacts of construction activities; (3) source retirement and replacement schedules; (4) basic smoke management practices for prescribed fire used for agricultural and wildland vegetation management purposes and smoke management programs; and (5) the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the period addressed by the LTS. The 2019 Guidance provides that a State may satisfy this requirement by considering these additional factors in the process of selecting sources for a FFA, when performing that analysis, or both, and that not every one of the additional factors needs to be considered at the same stage of the process. See 2019 Guidance at 21. EPA provided further guidance on the five additional factors in the 2021 Clarifications Memo, explaining that a State should generally not reject cost-effective and otherwise reasonable controls merely because there have been emission reductions since the first planning period owing to other ongoing air pollution control programs or merely because visibility is otherwise projected to improve at Class I areas. Additionally, States generally should not rely on these additional factors to summarily assert that the State has already made sufficient progress and, therefore, no sources need to be selected or no new controls are needed regardless of the outcome of FFAs. See 2021 Clarifications Memo at 13.
^{33} The five “additional factors” for consideration in section 51.308(f)(2)(iv) are distinct from the four factors listed in CAA section 169A(g)(1) and 40 CFR 51.308(f)(2)(i) that States must consider and apply to sources in determining reasonable progress.
Because the air pollution that causes regional haze crosses State boundaries, 40 CFR 51.308(f)(2)(ii) requires a State to consult with other States that also have emissions that are reasonably anticipated to contribute to visibility impairment in a given Class I area. Consultation allows for each State that impacts visibility in an area to share whatever technical information, analyses, and control determinations may be necessary to develop coordinated emission management strategies. This coordination may be managed through inter- and intra-RPO consultation and the development of regional emissions strategies; additional consultations between States outside of RPO processes may also occur. If a State, pursuant to consultation, agrees that certain measures ( e.g., a certain emission limitation) are necessary to make reasonable progress at a Class I area, it must include those measures in its SIP. See 40 CFR 51.308(f)(2)(ii)(A). Additionally, the RHR requires that States that contribute to visibility impairment at the same Class I area consider the emission reduction measures the other contributing States have identified as being necessary to make reasonable progress for their own sources. See 40 CFR 51.308(f)(2)(ii)(B). If a State has been asked to consider or adopt certain emission reduction measures, but ultimately determines those measures are not necessary to make reasonable progress, that State must document in its SIP the actions taken to resolve the disagreement. See 40 CFR 51.308(f)(2)(ii)(C). EPA will consider the technical information and explanations presented by the submitting State and the State with which it disagrees when considering whether to approve the State's implementation plan. See id.; 2019 Guidance at 53. Under all circumstances, a State must document in its SIP submission all substantive consultations with other contributing States. See 40 CFR 51.308(f)(2)(ii)(C).

D. Reasonable Progress Goals
RPGs “measure the progress that is projected to be achieved by the control measures States have determined are necessary to make reasonable progress based on a four-factor analysis.” See 82 FR at 3091. Their primary purpose is to assist the public and EPA in assessing the reasonableness of States' LTSs for making reasonable progress toward the national visibility goal. See 40 CFR 51.308(f)(3)(iii)-(iv). States in which Class I areas are located must establish two RPGs—one representing visibility conditions on the clearest days and one representing visibility on the most anthropogenically impaired days—for each area within their borders. See 40 CFR 51.308(f)(3)(i). The two RPGs, measured in deciviews, are intended to reflect the projected impacts, on each set of days, of the emission reduction measures the State with the Class I area and other contributing States have included in their LTSs for the second planning period. ^{34} The RPGs also account for the projected impacts of implementing other CAA requirements, including non-SIP based requirements. Because RPGs are the modeled result of the measures in States' LTSs (as well as other measures required under the CAA), they cannot be determined before States have conducted their FFAs and determined the control measures that are necessary to make reasonable progress. ^{35}
See 2021 Clarifications Memo at 6.
^{34} RPGs are intended to reflect the projected impacts of the measures all contributing States include in their long-term strategies. However, due to the timing of analyses, control determinations by other States, and other on-going emissions changes, a particular State's RPGs may not reflect all control measures and emissions reductions that are expected to occur by the end of the implementation period. The 2019 Guidance provides recommendations for addressing the timing of RPG calculations when States are developing their long-term strategies on disparate schedules, as well as for adjusting RPGs using a post-modeling approach. 2019 Guidance at 47-48.
^{35} The 2019 Guidance allows for the possibility of post-modeling adjustments to the RPGs to account for the fact that final LTS decisions for the State or for other States may not be known until late in the process, or even after SIPs are submitted. See 2019 Guidance at 46-48. See also, 82 FR 3078, 3080 (January 10, 2017).
For the second planning period, the RPGs are set for 2028. RPGs are not enforceable targets, 40 CFR 51.308(f)(3)(iii); rather, they “provide a way for the States to check the projected outcome of the [long-term strategy] against the goals for visibility improvement.” 2019 Guidance at 46. While States are not legally obligated to achieve the visibility conditions described in their RPGs, section 51.308(f)(3)(i) requires that “[t]he long- term strategy and the reasonable progress goals must provide for an improvement in visibility for the most impaired days since the baseline period and ensure no degradation in visibility for the clearest days since the baseline period.” Thus, States are required to have emission reduction measures in their LTSs that are projected to achieve visibility conditions on the most impaired days that are better than the baseline period and shows no degradation on the clearest days compared to the clearest days from the baseline period. The baseline period for the purpose of this comparison is the baseline visibility condition—the annual average visibility condition for the period 2000-2004. See 40 CFR 51.308(f)(1)(i), 82 FR at 3097-98.
So that RPGs may also serve as a metric for assessing the amount of progress a State is making toward the national visibility goal, the RHR requires States with Class I areas to compare the 2028 RPG for the most impaired days to the corresponding point on the URP line (representing visibility conditions in 2028 if visibility were to improve at a linear rate from conditions in the baseline period of 2000-2004 to natural visibility conditions in 2064). If the most impaired days RPG in 2028 is above the URP ( i.e., if visibility conditions are improving more slowly than the rate described by the URP), each State that contributes to visibility impairment in the Class I area must demonstrate, based on the FFA required under 40 CFR 51.308(f)(2)(i), that no additional emission reduction measures would be reasonable to include in its LTS. See 40 CFR 51.308(f)(3)(ii). To this end, 40 CFR 51.308(f)(3)(ii) requires that each State contributing to visibility impairment in a Class I area that is projected to improve more slowly than the URP provide “a robust demonstration, including documenting the criteria used to determine which sources or groups [of] sources were evaluated and how the four factors required by paragraph (f)(2)(i) were taken into consideration in selecting the measures for inclusion in its long-term strategy.” The 2019 Guidance provides suggestions about how such a “robust demonstration” might be conducted. See 2019 Guidance at 50-51.
The 2017 RHR, 2019 Guidance, and 2021 Clarifications Memo also explain that projecting an RPG that is on or below the URP based on only on-the-books and/or on-the-way control measures ( i.e., control measures already required or anticipated before the FFA is conducted) is not a “safe harbor” from the CAA's and RHR's requirement that all States must conduct a FFA to determine what emission reduction measures constitute reasonable progress. ^{36} The URP is a planning metric used to gauge the amount of progress made thus far and the amount left before reaching natural visibility conditions. However, the URP is not based on consideration of the four statutory factors and therefore cannot answer the question of whether the amount of progress being made in any particular planning period is “reasonable progress.” See 82 FR at 3093, 3099-3100; 2019 Guidance at 22; 2021 Clarifications Memo at 15-16.
^{36} In lieu of conducting an FFA, States may elect to show the source has existing effective controls for the particular pollutant(s) under evaluation or that the source is shutting down by the end of the planning period (or close to it).

E. Monitoring Strategy and Other State Implementation Plan Requirements
Section 51.308(f)(6) requires States to have certain strategies and elements in place for assessing and reporting on visibility. Individual requirements under this subsection apply either to States with Class I areas within their borders, States with no Class I areas but that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area, or both. A State with Class I areas within its borders must submit with its SIP revision a monitoring strategy for measuring, characterizing, and reporting regional haze visibility impairment that is representative of all Class I areas within the State. SIP revisions for such States must also provide for the establishment of any additional monitoring sites or equipment needed to assess visibility conditions in Class I areas, as well as reporting of all visibility monitoring data to EPA at least annually. Compliance with the monitoring strategy requirement may be met through a State's participation in the IMPROVE monitoring network, which is used to measure visibility impairment caused by air pollution at the 156 Class I areas covered by the visibility program. See 40 CFR 51.308(f)(6), (f)(6)(i), (f)(6)(iv). The IMPROVE monitoring data is used to determine the 20 percent most anthropogenically impaired and 20 percent clearest sets of days every year at each Class I area and tracks visibility impairment over time.
All States' implementation plans must provide for procedures by which monitoring data and other information are used to determine the contribution of emissions from within the State to regional haze visibility impairment in affected Class I areas. See 40 CFR 51.308(f)(6)(ii), (iii). Section 51.308(f)(6)(v) further requires that all States' implementation plans provide for a statewide inventory of emissions of pollutants that are reasonably anticipated to cause or contribute to visibility impairment in any Class I area; the inventory must include emissions for the most recent year for which data are available and estimates of future projected emissions. States must also include commitments to update their inventories periodically. The inventories themselves do not need to be included as elements in the SIP and are not subject to EPA review as part of the Agency's evaluation of a SIP revision. ^{37} All States' implementation plans must also provide for any other elements, including reporting, recordkeeping, and other measures, that are necessary for States to assess and report on visibility. See 40 CFR 51.308(f)(6)(vi). Per the 2019 Guidance, a State may note in its regional haze SIP that its compliance with the Air Emissions Reporting Rule (AERR) in 40 CFR part 51 subpart A satisfies the requirement to provide for an emissions inventory for the most recent year for which data are available. To satisfy the requirement to provide estimates of future projected emissions, a State may explain in its SIP how projected emissions were developed for use in establishing RPGs for its own and nearby Class I areas. ^{38}
^{37} See “Step 8: Additional requirements for regional haze SIPs” in 2019 Guidance at 55.
^{38} Id.
Separate from the requirements related to monitoring for regional haze purposes under 40 CFR 51.308(f)(6), the RHR also contains a requirement at 40 CFR 51.308(f)(4) related to any additional monitoring that may be needed to address visibility impairment in Class I areas from a single source or a small group of sources. This is called “reasonably attributable visibility impairment.” ^{39} Under this provision, if EPA or the FLM of an affected Class I area has advised a State that additional monitoring is needed to assess reasonably attributable visibility impairment (RAVI), the State must include in its SIP revision for the second planning period an appropriate strategy for evaluating such impairment.
^{39} EPA's visibility protection regulations define “reasonably attributable visibility impairment” as “visibility impairment that is caused by the emission of air pollutants from one, or a small number of sources.” See 40 CFR 51.301.

F. Requirements for Periodic Reports Describing Progress Toward the Reasonable Progress Goals
Section 51.308(f)(5) requires a State's regional haze SIP revision to address the requirements of paragraphs 40 CFR 51.308(g)(1) through (5) so that the plan revision due in 2021 will serve also as a progress report addressing the period since submission of the progress report for the first planning period. The regional haze progress report requirement is designed to inform the public and EPA about a State's implementation of its existing LTS and whether such implementation is in fact resulting in the expected visibility improvement. See 81 FR 26942, 26950 (May 4, 2016), 82 FR 3119 (January 10, 2017). To this end, every State's implementation plan revision for the second planning period is required to describe the status of implementation of all measures included in the State's LTS, including BART and reasonable progress emission reduction measures from the first planning period, and the resulting emissions reductions. See 40 CFR 51.308(g)(1) and (2).
A core component of the progress report requirements is an assessment of changes in visibility conditions on the clearest and most impaired days. For second planning period progress reports, 40 CFR 51.308(g)(3) requires States with Class I areas within their borders to first determine current visibility conditions for each area on the most impaired and clearest days, 40 CFR 51.308(g)(3)(i), and then to calculate the difference between those current conditions and baseline (2000-2004) visibility conditions in order to assess progress made to date. See 40 CFR 51.308(g)(3)(ii). States must also assess the changes in visibility impairment for the most impaired and clearest days since they submitted their first planning period progress reports. See 40 CFR 51.308(g)(3)(iii), (f)(5). Since different States submitted their first planning period progress.
Similarly, States must provide analyses tracking the change in emissions of pollutants contributing to visibility impairment from all sources and activities within the State over the period since they submitted their first planning period progress reports. See 40 CFR 51.308(g)(4), (f)(5). Changes in emissions should be identified by the type of source or activity. Section 51.308(g)(5) also addresses changes in emissions since the period addressed by the previous progress report and requires States' implementation plan revisions to include an assessment of any significant changes in anthropogenic emissions within or outside the State. This assessment must include an explanation of whether these changes in emissions were anticipated and whether they have limited or impeded progress in reducing emissions and improving visibility relative to what the State projected based on its LTS for the first planning period.

G. Requirements for State and Federal Land Manager Coordination
CAA section 169A(d) requires that before a State holds a public hearing on a proposed regional haze SIP revision, it must consult with the appropriate FLM or FLMs; pursuant to that consultation, the State must include a summary of the FLMs' conclusions and recommendations in the notice to the public. Consistent with this statutory requirement, the RHR also requires that States “provide the [FLM] with an opportunity for consultation, in person and at a point early enough in the State's policy analyses of its long-term strategy emission reduction obligation so that information and recommendations provided by the [FLM] can meaningfully inform the State's decisions on the long-term strategy.” See 40 CFR 51.308(i)(2). Consultation that occurs 120 days prior to any public hearing or public comment opportunity will be deemed “early enough,” but the RHR provides that in any event the opportunity for consultation must be provided at least 60 days before a public hearing or comment opportunity. This consultation must include the opportunity for the FLMs to discuss their assessment of visibility impairment in any Class I area and their recommendations on the development and implementation of strategies to address such impairment. See 40 CFR 51.308(i)(2). In order for EPA to evaluate whether FLM consultation meeting the requirements of the RHR has occurred, the SIP submission should include documentation of the timing and content of such consultation. The SIP revision submitted to EPA must also describe how the State addressed any comments provided by the FLMs. See 40 CFR 51.308(i)(3). Finally, a SIP revision must provide procedures for continuing consultation between the State and FLMs regarding the State's visibility protection program, including development and review of SIP revisions, five-year progress reports, and the implementation of other programs having the potential to contribute to impairment of visibility in Class I areas. See 40 CFR 51.308(i)(4).

IV. EPA's Evaluation of Georgia's Haze Submission for the Second Planning Period
On August 11, 2022, GA EPD submitted a revision to the Georgia SIP to address the State's regional haze obligations for the second planning period, which runs through 2028, in accordance with CAA sections 169A and the RHR at 40 CFR 51.308(f). ^{40} The following sections contain EPA's evaluation of Georgia's Haze Plan with respect to the requirements of the CAA and RHR for the second planning period of the regional haze program. Georgia has three Class I areas: Cohutta National Wilderness Area (Cohutta), Okefenokee National Wilderness Area (Okefenokee), and Wolf Island National Wilderness Area (Wolf Island). The following sections describe Georgia's Haze Plan, including analyses conducted by VISTAS and Georgia's determinations based on those analyses, Georgia's assessment of progress made since the first planning period in reducing emissions of visibility impairing pollutants, and the visibility improvement progress at its Class I areas and nearby Class I areas. This notice also contains EPA's evaluation of Georgia's Haze Plan against the requirements of the CAA and RHR for the second planning period of the regional haze program.
^{40} On June 28, 2012 (77 FR 38501), EPA issued a limited approval of Georgia's first period regional haze plan submitted to EPA on February 11, 2010, as supplemented November 19, 2010. On June 7, 2012, EPA finalized a limited disapproval of Georgia's first period haze plan and promulgated a FIP to replace reliance on the Clean Air Interstate Rule (CAIR) with reliance on the Cross-State Air Pollution Rule (CSAPR) (77 FR 33642). On May 4, 2018, EPA converted the previous limited approval/limited disapproval of Georgia's first period haze plan to a full approval and removed the FIP for Georgia which replaced reliance on CAIR with reliance on CSAPR (83 FR 19637). On October 4, 2017, EPA also approved Georgia's January 8, 2014, progress report for the first planning period (82 FR 46136).

A. Identification of Class I Areas
1. RHR Requirement: Section 169A(b)(2) of the CAA requires each State in which any Class I area is located or “the emissions from which may reasonably be anticipated to cause or contribute to any impairment of visibility” in a Class I area to have a plan for making reasonable progress toward the national visibility goal. The RHR implements this statutory requirement at 40 CFR 51.308(f), which provides that each State's plan “must address regional haze in each mandatory Class I Federal area located within the State and in each mandatory Class I Federal area located outside the State that may be affected by emissions from within the State,” and 40 CFR 51.308(f)(2), which requires each State's plan to include a LTS that addresses regional haze in such Class I areas. To develop a State's LTS, a State must first determine which Class I areas may be affected by its own emissions. For out- of-state Class I areas, States must assess their visibility impacts on a statewide basis which is discussed in Section IV.A.2 below and on a source-specific basis which is discussed in Section IV.C.2 below.
2. State Assessment: To address 40 CFR 51.308(f), Georgia identified Class I areas affected by Georgia's statewide emissions of visibility impairing pollutants and then consulted with States with Class I areas affected by Georgia's statewide emissions. GA EPD presented the results of Particulate Matter Source Apportionment Technology (PSAT) ^{41} modeling which VISTAS conducted to estimate the projected impact of statewide SO 2 and NO X emissions across all emissions sectors in 2028 on total light extinction for the 20 percent most impaired days in all Class I areas in the VISTAS modeling domain. ^{42} In Table 7-4 on pages 143-144 of the Haze Plan, GA EPD lists the total sulfate plus nitrate contribution from all source sectors in Georgia to total visibility impairment for the 20 percent most impaired days at Class I areas in the VISTAS modeling domain in inverse megameters (Mm − ^1 ). Georgia's top three highest sulfate plus nitrate impairment impacts to out-of-state Class I areas are: Cape Romain National Wilderness Area (Cape Romain) (SC) (2.19 Mm − ^1 ), Chassahowitzka National Wilderness Area (Chassahowitzka) (FL) (1.31 Mm − ^1 ), and St. Marks National Wilderness Area (FL) (1.31 Mm − ^1 ). ^{43}
^{41} PSAT is Particulate Matter Source Apportionment Technology, which is an option in the photochemical visibility impact modeling performed by VISTAS that is a methodology to track the fate of both primary and secondary PM. PSAT allows emissions to be tracked (“tagged”) for individual facilities as well as various combinations of sectors and geographic areas ( e.g., by State). The PSAT results provide the modeled contribution of each of the tagged sources or groups of sources to the total visibility impacts.
^{42} Georgia did not include primary PM (directly emitted) data in this analysis because the PSAT analyses performed by VISTAS tagged statewide emissions of SO 2 and NO X and did not tag primary total PM emissions in the analysis after concluding that emissions of the PM precursors SO 2 and NO X , particularly from point sources, are projected to have the largest impact on visibility impairment in 2028 and that SO 2 and NO X are the most significant visibility impairing pollutants from controllable anthropogenic sources.
^{43} In contrast, Georgia's highest sulfate plus nitrate impairment impacts to the State's Class I areas are: 2.57 Mm − ^1 , 2.17 Mm − ^1 , and 1.04 Mm − ^1 for Wolf Island, Okefenokee, and Cohutta, respectively.
Based on these results for the out-of-state Class I areas, GA EPD consulted with the VISTAS States, including Florida, North Carolina, and South Carolina. The purpose of this consultation was to identify whether Georgia's statewide impacts to the VISTAS and non-VISTAS States are significant enough to develop coordinated emission management strategies containing the emission reductions necessary to make reasonable progress. Consultation is further discussed in Section IV.C.2.e of this notice and in Section I.E of EPA's Technical Support Document (TSD) for this proposed rulemaking.
3. EPA Evaluation: EPA proposes to conclude that GA EPD adequately addressed the elements of 40 CFR 51.308(f) regarding identification of its statewide visibility impacts to Class I areas outside of the State and consulting with States with Class I areas which may reasonably be anticipated to cause or contribute to any impairment of visibility due to Georgia's emissions. EPA proposes to approve the State's approach of focusing on SO 2 and NO X impacts from Georgia on the basis that for current visibility conditions evaluated for the 2014-2018 period, ammonium sulfate is the dominant visibility impairing pollutant at most of the VISTAS Class I areas followed by organic carbon and ammonium nitrate (depending on the area). ^{44} VISTAS focused on controllable emissions from point sources and thus, initially considered impacts from sulfates and nitrates on regional haze at Class I areas affected by VISTAS States. EPA proposes to find that Georgia satisfied 40 CFR 51.308(f)(2) related to the identification of Class I areas outside of Georgia that may be affected by emissions from within the State and consultation with affected States because the State analyzed its statewide sulfate and nitrate contributions to total visibility impairment at out-of-state Class I areas (see Table 7-4 of the Haze Plan); none of the Class I areas listed in Table 7-4 of the Haze Plan have 2028 RPGs on the 20 percent most impaired days above the URP; ^{45} Georgia analyzed its in-state and out-of-state impacts through modeling (see, e.g., Haze Plan Table 7-4) ; and the State completed consultation with VISTAS States via the RPO processes and, in some cases, on a state-to-state basis and documented those consultations. ^{46}
^{44} See Figures 2-8 and 2-9 of the Haze Plan for the VISTAS Class I areas. See also Section IV.C.2.a of this document.
^{45} See Memorandum from Richard A, Wayland, OAQPS, to Regional Air Division Directors re: Availability of Modeling Data and Associated Technical Support Document for the EPA's Updated 2028 Visibility Air Quality Modeling (September 19, 2019), available at: https://www.epa.gov/sites/default/files/2019-10/documents/updated_2028_regional_haze_modeling-tsd-2019_0.pdf.
^{46} See Section IV.C.2.e of this notice and Section I.E. of EPA's TSD for additional detail regarding consultation.

B. Calculations of Baseline, Current, and Natural Visibility Conditions; Progress to Date; and the Uniform Rate of Progress
1. RHR Requirement: Section 51.308(f)(1) requires States to determine the following for “each mandatory Class I Federal area located within the State”: baseline visibility conditions for the clearest days and most impaired days, natural visibility conditions for the clearest days and most impaired days, progress to date for the clearest days and most impaired days, the differences between current visibility conditions and natural visibility conditions, and the URP. This section also provides the option for States to propose adjustments to the URP line for a Class I area to account for visibility impacts from anthropogenic sources outside the United States and/or the impacts from wildland prescribed fires that were conducted for certain, specified objectives. See 40 CFR 51.308(f)(1)(vi)(B).
2. State Assessment: In the Haze Plan, Georgia calculated the baseline visibility conditions (2000-2004) in Table 2-3, current visibility conditions (2014-2018) in Table 2-5, ^{47} and natural visibility conditions in Table 2-2 for the 20 percent clearest and 20 percent most impaired days in each Class I area in the State in deciviews. Georgia also calculated the actual progress made toward natural visibility conditions to date since the baseline period (current minus baseline), and the additional progress needed to reach natural visibility conditions from current conditions (natural minus current), in deciviews, in Table 2-6 (for the 20 percent most impaired days) and Table 2-7 (for the 20 percent clearest days) for Georgia's Class I areas, as shown in Table 2 below.
^{47} The period 2014-2018 represents current visibility conditions for Georgia because it is the most recent five-year period for which visibility monitoring data was available at the time of SIP development.
Table 1—Baseline, Current and Natural Visibility Conditions in Georgia's Class I Areas in Deciviews
[dv]
Class I area | Baseline clearest 20% (dv) | Baseline most impaired 20% (dv) | Current clearest 20% (dv) | Current most impaired 20% (dv) | Natural clearest 20% (dv) | Natural most impaired 20% (dv)
Cohutta | 13.73 | 29.12 | 8.10 | 17.37 | 4.42 | 9.88
Okefenokee | 15.23 | 25.34 | 11.57 | 17.39 | 5.43 | 9.45
Wolf Island | 15.23 | 25.34 | 11.57 | 17.39 | 5.43 | 9.45
Table 2—Actual Progress for Visibility Conditions in Georgia's Class I Areas in Deciviews
[dv]
Class I area | Current minus baseline for 20% clearest (dv) | Current minus baseline for 20% most impaired (dv) | Natural minus current for 20% clearest (dv) | Natural minus current for 20% most impaired (dv)
Cohutta | 5.63 | 11.75 | 3.68 | 7.49
Okefenokee | 3.66 | 7.95 | 6.14 | 7.94
Wolf Island | 3.66 | 7.95 | 6.14 | 7.94
Additionally, Figures 3-1 and 3-2 of Georgia's Haze Plan provides the URP figures on the 20 percent most impaired days for Cohutta and Okefenokee, respectively. The URP shown in Figure 3-2 for Okefenokee is considered representative of Wolf Island. ^{48} The URPs were developed using EPA guidance ^{49} and used data collected from the IMPROVE monitoring sites.
^{48} Wolf Island has no IMPROVE monitor. Visibility at Wolf Island is assumed to be the same as the nearest Class I area monitor located at Okefenokee.
^{49} https://www.epa.gov/sites/default/files/2018-12/documents/technical_guidance_tracking_visibility_progress.pdf and https://www.epa.gov/sites/default/files/2020-06/documents/memo_data_for_regional_haze_technical_addendum.pdf.
3. EPA Evaluation: EPA is proposing to find that Georgia's Haze Plan meets the requirements of 40 CFR 51.308(f)(1) because the State provided for its three Class I areas: baseline, current, and natural visibility conditions for the 20 percent clearest days and most impaired days; progress to date for the 20 percent clearest days and most impaired days; differences between current visibility conditions and natural visibility conditions; and the URP for each Class I area in Georgia.

C. Long-Term Strategy for Regional Haze
1. RHR Requirement: Each State having a Class I area within its borders or emissions that may affect visibility in a Class I area must develop a LTS for making reasonable progress toward the national visibility goal. See CAA 169A(b)(2)(B). As explained in Section II of this notice, reasonable progress is achieved when all States contributing to visibility impairment in a Class I area are implementing the measures determined—through application of the four statutory factors to sources of visibility impairing pollutants—to be necessary to make reasonable progress. See 40 CFR 51.308(f)(2)(i). Each State's LTS must include the enforceable emission limitations, compliance schedules, and other measures that are necessary to make reasonable progress. See 40 CFR 51.308(f)(2). All new ( i.e., additional) measures that are the outcome of FFAs are necessary to make reasonable progress and must be in the LTS. If the conclusion of a FFA and other measures necessary to make reasonable progress for a particular source is that no new measures are reasonable, that source's existing measures are necessary to make reasonable progress, unless the State can demonstrate that the source will continue to implement those measures and will not increase its emission rate. Existing measures that are necessary to make reasonable progress must also be in the LTS. In developing its LTS, a State must also consider the five additional factors in section 51.308(f)(2)(iv). As part of its reasonable progress determinations, the State must describe the criteria used to determine which sources or group of sources were evaluated ( i.e., subjected to FFA) for the second planning period and how the four factors were taken into consideration in selecting the emission reduction measures for inclusion in the LTS. See 40 CFR 51.308(f)(2)(iii).
States may rely on technical information developed by the RPOs of which they are members to select sources for FFA and to satisfy the documentation requirements under section 51.308(f). Where an RPO has performed source selection and/or FFAs (or considered the five additional factors in section 51.308(f)(2)(iv)) for its member States, those States may rely on the RPO's analyses for the purpose of satisfying the requirements of section 51.308(f)(2)(i) so long as the States have a reasonable basis to do so and all State participants in the RPO process have approved the technical analyses. See 40 CFR 51.308(f)(2)(iii). States may also satisfy the requirement of section 51.308(f)(2)(ii) to engage in interstate consultation with other States that have emissions that are reasonably anticipated to contribute to visibility impairment in a given Class I area under the auspices of intra- and inter-RPO engagement.
The consultation requirements of section 51.308(f)(2)(ii) provide that States must consult with other States that are reasonably anticipated to contribute to visibility impairment in a Class I area to develop coordinated emission management strategies containing the emission reductions measures that are necessary to make reasonable progress. Section 51.308(f)(2)(ii)(A) and (B) require States to consider the emission reduction measures identified by other States as necessary for reasonable progress and to include agreed upon measures in their SIPs, respectively. Section 51.308(f)(2)(ii)(C) speaks to what happens if States cannot agree on what measures are necessary to make reasonable progress. The documentation requirement of section 51.308(f)(2)(iii) provides that States may meet their obligations to document the technical bases on which they are relying to determine the emission reductions measures that are necessary to make reasonable progress through an RPO, as long as the process has been “approved by all State participants.”
Section 51.308(f)(2)(iii) also requires that the emissions information considered to determine the measures that are necessary to make reasonable progress include information on emissions for the most recent year for which the State has submitted triennial emissions data to EPA (or a more recent year), with a 12-month exemption period for newly submitted data.
2. State Assessment: To develop Georgia's LTS, GA EPD set criteria to identify sources to evaluate for potential controls using the four factors outlined in Section II.B, selected sources based on those criteria, considered the four factors, provided emissions limits and supporting conditions for adoption into the regulatory portion of the SIP, and evaluated the five additional factors at 40 CFR 51.308(f)(2)(iv).
a. Source Selection Criteria: With respect to 40 CFR 51.308(f)(2)(i), Georgia, through VISTAS, used a two-step source selection process: (1) Area of Influence (AoI) analysis, and (2) PSAT ^{50} modeling for sources exceeding an AoI threshold. ^{51} Georgia considered the four factors for sources that exceeded both the AoI and PSAT thresholds. Both sulfates and nitrates were considered in the source selection process. To identify sources having the most impact on visibility at Class I areas for PSAT modeling, Georgia used an AoI threshold of greater than or equal to two percent for sulfate and nitrate combined at any Class I area for all sources within the State and four percent for sulfate and nitrate combined at any Class I area for all sources outside of the State. Sources which exceeded Georgia's AoI threshold are listed in Table 7-11 of the Haze Plan. Of these sources, five sources located within Georgia exceeded the AoI threshold for any Class I area in the State: Brunswick Cellulose LLC (Brunswick Cellulose); International Paper—Savannah (IP-Savannah); Georgia Power Company—Plant Bowen (Plant Bowen); Temple Inland; and Georgia-Pacific Consumer Products LP (Savannah River Mill).
^{50} PSAT modeling is a type of photochemical modeling which quantifies individual facility visibility impacts to an area. See footnote 41.
^{51} The AoI represents the geographical area around a Class I area in which emissions sources located in the AoI have the potential to contribute to visibility impairment visibility at that Class I area. Emissions data from sources in the AoI is then evaluated to determine which of those sources are most likely contributing to visibility impairment visibility at that Class I area. VISTAS used AoI analysis for all point source facilities in the VISTAS modeling domain to determine the relative visibility impairment impacts at each Class I area associated with sulfate and nitrate. The results of the facility-level AoI analyses were then used to rank and prioritize facilities for further evaluation via PSAT.
Georgia, in coordination with the other VISTAS States, set a PSAT threshold of greater than or equal to one percent for sulfate and a separate PSAT threshold of greater than or equal to one percent for nitrate, by facility. ^{52} Sources identified based on the State's PSAT threshold are listed in Tables 7-29, 7-30, and 7-31 of the Haze Plan. Of these 17 sources identified, 14 are located in seven other States and three are in Georgia. Georgia selected the three in-state sources of Brunswick Cellulose, IP-Savannah, and Plant Bowen for an FFA. ^{53} The projected 2028 SO 2 from these three sources are 294 tons per year (tpy), 3,945 tpy, and 10,453 tpy, respectively, as described in Table 7-32 of the Haze Plan. No sources modeled for PSAT exceeded the selected PSAT threshold for nitrates. Ammonium sulfate continues to be the dominant visibility impairing pollutant at the Georgia Class I areas during the modeling base period of 2009-2013, on nearly all days, and for the 2014-2018 and 2015-2019 periods. ^{54}
^{52} In the first planning period, VISTAS States had initially set a greater than or equal to one percent PSAT threshold by emission unit when screening sources for reasonable progress evaluation. For the second planning period, VISTAS States changed the threshold from greater than or equal to one percent PSAT, by emission unit, to greater than or equal to one percent PSAT, by facility. Using a facility basis for emission estimates pulled in more facilities compared to an emission unit basis, resulting in more facilities with smaller visibility impacts being examined compared to the first planning period.
^{53} Brunswick Cellulose and IP-Savannah are pulp and paper mills. Plant Bowen is a coal-fired electric generating plant.
^{54} See Section 2.5.2 (particularly Figures 2-4 through 2-6 for the 2009-2013 period and Figures 2-7 through 2-9 for the 2014-2018 period), and Section 7.10 of the Haze Plan related to ammonium nitrate.
Although ammonium sulfate remains the dominant visibility impairing pollutant, GA EPD noted that NO X contributions to visibility impairment can vary from year to year. According to the Haze Plan, the NO X contributions to visibility impairment at Cohutta have increased from 1.7 percent in 2001 to 5.4 percent in 2019 on the 20 percent most impaired days, and the NO X contributions to visibility impairment at Okefenokee have increased from 4.2 percent in 2000 to 5.9 percent in 2019 on the 20 percent most impaired days. ^{55} In spite of these annual variations, in Figure 7-46 of the Haze Plan, GA EPD shows that during the 2015 through 2019 period, ammonium sulfate continues to be the dominant visibility impairing species at Cohutta, Okefenokee, and Wolf Island and surrounding VISTAS Class I areas. Moreover, in Figure 7-47 of the Haze Plan, Georgia demonstrates that reductions in the State's NO X emissions do not necessarily lead to reductions in nitrate at the Class I areas in Georgia. PSAT results indicate that across Georgia's Class I areas, sulfate visibility impacts per ton are universally higher than nitrate visibility impacts per ton. On average, the reduction of one ton of SO 2 will have the equivalent benefit of reducing 30.7 tons of NO X at Cohutta, 19.0 tons of NO X at Okefenokee, and 19.2 tons of NO X at Wolf Island. For the reasons discussed, GA EPD determined that SO 2 emission reductions have a significantly higher benefit on improving visibility at these Class I areas compared to controlling NO X emissions, as sulfates are still the dominant visibility impairing species at the Cohutta, Okefenokee, and Wolf Island in spite of some increases in nitrates. Because no sources exceeded the State's PSAT threshold for nitrates and because ammonium sulfate continues to be the dominant visibility impairing pollutant at the Georgia Class I areas (as discussed further below), GA EPD focused solely on evaluating potential SO 2 controls from Brunswick Cellulose, IP-Savannah, and Plant Bowen to address regional haze in potentially affected Class I areas and noted that it may be appropriate in future period haze plans to evaluate NO X controls depending on what the future data show.
^{55} See Figures 7-44 and 7-45 of the Haze Plan; see also Figure 7-46 of the Haze Plan regarding ammonium sulfate as compared to ammonium nitrative impacts on visibility at all Class I areas in the VISTAS region; see also Appendix H-4b of the Haze Plan at p. 33.
Figures 7-20, 7-21, and 7-22 in the Haze Plan show that projected light extinction in 2028 from total sulfate on the 20 percent most impaired days is significantly larger than light extinction from total nitrate for the Georgia Class I areas. At Cohutta, 2028 projected total sulfate and 2028 total nitrate extinction are approximately 41.3 percent (19 Mm −1 ) for sulfate and less than 6.5 percent (less than three Mm −1 ) for nitrate, in comparison to the 2028 total visibility impairment on the 20 percent most impaired days. ^{56} At Okefenokee, 2028 projected total sulfate and 2028 total nitrate extinction are greater than 44.6 percent (25 Mm −1 ) for sulfate and less than 7.1 percent (less than four Mm −1 ) for nitrate, in comparison to the 2028 total visibility impairment on the 20 percent most impaired days. At Wolf Island, 2028 projected total sulfate and 2028 total nitrate extinction are greater than 44.5 percent (24.5 Mm −1 ) for sulfate and less than 7.3 percent (less than four Mm −1 ) for nitrate, in comparison to the 2028 total visibility impairment on the 20 percent most impaired days. In addition, the majority of model-predicted 2028 nitrate light extinction on the 20 percent most impaired days at Cohutta, Okefenokee, and Wolf Island, respectively, is not caused by NO X emissions from EGU and non-EGU point sources. ^{57}
^{56} Percent impairment was calculated using 2028 total visibility impairment on the 20 percent most impaired days at Cohutta (46 Mm −1 ), Okefenokee (56 Mm −1 ), and Wolf Island (55 Mm −1 ), based on Table 7-2 of the Haze Plan.
^{57} See Figures 7-19, 7-47, 7-48, 7-49, and 7-50 of the Haze Plan contrasting nitrate visibility impairment to point source NO X emissions from EGUs and non-EGUs.
In Section 7.6.4 of the Haze Plan, the State reviewed Georgia facilities that were not selected for PSAT modeling and which had an AoI contribution greater than one percent for one or more Class I areas. This review included Georgia Power—Plant Wansley (Plant Wansley); Mohawk Industries Inc.; Southern States Phosphate & Fertilizer (now Seagate Terminals Savannah); and Savannah Sugar Refinery (now Imperial-Savannah LP). Regarding Plant Wansley, Georgia states that a recent change from coal to natural gas reduced visibility impacts from this facility and adjusting the AoI contribution from this facility to account for this change resulted in an AoI contribution below the State's screening threshold for further PSAT tagging. Additionally, Georgia has notified EPA that Plant Wansley has permanently ceased operations, and therefore, as of December 28, 2022, Georgia revoked all air quality permits previously issued for this facility, including its Part 70 Operating Permit No. 4911-149-0001-V-04-0. ^{58} Regarding the other facilities, Georgia indicated that they were all less than 100 kilometers from the nearest mandatory Class I area, and a VISTAS analysis of AoI compared to PSAT results shows that AoI results are always at least 2.75 times higher than PSAT results for facilities in close proximity (< 100 kilometers) to Class I areas. Therefore, based on that information, Georgia screened out these facilities from further analysis. Section I.A. of the TSD provides additional detail regarding the State's source selection process.
^{58} GA EPD's December 28, 2022, letter to Georgia Power revoking Plant Wansley's Part 70 Operating Permit is included in the docket for this proposed rule.
b. Consideration of the Four CAA Factors: Georgia considered each of the four CAA factors for Brunswick Cellulose, IP-Savannah, and Plant Bowen and described how the four factors were taken into consideration in selecting measures for inclusion in the State's LTS. The following subsections summarize the State's evaluation of these facilities. Additional detail is provided in Section I.B. of the TSD.
i. Brunswick Cellulose: The FFA for Brunswick Cellulose focused on the No. 4 Power Boiler, No. 5 Recovery Furnace, and No. 6 Recovery Furnace. ^{59} For the No. 4 Power Boiler, the FFA reviewed the following potential controls: substitution of No. 6 Fuel Oil with natural gas, wet scrubber with caustic addition, and trona dry sorbent injection (DSI). Tables 7-38 and 7-40 of the Haze Plan show that of the potential new control measures considered for the No. 4 Power Boiler, Brunswick Cellulose would obtain a cost savings from replacing No. 6 fuel oil with natural gas which would remove 49 tons of SO 2 annually and from replacing tire-derived fuel with natural gas which would remove 67 tons of SO 2 annually; the wet scrubber would remove 141 tons of SO 2 annually at a cost of $10,330/ton removed; and the DSI system would remove 129.1 tons of SO 2 annually at a cost of $26,301/ton removed.
^{59} GA EPD notes that the following emissions units were exempted from FFA review because the three-year average (2017-2019) actual SO 2 emissions from each unit are two tpy or less and thus any emissions reductions from new control measures is expected to be minimal: No. 5 Lime Kiln (L537), No. 6 Power Boiler (U706), No. 7 Power Boiler (U707), No. 5 Smelt Dissolving Tank (R403), No. 6 Smelt Dissolving Tank (R408), and Backup NCG Incinerator (R480).
For the No. 5 and No. 6 Recovery Furnaces, the FFA reviewed the following potential controls: use of low-sulfur fuels and a wet scrubber system. Tables 7-39 and 7-40 of the Haze Plan show that the most cost-effective control options for the No. 5 and No. 6 Recovery Furnaces are: replacement of No. 6. fuel oil with one percent sulfur fuel oil at the No. 4 Power Boiler, No. 5 Recovery Furnace, and No. 5 Lime Kiln ^{60} which would remove 41 tons of SO 2 annually at a cost of $5,028/ton of SO 2 removed ^{61} and replacement of No. 6. fuel oil with one percent sulfur fuel oil at the No. 4 Power Boiler and No. 5 Recovery Furnace which would also remove 41 tons of SO 2 annually at a cost of $5,098/ton of SO 2 removed. Additional control options assessed include installation of a wet scrubber system on the No. 5 Recovery Furnace which would remove 119 tons of SO 2 annually at a cost of $24,242/ton removed, while installation of a wet scrubber system on the No. 6 Recovery Furnace would remove 13 tons of SO 2 annually at a cost of $275,621/ton removed.
^{60} Although the No. 5 Lime Kiln was exempted from FFA review, as this unit shares the single No. 6 fuel oil tank supply with both the No. 4 Power Boiler and the No. 5 Recovery Furnace, any substitution to a lower sulfur fuel oil blend at these units would also include a fuel substitution for the No. 5 Lime Kiln (or would include the construction of a new fuel oil tank to supply the No. 4 Power Boiler and No. 5 Recovery Furnace separately from the No. 5 Lime Kiln). GA EPD has included the cost-effectiveness of both scenarios in Table 7-40 of the Haze Plan.
^{61} These 41 tpy of SO 2 reductions would be spread across the No. 4 Power Boiler and the No. 5 Recovery Furnace.
As explained in Section 7.7 of the Haze Plan, GA EPD reviewed a spreadsheet assembled by the Arkansas Department of Environmental Quality that compares the cost of compliance for SO 2 and NO X for controls adopted in various States during the first regional haze planning period in dollars per ton for various types of industrial emission units and presented the maximum and minimum cost per ton and various percentile values and updated it with VISTAS data. While GA EPD did not identify a specific cost per ton threshold, GA EPD determined that a cost-effectiveness of $5,028/ton of SO 2 removed was not reasonable, as the State concluded that this cost was greater than the highest 98th percent cost per ton value from the updated Arkansas spreadsheet (within the top two percentile) from each of the VISTAS States from the first planning period, listed in the Arkansas spreadsheet. ^{62}
^{62} See Section 7.7, Appendix G-4, and Appendix H-4b (Section 5.2.1) of the Haze Plan.
GA EPD also included an analysis of the other three factors in Section 7.8.3 of the Haze Plan. Regarding the time necessary for compliance, if controls, such as the installation of a new fuel oil tank or new burner were required, the facility would need at least four to five years to implement these changes. GA EPD notes that the emission units included are assumed to have a remaining useful life of 30 years or more. Regarding the energy and non-air related impacts, GA EPD included the impacts associated with each add-on control option evaluated in the FFA. Use of an SO 2 scrubber requires the use of additional water and generates a wastewater stream that must be treated. Additional electricity is required to power scrubber fans. In addition, GA EPD notes that a DSI generates additional waste.
The results of GA EPD's FFA for Brunswick Cellulose were to eliminate firing of tire-derived fuel in the No. 4 Power Boiler and to limit the firing of No. 6 fuel oil in the No. 4 Power Boiler to times of natural gas curtailment with additional fuel oil firing allowed during adverse bark/wood fuel conditions. GA EPD also limited SO 2 emissions from the No. 4 Power Boiler to 15 tpy when firing No. 6 fuel oil during adverse bark/wood fuel conditions. ^{63}
^{63} Permit No. 2631-127-0003-V-07-3, Condition 6.2.52, requires the source to use the emission factors and the records required by Condition 6.2.51 to ensure compliance with the 15 tpy SO 2 emission limit specified in Condition 3.2.25 for the No. 4 Power Boiler. On April 15, 2024, GA EPD supplemented its August 11, 2022, Haze Plan by providing clarification on the specific emission factor that the source will use for calculating compliance with Condition 3.2.25. This April 15, 2024, email containing the supplemental clarification is included in the docket for this proposed action.
Regarding the No. 5 and No. 6 Recovery Furnaces, for the reasons stated above, Georgia concluded that the costs associated with each of the measures considered were not reasonable and therefore did not select further controls for the No. 5 and No. 6 Recovery Furnaces. GA EPD also indicated that the facility has consistently utilized good operating practices as existing measures for the No. 5 and No. 6 Recovery Furnaces, and that GA EPD expects emissions from these units to remain in the range of 90.4-213.5 tons/year for the No. 5 Recovery Furnace and in the range of 7.8-22.0 tpy of SO 2 for the No. 6 Recovery Furnace. In addition, GA EPD notes that the SO 2 emissions rates have been consistent during the 2016 to 2020 period and have ranged from 0.1249 to 0.1523 tons SO 2 per 1,000 gallon of No. 6 Fuel Oil burned in the No. 5 Recovery Furnace. ^{64} Therefore, GA EPD did not include any existing measures for the No. 5 and No. 6 Recovery Furnaces in its Haze Plan submittal for inclusion in the SIP. See 2021 Clarifications Memo at 9.
^{64} This information was provided in an April 15, 2024, supplemental email, in which GA EPD provided historical emission rates (2016 through 2020) for the No. 6 Recovery Furnace. This information is contained in the docket for this proposed action.
Georgia provided EPA with Permit No. 2631-127-0003-V-07-3, issued on October 25, 2023, to implement the control measures that were selected from the FFA for Brunswick Cellulose for the No. 4 Power Boiler. ^{65}
^{65} GA EPD provided this permit to EPA on November 1, 2023. A copy of the permit is included in the docket. The November 1, 2023, permit conditions are identical to those included in Section 7.8.3 of the June 24, 2022, Haze Plan narrative that was subject to public comment at the State level.
ii. IP-Savannah: The FFA for IP-Savanah focused on the facility's No. 13 Power Boiler. ^{66} The FFA notes that as a result of a boiler project that was completed for compliance with 40 CFR part 63, subpart DDDDD (commonly referred to as the Boiler MACT) that became effective in 2013 with a 2016 compliance date, IP-Savannah ceased firing No. 6 fuel oil in the No. 13 Power Boiler, added load-bearing natural gas burners, and optimized combustion controls and the combustion air system. Prior to completion of this project, the No. 13 Power Boiler was permitted to burn coal, biomass, fuel oil, and non-condensable gases (NCGs). After completion of this project, the boiler was able to burn coal, biomass, natural gas, and NCGs. Although the plant remained permitted to continue burning coal, it has not burned coal since 2017. The FFA also notes that the No. 13 Power Boiler is controlled by an electrostatic precipitator, ^{67} with a portion of low-volume, high-concentration pulp mill gasses sent to a White Liquor Scrubber.
^{66} GA EPD did not evaluate IP-Savannah's No. 15 Recovery Furnace, No. 15 Recovery Furnace Smelt Dissolving Tank, and No. 7 Lime Kiln in the FFA because combined, these emission units emitted less than 30 tpy of SO 2 annually from 2018-2020. Nearly all SO 2 emissions from IP-Savannah are from the No. 13 Power Boiler.
^{67} The electrostatic precipitator that is being used to control emissions from the No. 13 Power Boiler at IP-Savannah is primarily a device to control particulate pollution and is not an SO 2 control device.
The FFA reviewed the following potential controls for the No. 13 Power Boiler: addition of a circulating dry scrubber with pulse jet fabric filter; addition of a DSI system; and permanent removal of coal as a permissible fuel. The FFA determined that installation of the dry scrubber would remove 3,674 tons of SO 2 per year at a cost of $5,564/ton; installation of the DSI system would remove 2,653 tons of SO 2 per year at a cost of $6,245/ton; and removal of coal as a fuel source would result prevent the emission of 2,662 tons of SO 2 annually and would result in a cost savings to the plant. GA EPD used the Arkansas Department of Environmental Quality spreadsheet for evaluating the cost-effectiveness for each of the controls evaluated, as explained in Section IV.C.2.b.1 of the proposed rule and Section 7.7 of the Haze Plan. While GA EPD did not identify a specific cost per ton threshold, GA EPD used the spreadsheet as rationale for the determination that cost-effectiveness of $5,564/ton and $6,245/ton of SO 2 removed was not reasonable, as the State concluded that these costs were greater than the highest 98th percent cost per ton value from the updated Arkansas spreadsheet (within the top two percentile) from each of the VISTAS States from the first planning period, listed in the Arkansas spreadsheet. ^{68}
^{68} See Section 7.7, Appendix G-4, and Appendix H-4b (section 5.2.1) of the Haze Plan.
GA EPD also included an analysis of the other three factors in Section 7.8.1 of the Haze Plan of the Haze Plan. Regarding the time necessary for compliance, GA EPD estimates it would take at least three years to implement the installation of any add-on controls. Regarding the remaining useful life of existing sources, GA EPD notes that the No. 13 Power Boiler has a useful life of 20 years or more. Regarding the energy and non-air related impacts, GA EPD included the impacts associated with each add-on control option evaluated in the FFA. The FFA notes that both the dry scrubber and DSI system options would utilize additional energy and water usage and generate additional solid waste and wastewater and could potentially cause a smaller compliance margin against non-air permit limits. In addition, GA EPD notes that both the dry scrubber and DSI option would require an expansion of the existing mill-owned landfill.
As such, GA EPD selected the removal of coal as an allowable fuel for the No. 13 Power Boiler as a necessary measure for reasonable progress. The FFA also concluded that installation of a dry scrubber or DSI carried unreasonable cost and that the other, non-cost factors weighed against installation of add-on controls. The FFA therefore determined that the installation of a dry scrubber or DSI were not necessary to make reasonable progress.
Georgia provided EPA with Permit No. 2631-051-0007-V-04-1, issued on October 20, 2023, to implement control measures that were selected from the FFA for IP-Savannah for incorporation into the SIP. ^{69}
^{69} GA EPD provided this permit to EPA on November 1, 2023. A copy of the permit is included in the docket. The November 1, 2023, permit conditions are identical to those included in Section 7.8.1 of the June 24, 2022, Haze Plan narrative that was subject to public comment at the State level.
iii. Plant Bowen: The Plant Bowen FFA evaluated technically feasible SO 2 controls for all four units (Units 1-4) at this plant. SO 2 emissions from Plant Bowen Units 1-4 are currently controlled by wet flue gas desulfurization (WFGD) scrubbers and the use of fuel that does not exceed three percent sulfur by weight. The FFA notes that Plant Bowen Units 1-4 currently combust bituminous coal primarily from the Illinois Basin, which has an average sulfur content of approximately 2.6 percent and an average heat content of 12,002 British thermal units (Btu) per pound. GA EPD states that the SO 2 removal efficiency for Units 1-4 ranges from 96 to 97.3 percent based on data from three years prior to submission of the final Haze Plan.
The FFA reviewed the following potential controls for Plant Bowen: the installation of dry flue gas desulfurization (DFGD) scrubbers to replace the existing wet scrubbers; switching coal to Powder River Basin coal, which has an average sulfur content of 0.42 percent and average heat content of 8,800 Btu per pound; and switching to Central Appalachian coal, which has an average sulfur content of 1.1 percent and average heat content of 12,000 Btu per pound. ^{70} The FFA concluded that DFGD is an inferior control option that would result in higher emissions compared to the existing WFGD. Therefore, this option was not explored further. Regarding the switch to Powder River Basin coal, the FFA determined that this option would reduce SO 2 emissions by 81 percent (7,482 tpy) at a cost of $6,424/ton of SO 2 removed. The FFA also determined that switching to Central Appalachian coal would reduce SO 2 emissions by 56 percent (5,199 tpy) at a cost of $13,447/ton of SO 2 removed.
^{70} See Table A2.1 to Appendix G-1b of the Haze Plan.
GA EPD used the Arkansas Department of Environmental Quality spreadsheet for evaluating the cost-effectiveness for each of the controls evaluated, as explained in Section IV.C.2.b.1 of the proposed rule and Section 7.7 of the Haze Plan. While GA EPD did not identify a specific cost per ton threshold, GA EPD used the spreadsheet as rationale for the determination that cost-effectiveness of $6,424/ton and $13,447/ton of SO 2 removed was not reasonable, as the State concluded that this cost was greater than the highest 98th percent cost per ton value from the updated Arkansas spreadsheet (within the top two percentile) from each of the VISTAS States from the first planning period, listed in the Arkansas spreadsheet. ^{71}
^{71} See Section 7.7, Appendix G-4, and Appendix H-4b (section 5.2.1) of the Haze Plan.
GA EPD also included an analysis of the other three factors in Appendix G-1b of the Haze Plan. For a switch to either Powder River Basin coal or Central Appalachian coal, Georgia notes that extensive engineering evaluations would be needed. Therefore, GA EPD estimates that the time necessary for compliance could take until December 31, 2028. Regarding the energy and non-air related impacts, the FFA explains that due to limitations in the plant's coal handling facilities, a switch to Powder River Basin coal would result in an electric generation derate of 27 percent or more based on the lower heat content of this type of coal that could not easily be remedied by simply increasing the tonnage of coal burned at the plant. ^{72}
^{72} The FFA also accounted for this 27 percent facility derate in the cost of compliance factor.
The FFA concluded that no new measures were reasonable for Plant Bowen, and therefore concluded that existing measures are necessary to make reasonable progress. Specifically, GA EPD concluded that adopting an SO 2 emission limit of 0.20 pound per million British thermal units (lb/MMBtu) on a 30-day rolling average into the SIP is necessary to make reasonable progress. This emission limit is the alternative emission limit currently applicable to Plant Bowen under the Mercury and Air Toxics Standards (MATS) rule. Including this emission limit in the SIP would also have the effect of removing the hydrogen chloride (HCl) MATS compliance option for Plant Bowen. Georgia provided EPA with Permit No. 4911-015-0011-V-04-3 dated September 6, 2023, to implement this control measure for Plant Bowen into the SIP. ^{73}
^{73} GA EPD provided this permit to EPA on November 1, 2023. This permit replaces the permit contained in Appendix G-1d. A copy of the permit is included in the docket. The November 1, 2023, permit conditions are identical to those included in Section 7.8.2 of the June 24, 2022, Haze Plan that was subject to public comment at the State level.
c. Documentation of Technical Basis: With respect to emissions information documentation pursuant to 40 CFR 51.308(f)(2)(iii), Section 4 of the Haze Plan explains the State's use of emissions inventories to develop the plan with additional documentation provided in Appendix B. Georgia, through VISTAS, developed a 2011 statewide base year emissions inventory which was used to project emissions out to 2028—the end of the second planning period. GA EPD also evaluated emissions data from 2017, the year of the most recent triennial emissions data available at the time of the development of the Haze Plan, and compared it to 2018, 2019, and 2028 projected emissions, that were used in the modeling. ^{74} GA EPD also provided annual, statewide anthropogenic SO 2, NO X , and PM 2.5 emissions data from 2011 through 2019 for Georgia in Tables 13-10, 13-11, and 13-12, respectively, of the Haze Plan. The 2011-2019 statewide emissions inventories and 2028 emissions projections were relied upon to satisfy 40 CFR 51.308(f)(6)(v).
^{74} A comparison of emissions between 2017, 2018, 2019, and 2028 emissions data is included in the following tables and figures in the Haze Plan: Table 7-32 (SO 2 ) and 7-33 (NO X ) for facilities in Georgia; Tables 13-10 (PM 2.5 ), 13-11 (NO X ), 13-12 (SO 2 ), 13-13 (SO 2 emissions from Georgia EGU for CAMD 2015-2021); Figures 13-7 (Georgia CAMD Emissions and Heat Input for 2014-2019) and 13-8 VISTAS CAMD Emissions and Heat Input for 2014-2019; and Table 13-14 (SO 2 , NO X for all RPOs).
With respect to modeling information documentation pursuant to 40 CFR 51.308(f)(2)(iii), Sections 5 and 6 of the Haze Plan describe the modeling methods used to develop the plan with additional documentation provided in Appendix E and results of the RPG modeling in Section 8 of the plan. Appendix D contains AoI analysis documentation, and Appendix E contains PSAT analysis documentation.
With respect to cost and engineering information documentation pursuant to 40 CFR 51.308(f)(2)(iii), Section 7.8 of the Haze Plan details the State's analysis of proposed FFAs for Brunswick Cellulose, IP-Savannah, and Plant Bowen located in Appendix G which evaluated the four factors, including the cost of compliance factor, and provided detailed cost calculations for potential new control measures assessed as part of the engineering analyses.
With respect to monitoring information documentation pursuant to 40 CFR 51.308(f)(2)(iii), the State assessed baseline (2000-2004), current (2014-2018), and natural visibility conditions for Georgia's Class I areas in Section 2 of the Georgia's Haze Plan with supporting information located in Appendix C.
Section I of the TSD provides a more detailed summary of the State's assessment of the documentation of the technical basis for the Georgia's Haze Plan under 40 CFR 51.308(f)(2)(iii) and 40 CFR 51.308(f)(6)(v).
d. Assessment of Five Additional Factors in 40 CFR 51.308(f)(2)(iv): With respect to 40 CFR 51.308(f)(2)(iv), Georgia considered each of the five additional factors in developing the State's LTS and evaluated their relevancy for the second period. See Haze Plan, Section 7.9. With respect to 40 CFR 51.308(f)(2)(iv)(A), Georgia referenced the State's emissions inventory development for the base year of 2011 as projected out to 2028 for the requirement to assess emission reductions due to ongoing air pollution control programs, including measures to address RAVI. With respect to 40 CFR 51.308(f)(2)(iv)(B), Georgia summarized the State's existing regulations that mitigate the impacts of construction activities by requiring control of erosion, siltation, and pollution from construction activities and requiring subject facilities to control PM from fugitive dust emission sources generated within plant boundaries. With respect to 40 CFR 51.308(f)(2)(iv)(C), Georgia addressed source retirement and replacement schedules by summarizing existing and planned source retirements in the Haze Plan in Section 13.3.1 and Section 13.3.2. With respect to 40 CFR 51.308(f)(2)(iv)(D), GA EPD referenced its 2008 Memorandum of Understanding with the Georgia Forestry Commission and the associated Smoke Management Plan to mitigate PM 2.5 emissions and regional haze impacts associated with prescribed burning. ^{75} With respect to 40 CFR 51.308(f)(2)(iv)(E), the 2028 RPGs for the Georgia Class I areas reflect the net effect on visibility due to projected changes in point, area, and mobile source emissions over the second period. Section I.C. of the TSD to this rulemaking provides a more detailed summary of the State's assessment of the five additional factors in 40 CFR 51.308(f)(2)(iv).
^{75} Georgia's current Smoke Management Plan is available at: https://epd.georgia.gov/document/document/view-georgias-smoke-management-plan/download.
e. Interstate Consultation: Georgia consulted with other States, as described below, and RPOs that identified Georgia sources as impacting those States' (or States within the RPOs') Class I areas, and GA EPD consulted with the seven States with one or more sources exceeding Georgia's PSAT threshold at one or more of Georgia's Class I areas.
i. State/RPOs Requesting Consultation with Georgia: Section 10.1.2 and Appendix F-1 of the Haze Plan documents other States' consultations with Georgia during the development of those States' LTSs regarding impacts from Georgia's emissions sources on Class I areas outside of the State. Georgia received requests for a FFA from Florida, North Carolina, Tennessee, and South Carolina regarding Plant Bowen. Georgia also received a request for a reasonable progress analysis from South Carolina regarding IP-Savannah. As discussed in Section 7.6.4 of the Haze Plan, Georgia selected Plant Bowen and IP-Savannah for a reasonable progress analysis.
ii. Georgia's Requests for Consultation with Other States: Consultation with other States with sources contributing to regional haze at Georgia's Class I areas is discussed in Section 10 and Appendix F of the Haze Plan. Table 10-1 provides a summary of the VISTAS and non-VISTAS States to which a letter was sent and identifies the total number of facilities impacting each Class I area in Georgia, as determined by the State. Table 10-2 identifies each out-of-state facility with a percent impairment impact greater than one percent sulfate or nitrate to each Class I area in Georgia. Appendix F-1 provides the consultation letters from GA EPD to each VISTAS State and the responses to these letters. Appendix F-2 provides the consultation letters from VISTAS to each non-VISTAS State and the responses to these letters. Georgia requested an FFA of 13 sources in seven other States because these sources exceeded the State's sulfate PSAT threshold at one or more of Georgia's Class I areas. ^{76} GA EPD documented the responses received for each of the sources in Section 10.1.1 of the Haze Plan. Georgia consulted with other VISTAS States (Florida, Kentucky, South Carolina, Tennessee) and each non-VISTAS State (Indiana, Ohio, Pennsylvania) regarding impacts from sources in those States to one or more Class I areas in Georgia and included responses from each VISTAS and non-VISTAS State in Appendix F-1 and Appendix F-2 of the Haze Plan, respectively. GA EPD has noted no disagreement with the decisions made by other State agencies concerning the emission sources in other States, as listed in Section 10.1.1 of the Haze Plan, except for the decision made by the Indiana Department of Environmental Management to not require FFAs from its electric generating units (EGUs), including Gibson Station and AEP Rockport Generating Station.
^{76} Georgia requested FFAs of non-VISTAS sources through VISTAS.
See Section I.E. of the TSD associated with this rulemaking for additional description of Georgia's interstate consultation for regional haze for the second period regarding: (a) visibility impacts from Georgia sources on other States' Class I area(s) and (b) visibility impacts from other States' sources on one or more of Georgia's Class I areas.
3. EPA Evaluation: EPA has reviewed Georgia's four-factor analyses, determinations of controls necessary for reasonable progress, and submitted permit conditions. Based on this review, EPA proposes to determine that Georgia's long-term strategy meets the requirements of 40 CFR 51.308(f)(2)(i) through (iv). However, EPA is soliciting comment on the adequacy of Georgia's analyses, including the four-factor analyses, determinations of controls necessary for reasonable progress and the adequacy of the submitted permit conditions, including associated monitoring, recordkeeping, and reporting, and whether the State has met the requirements of 40 CFR 51.308(f)(2)(i) through (iv).
a. Source Selection Criteria: EPA proposes to find that Georgia has satisfied the requirements of 40 CFR 51.308(f)(2)(i) with respect to including a description of the criteria that the State used to determine which sources the State evaluated for emissions controls. Georgia provided in the Haze Plan supporting information such as Appendix C, which includes monitoring and meteorological data used to support selection of sources; Appendix D, which provides documentation supporting the AoI analyses (first step of the State's source selection process); and Appendix E, which details the visibility and source apportionment data and results from the PSAT modeling (second step of the State's source selection process).
EPA also proposes to find that Georgia's source selection methodology was reasonable and resulted in a reasonable set of sources contributing to visibility impairment at Class I areas affected by Georgia's sources. AoI and PSAT are acceptable and well-established methods for selecting sources for a control analysis. ^{77} Additionally, Georgia's application of a two percent AoI threshold for in-state sources, a four percent AoI threshold for out-of-state sources, and a one percent PSAT threshold based on 2028 projected emissions enabled the selection of the three in-state sources that are projected to have the highest impact on visibility at the end of the second planning period and also identified 14 out-of-state sources that have the largest impacts on visibility at Class I areas in Georgia. Georgia completed control evaluations for the three in-state sources and requested control evaluations for the 14 out-of-state sources.
^{77} The State used the AoI process because it identifies the largest sources with potential visibility impacts to Class I areas and then used sophisticated photochemical source apportionment modeling to identify specific sources for control evaluations. See also 2019 Guidance, pp. 12-13.
Apart from AoI and PSAT being well-established methods to select sources, Georgia's source selection methodology is also reasonable given the specific circumstances present in Georgia. Georgia (through VISTAS' analysis) projects that visibility conditions in Georgia's Class I areas in 2028 are estimated to improve since the 2000-2004 baseline period by 14.22 deciviews (Cohutta) and 8.44 deciviews (Okefenokee and Wolf Island). Specific to the second planning period, visibility conditions in Georgia's Class I areas in 2028 are estimated to improve since the 2014-2018 period by 2.5 deciviews (Cohutta) and 0.49 deciviews (Okefenokee and Wolf Island) on the 20 percent most impaired days. These visibility improvements represent approximately 33.0 percent (Cohutta) and 6.2 percent (Okefenokee and Wolf Island) of the additional progress needed to reach natural conditions at each Class I area. ^{78} Additionally, using the most recent 2018-2022 IMPROVE data ^{79} for Georgia's Class I areas on the 20 percent most impaired days (15.69 deciviews (Cohutta) and 16.36 deciviews (Okefenokee and Wolf Island)), in the first four years of the second planning period (2019-2022), Georgia has already achieved 22.4 percent (Cohutta) and 13.0 percent (Okefenokee and Wolf Island)) of the remaining progress needed to reach natural conditions. Georgia is also not contributing to visibility impairment at any Class I areas above the URP, and the State appropriately focused on controlling point source SO 2 emissions based on data showing ammonium sulfate is the dominant visibility impairing pollutant at the Georgia Class I areas.
^{78} The additional visibility improvement needed to reach natural conditions at the start of the second planning period based upon 2014-2018 IMPROVE data for the 20 percent most impaired days is calculated as follows: ((2014-2018 visibility conditions)−(2028 RPG))/((2014-2018 visibility conditions)−(natural conditions)) × 100 = percent progress needed to reach natural conditions from the start of the second planning period. For example, using data for Cohutta, the calculation is: ((17.37 deciviews−14.90 deciviews)/(17.37 deciviews−9.88 deciviews)) × 100 = 33.0 percent.
^{79} The 2018-2022 IMPROVE data for the 20 percent most impaired days was obtained from https://vista.cira.colostate.edu/Improve/rhr-summary-data/ under the header “Means for Impairment Metric:” The IMPROVE data includes visibility monitoring data for each Class I area. This data was filtered for each Georgia Class I area, listed as “COHU1” and “OKEF1” for Cohutta and Okefenokee, respectively, (in column “A”, titled “site”). Then data was filtered for the years 2018 through 2022 (using column “B” titled “year”). These data points were then filtered for the 20 percent most impaired days, indicated by “90” (in column “C” titled “impairment_Group”). The resulting five data points for each Georgia Class I area within the “haze_dv” column “AK”, corresponding to each of the five years, were averaged to determine the 20 percent most impaired days for the 2018-2022 five-year period.
b. Consideration of the Four CAA Factors: EPA proposes to find that Georgia has satisfied the FFA requirements through its evaluation and actions documented in the Georgia Haze Plan for the second planning period. Additionally, as laid out in further detail in the following paragraphs of this section, EPA proposes to find that GA EPD's reasonable progress determinations and conclusions for these sources are reasonable and the Georgia submission satisfies the requirement of 40 CFR 51.308(f)(2)(i).
i. Brunswick Cellulose: Regarding Brunswick Cellulose, GA EPD's conclusions and analytical methods stated in its FFA are reasonable.
Regarding the No. 4 Power Boiler, EPA proposes to find that GA EPD's determination of measures that are necessary for reasonable progress for the second planning period are reasonable. These measures include: a) Brunswick Cellulose's No. 4 Power Boiler must eliminate the firing of tire-derived fuel and limit the firing of No. 6 fuel oil to times of natural gas curtailment with additional fuel oil firing allowances during adverse bark/wood fuel conditions and b) the No. 4 Power Boiler will be limited to 15 tpy of SO 2 emissions when firing No. 6 fuel oil during periods of adverse fuel conditions. As explained in Section 7.8.3 of the Haze Plan, Georgia EPD found that eliminating the firing of tire-derived fuel in the No. 4 Power Boiler would result in cost-savings for the facility, achieving an annual SO 2 reduction of 67 tpy without requiring significant capital investment to modify equipment at the site. Furthermore, the FFA also found that this option resulted in greater annual SO 2 emission reductions than some other more expensive fuel-switching options. See Tables 3 through 5 of the accompanying TSD for further detail.
Regarding the No. 5 and No. 6 Recovery Furnaces, EPA finds that Georgia has adequately demonstrated that based on high control costs, none of the add-on SO 2 controls evaluated for the selected units were reasonable and that existing SO 2 measures at the No. 5 and No. 6 Recovery Furnaces are not necessary for reasonable progress. Therefore, no permit conditions reflecting existing SO 2 measures are required for incorporation into the SIP for these emission units. ^{80} Specifically, emission rates from 2016 to 2020 at the No. 5 and No. 6 Recovery Furnaces are consistent over this five-year period. Of these two recovery furnaces, the No. 5 recovery furnace is the higher-emitting unit. ^{81} Regarding the No. 5 Recovery Furnace, on April 16, 2024, GA EPD provided a supplement to the Haze Plan containing additional emission rate information. ^{82} In this supplement, GA EPD also notes that this unit is already subject to PSD limits for sulfur, filterable PM, and the gallons of fuel oil burned. As such, GA EPD notes that while total SO 2 emissions for this unit have fluctuated during the 2016 to 2020 period, the emission rate for the unit is within a consistent range limited by the Permit. Specifically, GA EPD notes that the SO 2 emissions rates have been consistent during the 2016 to 2020 period and have ranged from 0.1249 to 0.1523 tons SO 2 per 1,000 gallon of No. 6 Fuel Oil burned in the No. 5 Recovery Furnace.
^{80} For additional discussion, see Section 4.1 of the 2021 Memo.
^{81} Emissions from the No. 6 Recovery Furnace have not exceeded 22 tpy from 2016 through 2020 according to Section 7.8.3 of the Haze Plan. The SO 2 emissions from the No. 6 Recovery Furnace have also consistently trended downward, and GA EPD notes that future SO 2 emissions will remain between 7.8 to 22 tpy.
^{82} The April 15, 2024, supplemental information is included in the docket for this proposed action.
The measures resulting from the FFA for Brunswick Cellulose are being implemented by GA EPD through the issuance of Permit No. 2631-127-0003-V-07-3 dated October 25, 2023, which is included in the docket for this proposed rule. EPA is proposing to incorporate by reference this permit and its associated conditions into Georgia's SIP because these measures are necessary to make reasonable progress toward visibility improvement at Class I areas impacted by this facility. These permit conditions are also described under “Summary and Proposed Permit Conditions” in Section 7.8.3 of the Haze Plan.
ii. IP-Savannah: Regarding IP-Savannah, EPA finds that GA EPD adequately demonstrated that the removal of coal as a permitted fuel for combustion in the No. 13 Power Boiler is a measure necessary for reasonable progress. The costs necessary for implementation result in an overall cost saving for the facility and achieve an annual SO 2 emissions reductions of 2,662 tpy. As is detailed in Section 7.8.1. of the Haze Plan, the evaluated add-on SO 2 controls, DSI and a dry scrubber, resulted in a higher cost of control and presented challenges in solid waste disposal. Furthermore, the FFA found that the removal of coal as a permitted fuel resulted in greater annual SO 2 emission reductions than the more expensive add-on option of DSI. Overall, GA EPD's conclusions and analytical methods stated in its FFA are reasonable. This includes GA EPD's cost calculations, which followed the EPA Air Pollution Control Cost Manual recommendations where relevant to address the cost of compliance factor and consideration of the other non-cost factors. The above-described measures resulting from the FFA for IP-Savannah are being implemented by GA EPD through the issuance of conditions in Permit No. 2631-051-0007-V-04-1 issued October 20, 2023. ^{83} EPA is proposing to incorporate by reference this permit and its associated conditions into Georgia's SIP because these measures are necessary to make reasonable progress toward visibility improvement at Class I areas impacted by this facility. These permit conditions are also described under “Summary and Proposed Permit Conditions” in Section 7.8.1 of the Haze Plan.
^{83} Permit No. 2631-051-0007-V-04-1, issued on October 20, 2023, contains the permit conditions to be included in the Regional Haze SIP for the second planning period that are related to the removal of coal as a fuel in No. 13 Power Boiler, except for Conditions 3.3.7 and 6.2.6(b). Note that Conditions 3.3.7 and 6.2.6(b) are already federally enforceable conditions developed for Georgia's Regional Haze SIP approved on July 30, 2012, as part of the first planning period and are included in the permit only for completeness. See 77 FR 38501. EPA is not proposing in this notice to adopt Conditions 3.3.7 and 6.2.6(b) into the SIP for this second planning period.
iii. Plant Bowen: Regarding Plant Bowen, GA EPD's conclusions and analytical methods stated in its FFA are reasonable. The lowest evaluated cost control measure is $6,424/ton of SO 2 removed for switching to Powder River Basin (PRB) coal. See Table 7-36 of the Haze Plan. GA EPD notes that a capacity derate of around 27 percent or greater would be expected using existing equipment to process Powder River Basin (PRB) coal at the same rate as current Illinois Basin coal operations, based on the heat contents of PRB coal at 8,800 Btu/lb and 2019 Illinois Basin coal at 12,002 Btu/lb. This derate is the main cost that is captured within the $6,424/ton of SO 2 removed figure for switching to PRB coal at Plant Bowen. EPA thus proposes to agree with GA EPD's conclusions and assessments as stated in the FFA for this facility. GA EPD's cost calculations, which followed the EPA Air Pollution Control Cost Manual recommendations where relevant to address the cost of compliance factor, are also reasonable.
Thus, EPA finds that GA EPD's conclusions as summarized below are reasonable: a) there are no new SO 2 control measures at Plant Bowen for Units 1-4 that are necessary for reasonable progress for the second period; and b) removal of the MATS HCl alternative limit from the title V permit, while retaining the 0.20 lb/MMBtu SO 2 MATS limit for Plant Bowen Units 1-4, is an existing measure that is necessary to make reasonable progress.
This existing measure is being implemented by GA EPD through the conditions in Permit No. 4911-015-0011-V-04-3 dated September 6, 2023, which is included in the docket for this proposed rule. EPA is proposing to incorporate by reference this permit and its associated conditions into Georgia's SIP because these measures are necessary to make reasonable progress toward visibility improvement at Class I areas impacted by this facility. These permit conditions are also described under “Summary and Proposed Permit Conditions” in Section 7.8.2 of the Haze Plan.
c. Assessment of Five Additional Factors in 40 CFR 51.308(f)(2)(iv): EPA proposes to find that Georgia has satisfied the requirements of 40 CFR 51.308(f)(2)(iv) because GA EPD considered each of the five additional factors, discussed the measures the State has in place to address each factor (or discussed why such measures are not needed), and, where relevant, explained how each factor informed GA EPD's and VISTAS' technical analyses for the second planning period.
With respect to 40 CFR 51.308(f)(2)(iv)(A), EPA proposes to find that EPD adequately addressed the requirement to assess emission reductions due to ongoing air pollution control programs, including measures to address RAVI, through the State's emissions inventory work for the base year of 2011 as projected out to 2028.
With respect to 40 CFR 51.308(f)(2)(iv)(B), EPA proposes to find that Georgia adequately addressed this requirement to evaluate measures to mitigate the impacts of construction activities by describing various State regulations that address control of erosion, siltation, and pollution from construction activities and that require subject facilities to control PM from fugitive dust emission sources generated within plant boundaries.
With respect to 40 CFR 51.308(f)(2)(iv)(C), EPA proposes to find that Georgia adequately addressed source retirement and replacement schedules by summarizing existing and planned source retirements throughout the Haze Plan, including in Section 7.2.2 (retirements accounted for in the 2028 inventory/RPGs).
With respect to 40 CFR 51.308(f)(2)(iv)(D), EPA proposes to find that Georgia adequately addressed the requirement to consider the State's basic smoke management practices for prescribed fire used for agricultural and wildland vegetation management purposes and smoke management programs for the following reasons. The State describes its smoke management plan, which is implemented through a memorandum of understanding between EPD, the Georgia Forestry Commission, and the Georgia Department of Natural Resources Wildlife Resources Division. ^{84}
^{84} GA EPD notes that elemental carbon is the primary visibility impairing pollutant related to wildfires, prescribed wildland fires, and agricultural burning. Elemental carbon is a relatively minor contributor to visibility impairment on the 20 percent most impaired days from the base period (2000-2004) through 2018 at the Class I areas in VISTAS and Class I areas neighboring VISTAS based on IMPROVE monitoring data as discussed in Section 2.4 of the Haze Plan.
With respect to 40 CFR 51.308(f)(2)(iv)(E), EPA proposes to find that Georgia assessed the anticipated net effect on visibility due to projected changes in point, area, and mobile source emissions over the second period in development of the 2028 RPGs for the Georgia Class I areas. EPD used the 2011 base year emissions inventory to project emissions from various source sectors to 2028, the end of the second planning period. EPD, through VISTAS, completed CAMx modeling to estimate visibility impairment in 2028 based on projected 2028 emissions from the 2011 base year inventory and using IMPROVE monitoring data for 2009-2013. ^{85} For Georgia, estimated visibility improvements by 2028 in each Class I area are based on: estimated emissions reductions associated with existing Federal and State measures implemented or expected to be implemented during the second planning period; emissions reductions associated with facility closures that occurred after the 2016 point source emissions base year ( i.e., January 1, 2017 through November 18, 2018); and estimates of emissions changes associated with economic growth and other factors.
^{85} In preparing the 2028 emissions for point sources, Georgia started with a 2016 base year inventory which includes emission reductions associated with Federal and State control programs and consent decrees included in the LTS for the first planning period.
e. Interstate Consultation: With respect to interstate consultation pursuant to 40 CFR 51.308(f)(2)(ii), EPA proposes to find that Georgia has met the requirements under 40 CFR 51.308(f)(2)(ii) to consult with those States with Class I areas where Georgia emissions may reasonably be anticipated to cause or contribute to visibility impairment and to consult with those States whose sources may reasonably be anticipated to cause or contribute to visibility impairment at Georgia's Class I areas. With respect to other States' requests for Georgia to complete four factor analyses for IP-Savannah and Plant Bowen, Georgia did so. Georgia also satisfactorily documented its disagreement with Indiana regarding Georgia's request for Indiana to complete FFAs for Gibson Station and AEP Rockport Generating Station. With respect to consultation with other States with visibility impacts to Georgia's, GA EPD adequately documented the responses from consulted States in Appendix F, provided a summary of its consultation in Section 10.1.1, and identified whether the State agrees with the conclusions.

D. Reasonable Progress Goals
1. RHR Requirement: Section 51.308(f)(3) contains the requirements pertaining to RPGs for each Class I area. Section 51.308(f)(3)(i) requires a State in which a Class I area is located to establish RPGs—one each for the clearest days and the most impaired days—reflecting the visibility conditions that will be achieved at the end of the planning period as a result of the emission limitations, compliance schedules, and other measures required under paragraph (f)(2) to be in States' LTSs, as well as the implementation of other CAA requirements. The LTSs, as reflected by the RPGs, must provide for an improvement in visibility on the most impaired days relative to the baseline period and ensure no degradation on the clearest days relative to the baseline period. Section 51.308(f)(3)(ii) applies in circumstances in which a Class I area's RPG for the most impaired days represents a slower rate of visibility improvement than the uniform rate of progress calculated under 40 CFR 51.308(f)(1)(vi). Under 40 CFR 51.308(f)(3)(ii)(A), if the State in which a mandatory Class I area is located establishes an RPG for the most impaired days that provides for a slower rate of visibility improvement than the URP, the State must demonstrate that there are no additional emission reduction measures for anthropogenic sources or groups of sources in the State that would be reasonable to include in its LTS. Section 51.308(f)(3)(ii)(B) requires that if a State contains sources that are reasonably anticipated to contribute to visibility impairment in a Class I area in another State, and the RPG for the most impaired days in that Class I area is above the URP, the upwind State must provide the same demonstration.
2. State Assessment: Georgia established 2028 RPGs for each of its Class I areas in deciviews for the 20 percent clearest days and the 20 percent most impaired in Tables 8-1 and 8-2, respectively, of the Haze Plan, which are all projected to remain below the URP for each Class I area based on VISTAS' modeling. Table 3 summarizes the 2028 RPGs and 2028 URPs for Georgia's Class I areas.
Table 3—Georgia's Class I Area RPGs and URPs for 2028 in Deciviews
[dv]
Class I area | 2028 RPG 20% clearest (dv) | 2028 RPG 20% most impaired (dv) | 2028 Uniform rate of progress (URP) (dv)
Cohutta | 9.15 | 14.90 | 21.42
Okefenokee | 11.58 | 16.90 | 18.98
Wolf Island | 11.58 | 16.90 | 18.98
Figures 3-1 and 3-2 of the Haze Plan show the URP for the 20 percent most impaired days for Cohutta and Okefenokee (also Wolf Island), respectively.
3. EPA Evaluation: EPA proposes to determine that Georgia has satisfied the applicable requirements of 40 CFR 51.308(f)(3) relating to RPGs. Specifically, the State established 2028 RPGs expressed in deciviews that reflect the visibility conditions that are projected to be achieved by the end of the second planning period as a result of implementation of the LTS and other CAA requirements. Georgia's RPGs illustrate improvement in visibility for the 20 percent most impaired days since the baseline period (2000-2004) and demonstrate that there is no degradation in visibility for the 20 percent clearest days since the baseline period. Any additional unanticipated emissions reductions provide further assurances that the State's Class I areas will achieve their 2028 RPGs.

E. Monitoring Strategy and Other State Implementation Plan Requirements
1. RHR Requirement: Section 51.308(f)(6) specifies that each comprehensive revision of a State's regional haze SIP must contain or provide for certain elements, including monitoring strategies, emissions inventories, and any reporting, recordkeeping, and other measures needed to assess and report on visibility. A main requirement of this subsection is for States with Class I areas to submit monitoring strategies for measuring, characterizing, and reporting on visibility impairment. Compliance with this requirement may be met through participation in the IMPROVE network.
Section 51.308(f)(6)(i) requires SIPs to provide for the establishment of any additional monitoring sites or equipment needed to assess whether RPGs to address regional haze for all mandatory Class I areas within the State are being achieved. Section 51.308(f)(6)(ii) requires SIPs to provide for procedures by which monitoring data and other information are used in determining the contribution of emissions from within the State to regional haze visibility impairment at mandatory Class I areas both within and outside the State. Section 51.308(f)(6)(iii) applies only to States that do not have a mandatory Class I areas. Section 51.308(f)(6)(iv) requires the SIP to provide for the reporting of all visibility monitoring data to the Administrator at least annually for each Class I area in the State. Section 51.308(f)(6)(v) requires SIPs to provide for a statewide inventory of emissions of pollutants that are reasonably anticipated to cause or contribute to visibility impairment, including emissions for the most recent year for which data are available and estimates of future projected emissions. It also requires a commitment to update the inventory periodically. Section 51.308(f)(6)(v) also requires States to include estimates of future projected emissions and include a commitment to update the inventory periodically. Under 40 CFR 51.308(f)(4), if EPA or the FLM of an affected Class I area has advised a State that additional monitoring is needed to assess RAVI, the State must include in its SIP revision for the second planning period an appropriate strategy for evaluating such impairment.
2. State Assessment: With respect to 40 CFR 51.308(f)(6)(i), Georgia states the existing IMPROVE monitors for the State's Class I areas are sufficient for the purposes of this SIP revision. With respect to 40 CFR 51.308(f)(6)(ii), Georgia will use data from these IMPROVE monitors for future haze plans and progress reports. 40 CFR 51.308(f)(6)(iii) does not apply to Georgia. With respect to 40 CFR 51.308(f)(6)(iv), NPS manages and oversees the IMPROVE monitoring network and reviews, verifies, and validates IMPROVE data before its submission to EPA's Air Quality System (AQS). With respect to 40 CFR 51.308(f)(6)(v), GA EPD provided a statewide baseline emissions inventory of pollutants for the year 2011 in Table 4-1; provided 2014 and 2017 emissions data for PM 2.5, SO 2 , and NO X , in Tables 13-10, 13-11, and 13-12, respectively; provided EPA and VISTAS 2028 future emissions projections for SO 2 and NO X in Table 4-2; and for specific point sources, 2028 VISTAS emission projections for SO 2 and NO X in Tables 7-26 through 7-28; and committed to update the inventory periodically. With respect to 40 CFR 51.308(f)(6)(vi), Georgia affirms there are no elements, including reporting, recordkeeping, or other measures, necessary to address and report on visibility for Georgia's Class I areas or Class I areas outside the State that are affected by sources in Georgia. With respect to 40 CFR 51.308(f)(4), the State did not include a strategy for evaluating RAVI for any Class I areas because no Federal agency requested additional monitoring to assess RAVI. Section II of the TSD to this rulemaking provides a more detailed summary of the State's assessment of Georgia's monitoring strategy for regional haze and other plan requirements pursuant to 40 CFR 51.308(f)(6).
3. EPA Evaluation: EPA proposes to determine that Georgia has satisfied the applicable requirements of 40 CFR 51.308(f)(4) and 40 CFR 51.308(f)(6) related to RAVI, visibility monitoring, and emissions inventories. With respect to 40 CFR 51.308(f)(4), EPA proposes to find that this requirement does not apply to Georgia at this time because neither EPA nor the FLMs requested additional monitoring to assess RAVI.
EPA proposes to determine that Georgia has satisfied 40 CFR 51.308(f)(6), which is generally met by the State's continued participation in the IMPROVE monitoring network and the VISTAS RPO, for the following reasons. With respect to 40 CFR 51.308(f)(6)(i), Georgia stated that the existing IMPROVE monitors relied upon for the State's three Class I areas are adequate, and thus, additional monitoring sites or equipment are not needed to assess whether RPGs for all Class I areas within the State are being achieved. With respect to 40 CFR 51.308(f)(6)(ii), Georgia has procedures by which monitoring data and other information are used to determine the contribution of emissions from within the State to regional haze at Class I areas both within and outside the State through Georgia's continued participation in VISTAS' regional haze work. With respect to 40 CFR 51.308(f)(6)(iii), this provision is applicable for States with no Class I areas and does not apply to Georgia. Regarding the reporting of visibility monitoring data to EPA at least annually for each Class I area in the State pursuant to 40 CFR 51.308(f)(6)(iv), EPA proposes to find that Georgia's participation in the IMPROVE Steering Committee and the IMPROVE monitoring network addresses this requirement. With respect to 40 CFR 51.308(f)(6)(v), EPA proposes to find that Georgia's continued participation in VISTAS' efforts for projecting future emissions and continued compliance with the requirements of the AERR to periodically update emissions inventories satisfies the requirement to provide for an emissions inventory for the most recent year for which data are available. EPA proposes to find that Georgia adequately documented that no further elements are necessary at this time for the State to assess and report on visibility pursuant to 40 CFR 51.308(f)(6)(vi).

F. Requirements for Periodic Reports Describing Progress Toward the Reasonable Progress Goals
1. RHR Requirement: Section 51.308(f)(5) requires that periodic comprehensive revisions of States' regional haze plans also address the progress report requirements of 40 CFR 51.308(g)(1) through (5). The purpose of these requirements is to evaluate progress toward the applicable RPGs for each Class I area within the State and each Class I area outside the State that may be affected by emissions from within that State. Sections 51.308(g)(1) and (2) apply to all States and require a description of the status of implementation of all measures included in a State's first planning period regional haze plan and a summary of the emission reductions achieved through implementation of those measures. Section 51.308(g)(3) applies only to States with Class I areas within their borders and requires such States to assess current visibility conditions, changes in visibility relative to baseline (2000-2004) visibility conditions, and changes in visibility conditions relative to the period addressed in the first planning period progress report. Section 51.308(g)(4) applies to all States and requires an analysis tracking changes in emissions of pollutants contributing to visibility impairment from all sources and sectors since the period addressed by the first planning period progress report. This provision further specifies the year or years through which the analysis must extend depending on the type of source and the platform through which its emission information is reported. Finally, 40 CFR 51.308(g)(5), which also applies to all States, requires an assessment of any significant changes in anthropogenic emissions within or outside the State have occurred since the period addressed by the first planning period progress report, including whether such changes were anticipated and whether they have limited or impeded expected progress toward reducing emissions and improving visibility.
2. State Assessment: With respect to the progress report elements pursuant to 40 CFR 51.308(f)(5), GA EPD addressed these elements in Section 13 of the Haze Plan for the period 2013 to 2018, the end of the first period. ^{86}
^{86} Georgia's first period progress report covered the period from 2008-2013. In Section 13 of the Haze Plan, Georgia included EGU emissions data through 2021.
Regarding 40 CFR 51.308(g)(1) and 40 CFR 51.308(g)(2), GA EPD describes the status of the implementation of the measures of the LTS from the first planning period and provides a summary of the emission reductions achieved by implementing those measures from 2014-2019 in Section 13.3.1. Emissions reductions data is quantified where such data is available. The status of the SO 2 control measures and associated emissions reductions for Georgia's BART and reasonable progress sources from the first planning period is summarized in Table 13-4 of the Haze Plan which shows that these sources reduced emissions by approximately 8,223 tpy of SO 2 . Section 13.3.2 describes the status and SO 2 emissions reductions from measures not included in Georgia's haze plan for the first period.
With respect to 40 CFR 51.308(g)(3), in Tables 13-5 through 13-9 of the Haze Plan, GA EPD calculated for the three Class I areas: current visibility conditions (2014-2018), changes in visibility relative to baseline (2000-2004) visibility conditions, and changes in visibility conditions compared to the last five years. The data shows that all Class I areas saw an improvement in visibility on the 20 percent worst days and on the 20 percent clearest days. ^{87}
^{87} For the first period, visibility conditions were determined for the average of the 20 percent most impaired visibility days (referred to as the “worst” days) and the 20 percent least impaired visibility days (referred to as the “best” days). These terms were updated to “clearest” and “most impaired,” respectively, as part of two recent actions by EPA. See 82 FR 3078 (January 10, 2017) and “2018 Visibility Tracking Guidance.”
Regarding 40 CFR 51.308(g)(4), in Section 13.5, GA EPD provided emissions trends from 2011 through 2019 for SO 2 , NO X , PM 2.5 , PM 10 , and VOCs which reflect the emissions reductions from the measures in the first period LTS. In summary, reductions in SO 2 emissions have been significant and greater than VISTAS projected. For example, statewide SO 2 emissions from all sources (point, area, on-road, non-road, and fires) decreased from 102,155 tpy in 2014 to 38,188 tpy in 2017. Similarly, SO 2 emissions from EGU sources in Georgia decreased from 64,506 tpy in 2014 to 8,385 tpy in 2021. In spite of significant reductions in SO 2 , Section 7.4 of the Haze Plan identifies sulfates as continuing to play a significant role in visibility impairment, especially for the most anthropogenically impaired days. ^{88} As SO 2 emissions continue to drop, nitrates may begin to have a larger relative impact on regional haze in future planning periods.
^{88} Figures 13-1 and 13-2 of the Haze Plan provides the breakdown of visibility impairing pollutants for the 20 percent worst visibility days and clearest visibility days in each of Georgia's Class I areas over 2011 through 2018 timeframe.
Regarding 40 CFR 51.308(g)(5), GA EPD believes that there does not appear to be any significant change in anthropogenic emissions within Georgia or outside the State that have occurred since the period addressed in the most recent plan that would limit or impede progress in reducing pollutant emissions or improving visibility. Section III of the TSD to this rulemaking provides a more detailed summary of the State's assessment of how Georgia addressed requirements for periodic reports describing progress toward the RPGs for the State's Class I areas pursuant to 40 CFR 51.308(f)(5).
3. EPA Evaluation: EPA proposes to find that Georgia has met the requirements of 40 CFR 51.308(g)(1)-(5) because the Haze Plan adequately describes the status of the measures included in the LTS from the first planning period and the emission reductions achieved from those measures; the visibility conditions and changes at the Georgia Class I areas; an analysis tracking the changes in emissions since the first planning period progress report using available NEI emissions data for 2014 and 2017 and annual EGU SO 2 emissions data from 2014 to 2021; evaluates 2017 NEI data which is the most recent triennial emissions inventory submission from Georgia prior to submission of the Haze Plan in accordance with the RHR; and assessed whether any significant changes in anthropogenic emissions within or outside the State have occurred since 2013 (the end of the period addressed by Georgia's first planning period progress report), including whether or not these changes in anthropogenic emissions were anticipated in that most recent plan and whether they have limited or impeded progress in reducing pollutant emissions and improving visibility. Thus, EPA is proposing to find that Georgia has met the requirements of 40 CFR 51.308(f)(5).

G. Requirements for State and Federal Land Manager Coordination
1. RHR Requirement: Section 169A(d) of the CAA requires States to consult with FLMs before holding the public hearing on a proposed regional haze SIP and to include a summary of the FLMs' conclusions and recommendations in the notice to the public. In addition, the FLM consultation provision of 40 CFR 51.308(i)(2) requires a State to provide the FLMs with an opportunity for consultation that is early enough in the State's policy analyses of its emission reduction obligation so that information and recommendations provided by the FLMs can meaningfully inform the State's decisions on its LTS. If the consultation has taken place at least 120 days before a public hearing or public comment period, the opportunity for consultation will be deemed early enough. Regardless, the opportunity for consultation must be provided at least 60 days before a public hearing or public comment period at the State level. Section 51.308(i)(2) also provides two substantive topics on which the FLMs must be provided an opportunity to discuss with States: assessment of visibility impairment in any Class I area and recommendations on the development and implementation of strategies to address visibility impairment. Section 51.308(i)(3) requires States, in developing their implementation plans, to include a description of how they addressed FLMs' comments. Section 40 CFR 51.308(i)(4) requires that the regional haze SIP revision provide procedures for continuing consultation between the State and FLMs regarding the State's visibility protection program.
2. State Assessment: As required by CAA section 169A(d), Georgia consulted with the FLMs prior to opening the State public period ^{89} on its proposed haze plan and included a summary of the conclusions and recommendations of the FLMs in the proposed plan dated June 24, 2022. See Haze Plan Section 10.3 and Appendix H. Georgia consulted with the FLMs on April 22, 2022, which was 62 days before the opening of the public comment period on June 24, 2022.
^{89} GA EPD provided a draft plan to the FLMs on April 22, 2022.
With respect to 40 CFR 51.308(i)(2), GA EPD offered to the three FLM agencies the opportunity to consult on the April 22, 2022, draft Georgia Haze Plan. Additionally, GA EPD shared with the FLMs the June 24, 2022, Prehearing Georgia Haze Plan issued for State public notice and comment with a public hearing held July 25, 2022, with the close of the comment period on July 26, 2022. A summary of this consultation process is discussed and documented in Appendix H-4a of the Haze Plan (responses to FLM comments) with supporting information in Appendix H-1a, H-1b, and H-1c (FLM comments received) and Appendix F. ^{90} Appendix H provides a summary of the NPS and USFS comments received on the draft and prehearing haze plans. Appendix H-4a provides GA EPD's responses to comments from the FLMs. Appendix H-1a contains comments from the USFS. Appendix H-1b and H-1c contains comments from the NPS. No comments were received from the FWS.
^{90} Appendix F-3o of the Haze Plan provides three sets of letters to the FLMs dated April 22, 2022, requesting input on Georgia's draft plan. Appendices F-3a-3n include VISTAS consultation outreach with stakeholders, including the FLMs. ( See, in particular, Appendices F-3b, F-3c, F-3d, and F-3j).
To address 40 CFR 51.308(i)(3), GA EPD provided responses to NPS and USFS comments in Appendix H-4a of the Haze Plan.
With respect to 40 CFR 51.308(i)(4), Georgia updated its existing procedures for continuing consultation with the FLMs, including annual discussions with a review of the most recent IMPROVE monitoring data. Records of annual consultations and progress report consultations will be maintained in GA EPD's regional haze files.
3. EPA Evaluation: EPA proposes to find that Georgia adequately addressed the FLM requirements in CAA section 169A(d) and 40 CFR 51.308(i). Georgia consulted with the FLMs prior to the public hearing on the Haze Plan and included a summary of the conclusions and recommendations of the FLMs in the proposed plan issued for public review. ^{91}
^{91} The consultation did not occur in person as stated in the CAA due to the convenience and efficiency of using email, phone calls, and video meetings.
EPA proposes to find that Georgia fully addressed the minimum 60-day requirement for FLM consultation under 40 CFR 51.308(i)(2) for the Haze Plan because GA EPD offered the April 22, 2022, draft Georgia Haze Plan for FLM comment at least 60 days prior to the start of GA EPD's public comment opportunity which opened on June 24, 2022, and closed on July 26, 2022.
EPA proposes to find that Georgia adequately addressed 40 CFR 51.308(i)(3) for the Haze Plan because the State's provided its responses to the FLM comments, as detailed in Appendices H-1a, 1b, and 1c of the Haze Plan.
EPA proposes to find that Georgia adequately addressed 40 CFR 51.308(i)(4) because the SIP revision provides ongoing consultation procedures with the FLMs, including annual discussions regarding implementation of the State's regional haze program with a review of the most recent IMPROVE monitoring data.

H. Environmental Justice Considerations
This proposed action would adopt source-specific provisions addressing SO 2 emissions into the Georgia SIP. EPA expects that this proposed action and resulting emissions reductions will generally contribute to reduced environmental and health impacts on all populations in Georgia, including people of color and low-income populations. Further, there is no information in the record indicating that this action is expected to have disproportionately high or adverse human health or environmental effects on a particular group of people. ^{92}
^{92} In Section 7.11 of the Haze Plan. GA EPD notes that the State has not identified any EJ communities living in any Class I areas whose visibility would be disproportionately impacted by GA EPD's selection of reasonable progress controls.

V. Incorporation by Reference
In this document, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, and as discussed above in this preamble, EPA is proposing to incorporate by reference into Georgia's SIP GA EPD Permit No. 4911-015-0011-V-04-3 for Bowen Steam-Electric Generating Plant (State effective September 6, 2023), GA EPD Permit No. 2631-051-0007-V-04-1 for International Paper—Savannah (State effective October 20, 2023), and GA EPD Permit No. 2631-127-0003-V-07-3 for Brunswick Cellulose LLC (State effective October 25, 2023). EPA has made, and will continue to make, the SIP generally available through www.regulations.gov and at the EPA Region 4 Office (please contact the person identified in the “For Further Information Contact” section of this preamble for more information).

VI. Proposed Action
EPA is proposing to approve Georgia's August 11, 2022, SIP submission as satisfying the regional haze requirements for the second planning period contained in 40 CFR 51.308(f). Thus, EPA is proposing to adopt into Georgia's SIP GA EPD Permit No. 4911-015-0011-V-04-3 for Bowen Steam-Electric Generating Plant (State effective September 6, 2023), GA EPD Permit No. 2631-051-0007-V-04-1 for International Paper—Savannah (State effective October 20, 2023), and GA EPD Permit No. 2631-127-0003-V-07-3 for Brunswick Cellulose LLC (State effective October 25, 2023).

VII. Statutory and Executive Order Reviews
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the CAA. Accordingly, this proposed action merely proposes to approve State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this proposed action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a State program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. In those areas of Indian country, the rule does not have Tribal implications and will not impose substantial direct costs on Tribal governments or preempt Tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
Georgia did not evaluate EJ considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this proposed action. Due to the nature of the action being proposed here, this proposed action is expected to have positive impact on the air quality of the affected area. Consideration of EJ is not required as part of this proposed action, and there is no information in the record inconsistent with the stated goal of Executive Order 12898 of achieving EJ for people of color, low-income populations, and Indigenous peoples.

List of Subjects in 40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by reference, Nitrogen dioxide, Particulate matter, Sulfur oxides.

Authority:
42 U.S.C. 7401 et seq.
Dated: May 28, 2024.
Jeaneanne Gettle,

Acting Regional Administrator, Region 4.
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 52 and 70
[EPA-R07-OAR-2024-0025; FRL-11676-01-R7]
Air Plan Approval; Nebraska; Revisions to Title 129 of the Nebraska Administrative Code; Nebraska Air Quality Regulations

AGENCY:
Environmental Protection Agency (EPA).

ACTION:
Proposed rule.

SUMMARY:
The Environmental Protection Agency (EPA) is proposing to approve revisions to the Nebraska State Implementation Plan (SIP), Operating Permits Program, and 112(l) Plan. The revisions were submitted by the State of Nebraska on December 2, 2022. This proposed action will amend the SIP to revise Nebraska air quality regulations and will add specific definitions from a Nebraska statute. These proposed changes include new and renumbered rules, the consolidation of 43 chapters into 16 chapters, replacement of duplicative language with references to state statute and federal regulation, revisions to reflect changes to state and federal law, and other changes to state regulations. The EPA's proposed approval of this rule revision is in accordance with the requirements of the Clean Air Act (CAA).

DATES:
Comments must be received on or before July 3, 2024.

ADDRESSES:
You may send comments, identified by Docket ID No. EPA-R07-OAR-2024-0025 to https://www.regulations.gov. Follow the online instructions for submitting comments.
Instructions: All submissions received must include the Docket ID No. for this rulemaking. Comments received will be posted without change to https://www.regulations.gov, including any personal information provided. For detailed instructions on sending comments and additional information on the rulemaking process, see the “Written Comments” heading of the SUPPLEMENTARY INFORMATION section of this document.

FOR FURTHER INFORMATION CONTACT:
William Stone, Environmental Protection Agency, Region 7 Office, Air Permitting and Planning Branch, 11201 Renner Boulevard, Lenexa, Kansas 66219; telephone number: (913) 551-7714; email address: stone.william@epa.gov.

SUPPLEMENTARY INFORMATION:
Throughout this document “we,” “us,” and “our” refer to the EPA.

Table of Contents
I. Written Comments
II. What is being addressed in this document?
III. Have the requirements for approval of a SIP revision been met?
IV. What action is the EPA taking?
V. Incorporation by Reference
VI. Statutory and Executive Order Reviews

I. Written Comments
Submit your comments, identified by Docket ID No. EPA-R07-OAR-2024-0025, at https://www.regulations.gov. Once submitted, comments cannot be edited or removed from Regulations.gov . The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( i.e. on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

II. What is being addressed in this document?
The EPA is proposing to amend Nebraska's SIP and Operating Permits Program to include revisions to title 129 of the Nebraska Administrative Code and to add specific definitions from Nebraska Revised Statute 81-1502. The EPA is proposing to approve revisions to the Nebraska SIP received on December 2, 2022. The revisions are to Title 129—Nebraska Air Quality Regulations and include specific definitions from Nebraska Revised Statute 81-1502. These proposed changes include new and renumbered rules, the consolidation of 43 chapters into 16 chapters, replacement of duplicative language with references to state statute and federal regulation, approval of specific definitions in state statute, revisions to reflect changes to state and federal law, and other changes to state regulations.
In addition to the changes discussed above, the state's revision to title 129 includes state rules that allow small projects to start construction prior to receiving a construction permit. To be eligible for this program, the new source or modification to an existing source must not be subject to Nonattainment New Source Review (NSR), case-by-case Maximum Achievable Control Technology (MACT) or Prevention of Significant Deterioration (PSD) or be a source seeking federally enforceable permit restrictions to avoid review under Nonattainment NSR, case-by-case MACT or PSD. The source is prohibited from operating until a construction permit has been issued. Since the source is not allowed to hook up the equipment to the exhaust stack or operate the equipment in any way that may emit any pollutant prior to receiving a construction permit, there is no change to emissions or air quality as a result of these revisions. Nebraska Department of Environment and Energy's (NDEE's) requirements for reviewing the permit application and protecting air quality are unchanged by these revisions. In the Technical Support Document (TSD) for Chapter 3 included in the docket for this action, we include more information about this change.
This revision is in compliance with federal requirements, including: (1) CAA section 110(a)(2)(c), which requires states to include a minor NSR program in their SIP to regulate modifications and new construction of stationary sources within the area as necessary to assure the National Ambient Air Quality Standards (NAAQS) are achieved; (2) The regulatory requirements under 40 CFR 51.160, including § 51.160(b), which requires states to have legally enforceable procedures to prevent construction or modification of a source if it would violate any SIP control strategies or interfere with attainment or maintenance of the NAAQS; and (3) the statutory requirements under CAA section 110(l), which provides that the EPA cannot approve a SIP revision if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress, or any other applicable requirement of the CAA.
The state also revised the carbon monoxide threshold for minor construction permitting from 50 tons per year to 100 tons per year. In the TSD for Chapter 3 included in the docket for this action, we explain how allowing NDEE to increase the permitting threshold for Carbon Monoxide (CO) for minor construction permits meets the requirements of section 110(l) of the CAA. The summary includes the state's monitoring and emissions trends for CO and an explanation of how Nebraska's construction permitting program protects protect air quality in Nebraska from exceeding the NAAQS. In this analysis we also stated that the state of Nebraska operates two CO monitors and both are in attainment for the 1-hour and 8-hour 1971 CO NAAQS, with design values less than 16% of the 8-hour NAAQS.
In addition, title 129 has been revised to include an exemption to emission standards for oxides of nitrogen at nitric acid production installations if the installation is subject to 40 CFR part 60 Subpart Ga Standards of Performance for Nitric Acid Plants for Which Construction, Reconstruction, or Modification Commenced After October 14, 2011 or other more stringent federal standards or a more stringent permit limit. Section 110(l) of the CAA states that EPA cannot approve a SIP revision if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress (RFP), or any other applicable requirement of the CAA. The new exemptions to the nitrogen oxide limit of this regulation only apply to sources subject to the NSPS or other more stringent limits. This means that any source that becomes exempt from the nitrogen oxide limit in title 129, is controlled for this pollutant by the NSPS or other more stringent limits. In addition to this regulatory backstop EPA acknowledges that the state of Nebraska in currently in attainment with all NAAQS. For these reasons, we find that this action will not interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in section 171 of the CAA), or any other applicable requirement of the CAA as required under section 110(l). This change is further explained the TSD for Chapter 16.
This action also proposes to remove the total reduced sulfur (TRS) ambient standard from the SIP. On April 16, 2024, Nebraska requested that EPA not approve this portion of Chapter 2 from the December 2, 2022 submission. This standard was approved into the SIP initially in Chapter 4, but has no federal basis, so the state has proposed to remove it from the SIP, but retain it as a state only standard. Because Nebraska's December 2, 2022 submission requested that the EPA replace rules that were approved in the SIP with the amended title 129 rules, and because Nebraska has withdrawn the amended title 129 rules related to TRS, the EPA proposes to remove rules related to TRS from the SIP. In the TSD for Chapter 2 included in the docket for this action, we explain how removing TRS from the SIP meets the requirements of section 110(l) of the CAA.
In Chapter 10 Permits—Public Participation, NDEE has removed language that is duplicated in Title 115 Chapter 3 Public Hearings which was approved into the SIP (86 FR 26843). In section 2 of Chapter 10, NDEE has also removed language requiring public notice to be distributed to persons that have signed up for a department mailing list. The state continues to distribute public notices for air permits by email to person who provide and email to the department as required by 40 CFR 70.7(h)(2).
In section 3 of Chapter 10, NDEE removed language that specifically requires the public notice to contain the emissions change involved in any permit modification. Title 115 Chapter 3 section 7 requires the public notice to contain a brief description of the business conducted at the facility or activity described in the permit application or the draft permit. The department considers any change in emissions to be an activity described in the permit application, and as such, continues to put any emission change in the public notice. The EPA agrees with NDEE that this requirement fulfills the requirement of 40 CFR 70.7(h)(2) to identify the emissions change involved in any permit modification.
All of the revisions are described in detail in the technical support documents (TSD) included in the docket for this action.

III. Have the requirements for approval of a SIP revision been met?
The State submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. The State provided public notice on this SIP revision from February 23, 2022 to March 29, 2022, and held a public hearing on March 30, 2022 and received no comments. In addition, as explained above and in more detail in the TSD which is part of this docket, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

IV. What action is the EPA taking?
We are proposing to amend the Nebraska SIP by approving the State's request to revise Title 129—Nebraska Air Quality Regulations and certain definitions in Nebraska Revised Statute 81-1502. Approval of these revisions will ensure consistency between state and federally-approved rules. The EPA has determined that these changes will not adversely impact air quality.
The EPA is soliciting comment on the substantive revisions detailed in this proposal and the TSDs. The EPA is not soliciting comment on existing rule text, including existing rule text that has been reorganized, as these provisions have been previously approved by the EPA into the SIP or Operating Permits Program. Final rulemaking will occur after consideration of any comments.

V. Incorporation by Reference
In this document, the EPA is proposing to include regulatory text in an EPA final rule that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Nebraska rules:
• Chapter 1—General Provisions; Definitions, which provides general provisions and definitions for air quality regulations;
• Chapter 2—Nebraska Air Quality Standards, which lists the ambient air quality standards;
• Chapter 3—Construction Permits, which regulates air construction permitting in Nebraska;
• Chapter 4—Prevention Of Significant Deterioration of Air Quality (PSD) which regulates PSD permitting in Nebraska;
• Chapter 6—Operating Permits which regulates air operating permitting in Nebraska;
• Chapter 7—General Permits which regulates air general permitting in Nebraska;
• Chapter 8—Permits-By-Rule which regulates air permit-by-rule permitting in Nebraska;
• Chapter 9—Permit Revisions; Reopening For Cause which regulates air permit revisions in Nebraska;
• Chapter 10—Permits—Public Participation which regulates public notice requirements for air permitting in Nebraska;
• Chapter 11—Emissions Reporting, When Required which regulates air emissions inventory in Nebraska;
• Chapter 14—Incinerators, Emission Standards which regulates emissions from incinerators in Nebraska;
• Chapter 15—Compliance which regulates compliance with air regulations in Nebraska;
• Chapter 16—Sulfur Compound and Nitrogen Oxides Emissions Standards which regulates emissions of sulfur dioxide and nitrogen oxides in Nebraska;
• Appendix I—Hazardous Air Pollutants Sorted by CAS Number which lists the hazardous air pollutants;
• Appendix II—Air Pollution Emergency Episodes which explains Nebraska's emergency episode procedures; and
• Nebraska Revised Statute 81-1502—Terms, Defined which contains definitions for Nebraska's air quality regulations.
The state effective date of these rules is September 28, 2022. The state effective date of Nebraska Revised Statute 81-1502 is March 21, 2019. The EPA has made, and will continue to make, these materials generally available through https://www.regulations.gov and at the EPA Region 7 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).
Also, in this document, as described in the proposed amendments to 40 CFR part 52 set forth below, EPA is proposing to remove provisions of the EPA-Approved Nebraska Regulations and Statutes from the Nebraska State Implementation Plan, which is incorporated by reference in accordance with the requirements of 1 CFR part 51.

VI. Statutory and Executive Order Reviews
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it approves a state program;
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001); and
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA.
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Executive Order 12898 (Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, February 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”
The NDEE did not evaluate environmental justice considerations as part of its SIP submittal; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.

List of Subjects
40 CFR Part 52
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.
40 CFR Part 70
Environmental protection, Administrative practice and procedure, Air pollution control, Intergovernmental relations, Operating permits, Reporting and recordkeeping requirements.
Dated: May 21, 2024.
Meghan A. McCollister,

Regional Administrator, Region 7.
For the reasons stated in the preamble, the EPA proposes to amend 40 CFR parts 52 and 70 as set forth below:

PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS
1. The authority citation for part 52 continues to read as follows:

Authority:
42 U.S.C. 7401 et seq.

Subpart CC—Nebraska
2. In § 52.1420, in the table in paragraph (c):
a. Revise the center heading “Department of Environmental Quality” to read “Department of Environment and Energy”.
b. Revise the entries “129-1”, “129-2”, “129-3”, and “129-4”;
c. Remove the entry “129-5”;
d. Revise the entries “129-6”, “129-7”, “129-8”, “129-9”, “129-10”, and “129-11”;
e. Remove the entries “129-12” and “129-13”;
f. Revise the entries “129-14”, “129-15”, and “129-16”;
g. Remove the entries “129-17”, “129-19”, “129-20”, “129-21”, “129-22”, “129-24”, “129-25”, “129-30”, “129-32”, “129-33”, “129-34”, “129-35”, “129-36”, “129-37”, “129-38”, “129-41”, “129-42”, “129-43”, and “129-44”;
h. Revise the entries “Appendix I” and “Appendix II”; and
i. Add the center heading “Nebraska Revised Statute 81-1502 Terms Defined” and the entry “1502” after the entry “115-3”.
The revisions and additions read as follows:
§ 52.1420
Identification of plan.
* * * * *
(c) * * *
EPA-Approved Nebraska Regulations
Nebraska citation | Title | State effective date | EPA approval date | Explanation
State of Nebraska
Department of Environment and Energy
Title 129—Nebraska Air Quality Regulations
129-1 | General Provisions; Definitions | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-2 | Nebraska Air Quality Standards | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule] | Section 002 Total reduced sulfur (TRS) is not approved into the SIP.
129-3 | Construction Permits | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-4 | Prevention of Significant Deterioration (PSD) | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-6 | Operating Permits | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-7 | General Permits | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-8 | Permits-By-Rule | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-9 | Permit Revisions; Reopening For Cause | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-10 | Permits—Public Participation | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-11 | Emissions Reporting, When Required | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-14 | Incinerators, Emission Standards | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-15 | Compliance | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
129-16 | Sulfur Compound and Nitrogen Dioxides Emissions Standards | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
Appendix I | Hazardous Air Pollutants Sorted by CAS Number | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
Appendix II | Air Pollution Emergency Episodes | 9/28/2022 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule]
* * * * * * *
Nebraska Revised Statute 81-1502 Terms Defined
1502 | Terms Defined | 3/21/2019 | [Date of publication of the final rule in the Federal Register ], [ Federal Register citation of the final rule] | The following paragraphs of Nebraska Revised Statute 81-1502 are approved into the SIP: (2) Air pollution; (3) Chairperson; and (10) Person.
* * * * * * *
* * * * *

PART 70—STATE OPERATING PERMIT PROGRAMS
3. The authority citation for part 70 continues to read as follows:

Authority:
42 U.S.C. 7401, et seq.
4. Appendix A to part 70 is amended by adding paragraph (r) under “Nebraska; City of Omaha; Lincoln-Lancaster County Health Department” to read as follows:

Appendix A to Part 70—Approval Status of State and Local Operating Permits Programs
* * * * *

Nebraska; City of Omaha; Lincoln-Lancaster County Health Department
* * * * *
(r) The Nebraska Department of Environment and Energy submitted for program approval revisions to the Nebraska Administrative Code, title 129, chapters 1, 6, 7, 9, 10, 11, and appendix I on December 2, 2022. Title 129 Chapter 8 “Operating Permit Content” has been renumbered and renamed Chapter 6 “Operating Permits” and Chapter 8 is no longer part 70 approved. Appendix III has been repealed and is no longer part 70 approved. The state effective date is September 28, 2022. The proposed revision effective date is [date 30 days after date of publication of the final rule in the Federal Register ].
* * * * *
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 216
[Docket No. 240415-0108]
RIN 0648-BK65
Proposed Rule To Modify the Duration of Certain Permits and Letters of Confirmation Under the Marine Mammal Protection Act; Extension of Public Comment Period

AGENCY:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

ACTION:
Proposed rule; extension of public comment period.

SUMMARY:
NMFS announces the extension of the public comment period on our May 3, 2024, proposed rule to modify the regulations for Marine Mammal Protection Act (MMPA) section 104 permits, including scientific research, enhancement, photography, and public display permits and Letters of Confirmation (LOCs). We published our proposed rule with a 30-day public comment period. Today we extend the public comment period by 15 days.

DATES:
The deadline for receipt of comments is extended from June 3, 2024, until June 18, 2024.

ADDRESSES:
A plain language summary of this proposed rule is available at https://www.regulations.gov/docket/NOAA-NMFS-2024-0054. You may submit comments on this document, identified by NOAA-NMFS-2024-0054, by any of the following methods:
• Electronic Submission: Submit all electronic public comments via the Federal e-Rulemaking Portal. Visit https://www.regulations.gov and type NOAA-NMFS-2024-0054 in the Search box. Click on the “Comment” icon, complete the required fields, and enter or attach your comments.
• Mail: Submit written comments to Permits and Conservation Division, Office of Protected Resources, NMFS, 1315 East-West Highway, Room 13705, Silver Spring, MD 20910; ATTN: Jolie Harrison, Chief, Permits and Conservation Division.
Instructions: Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. All comments received are a part of the public record and will generally be posted for public viewing on https://www.regulations.gov without change. All personal identifying information ( e.g., name, address, etc. ), confidential business information, or otherwise sensitive information submitted voluntarily by the sender will be publicly accessible. NMFS will accept anonymous comments (enter “N/A” in the required fields if you wish to remain anonymous).

FOR FURTHER INFORMATION CONTACT:
Sara Young or Carrie Hubard, Office of Protected Resources, NMFS, (301) 427-8401.

SUPPLEMENTARY INFORMATION:

Background
On May 3, 2024, NMFS published a proposed rule to modify the regulations for MMPA section 104 permits, including scientific research, LOCs with a 30-day public comment period. NMFS received a request from the Animal Welfare Institute to extend the public comment period by 60 days to maximize public input on the proposed rule. NMFS considered the request and concluded that a 15-day extension should allow sufficient time for responders to submit public comments without significantly delaying the rulemaking process. We are therefore extending the close of the public comment period from June 3, 2024, to June 18, 2024. This extension provides a total of 45 days for public input on the proposed rule. All comments and information submitted previously regarding the proposed rule will be fully considered during the development of the final rule, if promulgated, and do not need to be resubmitted.
Dated: May 28, 2024.
Samuel D. Rauch III,

Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.
89
107
Monday, June 3, 2024
Notices
DEPARTMENT OF AGRICULTURE
Forest Service
Alpine County Resource Advisory Committee

AGENCY:
Forest Service, Agriculture (USDA).

ACTION:
Notice of meeting.

SUMMARY:
The Alpine County Resource Advisory Committee (RAC) will hold a public meeting according to the details shown below. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with title II of the Act, as well as make recommendations on recreation fee proposals for sites on the Humboldt-Toiyabe National Forest within Alpine County, consistent with the Federal Lands Recreation Enhancement Act.

DATES:
An in-person and virtual meeting will be held on June 17, 2024, 2:00 p.m. to 4:00 p.m., Pacific Daylight Time (PDT).
Written and Oral Comments: Anyone wishing to provide in-person or virtual oral comments must pre-register by 11:59 p.m. PDT on June 7, 2024. Written public comments will be accepted by 11:59 p.m. PDT on June 7, 2024. Comments submitted after this date will be provided by the Forest Service to the committee, but the committee may not have adequate time to consider those comments prior to the meeting.
All committee meetings are subject to cancellation. For status of the meeting prior to attendance, please contact the person listed under FOR FURTHER INFORMATION CONTACT .

ADDRESSES:
This meeting will be held in-person at the Turtle Rock Park Community Center, located at 17300 State Route 89/4, Markleeville, CA 96120. The public may also join the meeting virtually via Microsoft Teams (Meeting ID: 293 992 503 784; Passcode: NhGGUn). More information about RACs and meeting details can be found on the advisory committees website ( https://www.fs.usda.gov/main/htnf/workingtogether/advisorycommittees ) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT .
Written Comments: Written comments must be sent by email to matthew.dickinson@usda.gov or via mail (postmarked) to Matthew Dickinson, 1536 S Carson St., Carson City, NV 89701. The Forest Service strongly prefers comments be submitted electronically.
Oral Comments: Persons or organizations wishing to make oral comments must pre-register by 11:59 p.m. PDT on June 7, 2024, and speakers can only register for one speaking slot. Oral comments must be sent by email to matthew.dickinson@usda.gov or via mail (postmarked) to Matthew Dickinson, 1536 S Carson St., Carson City, NV 89701.

FOR FURTHER INFORMATION CONTACT:
Matthew Zumstein, Designated Federal Officer, by phone at 775-884-8100 or email at matthew.zumstein@usda.gov, or Matthew Dickinson, RAC Coordinator, by phone at 775-884-8154 or email at matthew.dickinson@usda.gov.

SUPPLEMENTARY INFORMATION:
The purpose of the meeting is to:
1. Hear from Title II project proponents and discuss project status;
2. Update on current funding;
3. Decide on the next round of Project Solicitation; and
4. Schedule the next meeting.
The agenda will include time for individuals to make oral statements of three minutes or less. Individuals wishing to make an oral statement should make a request in writing at least three days prior to the meeting date to be scheduled on the agenda. Written comments may be submitted to the Forest Service up to 7 days after the meeting date listed under DATES .
Please contact the person listed under FOR FURTHER INFORMATION CONTACT , by or before the deadline, for all questions related to the meeting. All comments, including names and addresses when provided, are placed in the record and are available for public inspection and copying. The public may inspect comments received upon request.
Meeting Accommodations: The meeting location is compliant with the Americans with Disabilities Act, and the USDA provides reasonable accommodation to individuals with disabilities where appropriate. If you are a person requiring reasonable accommodation, please make requests in advance for sign language interpretation, assistive listening devices, or other reasonable accommodation to the person listed under the FOR FURTHER INFORMATION CONTACT section or contact USDA's TARGET Center at 202-720-2600 (voice and TTY) or USDA through the Federal Relay Service at 800-877-8339. Additionally, program information may be made available in languages other than English.
USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Equal opportunity practices in accordance with USDA's policies will be followed in all appointments to the committee. To ensure that the recommendations of the committee have taken in account the needs of the diverse groups served by USDA, membership shall include to the extent possible, individuals with demonstrated ability to represent minorities, women, and person with disabilities. USDA is an equal opportunity provider, employer, and lender.
Dated: April 29, 2024.
Cikena Reid,

USDA Committee Management Officer.
DEPARTMENT OF AGRICULTURE
Forest Service
Southern Arizona Resource Advisory Committee

AGENCY:
Forest Service, Agriculture (USDA).

ACTION:
Notice of meeting.

SUMMARY:
The Southern Arizona Resource Advisory Committee will hold a public meeting according to the details shown below. The committee is authorized under the Secure Rural Schools and Community Self-Determination Act (the Act) and operates in compliance with the Federal Advisory Committee Act. The purpose of the committee is to improve collaborative relationships and to provide advice and recommendations to the Forest Service concerning projects and funding consistent with title II of the Act for the Maricopa, Cochise, Pima, Pinal, and Santa Cruz counties in Arizona.

DATES:
An in-person and virtual meeting will be held on June 17, 2024, at 8 a.m. Pacific standard time (PST) and will end when all business is concluded.
Written and Oral Comments: Anyone wishing to provide in-person and virtual oral comments must pre-register by 11:59 p.m. PST on June 12, 2024. Written public comments will be accepted by 11:59 p.m. PST on June 12, 2024. Comments submitted after this date will be provided by the Forest Service to the committee, but the Committee may not have adequate time to consider those comments prior to the meeting.
All committee meetings are subject to cancellation. For status of the meeting prior to attendance, please contact the person listed under FOR FURTHER INFORMATION CONTACT .

ADDRESSES:
This meeting will be held in-person at the Santa Catalina Ranger District, located at 5700 North Sabino Canyon Road, Tucson, Arizona 85750. The public may also join the meeting virtually via Microsoft Teams at: Meeting ID: 230310191174 Passcode: ke94Rv or dial in by phone at +1 202-650-0123 Phone conference ID: 563900529#. More information and meeting details can be found on the Advisory Committees website at https://www.fs.usda.gov/main/coronado/workingtogether/advisorycommittees or by contacting the person listed under FOR FURTHER INFORMATION CONTACT .
Written Comments: Written comments must be sent by email to Robyn.Abeyta@usda.gov or via mail (postmarked) to USDA Forest Service, Resource Advisory Committee Coordinator, Robyn Abeyta, 300 West Congress Street, 6th Floor, Tucson, Arizona 85701. The Forest Service strongly prefers comments be submitted electronically.
Oral Comments: Persons or organizations wishing to make oral comments must pre-register by 11:59 p.m. PST, June 12, 2024, and speakers can only register for one speaking slot. Oral comments must be sent by email to Robyn.Abeyta@usda.gov or via mail (postmarked) to USDA Forest Service, Resource Advisory Committee Coordinator, Robyn Abeyta, 300 West Congress Street, 6th Floor, Tucson, Arizona 85701.

FOR FURTHER INFORMATION CONTACT:
Kerwin Dewberry, Designated Federal Officer, by phone at 520-388-8300 or email at Kerwin.Dewberry@usda.gov or Robyn Abeyta, Resource Advisory Committee Coordinator, by phone at 520-388-8424 or email at Robyn.Abeyta@usda.gov.

SUPPLEMENTARY INFORMATION:
The purpose of the meeting is to:
1. Add, remove, or edit the below agenda items, as needed;
2. Hear from title II project proponents and discuss title II project proposals;
3. Make funding recommendations on title II projects;
4. Approve meeting minutes; and
5. Other.
The agenda will include time for individuals to make oral statements of three minutes or less. Individuals wishing to make an oral statement should make a request in writing at least three days prior to the meeting date to be scheduled on the agenda. Written comments may be submitted to the Forest Service up to 14 days after the meeting date listed under DATES .
Please contact the person listed under FOR FURTHER INFORMATION CONTACT , by or before the deadline, for all questions related to the meeting. All comments, including names and addresses when provided, are placed in the record and are available for public inspection and copying. The public may inspect comments received upon request.
Meeting Accommodations: The meeting location is compliant with the Americans with Disabilities Act, and the USDA provides reasonable accommodation to individuals with disabilities where appropriate. If you are a person requiring reasonable accommodation, please make requests in advance for sign language interpretation, assistive listening devices, or other reasonable accommodation to the person listed under the FOR FURTHER INFORMATION CONTACT section or contact USDA's TARGET Center at 202-720-2600 (voice and TTY) or USDA through the Federal Relay Service at 800-877-8339. Additionally, program information may be made available in languages other than English.
USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Equal opportunity practices in accordance with USDA's policies will be followed in all appointments to the committee. To ensure that the recommendations of the Committee have taken into account the needs of the diverse groups served by the Department, membership shall include, to the extent practicable, individuals with demonstrated ability to represent the many communities, identities, races, ethnicities, backgrounds, abilities, cultures, and beliefs of the American people, including underserved communities. USDA is an equal opportunity provider, employer, and lender.
Dated: May 14, 2024.
Cikena Reid,

USDA Committee Management Officer.
DEPARTMENT OF AGRICULTURE
Rural Housing Service
[Docket No. RHS-24-CF-0013]
Notice of Funding Availability for the Community Facilities Technical Assistance and Training Grant Program for Fiscal Year 2024

AGENCY:
Rural Housing Service, USDA.

ACTION:
Notice.

SUMMARY:
The Rural Housing Service (RHS or the Agency), a Rural Development (RD) agency of the United States Department of Agriculture (USDA), announces that it is accepting applications under the Community Facilities Technical Assistance and Training (TAT) Grant Program for fiscal year (FY) 2024. The funding amount available for FY 24 is $540,000.

DATES:
Complete applications for grants must be submitted according to the following deadlines:
Paper submissions: Paper submissions must be received by the Agency no later than 4:00 p.m. local time on July 8, 2024 to be eligible for funding under this grant opportunity. Late or incomplete applications will not be eligible for funding.
Electronic submissions: Electronic submissions submitted via Grants.gov must be received no later than 11:59 p.m. Eastern Time on July 3, 2024 to be eligible for funding under this grant opportunity. Late or incomplete applications will not be eligible for funding.

ADDRESSES:
This funding announcement will be announced on Grants.gov . Paper applications must be submitted to the USDA Rural Development State Office (RDSO) for the State where the Project is located. For Projects involving multiple states, the application must be filed in the RDSO where the Applicant is located. Applicants may also request paper application packages from their respective RDSO. A list of the USDA RDSO contacts can be found at: rd.usda.gov/about-rd/state-offices.
Entities wishing to apply for assistance may download the application documents and requirements described in this notice from Grants.gov . Application information for electronic submissions may be found at Grants.gov .

FOR FURTHER INFORMATION CONTACT:
Louis Trivette, Asset Risk Management Specialist at email address: louis.trivette@usda.gov, United States Department of Agriculture, Rural Development, 214 N. College Street, Suite 300, Greeneville, TN 37745; or call; Telephone: 423-612-1791. For further information on submitting program applications under this notice, please contact the USDA RDSO in the state where the applicant's headquarters is located. A list of RDSO contacts is provided at the following link: rd.usda.gov/about-rd/offices/state-offices.

SUPPLEMENTARY INFORMATION:

Overview
Federal Awarding Agency Name: Rural Housing Service (RHS).
Funding Opportunity Title: Community Facilities Technical Assistance and Training Grant.
Announcement Type: Notice of Funding Availability (NOFA).
Funding Opportunity Number: USDA-RD-CFTAT-2024.
Assistance Listing: 10.766.
Dates: Applications must be submitted using one of the following methods:
• Paper submissions: The deadline for receipt of a paper application is 4 p.m. local time, July 8, 2024. Applicants intending to mail applications must provide sufficient time to permit delivery on or before the closing deadline date and time. Acceptance by the United States Postal Service or private mailer does not constitute delivery. Facsimile (FAX), electronic mail, and postage due applications will not be accepted.
• Electronic submissions: Electronic applications will be accepted via Grants.gov . The deadline for receipt of an electronic application via Grants.gov is 11:59 p.m. Eastern Time on July 3, 2024. The application dates and times are firm. The Agency will not consider any application received after the deadline.
Prior to official submission of applications, applicants may request technical assistance or other application guidance from the Agency, as long as such requests are made prior to June 28, 2024. Technical assistance is not meant to be an analysis or assessment of the quality of the materials submitted, a substitute for agency review of completed applications, nor a determination of eligibility, if such determination requires in-depth analysis. The Agency will not solicit or consider scoring or eligibility information that is submitted after the application deadline. The Agency reserves the right to contact applicants to seek clarification information on materials contained in the submitted application.
Rural Development Key Priorities: The Agency encourages applicants to consider projects that will advance the following key priorities (more details available at rd.usda.gov/priority-points ):
• Creating More and Better Market Opportunities: Assisting rural communities recover economically through more and better market opportunities through improved infrastructure.
• Addressing Climate Change and Environmental Justice: Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities.
• Advancing Racial Justice, Place-Based Equity, and Opportunity: Ensuring all rural residents have equitable access to RD programs and benefits from RD funded projects.
For further information, visit rd.usda.gov/priority-points.

A. Program Description
1. Purpose of the Program. The purpose of the Community Facilities TAT Grant Program is to provide technical assistance and training with respect to essential community facilities programs. To meet this purpose, the Agency will make grants to public bodies and private nonprofit corporations (such as States, counties, cities, townships, and incorporated towns and villages, boroughs, authorities, districts, and Indian tribes on Federal and State reservations) to provide assistance and/or training with respect to essential community facilities programs. The Technical Assistance and/or training will assist communities, Indian tribes, and nonprofit corporations to identify and plan for community facility needs that exist in their area. Once those needs have been identified, the Grantee can assist in identifying public and private resources to finance those identified community facility needs.
2. Statutory and Regulatory Authority. This NOFA is authorized pursuant; Section 306(a)(26) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)(26)); and implemented under 7 CFR part 3570, subpart F.
3. Definitions. The definitions and abbreviations applicable to this Notice are published at 7 CFR 3570.252 ( ecfr.gov/current/title-7/subtitle-B/chapter-XXXV/part-3570/subpart-F/section-3570.252 ).
4. Application of Awards. The Agency will review, evaluate, and score applications received in response to this notice based on the provisions found in 7 CFR part 3570, subpart F, and as indicated in this notice.
The requirements for submitting an application can be found at 7 CFR 3570.267 ( ecfr.gov/current/title-7/subtitle-B/chapter-XXXV/part-3570/subpart-F/section-3570.267 ). All applicants can access application materials at Grants.gov . Applications must be received by the Agency by the due date listed in the DATES section of this Notice. Applications received after that due date will not be considered for funding. Paper copies of the applications must be submitted to the RDSO in which the applicant is headquartered. Electronic submissions must be submitted at Grants.gov . A listing of the RDSO contacts may be found at rd.usda.gov/files/CF_State_Office_Contacts.pdf. Applicants whose headquarters are in the District of Columbia must submit their application to the National Office in care of Shirley Stevenson, 1400 Independence Ave., SW, STOP 0787, Community Programs Division Room 5104A RD Rural Housing Service (RHS) Community Facilities General Mailbox, Washington, DC 20250. Both paper and electronic applications must be received by the Agency by the deadlines stated in the DATES section of this Notice. The use of a courier and package tracking for paper applications is strongly encouraged. An applicant can only submit one application for funding. Application information for electronic submissions may be found at Grants.gov . Applications will not be accepted via FAX or email.
5. The Agency advises all interested parties that the applicant bears the burden in preparing and submitting an application in response to this notice whether or not the applicant receives any funding as a result of its application.
6. If the proposal involves large increases in employment; hazardous waste; a change in use, size, capacity, purpose, or location from an original facility; or is publicly controversial, the following is required: environmental documentation in accordance with 7 CFR part 1970; financial and statistical information; and a written project description.

B. Federal Award Information
Type of Awards: Grants.
Fiscal Year Funds: FY 2024.
Available Funds: $540,000. Up to ten percent of the available funds may be awarded to the highest scoring Ultimate Recipient(s) as long as they score a minimum score of at least 65. The Agency reserves the right to reduce funding amounts based on the Agency's determination of available funding or other Agency funding priorities.
Award Amounts: Grant funds are limited and are awarded through a competitive process.
Minimum/Maximum Award Amount: Grant awards made to Ultimate Recipients will not exceed $50,000. The Agency has capped the grant awards for Technical Assistance Providers assisting Ultimate Recipients to not exceed $150,000. This applies even if the Technical Assistance Provider covers entities in one county, multiple counties, or multiple states.
Anticipated Award Date: Awards will be made on or before September 15, 2024.
Performance Period: The grant period is to be for no more than three years.
Renewal or Supplemental Awards: Applicants may apply for funding in future funding cycles. No unfunded applications will carry over to the next funding cycle. The Agency awards points for applicants that have not received a previous grant. Applicants must re-apply for an additional grant.
Type of Assistance Instrument: Grant agreement.

C. Eligibility Information
1. Eligible Applicants. Both the applicant and the use of funds must meet eligibility requirements. The applicant eligibility requirements can be found at 7 CFR 3570.262. Eligible project purposes can be found at 7 CFR 3570.263. Ineligible project purposes can be found at 7 CFR 3570.264.
Non-tribal applicants proposing to provide Technical Assistance to Tribes should provide adequate documentation (for example, a letter of support from the Tribe or Tribes) that the Technical Assistance they are proposing to provide is supported by the Tribes they plan to serve.
Any corporation that has been convicted of a felony criminal violation under any Federal law within the past 24 months, or that has any unpaid Federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, is not eligible for financial assistance provided with full-year appropriated funds, unless a Federal agency has considered suspension or debarment of the corporation and has made a determination that this further action is not necessary to protect the interests of the Government.
Debarment and suspension information is required in accordance with 2 CFR parts 417 (Nonprocurement Debarment and Suspension) and 180 (OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement). The section heading “What information must I provide before entering into a covered transaction with a Federal agency?” located at 2 CFR 180.335 is part of OMB's Guidance for Grants and Agreements concerning Governmentwide Debarment and Suspension. Applicants are not eligible if they have been debarred or suspended or otherwise excluded from, or ineligible for, participation in Federal assistance programs under 2 CFR parts 180 and 417.
2. Cost Sharing or Matching. Matching funds are not required. Up to 10 points may be awarded for applications that contain matching funds. These matching funds must be in the form of cash.
3. Other. All submitted applications must meet the eligibility requirements in this notice and at 7 CFR part 3570, subpart F ( ecfr.gov/current/title-7/part-3570/subpart-F ), and application requirements noted in 7 CFR 3570.267 ( ecfr.gov/current/title-7/subtitle-B/chapter-XXXV/part-3570/subpart-F/section-3570.267 ).
Applications will not be considered for funding if they do not provide sufficient information to determine eligibility or are missing required elements.

D. Application and Submission Information
1. Address to Request Application Package. For further information on the Community Facilities TAT Grant Program, entities wishing to apply for assistance should contact the USDA RDSO provided in the ADDRESSES section of this notice to obtain copies of the application package. Application information is also available at Grants.gov . Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information ( e.g., Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, or staff office; or the 711 Federal Relay Service.
Prior to official submission of applications, applicants may request application guidance from the Agency, as long as such requests are made prior to June 28, 2024. Technical assistance is not meant to be an analysis or assessment of the quality of the materials submitted, a substitute for agency review of completed applications, nor a determination of eligibility. The Agency will not solicit or consider scoring or eligibility information that is submitted after the application deadline. The Agency reserves the right to contact applicants to seek clarification information on materials contained in the submitted application.
2. Content and Form of Application Submission. An application must contain all of the required elements outlined in 7 CFR 3570.267. Each application must address the applicable scoring criteria presented in 7 CFR 3570.273 for the type of funding being requested.
3. System for Award Management and Unique Entity Identifier. At the time of application, each applicant must have an active registration in the System for Award Management (SAM) before submitting its application in accordance with 2 CFR part 25. In order to register in SAM, entities will be required to obtain a Unique Entity Identifier (UEI). Instructions for obtaining the UEI are available at sam.gov/content/entity-registration.
a. Applicant must maintain an active SAM registration, with current, accurate and complete information, at all times during which it has an active Federal award or an application under consideration by a Federal awarding agency.
b. Applicant must ensure that it completes the Financial Assistance General Certifications and Representations in SAM.
c. Applicant must provide a valid UEI in its application, unless determined exempt under 2 CFR 25.110.
d. The Agency will not make an award until the applicant has complied with all SAM requirements including providing the UEI. If an applicant has not fully complied with the requirements by the time the Agency is ready to make an award, the Agency may determine that the applicant is not qualified to receive a Federal award and use that determination as a basis for making a Federal award to another applicant.
4. Submission Dates and Times. Application Funding Submission Deadlines:
a. Paper submissions: The deadline for receipt of a paper application is 4 p.m. local time, July 8, 2024.
b. Electronic submissions: Electronic applications will be accepted via Grants.gov . The deadline for receipt of an electronic application via Grants.gov is 11:59 p.m. Eastern Time on July 3, 2024.
Explanation of Dates: The application dates and times are firm. Applications must be in the USDA RDSO by the dates and times specified above. If the due date falls on a Saturday, Sunday, or Federal holiday, the application is due the next business day. The Agency will not consider any application received after the deadline.
Allow Sufficient Time For Mailing of Application: Applicants intending to mail applications must provide sufficient time to permit delivery on or before the closing deadline date and time. Acceptance by the United States Postal Service or private mailer does not constitute delivery. Facsimile (FAX), electronic mail, and postage due applications will not be accepted. Prior to official submission of applications, applicants may request technical assistance or other application guidance from the Agency, as long as such requests are made prior to June 28, 2024.
5. Intergovernmental Review. This program is subject to Executive Order 12372, which requires intergovernmental consultation with state and local officials. RD conducts intergovernmental consultation as implemented by 2 CFR part 415, subpart C. Not all States have chosen to participate in the intergovernmental review process. A list of participating States is available at the following website: whitehouse.gov/omb/management/office-federal-financial-management.
6. Funding Restrictions. None.
7. Other Submission Requirements. None.

E. Application Review Information
1. Criteria. All eligible and complete applications will be evaluated and scored based on the selection criteria and weights contained in 7 CFR 3570.273 ( see, ecfr.gov/current/title-7/subtitle-B/chapter-XXXV/part-3570/subpart-F/section-3570.273 ). Failure to address any one of the criteria by the application deadline will result in the application being determined ineligible, and the application will not be considered for funding.
All applications that are complete and eligible will be scored and ranked competitively.
The categories for scoring criteria used are the following:
The Agency will score each application using the following scoring factors unless otherwise provided in an annual Notice in the Federal Register :
(a) Experience: Applicant Experience at developing and implementing successful technical assistance and/or training programs:
(1) More than 10 years—40 points.
(2) More than 5 years to 10 years—25 points.
(3) 3 to 5 years—10 points.
(b) No prior grants received:
(1) Applicant has never received a TAT Grant—5 points.
(c) Population: The average population of proposed area(s) to be served:
(1) 2,500 or less—15 points.
(2) 2,501 to 5,000—10 points.
(3) 5,001 to 10,000—5 points.
(d) MHI: The average median household income (MHI) of proposed area to be served is below the higher of the poverty line or:
(1) 60 percent of the State's MHI—15 points.
(2) 70 percent of the State MHI—10 points.
(3) 90 percent of the State's MHI—5 points.
(e) Multi-jurisdictional: The proposed technical assistance or training project is a part of a Multi-jurisdictional project comprised of:
(1) More than 10 jurisdictions—15 points.
(2) More than 5 to 10 jurisdictions—10 points.
(3) 3 to 5 jurisdictions—5 points.
(f) Soundness of approach: Up to 10 points.
(1) Needs assessment: The problem/issue being addressed is clearly defined, supported by data, and addresses the needs;
(2) Goals and objectives are clearly defined, tied to the need as defined in the work plan, and are measurable;
(3) Work plan clearly articulates a well thought out approach to accomplishing objectives and clearly identifies who will be served by the project;
(4) The proposed activities are needed in order for a complete Community Facilities loan and/or grant application.
(g) Matching funds:
(1) There is evidence of the commitment of other cash funds of 20% of the total project costs—10 points.
(2) There is evidence of the commitment of other cash funds of 10% of the total project costs—5 points.
(h) State Director discretionary points. The State Director may award up to 10 discretionary points for the highest priority project in each state, up to 7 points for the second highest priority project in each state, and up to 5 points for the third highest priority project that addresses unforeseen exigencies or emergencies, such as the loss of a community facility due to an accident or natural disaster, or other areas of need in their particular state. The State Director will place written documentation in the project file each time the State Director assigns these points—Up to 10 points.
(i) Administrator discretionary points. The Administrator may award up to 20 discretionary points for projects to address geographic distribution of funds, emergency conditions caused by economic problems, natural disasters and other initiatives identified by the Secretary—Up to 20 points.
2. Review and Selection Process. The State Offices will review applications to determine if applications are eligible for assistance based on requirements contained in 7 CFR part 3570, subpart F. If determined eligible, your application will be forwarded to the National Office. Funding of projects is subject to the intermediary's satisfactory submission of the additional items required by that subpart and the USDA RD Letter of Conditions. Due to the competitive nature of this program, applications receiving the same score will be competed/ranked based on the application scoring the highest on matching funds and multi-jurisdictional categories. In addition to the State Director and Administrator Discretionary priority points, under 7 CFR 3570.273 ( see, 7 CFR 3570.273(h) and 7 CFR 3570.273(i)), points may also be awarded with documented justification for any of the three following categories, not to exceed the points allowed in 7 CFR 3570.273(h) and 7 CFR 3570.273(i):
• Addressing Climate Change and Environmental Justice: Reducing climate pollution and increasing resilience to the impacts of climate change through economic support to rural communities. An applicant can receive priority points through one of the three options listed below:
Option 1: Applicants will receive points if the project is located in or serves a Disadvantaged Community as defined by the Climate and Economic Justice Screening Tool (CEJST), from the White House Council on Environmental Quality (CEQ). CEJST is a tool to help Federal agencies identify disadvantaged communities that will benefit from programs included in the Justice40 initiative. Census tracts are considered disadvantaged if they meet the thresholds for at least one of the CEJST's eight (8) categories of burden: Climate, Energy, Health, Housing, Legacy Pollution, Transportation, Water and Wastewater, or Workforce Development.
Option 2: Applicants will receive points if the project is located in or serves an Energy Community as defined by the Inflation Reduction Act (IRA). The IRA defines energy communities as:
• A “brownfield site” (as defined in certain subparagraphs of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA)).
• A “metropolitan statistical area” or “non-metropolitan statistical area” that has (or had at any time after 2009).
• 0.17% or greater direct employment or 25% or greater local tax revenues related to the extraction, processing, transport, or storage of coal, oil, or natural gas; and has an unemployment rate at or above the national average unemployment rate for the previous year.
• A census tract (or directly adjoining census tract) in which a coal mine has closed after 1999; or in which a coal-fired electric generating unit has been retired after 2009.
Option 3: Applicants will receive points by demonstrating through written narrative how proposed climate-impact projects improve the livelihoods of community residents and meet pollution mitigation or clean energy goals.
To determine if your project qualifies for priority points under Option 1 or Option 2, please use the Disadvantaged Community & Energy Community Look-Up Map.
For more information, please use the following link: rd.usda.gov/priority-points.
• Advancing Racial Justice, Place-Based Equity, and Opportunity: Ensuring all rural residents have equitable access to RD programs and benefits from RD funded projects.
Applicant receives priority points if the project is located in or serving a community with score 0.75 or above on the CDC Social Vulnerability Index. Please use Community Look-Up Map to look up map or list to determine if your project qualifies for priority points.
Applications from Federally Recognized Tribes, including Tribal instrumentalities and entities that are wholly owned by Tribes will receive priority points. Federally Recognized Tribes are classified as any Indian or Alaska Native tribe, band, nation, pueblo, village or community as defined by the Federally Recognized Indian Tribe List Act (List Act) of 1994 (Pub. L. 103-454). Please refer to the Bureau of Indian Affairs for a listing of Federally Recognized Tribes.
Additionally, projects where at least 50% of the project beneficiaries are members of Federally Recognized Tribes, will receive priority points if applications from non-Tribal applicants include a Tribal Resolution of Consent from the Tribe or Tribes that the applicant is proposing to serve.
Applications from or benefiting a Rural Partner's Network's (RPN) community network will receive priority points ( rural.gov ) in applicable funding notices. Currently RPN Networks exist in Alaska, Arizona, Georgia, Kentucky, Mississippi, Nevada, New Mexico, North Carolina, Puerto Rico, West Virginia and Wisconsin. Please use the Community Look-Up map to determine if your project qualifies for priority points.
For additional information on data sources used for this priority determination, please download the Data Sources for Rural Development Priorities document at the following link: rd.usda.gov/media/file/download/rd-ic-prioritiesdatasupplementalupdatedfy2024.pdf.
• Creating More and Better Market Opportunities: Assisting rural communities recover economically through more and better market opportunities through improved infrastructure. Applicants receive priority points if the project is located in or serving a rural community whose economic well-being ranks in the most distressed tier of the Distressed Communities Index. The Distressed Communities Index provides a score between 1-100 for every community at the zip code level. The most distressed tier of the index are those communities with a score over 80. Please use the Distressed Communities Index Look-Up Map to determine if your project qualifies for priority points.
For additional information on data sources used for this priority determination, please download the Data Sources for Rural Development Priorities document at the following link: rd.usda.gov/media/file/download/rd-ic-prioritiesdatasupplementalupdatedfy2024.pdf.

F. Federal Award Administration Information
1. Federal Award Notices. Successful applicants will receive notification for funding from the RDSO. Applicants must comply with all applicable statutes and regulations before the grant award can be approved. If an application is withdrawn by the applicant, it can be resubmitted and will be evaluated as a new application, provided the application is resubmitted before the submission deadline as stated in section D4.
2. Administrative and National Policy Requirements. Additional requirements that apply to Grantees selected for this Program can be found in 7 CFR part 3570, subpart F ( ecfr.gov/current/title-7/part-3570/subpart-F ). Awards are subject to the grant regulations at 2 CFR part 400 ( ecfr.gov/current/title-2/part-400 ), which adopt the Office of Management and Budget (OMB) regulations at 2 CFR part 200 ( ecfr.gov/current/title-2/part-200 ) as USDA policies and procedures for grant awards.
If the applicant wishes to consider beginning its project performance prior to the grant being officially closed, all pre-evaluation award costs must be approved in writing and in advance by the Agency.
In addition, all recipients of Federal financial assistance are required to report information about first-tier sub-awards and executive compensation (see 2 CFR part 170 ( ecfr.gov/current/title-2/part-170 ). The applicant will be required to have the necessary processes and systems in place to comply with the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282) and reporting requirements (see 2 CFR 170.200(b) ( ecfr.gov/current/title-2/section-170.200#p-170.200(b) ), unless the recipient is exempt under 2 CFR 170.110(b) ( ecfr.gov/current/title-2/section-170.110#p-170.110(b) ).
The following additional requirements apply to Grantees selected for these Programs:
(a) Form RD 1940-1, “Request for Obligation of Funds.”
(b) Form RD 1942-46, “Letter of Intent to Meet Conditions.”
(c) Form SF-LLL, “Disclosure of Lobbying Activities,” if applicable.
(d) Form SF 270, “Request for Advance or Reimbursement.”
(e) Form RD 400-4, “Assurance Agreement” must be completed by the applicant and each prospective ultimate recipient.
(f) Grantees must collect and maintain data provided by ultimate recipients on race, sex, and national origin and ensure ultimate recipients collect and maintain this data. Race and ethnicity data will be collected in accordance with OMB Federal Register notice, “Revisions to the Standards for the Classification of Federal Data on Race and Ethnicity” (62 FR 58782), October 30, 1997. Sex data will be collected in accordance with Title IX of the Education Amendments of 1972. These items should not be submitted with the application but should be available upon request by the Agency.
(e) The applicant and the ultimate recipient must comply with Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, Americans with Disabilities Act (ADA), Section 504 of the Rehabilitation Act of 1973, Age Discrimination Act of 1975, Executive Order 12250, Executive Order 13166 Limited English Proficiency (LEP), and 7 CFR part 1901, subpart E.
(3) Reporting. The Grantee must provide reports as required by 7 CFR part 3570, subpart F. A financial status report, SF 425 “Federal Financial Report,” and a project performance report will be required as provided in the grant agreement. The financial status report must show how grant funds and matching funds have been used to date. A final report may serve as the last report. Grantees shall constantly monitor performance to ensure that time schedules are being met and projected goals by time periods are being accomplished. Applicant may find the reporting requirements for this grant as set forth at 7 CFR 3570.276 in addition to any reports required by 2 CFR part 200 ( ecfr.gov/current/title-2/part-200 ) and 2 CFR 400.1 ( ecfr.gov/current/title-2/section-400.1 ) to 400.2 ( ecfr.gov/current/title-2/section-400.2 ), and 2 CFR parts 415 to 422 ( ecfr.gov/current/title-2/section-415 ).

G. Federal Awarding Agency Contact(s)
For general questions about this announcement, please contact your USDA RDSO as provided in the ADDRESSES section of this notice or the program website at: rd.usda.gov/programs-services/community-facilities/community-facilities-direct-loan-grant-program.

H. Other Information
(1) Civil Rights Requirements. All grants made under this Notice are subject to Title VI of the Civil Rights Act of 1964 and USDA's nondiscrimination regulation (7 CFR part 15, subpart A), Section 504 of the Rehabilitation Act of 1973, Title VIII of the Civil Rights Act of 1968, Title IX, Executive Order 13166 (Limited English Proficiency), Executive Order 11246, and the Equal Credit Opportunity Act of 1974.
(2) Paperwork Reduction Act. In accordance with the Paperwork Reduction Act of 1995, the information collection requirement contained in this notice has been approved by OMB under OMB Control Number 0575-0198.
(3 ) National Environmental Policy Act. All recipients under this notice are subject to the requirements of 7 CFR part 1970, available at: rd.usda.gov/resources/environmental-studies/environmental-guidance.
(4) Nondiscrimination Statement. In accordance with Federal civil rights laws and USDA civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information ( e.g., Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, or staff office; or the 711 Federal Relay Service.
To file a program discrimination complaint, a complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form, which can be obtained online at usda.gov/sites/default/files/documents/USDA-OASCR%20P-Complaint-Form-0508-0002-508-11-28-17Fax2Mail.pdf?time=1671165786489, from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant's name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights about the nature and date of an alleged civil rights violation.
The completed AD-3027 form or letter must be submitted to USDA by:
(1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410; or
(2) Fax: (833) 256-1665 or (202) 690-7442; or
(3) Email: program.intake@usda.gov.
USDA is an equal opportunity provider, employer, and lender.
Yvonne Hsu,

Acting Administrator, Rural Housing Service, USDA Rural Development.
COMMISSION ON CIVIL RIGHTS
Sunshine Act Meeting Notice

AGENCY:
United States Commission on Civil Rights.

ACTION:
Notice of Commission public business meeting.

DATES:
Friday, June 7, 2024, 10:00 a.m. ET.

ADDRESSES:
Meeting to take place virtually and is open to the public via livestream on the Commission's YouTube page: https://www.youtube.com/user/USCCR/videos.

FOR FURTHER INFORMATION CONTACT:
Angelia Rorison: 202-376-8371; publicaffairs@usccr.gov .

SUPPLEMENTARY INFORMATION:
In accordance with the Government in Sunshine Act (5 U.S.C. 552b), the Commission on Civil Rights is holding a meeting to discuss the Commission's business for the month. This business meeting is open to the public. Computer assisted real-time transcription (CART) will be provided. The web link to access CART (in English) on Friday, June 7, 2024, is https://www.streamtext.net/player?event=USCCR. Please note that CART is text-only translation that occurs in real time during the meeting and is not an exact transcript.

Meeting Agenda
I. Approval of Agenda
II. Business Meeting
A. Discussion and Vote on 2024 USCCR Business Meeting Calendar
B. Presentations by State Advisory Committee Chairs on Released Reports and Memorandums
C. Discussion and Vote on State Advisory Committee Appointments
D. Discussion and Vote 2024 Topic for USCCR Statutory Enforcement Report
E. Management and Operations
• Staff Director's Report
III. Adjourn Meeting
Dated: May 30, 2024.
Angelia Rorison,

USCCR Media and Communications Director.
DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-156]
Aluminum Lithographic Printing Plates From the People's Republic of China: Amended Preliminary Determination of the Less-Than-Fair-Value Investigation

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) is amending its preliminarily affirmative determination in the less-than-fair value (LTFV) investigation of aluminum lithographic printing plates (printing plates) from People's Republic of China (China) to correct significant ministerial errors. The period of investigation (POI) is January 1, 2023, through June 30, 2023.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Benito Ballesteros, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-7425.

SUPPLEMENTARY INFORMATION:

Background
On May 1, 2024, Commerce published in the Federal Register its preliminary affirmative determination in the LTFV investigation of printing plates from China. ^1 On May 6, 2024, Eastman Kodak Company (the petitioner) timely alleged that Commerce made significant ministerial errors in calculating FUJIFILM Printing Plate (China) Co., Limited's (Fujifilm) preliminary estimated weighted-average dumping margin. ^2
^1 See Aluminum Lithographic Printing Plates from the People's Republic of China: Preliminary Affirmative Determination of Sales at Less Than Fair Value, Preliminary Affirmative Determination of Critical Circumstances, and Postponement of Final Determination and Extension of Provisional Measures, 89 FR 35062 (May 1, 2024) ( Preliminary Determination ), and accompanying Preliminary Decision Memorandum (PDM).
^2 See Petitioner's Letter, “Petitioner's Comments on Significant Ministerial Errors in Preliminary Margin Calculations,” dated May 6, 2024 (Petitioner Ministerial Errors Allegation).

Scope of the Investigation
The products covered by this investigation are printing plates from China. For a complete description of the scope of this investigation, see the Preliminary Determination. ^3
^3 See Preliminary Determination, 89 FR at 35064.

Legal Framework
Pursuant to 19 CFR 351.224(e), Commerce will correct any significant ministerial error by amending the preliminary determination. A ministerial error is defined as including errors “in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error which {Commerce} considers ministerial.” ^4 A ministerial error is considered to be “significant” if its correction, either singly or in combination with other errors, would result in: (1) a change of at least five absolute percentage points in, but not less than 25 percent of, the weighted-average dumping margin calculated in the preliminary determination; or (2) a difference between a weighted-average dumping margin of zero (or de minimis ) and a weighted-average dumping margin of greater than de minimis or vice versa. ^5
^4 See section 735(e) of the Tariff Act of 1930, as amended (the Act); see also 19 CFR 351.224(f).
^5 See 19 CFR 351.224(g).

Analysis of Significant Ministerial Errors
The petitioner alleged that: (1) Commerce's conversion of surrogate value (SV) information, from a per-kilogram to a per-pound basis for direct material and packing inputs, results in a mismatch in the units of measure between the SV information and Fujifilm's reported data; (2) Commerce erroneously converted the natural gas and steam surrogate values from kilograms to pounds, not to cubic meters and metric tons; and (3) Commerce did not include certain packing input variables in the calculation of the PACKING variable, which is used in the calculation of normal value. ^6 In the Preliminary Determination, when calculating SVs for Fujifilm, we inadvertently converted the SVs to pounds, resulting in a mismatch to Fujifilm's factors of production, which were reported on a kilogram basis. ^7 In addition, we inadvertently excluded certain packing inputs from the calculation of normal value. ^8
^6 See Petitioner Ministerial Errors Allegation.
^7 See Memorandum, “Surrogate Values for the Preliminary Determination,” dated April 25, 2024, at Attachment I.
^8 See Memorandum, “Preliminary Determination Analysis Memorandum for FUJIFILM Printing Plate (China) Co., Limited,” dated April 25, 2024, at Attachment III.
Commerce finds that the allegations by the petitioner constitute significant ministerial errors within the meaning of 19 CFR 351.224(f) and (g)(1), because correcting for these errors increases Fujifilm's preliminary weighted-average dumping margin from 38.57 to 164.31 percent, which is a change that is at least five absolute percentage points in, but not less than 25 percent of, the weighted-average dumping margin calculated for Fujifilm in the Preliminary Determination.
Furthermore, in the Preliminary Determination, Commerce preliminarily determined that it was appropriate to use the facts available in determining the rate of the China-wide entity, pursuant to sections 776(a)(1) and (2)(A)-(C) of the Act, ^9 including the use of an adverse inference, pursuant to section 776(b) of the Act. ^{10} In selecting a rate to apply to the China-wide entity, Commerce selects a rate that is sufficiently adverse to ensure that the uncooperative party does not obtain a more favorable result by failing to cooperate than if it had fully cooperated. ^{11} In an investigation, it is Commerce's practice with respect to the assignment of an adverse facts available (AFA) rate to select the higher of the: (a) highest margin alleged in the petition; or (b) the highest calculated rate of any respondent in the investigation. ^{12} As a result of correcting the ministerial errors discussed above, because the rate calculated for Fujifilm is now higher than the dumping margin alleged in the Petition ( i.e., 107.62 percent), we find it most appropriate to apply the highest individual margin calculated for Fujifilm ( i.e., 477.60 percent) as the basis for the AFA rate assigned to the China-wide entity. ^{13} For a detailed discussion of the alleged ministerial errors, as well as Commerce's analysis, see the Ministerial Error Memorandum. ^{14}
^9 See Preliminary Determination PDM at 12.
^{10} Id. at 13.
^{11} See Preliminary Determination PDM at 14 (citing Tapered Roller Bearing and Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof from Japan; Preliminary Results of Antidumping Duty Administrative Reviews and Partial Termination of Administrative Reviews, 61 FR 57391, 57392 (November 6, 1996), unchanged in Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, from Japan; Final Results of Antidumping Duty Administrative Revies and Termination in Part, 62 FR 11825 (March 13, 1997)).
^{12} Id. (citing Certain Uncoated Paper from Indonesia: Final Determination of Sales at Less Than Fair Value, 81 FR 3101 (January 20, 2016), and accompanying Issues and Decision Memorandum at 7).
^{13} See Memorandum, “Amended Preliminary Determination Analysis Memorandum for FUJIFILM Printing Plate (China) Co., Limited,” dated concurrently with this notice at Attachment III.
^{14} See Memorandum, “Less-Than-Fair-Value Investigation of Aluminum Lithographic Printing Plates from the People's Republic of China: Allegations of Ministerial Errors in the Preliminary Determination,” dated concurrently with, and hereby adopted by, this notice (Ministerial Error Memorandum).

Amended Preliminary Determination
As a result of correcting these significant ministerial errors, Commerce determines the following weighted-average dumping margins exist:
Producer | Exporter | Estimated weighted-average dumping margin (percent) | Cash deposit rate (adjusted for subsidy offset) (percent)
Fujifilm Printing Plate (China) Co., Ltd | Fujifilm Printing Plate (China) Co., Ltd | 164.31 | 164.30
China-wide Entity | 477.60 | 477.59

Disclosure
We intend to disclose the calculations performed for this amended preliminary determination to parties within five days after public announcement or, if there is no public announcement, within five days of the date of publication of this notice, in accordance with 19 CFR 351.224(b).

Amended Cash Deposits and Suspension of Liquidation
The collection of cash deposits and suspension of liquidation will be revised according to the rates established in this amended preliminary determination, in accordance with section 773(d) of the Act. Because this amended preliminary determination results in increased cash deposit rates, these rates will be effective on the date of publication of this notice in the Federal Register . These suspension of liquidation instructions will remain in effect until further notice.

Notification of U.S. International Trade Commission (ITC)
In accordance with section 733(f) of the Act, we intend to notify the ITC of our amended preliminary determination.

Notification to Interested Parties
This amended preliminary determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act, and 19 CFR 351.224(e).
Dated: May 28, 2024.
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.
DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-850]
Thermal Paper From the Federal Republic of Germany: Final Results of Antidumping Duty Administrative Review; 2021-2022

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) determines that Koehler Paper SE and Koehler Kehl GmbH (collectively, Koehler), the sole producer/exporter subject from the Federal Republic of Germany (Germany) subject to this administrative review, made sales of subject merchandise at less than normal value during the period of review (POR), May 12, 2021, through October 31, 2022.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Ashley Cossaart, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0462.

SUPPLEMENTARY INFORMATION:

Background
On November 29, 2023, Commerce published the Preliminary Results and invited interested parties to comment. ^1 On March 13, 2024, we extended the deadline of the final results to May 24, 2024. ^2 On April 26, 2024, Domtar Corporation and Appvion, LLC (collectively, the petitioners) submitted a timely-filed case brief. ^3 On May 1, 2024, Koehler and Matra Americas LLC (Matra) submitted a timely-filed joint rebuttal brief. ^4 For a complete description of the events that occurred since the Preliminary Results, see the Issues and Decision Memorandum. ^5
^1 See Thermal Paper from the Republic of Germany: Preliminary Results of Antidumping Duty Administrative Review; 2021-2022, 88 FR 83397 (November 29, 2023) ( Preliminary Results ), and accompanying Preliminary Decision Memorandum.
^2 See Memorandum, “Extension of Deadline for Final Results of 2021-2022 Antidumping Duty Administrative Review,” dated March 13, 2024.
^3 See Petitioners' Letter, “Petitioners' Case Brief,” dated April 26, 2024.
^4 See Koehler and Matra's Letter, “Joint Rebuttal Brief of Koehler Paper SE and Matra Americas, LLC and Matra Atlantic GmbH,” dated May 1, 2024.
^5 See Memorandum, “Decision Memorandum for the Final Results of the Administrative Review of the Antidumping Duty Order on Thermal Paper from the Republic of Germany; 2021-2022,” dated concurrently with, and hereby adopted by, this notice (Issues and Decision Memorandum).

Scope of the Order ^6
^6 See Thermal Paper from Germany, Japan, the Republic of Korea, and Spain: Antidumping Duty Orders, 86 FR 66284 (November 22, 2021) ( Order ).
The merchandise subject to the Order is thermal paper from Germany. For a complete description of the scope of the Order, see the Issues and Decision Memorandum.

Analysis of Comments Received
All issues raised in the case and rebuttal briefs are listed in the appendix to this notice and addressed in the Issues and Decision Memorandum. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly at https://access.trade.gov/public/FRNoticesListLayout.aspx.

Changes Since the Preliminary Results
Based on a review of the record and comments received from interested parties regarding our Preliminary Results, we made certain changes to the margin calculations for Koehler. For a discussion of these changes, see the Issues and Decision Memorandum.

Final Results of the Review
As a result of this review, we determine the following estimated weighted-average dumping margin for the period May 12, 2021, through October 31, 2022:
Exporter/ producer | Weighted- average dumping margin (percent)
Koehler Paper SE; Koehler Kehl GmbH | 0.76

Disclosure
Commerce intends to disclose the calculations performed for Koehler in connection with these final results to interested parties within five days of the date of publication of this notice in the Federal Register , in accordance with 19 CFR 351.224(b).

Assessment Rates
Pursuant to section 751(a)(2)(C) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.212(b)(1), Commerce has determined, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise in accordance with the final results of this review.
Pursuant to 19 CFR 351.212(b)(1), because Koehler reported the entered value for all of its U.S. sales, we calculated importer-specific ad valorem antidumping duty assessment rates based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of the sales for which entered value was reported. Where either Koehler's weighted-average dumping margin is zero or de minimis within the meaning of 19 CFR 351.106(c), or an importer-specific rate is zero or de minimis, we will instruct CBP to liquidate the appropriate entries without regard to antidumping duties.
Commerce's “automatic assessment” will apply to entries of subject merchandise during the POR produced by Koehler for which it did not know that the merchandise it sold to an intermediary ( e.g., a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate those entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. ^7
^7 For a full discussion of this practice, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the Federal Register . If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired ( i.e., within 90 days of publication).

Cash Deposit Requirements
The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for Koehler will be the rate shown above; (2) if the exporter is not a firm covered in this review, or the less-than-fair-value (LTFV) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent segment for the manufacturer of the merchandise; and (3) the cash deposit rate for all other manufacturers and/or exporters will continue to be 2.90 percent, the all-others rate established in the LTFV investigation. ^8 These deposit requirements, when imposed, shall remain in effect until further notice.
^8 See Order, 86 FR at 66286.

Administrative Protective Order
This notice serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

Notification to Importers
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

Notification to Interested Parties
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: May 24, 2024.
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.

Appendix

List of Topics Discussed in the Issues and Decision Memorandum
I. Summary
II. Background
III. Scope of the Order
IV. Changes Since the Preliminary Results
V. Discussion of the Issues
Comment 1: Whether Commerce Should Apply Facts Available to Koehler's Reporting of U.S. Sales
Comment 2: Whether Commerce Should Attribute Accrued Interest on Unpaid Antidumping Duties to Matra's U.S. Sales
Comment 3: Whether Commerce Should Exclude Certain Post-Sale Adjustments Reported in BILLADJ2H and REBATE2H
Comment 4: Whether Commerce Should Apply Partial Adverse Facts Available to U.S. Credit Expenses
Comment 5: Whether Commerce Should Adjust Matra's Reporting of DINDIRS2U and USINSUR2U
Comment 6: Whether Commerce Should Implement Corrections from Verification
VI. Recommendation
DEPARTMENT OF COMMERCE
International Trade Administration
Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review and Join Annual Inquiry Service List

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

FOR FURTHER INFORMATION CONTACT:
Brenda E. Brown, Office of AD/CVD Operations, Customs Liaison Unit, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-4735.

SUPPLEMENTARY INFORMATION:

Background
Each year during the anniversary month of the publication of an antidumping duty (AD) or countervailing duty (CVD) order, finding, or suspended investigation, an interested party, as defined in section 771(9) of the Tariff Act of 1930, as amended (the Act), may request, in accordance with 19 CFR 351.213, that the U.S. Department of Commerce (Commerce) conduct an administrative review of that AD or CVD order, finding, or suspended investigation.
All deadlines for the submission of comments or actions by Commerce discussed below refer to the number of calendar days from the applicable starting date.

Respondent Selection
In the event Commerce limits the number of respondents for individual examination for administrative reviews initiated pursuant to requests made for the orders identified below, Commerce intends to select respondents based on U.S. Customs and Border Protection (CBP) data for U.S. imports during the period of review (POR). We intend to release the CBP data under Administrative Protective Order (APO) to all parties having an APO within five days of publication of the initiation notice and to make our decision regarding respondent selection within 35 days of publication of the initiation Federal Register notice. Therefore, we encourage all parties interested in commenting on respondent selection to submit their APO applications on the date of publication of the initiation notice, or as soon thereafter as possible. Commerce invites comments regarding the CBP data and respondent selection within five days of placement of the CBP data on the record of the review.
In the event Commerce decides it is necessary to limit individual examination of respondents and conduct respondent selection under section 777A(c)(2) of the Act:
In general, Commerce finds that determinations concerning whether particular companies should be “collapsed” ( i.e., treated as a single entity for purposes of calculating AD rates) require a substantial amount of detailed information and analysis, which often require follow-up questions and analysis. Accordingly, Commerce will not conduct collapsing analyses at the respondent selection phase of a review and will not collapse companies at the respondent selection phase unless there has been a determination to collapse certain companies in a previous segment of this AD proceeding ( i.e., investigation, administrative review, new shipper review, or changed circumstances review). For any company subject to a review, if Commerce determined, or continued to treat, that company as collapsed with others, Commerce will assume that such companies continue to operate in the same manner and will collapse them for respondent selection purposes. Otherwise, Commerce will not collapse companies for purposes of respondent selection. Parties are requested to: (a) identify which companies subject to review previously were collapsed; and (b) provide a citation to the proceeding in which they were collapsed. Further, if companies are requested to complete a Quantity and Value Questionnaire for purposes of respondent selection, in general each company must report volume and value data separately for itself. Parties should not include data for any other party, even if they believe they should be treated as a single entity with that other party. If a company was collapsed with another company or companies in the most recently completed segment of a proceeding where Commerce considered collapsing that entity, complete quantity and value data for that collapsed entity must be submitted.

Deadline for Withdrawal of Request for Administrative Review
Pursuant to 19 CFR 351.213(d)(1), a party that requests a review may withdraw that request within 90 days of the date of publication of the notice of initiation of the requested review. The regulation provides that Commerce may extend this time if it is reasonable to do so. Determinations by Commerce to extend the 90-day deadline will be made on a case-by-case basis.

Deadline for Particular Market Situation Allegation
Section 504 of the Trade Preferences Extension Act of 2015 amended the Act by adding the concept of particular market situation (PMS) for purposes of constructed value under section 773(e) of the Act. ^1 Section 773(e) of the Act states that “if a particular market situation exists such that the cost of materials and fabrication or other processing of any kind does not accurately reflect the cost of production in the ordinary course of trade, the administering authority may use another calculation methodology under this subtitle or any other calculation methodology.” When an interested party submits a PMS allegation pursuant to section 773(e) of the Act, Commerce will respond to such a submission consistent with 19 CFR 351.301(c)(2)(v). If Commerce finds that a PMS exists under section 773(e) of the Act, then it will modify its dumping calculations appropriately.
^1 See Trade Preferences Extension Act of 2015, Public Law 114-27, 129 Stat. 362 (2015).
Neither section 773(e) of the Act nor 19 CFR 351.301(c)(2)(v) set a deadline for the submission of PMS allegations and supporting factual information. However, in order to administer section 773(e) of the Act, Commerce must receive PMS allegations and supporting factual information with enough time to consider the submission. Thus, should an interested party wish to submit a PMS allegation and supporting new factual information pursuant to section 773(e) of the Act, it must do so no later than 20 days after submission of initial Section D responses.
Opportunity To Request a Review: Not later than the last day of June 2024, ^2 interested parties may request administrative review of the following orders, findings, or suspended investigations, with anniversary dates in June for the following periods:
^2 Or the next business day, if the deadline falls on a weekend, Federal holiday or any other day when Commerce is closed.
| Period to be reviewed
Antidumping Duty Proceedings
ARGENTINA: Raw Honey, A-357-823 | 6/1/23-5/31/24
BRAZIL: Raw Honey, A-351-857 | 6/1/23-5/31/24
GERMANY: Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel, A-428-845 | 6/1/23-5/31/24
INDIA:
Glycine, A-533-883 | 6/1/23-5/31/24
Quartz Surface Products, A-533-889 | 6/1/23-5/31/24
Raw Honey, A-533-903 | 6/1/23-5/31/24
Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel, A-533-873 | 6/1/23-5/31/24
INDONESIA: Prestressed Concrete Steel Wire Strand, A-560-837 | 6/1/23-5/31/24
ITALY:
Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel, A-475-838 | 6/1/23-5/31/24
Pressed Concrete Steel Wire Strand, A-475-843 | 6/1/23-5/31/24
JAPAN:
Carbon and Alloy Seamless Standard, Line, and Pressure (over 4 1/2 inches), A-588-850 | 6/1/23-5/31/24
Carbon and Alloy Seamless Standard, Line, and Pressure (under 4 1/2 inches), A-588-851 | 6/1/23-5/31/24
Glycine, A-588-878 | 6/1/23-5/31/24
MALAYSIA: Prestressed Concrete Steel Wire Strand, A-557-819 | 6/1/23-5/31/24
REPUBLIC OF KOREA: Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel, A-580-892 | 6/1/23-5/31/24
REPUBLIC OF TÜRKIYE: Quartz Surface Products, A-489-837 | 6/1/23-5/31/24
SOCIALIST REPUBLIC OF VIETNAM:
Certain Tool Chests and Cabinets, A-552-821 | 6/1/23-5/31/24
Laminated Woven Sacks, A-552-823 | 6/1/23-5/31/24
Raw Honey, A-552-833 | 6/1/23-5/31/24
SPAIN:
Chlorinated Isocyanurates, A-469-814 | 6/1/23-5/31/24
Finished Carbon Steel Flanges, A-469-815 | 6/1/23-5/31/24
Prestressed Concrete Steel Wire Strand, A-469-821 | 6/1/23-5/31/24
SOUTH AFRICA: Prestressed Concrete Steel Wire Strand, A-791-826 | 6/1/23-5/31/24
SWITZERLAND: Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel, A-441-801 | 6/1/23-5/31/24
THE PEOPLE'S REPUBLIC OF CHINA:
Artist Canvas, A-570-899 | 6/1/23-5/31/24
Ceramic Tile, A-570-108 | 6/1/23-5/31/24
Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel, A-570-058 | 6/1/23-5/31/24
Certain Tool Chests and Cabinets, A-570-056 | 6/1/23-5/31/24
Chlorinated Isocyanurates, A-570-898 | 6/1/23-5/31/24
Furfuryl Alcohol, A-570-835 | 6/1/23-5/31/24
Polyester Staple Fiber, A-570-905 | 6/1/23-5/31/24
Prestressed Concrete Steel Wire Strand, A-570-945 | 6/1/23-5/31/24
Silicon Metal, A-570-806 | 6/1/23-5/31/24
Tapered Roller Bearings and Parts Thereof, Finished or Unfinished, A-570-601 | 6/1/23-5/31/24
TUNISIA: Prestressed Concrete Steel Wire Strand, A-723-001 | 6/1/23-5/31/24
UKRAINE: Prestressed Concrete Steel Wire Strand, A-823-817 | 6/1/23-5/31/24
Countervailing Duty Proceedings
INDIA:
Glycine, C-533-884 | 1/1/23-12/31/23
Quartz Surface Products, C-533-890 | 1/1/23-12/31/23
REPUBLIC OF TÜRKIYE: Quartz Surface Products, C-489-838 | 1/1/23-12/31/23
SOCIALIST REPUBLIC OF VIETNAM: Laminated Woven Sacks, C-552-824 | 1/1/23-12/31/23
THE PEOPLE'S REPUBLIC OF CHINA:
Ceramic Tile, C-570-109 | 1/1/23-12/31/23
Glycine, C-570-081 | 1/1/23-12/31/23
Stainless Steel Flanges, C-570-065 | 1/1/23-12/31/23
Suspension Agreements
None
In accordance with 19 CFR 351.213(b), an interested party as defined by section 771(9) of the Act may request in writing that Commerce conduct an administrative review. For both AD and CVD reviews, the interested party must specify the individual producers or exporters covered by an AD finding or an AD or CVD order or suspension agreement for which it is requesting a review. In addition, a domestic interested party or an interested party described in section 771(9)(B) of the Act must state why it desires Commerce to review those particular producers or exporters. If the interested party intends for Commerce to review sales of merchandise by an exporter (or a producer if that producer also exports merchandise from other suppliers) which was produced in more than one country of origin and each country of origin is subject to a separate order, then the interested party must state specifically, on an order-by-order basis, which exporter(s) the request is intended to cover.
Note that, for any party Commerce was unable to locate in prior segments, Commerce will not accept a request for an administrative review of that party absent new information as to the party's location. Moreover, if the interested party who files a request for review is unable to locate the producer or exporter for which it requested the review, the interested party must provide an explanation of the attempts it made to locate the producer or exporter at the same time it files its request for review, in order for Commerce to determine if the interested party's attempts were reasonable, pursuant to 19 CFR 351.303(f)(3)(ii).
As explained in Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003), and Non-Market Economy Antidumping Proceedings: Assessment of Antidumping Duties, 76 FR 65694 (October 24, 2011), Commerce clarified its practice with respect to the collection of final antidumping duties on imports of merchandise where intermediate firms are involved. The public should be aware of this clarification in determining whether to request an administrative review of merchandise subject to antidumping findings and orders. ^3
^3 See the Enforcement and Compliance website at https://www.trade.gov/us-antidumping-and-countervailing-duties .
Commerce no longer considers the non-market economy (NME) entity as an exporter conditionally subject to an AD administrative review. ^4 Accordingly, the NME entity will not be under review unless Commerce specifically receives a request for, or self-initiates, a review of the NME entity. ^5 In administrative reviews of AD orders on merchandise from NME countries where a review of the NME entity has not been initiated, but where an individual exporter for which a review was initiated does not qualify for a separate rate, Commerce will issue a final decision indicating that the company in question is part of the NME entity. However, in that situation, because no review of the NME entity was conducted, the NME entity's entries were not subject to the review and the rate for the NME entity is not subject to change as a result of that review (although the rate for the individual exporter may change as a function of the finding that the exporter is part of the NME entity). Following initiation of an AD administrative review when there is no review requested of the NME entity, Commerce will instruct CBP to liquidate entries for all exporters not named in the initiation notice, including those that were suspended at the NME entity rate.
^4 See Antidumping Proceedings: Announcement of Change in Department Practice for Respondent Selection in Antidumping Duty Proceedings and Conditional Review of the Nonmarket Economy Entity in NME Antidumping Duty Proceedings, 78 FR 65963 (November 4, 2013).
^5 In accordance with 19 CFR 351.213(b)(1), parties should specify that they are requesting a review of entries from exporters comprising the entity, and to the extent possible, include the names of such exporters in their request.
All requests must be filed electronically in Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS) on Enforcement and Compliance's ACCESS website at https://access.trade.gov . ^6 Further, in accordance with 19 CFR 351.303(f)(l)(i), a copy of each request must be served on the petitioner and each exporter or producer specified in the request. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^7
^6 See Antidumping and Countervailing Duty Proceedings: Electronic Filing Procedures; Administrative Protective Order Procedures, 76 FR 39263 (July 6, 2011).
^7 See Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings; Final Rule, 88 FR 67069 (September 29, 2023).
Commerce will publish in the Federal Register a notice of “Initiation of Administrative Review of Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation” for requests received by the last day of June 2024. If Commerce does not receive, by the last day of June 2024, a request for review of entries covered by an order, finding, or suspended investigation listed in this notice and for the period identified above, Commerce will instruct CBP to assess antidumping or countervailing duties on those entries at a rate equal to the cash deposit of estimated antidumping or countervailing duties required on those entries at the time of entry, or withdrawal from warehouse, for consumption and to continue to collect the cash deposit previously ordered.
For the first administrative review of any order, there will be no assessment of antidumping or countervailing duties on entries of subject merchandise entered, or withdrawn from warehouse, for consumption during the relevant provisional-measures “gap” period of the order, if such a gap period is applicable to the period of review.

Establishment of and Updates to the Annual Inquiry Service List
On September 20, 2021, Commerce published the final rule titled “ Regulations to Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws ” in the Federal Register . ^8 On September 27, 2021, Commerce also published the notice entitled “ Scope Ruling Application; Annual Inquiry Service List; and Informational Sessions ” in the Federal Register . ^9 The Final Rule and Procedural Guidance provide that Commerce will maintain an annual inquiry service list for each order or suspended investigation, and any interested party submitting a scope ruling application or request for circumvention inquiry shall serve a copy of the application or request on the persons on the annual inquiry service list for that order, as well as any companion order covering the same merchandise from the same country of origin. ^{10}
^8 See Regulations to Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws, 86 FR 52300 (September 20, 2021) ( Final Rule ).
^9 See Scope Ruling Application; Annual Inquiry Service List; and Informational Sessions, 86 FR 53205 (September 27, 2021) ( Procedural Guidance ).
^{10} Id.
In accordance with the Procedural Guidance, for orders published in the Federal Register before November 4, 2021, Commerce created an annual inquiry service list segment for each order and suspended investigation. Interested parties who wished to be added to the annual inquiry service list for an order submitted an entry of appearance to the annual inquiry service list segment for the order in ACCESS and, on November 4, 2021, Commerce finalized the initial annual inquiry service lists for each order and suspended investigation. Each annual inquiry service list has been saved as a public service list in ACCESS, under each case number, and under a specific segment type called “AISL-Annual Inquiry Service List.” ^{11}
^{11} This segment has been combined with the ACCESS Segment Specific Information (SSI) field which will display the month in which the notice of the order or suspended investigation was published in the Federal Register , also known as the anniversary month. For example, for an order under case number A-000-000 that was published in the Federal Register in January, the relevant segment and SSI combination will appear in ACCESS as “AISL-January Anniversary.” Note that there will be only one annual inquiry service list segment per case number, and the anniversary month will be pre-populated in ACCESS.
As mentioned in the Procedural Guidance, beginning in January 2022, Commerce will update these annual inquiry service lists on an annual basis when the Opportunity Notice for the anniversary month of the order or suspended investigation is published in the Federal Register . ^{12} Accordingly, Commerce will update the annual inquiry service lists for the above-listed AD and CVD proceedings. All interested parties wishing to appear on the updated annual inquiry service list must take one of the two following actions: (1) new interested parties who did not previously submit an entry of appearance must submit a new entry of appearance at this time; (2) interested parties who were included in the preceding annual inquiry service list must submit an amended entry of appearance to be included in the next year's annual inquiry service list. For these interested parties, Commerce will change the entry of appearance status from “Active” to “Needs Amendment” for the annual inquiry service lists corresponding to the above-listed proceedings. This will allow those interested parties to make any necessary amendments and resubmit their entries of appearance. If no amendments need to be made, the interested party should indicate in the area on the ACCESS form requesting an explanation for the amendment that it is resubmitting its entry of appearance for inclusion in the annual inquiry service list for the following year. As mentioned in the Final Rule, ^{13} once the petitioners and foreign governments have submitted an entry of appearance for the first time, they will automatically be added to the updated annual inquiry service list each year.
^{12} See Procedural Guidance, 86 FR at 53206.
^{13} See Final Rule, 86 FR at 52335.
Interested parties have 30 days after the date of this notice to submit new or amended entries of appearance. Commerce will then finalize the annual inquiry service lists five business days thereafter. For ease of administration, please note that Commerce requests that law firms with more than one attorney representing interested parties in a proceeding designate a lead attorney to be included on the annual inquiry service list.
Commerce may update an annual inquiry service list at any time as needed based on interested parties' amendments to their entries of appearance to remove or otherwise modify their list of members and representatives, or to update contact information. Any changes or announcements pertaining to these procedures will be posted to the ACCESS website at https://access.trade.gov .

Special Instructions for Petitioners and Foreign Governments
In the Final Rule, Commerce stated that, “after an initial request and placement on the annual inquiry service list, both petitioners and foreign governments will automatically be placed on the annual inquiry service list in the years that follow.” ^{14} Accordingly, as stated above and pursuant to 19 CFR 351.225(n)(3), the petitioners and foreign governments will not need to resubmit their entries of appearance each year to continue to be included on the annual inquiry service list. However, the petitioners and foreign governments are responsible for making amendments to their entries of appearance during the annual update to the annual inquiry service list in accordance with the procedures described above.
^{14} Id.
This notice is not required by statute but is published as a service to the international trading community.
Dated: May 28, 2024.
James Maeder,

Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations.
DEPARTMENT OF COMMERCE
International Trade Administration
Request for Comment: Proposed Topics for U.S.-Brazil Commercial Dialogue Agenda

AGENCY:
International Trade Administration (ITA), Department of Commerce (DOC).

ACTION:
Request for comment.

SUMMARY:
This notice requests input on proposed topics for the agenda of the 22nd Plenary of the U.S.-Brazil Commercial Dialogue (Dialogue), taking place on September 19, 2024. In 2006, the Governments of the United States and Brazil established the Dialogue with the purpose of working together to prevent, reduce and remove non-tariff barriers to trade.

DATES:
In order to be considered in advance of Dialogue, comments should be received by July 31, 2024. Comments received after that date will be evaluated for future discussions.

ADDRESSES:
Comments should be submitted by email to brazildesk@trade.gov.

FOR FURTHER INFORMATION CONTACT:
Maria Cameron, maria.cameron@trade.gov, 202 482-0475; Office of Latin America & the Caribbean, U.S. Department of Commerce.

SUPPLEMENTARY INFORMATION:
The Dialogue was established by a Letter of Intent between the U.S. Department of Commerce (Commerce) and the Brazilian Ministry of Development, Industry and Foreign Trade (MDIC) on June 6, 2006, which was intended to guide commercial cooperation between the two Ministries. The Dialogue is the mechanism through which Commerce and MDIC work together to prevent, reduce and remove non-tariff barriers to trade in order to foster increased bilateral trade and investment. The Dialogue does this through a working group structure and organizes regular information exchanges between technical experts.
Following the 21st Plenary of the U.S.-Brazil Commercial Dialogue in November 2023, Commerce and MDIC issued a Joint Statement which noted the Dialogue maintains its overarching intention to:
• Support the implementation of the U.S.-Brazil Protocol on Trade Rules and Transparency;
• Foster an environment for ongoing and future cooperation;
• Support both countries' efforts to enhance resilient supply chains; and
• Remain engaged with the private sector and other stakeholders.
Currently the Dialogue is made up of working groups which address topics including but not limited to:
• Good regulatory practices;
• Standards, metrology and conformity assessment;
• Trade in the digital economy;
• Customs and trade facilitation;
• Trade and sustainable development.
Commerce will use the information gathered in this request for comment to develop proposed topics for the Dialogue agenda.
More information about the Dialogue can be found at: https://www.trade.gov/brazil-us-brazil-commercial-dialogue.
Alexander Peacher,

Director.
DEPARTMENT OF COMMERCE
International Trade Administration
[A-580-897]
Large Diameter Welded Pipe From the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review; 2022-2023

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) preliminarily determines that large diameter welded pipe (welded pipe) from the Republic of Korea (Korea) was not sold in the United States at less than normal value (NV) during the period of review (POR) May 1, 2022, through April 30, 2023. We invite interested parties to comment on these preliminary results.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Kate Johnson or Davyd Williams, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4929 or (202) 482-4338, respectively.

SUPPLEMENTARY INFORMATION:

Background
On May 2, 2019, Commerce published in the Federal Register the antidumping duty order on welded pipe from Korea. ^1 On May 2, 2023, Commerce published in the Federal Register a notice of opportunity to request an administrative review of the Order. ^2 On July 12, 2023, in accordance with 19 CFR 351.221(c)(1)(i), Commerce initiated an administrative review of the Order. ^3 Pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), on December 20, 2023, Commerce extended the deadline for the preliminary results of this review until May 30, 2024. ^4
^1 See Large Diameter Welded Pipe from the Republic of Korea: Amended Final Affirmative Antidumping Determination and Antidumping Duty Order, 84 FR 18767 (May 2, 2019) ( Order ).
^2 See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review and Join Annual Inquiry Service List, 88 FR 27445 (May 2, 2023).
^3 See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 88 FR 44262, 44267 (July 12, 2023), and Initiation of Antidumping and Countervailing Duty Administrative Reviews, 88 FR 62323, 62328 n.8 (September 11, 2023).
^4 See Memorandum, “Extension of Deadline for Preliminary Results of Antidumping Duty Administrative Review,” dated December 20, 2023.

Scope of the Order
The product covered by the Order is welded pipe from Korea. For a full description of the scope, see the Preliminary Decision Memorandum. ^5
^5 See Memorandum, “Decision Memorandum for Preliminary Results of the Antidumping Duty Administrative Review of Large Diameter Welded Pipe from the Republic of Korea; 2022-2023,” dated concurrently with, and hereby adopted by, this notice (Preliminary Decision Memorandum).

Methodology
Commerce is conducting this administrative review in accordance with section 751(a) of the Act. Constructed export price is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act.
For a full description of the methodology underlying these preliminary results, see the Preliminary Decision Memorandum. A list of topics included in the Preliminary Decision Memorandum is attached as an appendix to this notice. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov. In addition, a complete version of the Preliminary Decision Memorandum can be accessed at https://access.trade.gov/public/FRNoticesListLayout.aspx.

Rate for Non-Selected Companies
The statute and Commerce's regulations do not address the establishment of a weighted-average dumping margin to be determined for companies not selected for individual examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in an investigation, for guidance when determining the weighted-average dumping margin for companies which were not selected for individual examination in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins determined entirely {on the basis of facts available}.”
Where the rates for the individually examined companies are all zero, de minimis, or determined entirely using facts available, section 735(c)(5)(B) of the Act instructs that Commerce “may use any reasonable method to establish the estimated all-others rate for exporters and producers not individually investigated, including averaging the estimated weighted average dumping margins determined for the exporters and producers individually investigated.” One such reasonable method is to weight average the zero and de minimis rates, and the rates determined entirely pursuant to facts available. In fact, the SAA states that this is the “expected” method in such circumstances. ^6
^6 See Statement of Administrative Action Accompanying the Uruguay Round Agreements Act, H.R. Doc. 103-316, vol. 1 (1994) (SAA) at 873.
In this review, we have preliminarily calculated a weighted-average dumping margin for each of the mandatory respondents, Hyundai Steel Company (Hyundai Steel) and SeAH Steel Corporation (SeAH), that is zero percent. Accordingly, we preliminarily assign to the non-selected companies a dumping margin of zero percent consistent with section 735(c)(5)(B) of the Act.

Preliminary Results of the Review
We preliminarily determine that the following estimated weighted-average dumping margins exist for the period May 1, 2022, through April 30, 2023:
^7 See Appendix II.
Exporter and/or producer | Weighted- average dumping margin (percent)
Hyundai Steel Company | 0.00
SeAH Steel Corporation | 0.00
Non-Examined Companies ^7 | 0.00

Disclosure and Public Comment
Commerce intends to disclose its calculations performed for these preliminary results to interested parties within five days of the date of publication of this notice in the Federal Register in accordance with 19 CFR 351.224(b).
Interested parties may submit case briefs to Commerce no later than 30 days after the date of publication of this notice. ^8 Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than five days after the date for filing case briefs. ^9 Interested parties who submit case briefs or rebuttal briefs in this proceeding must submit: (1) a table of contents listing each issue; and (2) a table of authorities. ^{10} Case and rebuttal briefs should be filed using ACCESS.
^8 See 19 CFR 351.309(c)(1)(ii); see also 19 CFR 351.303 (for general filing requirements).
^9 See 19 CFR 351.309(d); see also Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings,
88 FR 67069, 67077 (September 29, 2023) ( APO and Service Final Rule ).
^{10} See 19 CFR 351.309(c)(2) and (d)(2).
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 review, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs. ^{11} Further, we request that interested parties limit their public executive summary of each issue to no more than 450 words, not including citations. We intend to use the public executive summaries as the basis of the comment summaries included in the issues and decision memorandum that will accompany the final results in this administrative review. We request that interested parties include footnotes for relevant citations in the public executive summary of each issue. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^{12}
^{11} We use the term “issue” here to describe an argument that Commerce would normally address in a comment of the Issues and Decision Memorandum.
^{12} See APO and Service Final Rule, 88 FR at 67069.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS. Requests should contain: (1) the party's name, address, and telephone number; (2) the number of participants and whether any participant is a foreign national; and (3) a list of issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case and rebuttal briefs. An electronically filed hearing request must be received successfully in its entirety via ACCESS by 5 p.m. Eastern Time within 30 days after the date of publication of this notice.

Assessment Rates
Pursuant to section 751(a)(2)(A) of the Act and 19 CFR 351.212(b)(1), upon completion of the final results of this administrative review, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise covered by this review.
If the weighted-average dumping margin for an individually examined respondent is not zero or de minimis ( i.e., less than 0.5 percent) in the final results of this review, Commerce intends to calculate an importer-specific ad valorem antidumping duty assessment rate based on the ratio of the total amount of dumping calculated for each importer's examined sales to the total entered value of those sales, in accordance with 19 CFR 351.212(b)(1). ^{13} We intend to instruct CBP to assess antidumping duties on all appropriate entries covered by this review when the importer-specific assessment rate calculated in the final results of this review is above de minimis ( i.e., 0.50 percent).
^{13} See Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Proceedings; Final Modification, 77 FR 8101, 8103 (February 14, 2012) ( Final Modification ).
Where we do not have entered values for all U.S. sales to a particular importer (or customer), we will calculate a per-unit assessment rate by aggregating the antidumping duties due for all U.S. sales to that importer (or customer) and dividing this amount by the total quantity sold to that importer (or customer). ^{14} To determine whether a per-unit assessment rate is de minimis, we will calculate estimated entered values.
^{14} See 19 CFR 351.212(b)(1).
If the weighted-average dumping margin for an individually examined respondent or an importer-specific assessment rate is zero or de minimis in the final results of review, we intend to instruct CBP to liquidate the appropriate entries without regard to antidumping duties. ^{15} The final results of this administrative review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties, where applicable. ^{16}
^{15} See 19 CFR 351.106(c)(2); see also Final Modification, 77 FR at 8103.
^{16} See section 751(a)(2)(C) of the Act.
For entries of subject merchandise during the POR produced by each individually examined respondent for which it did not know that the merchandise was destined for the United States, we intend to instruct CBP to liquidate unreviewed entries at the all-others rate ( i.e., 7.08 percent) established in the less-than-fair-value (LTFV) investigation ^{17} if there is no rate for the intermediate company involved in the transaction. ^{18}
^{17} See Order, 87 FR at 14515.
^{18} For a full discussion of this practice, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this administrative review in the Federal Register . If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired ( i.e., within 90 days of publication).

Cash Deposit Requirements
The following cash deposit requirements will be effective upon publication in the Federal Register of the notice of final results of administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for Hyundai Steel and SeAH will be equal to the weighed-average dumping margin established in the final results of this administrative review, except if the rate is less than 0.50 percent, and, therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for merchandise exported by a company not covered in this review but covered in a prior segment of the proceeding, the cash deposit rate will continue to be the company-specific cash deposit rate published in the completed segment for the most recent period; (3) if the exporter is not a firm covered in this review, or a previous segment, but the producer is, then the cash deposit rate will be the rate established in the completed segment for the most recent period of the producer of the merchandise; and (4) the cash deposit rate for all other producers or exporters will continue to be 7.08 percent, the all-others rate established in the LTFV investigation. ^{19} These cash deposit requirements, when imposed, shall remain in effect until further notice.
^{19} See Order, 84 FR at 18769.

Final Results of the Review
Unless the deadline is extended, Commerce intends to issue the final results of this administrative review, including the results of our analysis of issues raised by interested parties in any case or rebuttal briefs, within 120 days of publication of these preliminary results in the Federal Register . ^{20}
^{20} See section 751(a)(3)(A) of the Act and 19 CFR 351.213(h).

Notification to Importers
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping and/or countervailing duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping and/or countervailing duties occurred and the subsequent assessment of doubled antidumping duties, and/or an increase in the amount of antidumping duties by the amount of the countervailing duties.

Notification to Interested Parties
We are issuing and publishing these preliminary results in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(4).
Dated: May 28, 2024.
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, Performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.

Appendix I—List of Topics Discussed in the Preliminary Decision Memorandum
I. Summary
II. Background
III. Scope of the Order
IV. Discussion of the Methodology
V. Currency Conversion
VI. Recommendation

Appendix II—Companies Not Selected for Individual Review
1. AJU Besteel Co., Ltd.
2. Chang Won Bending Co., Ltd.
3. Daiduck Piping Co., Ltd.
4. Dong Yang Steel Pipe Co., Ltd.
5. Dongbu Incheon Steel Co., Ltd.
6. EEW KHPC Co., Ltd.
7. EEW Korea Co., Ltd.
8. Geumok Tech. Co. Ltd.
9. Hansol Metal Co. Ltd.
10. HiSteel Co., Ltd.
11. Husteel Co., Ltd.
12. Hyundai RB Co., Ltd.
13. Il Jin Nts Co. Ltd.
14. Kiduck Industries Co., Ltd.
15. Kum Kang Kind. Co., Ltd.
16. Kumsoo Connecting Co., Ltd.
17. Nexteel Co., Ltd.
18. Seonghwa Industrial Co., Ltd.
19. SIN-E B&P Co., Ltd.
20. Steel Flower Co., Ltd.
21. WELTECH Co., Ltd.
DEPARTMENT OF COMMERCE
International Trade Administration
Initiation of Five-Year (Sunset) Reviews

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
In accordance with the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) is automatically initiating the five-year reviews (Sunset Reviews) of the antidumping duty and countervailing duty (AD/CVD) order(s) and suspended investigation(s) listed below. The U.S. International Trade Commission (ITC) is publishing concurrently with this notice its notice of Institution of Five-Year Reviews which covers the same order(s) and suspended investigation(s).

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Commerce official identified in the Initiation of Review section below at AD/CVD Operations, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230. For information from the ITC, contact Mary Messer, Office of Investigations, U.S. International Trade Commission at (202) 205-3193.

SUPPLEMENTARY INFORMATION:

Background
Commerce's procedures for the conduct of Sunset Reviews are set forth in its Procedures for Conducting Five-Year (Sunset) Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 (March 20, 1998) and 70 FR 62061 (October 28, 2005). Guidance on methodological or analytical issues relevant to Commerce's conduct of Sunset Reviews is set forth in Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings; Final Modification, 77 FR 8101 (February 14, 2012).

Initiation of Review
In accordance with section 751(c) of the Act and 19 CFR 351.218(c), we are initiating the Sunset Reviews of the following antidumping and countervailing duty order(s) and suspended investigation(s):
DOC Case No. | ITC Case No. | Country | Product | Commerce contact
A-570-875 | 731-TA-990 | China | Non-Malleable Cast Iron Pipe Fittings (4th Review) | Thomas Martin, (202) 482-3936.
A-570-084 | 731-TA-1416 | China | Quartz Surface Products (1st Review) | Mary Kolberg, (202) 482-1785.
A-570-922 | 731-TA-1129 | China | Raw Flexible Magnets (3rd Review) | Mary Kolberg, (202) 482-1785.
A-583-842 | 731-TA-1130 | Taiwan | Raw Flexible Magnets (3rd Review) | Mary Kolberg, (202) 482-1785.
C-570-085 | 701-TA-606 | China | Quartz Surface Products (1st Review) | Thomas Martin, (202) 482-3936.
C-570-923 | 701-TA-452 | China | Raw Flexible Magnets (3rd Review) | Mary Kolberg, (202) 482-1785.

Filing Information
As a courtesy, we are making information related to sunset proceedings, including copies of the pertinent statute and Commerce's regulations, Commerce's schedule for Sunset Reviews, a listing of past revocations and continuations, and current service lists, available to the public on Commerce's website at the following address: https://enforcement.trade.gov/sunset/ . All submissions in these Sunset Reviews must be filed in accordance with Commerce's regulations regarding format, translation, and service of documents. These rules, including electronic filing requirements via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS), can be found at 19 CFR 351.303.
In accordance with section 782(b) of the Act, any party submitting factual information in an AD/CVD proceeding must certify to the accuracy and completeness of that information. Parties must use the certification formats provided in 19 CFR 351.303(g). Commerce intends to reject factual submissions if the submitting party does not comply with applicable revised certification requirements.

Letters of Appearance and Administrative Protective Orders
Pursuant to 19 CFR 351.103(d), Commerce will maintain and make available a public service list for these proceedings. Parties wishing to participate in any of these five-year reviews must file letters of appearance as discussed at 19 CFR 351.103(d). To facilitate the timely preparation of the public service list, it is requested that those seeking recognition as interested parties to a proceeding submit an entry of appearance within 10 days of the publication of the Notice of Initiation. Because deadlines in Sunset Reviews can be very short, we urge interested parties who want access to proprietary information under administrative protective order (APO) to file an APO application immediately following publication in the Federal Register of this notice of initiation. Commerce's regulations on submission of proprietary information and eligibility to receive access to business proprietary information under APO can be found at 19 CFR 351.304-306. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^1
^1 See Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings; Final Rule, 88 FR 67069 (September 29, 2023).

Information Required From Interested Parties
Domestic interested parties, as defined in sections 771(9)(C), (D), (E), (F), and (G) of the Act and 19 CFR 351.102(b), wishing to participate in a Sunset Review must respond not later than 15 days after the date of publication in the Federal Register of this notice of initiation by filing a notice of intent to participate. The required contents of the notice of intent to participate are set forth at 19 CFR 351.218(d)(1)(ii). In accordance with Commerce's regulations, if we do not receive a notice of intent to participate from at least one domestic interested party by the 15-day deadline, Commerce will automatically revoke the order without further review. ^2
^2 See 19 CFR 351.218(d)(1)(iii).
If we receive an order-specific notice of intent to participate from a domestic interested party, Commerce's regulations provide that all parties wishing to participate in a Sunset Review must file complete substantive responses not later than 30 days after the date of publication in the Federal Register of this notice of initiation. The required contents of a substantive response, on an order-specific basis, are set forth at 19 CFR 351.218(d)(3). Note that certain information requirements differ for respondent and domestic parties. Also, note that Commerce's information requirements are distinct from the ITC 's information requirements. Consult Commerce's regulations for information regarding Commerce's conduct of Sunset Reviews. Consult Commerce's regulations at 19 CFR part 351 for definitions of terms and for other general information concerning antidumping and countervailing duty proceedings at Commerce.
This notice of initiation is being published in accordance with section 751(c) of the Act and 19 CFR 351.218(c).
Dated: May 21, 2024.
James Maeder,

Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations.
DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-089]
Steel Racks From the People's Republic of China: Rescission of Countervailing Duty Administrative Review; 2022

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) is rescinding the administrative review of the countervailing duty (CVD) order on steel racks from the People's Republic of China (China), covering the period of review (POR), January 1, 2022, through December 31, 2022.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Thomas Martin or Dylan Hill, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-3936 or (202) 482-1197, respectively.

SUPPLEMENTARY INFORMATION:

Background
On September 6, 2023, Commerce published in the Federal Register a notice of opportunity to request an administrative review of the CVD order on steel racks from China. ^1 Commerce received a timely request for review of the order from the following exporters of subject merchandise: (1) Jiangsu JISE Intelligent Storage Equipment Co., Ltd. (Jiangsu JISE); (2) Jiangsu Nova Intelligent Logistics Equipment Co., Ltd (Jiangsu Nova); (3) Jiangsu Starshine Industry Equipment Co., Ltd. (Starshine); (4) Nanjing Dongsheng Shelf Manufacturing Co., Ltd. (Dongsheng); (5) Nanjing Ironstone Storage Equipment Co., Ltd. (Nanjing Ironstone); (6) Ningbo Xinguang Rack Co., Ltd. (Xinguang Rack); and (7) Xiamen Luckyroc Industry Co., Ltd. (Luckyroc). ^2 We received no other requests for review. On November 15, 2023, Commerce published in the Federal Register a notice of initiation of an administrative review with respect to Dongsheng, Jiangsu JISE, Jiangsu Nova, Luckyroc, Nanjing Ironstone, Starshine, and Xinguang Rack, in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act). ^3 On December 13, 2023, Commerce placed U.S. Customs and Border Protection (CBP) entry data for U.S. imports of the subject merchandise during the POR on the record for respondent selection purposes. ^4
^1 See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review and Join Annual Inquiry Service List, 88 FR 60923 (September 6, 2023).
^2 See Dongsheng's Letter, “Request for Administrative Review,” dated September 29, 2023; and Nanjing Ironstone, Luckyroc, and Xinguang Racks's Letter, “Request for Administrative Review,” dated September 29, 2023; and Jiangsu Nova's Letter, “Request for Administrative Review,” dated September 15, 2023; and Starshine's Letter “Request for Administrative Review,” dated September 15, 2023; and Jiangsu JISE's Letter, “Request for Administrative Review,” dated September 15, 2023.
^3 See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 88 FR 78298 (November 15, 2023).
^4 See Memorandum, “Customs Data for Respondent Selection,” dated December 13, 2023.
On January 10, 2024, Commerce selected Dongsheng as the sole mandatory respondent, having accounted for all suspended entries of subject merchandise for all companies under review. ^5 Between January 30, 2024, and February 13, 2024, Dongsheng, Luckyroc, and Xinguang Rack timely withdrew their requests for administrative review. ^6 On March 18, 2024, Commerce notified all interested parties that in the absence of any suspended entries during the POR for Nanjing Ironstone, Jiangsu JISE, Starshine, and Jiangsu Nova, which are the only remaining companies subject to the instant administrative review, Commerce intended to rescind this review. ^7 Commerce provided all parties an opportunity to comment on CBP's findings. ^8 No parties submitted comments.
^5 See Memorandum, “Respondent Selection,” dated January 10, 2024.
^6 See Dongsheng's Letter, “Dongsheng Withdrawal of Request for Administrative Review,” dated January 30, 2024; and Luckyroc and Xinguang Rack's Letter, “Withdrawal of Request for Administrative Review,” dated February 13, 2024.
^7 See Memorandum, “Notice of Intent to Rescind Review,” dated March 18, 2024.
^8 Id.

Rescission of Review
Pursuant to 19 CFR 351.213(d)(3), it is Commerce's practice to rescind an administrative review of a CVD order where it concludes that there were no reviewable entries of subject merchandise during the POR. ^9 Normally, upon completion of an administrative review, the suspended entries are liquidated at the CVD assessment rate for the review period. ^{10} Therefore, for an administrative review to be conducted, there must be a reviewable, suspended entry that Commerce can instruct CBP to liquidate at the calculated CVD assessment rate for the review period. ^{11} As noted above, CBP data showed that there were no entries of subject merchandise during the POR with respect to Jiangsu JISE, Jiangsu Nova, Nanjing Ironstone, and Starshine, the companies remaining subject to this review. Accordingly, in the absence of reviewable, suspended entries of subject merchandise during the POR for any companies remaining under review and for which review requests have not been withdrawn, we are rescinding this administrative review,in its entirety, in accordance with 19 CFR 351.213(d)(3).
^9 See, e.g., Certain Hardwood Plywood Products from the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review and Rescission of Review, in Part; 2017-2018, 84 FR 54844, 54845 and n.8 (October 11, 2019) (citing Lightweight Thermal Paper from the People's Republic of China: Notice of Rescission of Countervailing Duty Administrative Review; 2015, 82 FR 14349 (March 20, 2017)).
^{10} See 19 CFR 351.212(b)(2).
^{11} See 19 CFR 351.213(d)(3).

Cash Deposit Requirements
As Commerce has proceeded to a final rescission of this administrative review, no cash deposit rates will change. Accordingly, the current cash deposit requirements shall remain in effect until further notice.

Assessment
Commerce will instruct CBP to assess countervailing duties on all appropriate entries. Because Commerce is rescinding this review in its entirety, the entries to which this administrative review pertained shall be assessed at rates equal to the cash deposit of estimated countervailing duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of this rescission notice in the Federal Register .

Notification Regarding Administrative Protective Order
This notice serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of the APO materials, or conversion to judicial protective order is hereby requested. Failure to comply with regulations and terms of an APO is a violation, which is subject to sanction.

Notification to Interested Parties
This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(l) of the Act, and 19 CFR 351.213(d)(4).
Dated: May 28, 2024.
James Maeder,

Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations.
DEPARTMENT OF COMMERCE
International Trade Administration
[A-533-502]
Certain Welded Carbon Steel Standard Pipes and Tubes From India: Final Determination of No Shipments of Antidumping Duty Administrative Review; 2022-2023

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) has determined that Surya Roshni Limited (Surya) made no shipments during the period of review (POR), May 1, 2022, through April 30, 2023.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Garry Kasparov, 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) 482-1397.

SUPPLEMENTARY INFORMATION:

Background
On February 6, 2024, Commerce published the Preliminary Determination of No Shipments of this review in the Federal Register . ^1 We invited interested parties to comment on the Preliminary Determination of No Shipments. ^2 No interested parties submitted comments. Accordingly, Commerce made no changes to the Preliminary Determination of No Shipments, which we have adopted as the final results of review, and thus, no decision memorandum accompanies this notice. Commerce conducted this administrative review in accordance with section 751 of the Tariff Act of 1930, as amended (the Act).
^1 See Certain Welded Carbon Steel Standard Pipes and Tubes from India: Preliminary Determination of No Shipments and Partial Rescission of Review; 2022-2023, 89 FR 8160 (February 6, 2024) ( Preliminary Determination of No Shipments ), and accompanying Preliminary Decision Memorandum (PDM).
^2 Id.

Scope of the Order
The products covered by the order include certain welded carbon steel standard pipes and tubes with an outside diameter of 0.375 inch or more but not over 16 inches. A full description of the scope of the order is contained in the Preliminary Determination of No Shipments PDM.

Final Determination of No Shipments
In the Preliminary Determination of No Shipments, Commerce determined that Surya did not have knowledge that the subject merchandise was destined for the United States, and, thus, Surya is not considered the exporter of subject merchandise during the POR for the purposes of this review. ^3 As no parties commented on the determination and we have not received any information to contradict this determination, for the final results of review, we continue to find that Surya made no shipments of subject merchandise to the United States during the POR.
^3 See Preliminary Determination of No Shipments PDM at 3-4.

Disclosure
Normally, Commerce discloses to interested parties the calculations performed in final results within five days of any public announcement or, if there is no public announcement, within five days of the date of publication of these final results in the Federal Register , in accordance with 19 CFR 351.224(b). However, as there were no calculations performed in this administrative review, there are no calculations to disclose.

Assessment Rates
For entries of subject merchandise during the POR produced by Surya, we will instruct CBP to liquidate suspended entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. ^4
^4 See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the Federal Register . If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired ( i.e., within 90 days of publication).

Cash Deposit Requirements
The following cash deposit requirements for estimated antidumping duties will be effective for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) for merchandise exported by a producer or exporter not covered in this review but covered in a prior completed segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently-completed segment of this proceeding; (2) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value (LTFV) investigation, but the producer has been covered in a prior completed segment of this proceeding, the cash deposit rate will be the company-specific rate established for the most recent period for the producer of the merchandise; (3) the cash deposit rate for all other producers or exporters will continue to be 7.08 percent, ^5 the all-others rate established in the LTFV investigation. These cash deposit requirements, when imposed, shall remain in effect until further notice.
^5 See Antidumping Duty Order; Certain Welded Carbon Steel Standard Pipes and Tubes from India, 51 FR at 17384 (May 12, 1986).

Notification to Importers
This notice serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during the POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

Administrative Protective Order
This notice also serves as a final reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

Notification to Interested Parties
We are issuing and publishing these final results of administrative review in accordance with sections 751(a)(1) and 777(i) of the Act, and 19 CFR 351.221(b)(5).
Dated: May 28, 2024.
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.
DEPARTMENT OF COMMERCE
International Trade Administration
[A-560-836]
Mattresses From Indonesia: Preliminary Results of Antidumping Duty Administrative Review; 2022-2023

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) preliminarily determines that PT Ecos Jaya Indonesia and PT Grantec Jaya Indonesia (collectively, Ecos/Grantec), and the non-individually-examined companies for which a review was requested made sales of mattresses from Indonesia at prices below normal value (NV) during the period of review (POR), May 1, 2022, through April 30, 2023. Additionally, Commerce preliminarily determines that PT Zinus Global Indonesia (Zinus Indonesia) did not make sales of mattresses from Indonesia at prices below NV during the POR. We invite interested parties to comment on these preliminary results.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Katherine Johnson or Brian Smith, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-4929 or (202) 482-1766, respectively.

SUPPLEMENTARY INFORMATION:

Background
On May 14, 2021, Commerce published the antidumping duty (AD) order on mattresses from Indonesia. ^1 On July 12, 2023, in accordance with 19 CFR 351.221(c)(1)(i), Commerce initiated an administrative review of the Order. ^2
^1 See Mattresses from Cambodia, Indonesia, Malaysia, Serbia, Thailand, Republic of Turkey, and the Socialist Republic of Vietnam: Antidumping Duty Orders and Amended Final Affirmative Antidumping Determination for Cambodia, 86 FR 26460 (May 14, 2021) ( Order ).
^2 See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 89 FR 44262 (July 12, 2023).
Pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), on January 10, 2024, Commerce determined that it was not practicable to complete the preliminary results of this review within 245 days and extended the deadline for the preliminary results of this review by 120 days, until May 30, 2024. ^3
^3 See Memorandum, “Extension of Deadline for Preliminary Results of 2022-2023 Antidumping Duty Administrative Review,” dated January 10, 2024.
For a detailed description of the events that followed the initiation of this review, see the Preliminary Decision Memorandum. ^4 The Preliminary Decision Memorandum is a public document and is available via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov. In addition, a complete version of the Preliminary Decision Memorandum can be found at https://access.trade.gov/public/FRNoticesListLayout.aspx.
^4 See Memorandum, “Decision Memorandum for the Preliminary Results of Antidumping Duty Administrative Review of Mattresses from Indonesia; 2022-2023,” dated concurrently with, and hereby adopted by, this notice (Preliminary Decision Memorandum).

Scope of the Order
The products covered by the Order are mattresses from Indonesia. The product is currently classified under the Harmonized Tariff Schedule of the United States (HTSUS) subheadings 9404.21.0010, 9404.21.0013, 9404.29.1005, 9404.29.1013, 9404.29.9085, and 9404.29.9087. Products subject to this review may also enter under HTSUS subheadings 9404.21.0095, 9404.29.1095, 9404.29.9095, 9401.40.0000, and 9401.90.5081. The HTSUS subheadings are provided for convenience and customs purposes only; the written product description of the scope of the Order is dispositive. For a full description of the scope, see the Preliminary Decision Memorandum.

Methodology
Commerce is conducting this administrative review in accordance with section 751(a) of the Act. Export price and constructed export price are calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying these preliminary results, see the Preliminary Decision Memorandum. A list of topics included in the Preliminary Decision Memorandum is included as Appendix I to this notice.

Rate for Non-Examined Companies
The statute and Commerce's regulations do not address the establishment of a weighted-average dumping margin to be determined for companies not selected for individual examination when Commerce limits its examination in an administrative review pursuant to section 777A(c)(2) of the Act. Generally, Commerce looks to section 735(c)(5) of the Act, which provides instructions for calculating the all-others rate in an investigation, for guidance when determining the weighted-average dumping margin for companies which were not selected for individual examination in an administrative review. Under section 735(c)(5)(A) of the Act, the all-others rate is normally “an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins determined entirely {on the basis of facts available}.”
We preliminarily calculated dumping margins for the two mandatory respondents, Ecos/Grantec and Zinus Indonesia, of 31.17 percent and 0.00 percent, respectively, and we have assigned to the non-selected companies a rate of 31.17 percent, which is the rate for Ecos/Grantec.

Preliminary Results of the Review
We preliminarily determine that the following weighted-average dumping margins exist for the period May 1, 2022, through April 30, 2023:
^5 We are treating these companies as a single entity for purposes of this review. For a complete discussion, see Memorandum, “Affiliation and Collapsing of PT Ecos Jaya Indonesia and PT Grantec Jaya Indonesia,” dated December 8, 2022.
^6 See Appendix II for a list of these companies.
Exporter or producer | Weighted- average dumping margin (percent)
PT Ecos Jaya Indonesia/PT Grantec Jaya Indonesia ^5 | 31.17
PT Zinus Global Indonesia | 0.00
Non-Examined Companies ^6 | 31.17

Disclosure and Public Comment
Commerce intends to disclose its calculations and analysis performed for these preliminary results to interested parties within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).
Pursuant to 19 CFR 351.309(c), interested parties may submit case briefs to Commerce no later than 30 days after the date of publication of this notice. ^7 Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than five days after the date for filing case briefs. ^8 Interested parties who submit case or rebuttal briefs in this proceeding must submit: (1) a table of contents listing each issue; and (2) a table of authorities. ^9 Case and rebuttal briefs should be filed using ACCESS.
^7 See 19 CFR 351.309(c); see also 19 CFR 351.303 (for general filing requirements).
^8 See 19 CFR 351.309(d); see also Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings, 88 FR 67069, 67077 (September 29, 2023) ( APO and Service Final Rule ).
^9 See 19 351.309(c)(2) and (d)(2).
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 review, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs. ^{10} Further, we request that interested parties limit their executive summary of each issue to no more than 450 words, not including citations. We intend to use the executive summaries as the basis of the comment summaries included in the issues and decision memorandum that will accompany the final results in this administrative review. We request that interested parties include footnotes for relevant citations in the executive summary of each issue. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^{11}
^{10} We use the term “issue” here to describe an argument that Commerce would normally address in a comment of the Issues and Decision Memorandum.
^{11} See APO and Service Final Rule.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS. Requests should contain: (1) the party's name, address, and telephone number; (2) the number of participants and whether any participant is a foreign national; and (3) a list of issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case briefs. An electronically filed hearing request must be received successfully in its entirety via ACCESS by 5 p.m. Eastern Time within 30 days after the date of publication of this notice.

Assessment Rates
Pursuant to section 751(a)(2)(A) of the Act and 19 CFR 351.212(b)(1), Commerce intends to determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries of subject merchandise covered by this review. Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this administrative review in the Federal Register . If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired ( i.e., within 90 days of publication).
For an individually examined respondent whose weighted-average dumping margin is not zero or de minimis ( i.e., less than 0.50 percent), upon completion of the final results, Commerce intends to calculate importer-specific AD assessment rates on the basis of the ratio of the total amount of dumping calculated for each importer's examined sales to the total entered value of those sales. Where we do not have entered values for all U.S. sales to a particular importer, we will calculate an importer-specific, per-unit assessment rate on the basis of the ratio of the total amount of dumping calculated for the importer's examined sales to the total quantity of those sales. ^{12} To determine whether an importer-specific, per-unit assessment rate is de minimis, in accordance with 19 CFR 351.106(c)(2), we also will calculate an importer-specific ad valorem ratio based on estimated entered values. Where either a respondent's weighted-average dumping margin is zero or de minimis, or an importer-specific assessment rate is zero or de minimis, we intend to instruct CBP to liquidate appropriate entries without regard to antidumping duties. ^{13}
^{12} See 19 CFR 351.212(b)(1).
^{13} See 19 CFR 351.106(c)(2); see also Antidumping Proceeding: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Proceedings; Final Modification, 77 FR 8101, 8103 (February 14, 2012).
For entries of subject merchandise during the POR produced by each individually-examined respondent for which it did not know its merchandise was destined for the United States, we intend to instruct CBP to liquidate such entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. ^{14}
^{14} See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
For the companies which were not selected for individual examination, we intend to assign an AD assessment rate equal to the dumping margin determined for Ecos/Grantec in the final results of review.
The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future cash deposits of estimated antidumping duties, where applicable. ^{15}
^{15} See section 751(a)(2)(C) of the Act.

Cash Deposit Requirements
The following cash deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for the companies listed above will be equal to the weighted-average dumping margin established in the final results of this review, except if the rate is less than 0.50 percent and, therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for previously reviewed or investigated companies not covered in this review, the cash deposit rate will continue to be the company-specific rate published for the most recently-completed segment of this proceeding in which the company was reviewed; (3) if the exporter is not a firm covered in this review, a prior completed review, or the less-than-fair value (LTFV) investigation, but the producer is, then the cash deposit rate will be the company-specific rate established for the most recently-completed segment of this proceeding for the producer of subject merchandise; and (4) the cash deposit rate for all other producers and exporters will continue to be 2.22 percent, the all-others rate established in the LTFV investigation. ^{16}
^{16} See Order.
These cash deposit requirements, when imposed, shall remain in effect until further notice.

Final Results of the Review
Unless the deadline is otherwise extended, Commerce intends to issue the final results of this administrative review, including the results of our analysis of issues raised by the parties in the written comments, within 120 days of publication of these preliminary results in the Federal Register , pursuant to section 751(a)(3)(A) of the Act and 19 CFR 351.213(h)(1).

Notification to Importers
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

Notification to Interested Parties
These preliminary results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(4).
Dated: May 28, 2024
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.

Appendix I—List of Topics Discussed in the Preliminary Decision Memorandum
I. Summary
II. Background
III. Scope of the Order
IV. Discussion of the Methodology
V. Currency Conversion
VI. Recommendation

Appendix II—Companies Not Selected for Individual Examination
1. Bali Natural Latex
2. CV. Aumireta Anggun
3. CV. Lautan Rezeki
4. Duta Abadi Primantara, Pt
5. Ecos Jaya JL Pasir Awi
6. Mimpi
7. PT. Ateja Multi Industri
8. PT. Ateja Tritunggal
9. PT. Aurora World Cianjur
10. P.T. Barat Daya Gemilang
11. PT. CJ Logistics Indonesia
12. PT. Cahaya Buana Furindotama;
13. PT Celebes Putra Prima
14. PT Champion Mattress Indonesia Manufacturing
15. PT Demak Putra Mandiri
16. PT. Dinamika Indonusa Prima
17. PT. Dunlopillo Indonesia
18. PT. Dynasti Indomegah
19. PT Graha Anom Jaya
20. PT Graha Seribusatujaya
21. PT Kline Total Logistics Indonesia
22. PT. Massindo International
23. PT. Ocean Centra Furnindo
24. PT. Quantum Tosan Internasional
25. PT. Romance Bedding & Furniture
26. PT. Royal Abadi Sejahtera
27. PT Rubberfoam Indonesia
28. PT Solo Murni Epte
29. PT. Transporindo Buana Kargotama
30. Sonder Canada Inc
31. Super Poly Industry PT
DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-844]
Certain Carbon and Alloy Steel Cut-to-Length Plate From the Federal Republic of Germany: Preliminary Results of Antidumping Duty Administrative Review; 2022-2023

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) preliminarily determines that certain carbon and alloy steel cut-to-length plate (CTL plate) from the Federal Republic of Germany (Germany) is not being, or is not likely to be, sold in the United States at less than normal value (NV) during the period of review (POR) May 1, 2022, through April 30, 2023.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Adam Simons, AD/CVD Operations, Office IX, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-6172.

SUPPLEMENTARY INFORMATION:

Background
On July 12, 2023, based on a timely request for review, in accordance with 19 CFR 351.221(c)(1)(i), we initiated an administrative review on CTL plate from Germany. ^1 This review covers one producer/exporter of the subject merchandise, AG der Dillinger Hüttenwerke (Dillinger). On January 11, 2024, we extended the preliminary results of this review to no later than May 24, 2024. ^2 For a complete description of the events that followed the initiation of this review, see the Preliminary Decision Memorandum. ^3
^1 See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 88 FR 44262 (July 12, 2023).
^2 See Memorandum, “Extension of Deadline for Preliminary Results of 2022-2023 Antidumping Duty Administrative Review,” dated January 11, 2024.
^3 See Memorandum, “Decision Memorandum for the Preliminary Results of the 2022-2023 Administrative Review of the Antidumping Duty Order on Certain Carbon and Alloy Steel Cut-To-Length Plate from the Federal Republic of Germany,” dated concurrently with, and hereby adopted by, this notice (Preliminary Decision Memorandum).

Scope of the Order
The products covered by the order are certain carbon and alloy steel hot-rolled or forged flat plate products not in coils, whether or not painted, varnished, or coated with plastics or other non-metallic substances from Germany. Products subject to the order are currently classified in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers: 7208.40.3030, 7208.40.3060, 7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7211.13.0000, 7211.14.0030, 7211.14.0045, 7225.40.1110, 7225.40.1180, 7225.40.3005, 7225.40.3050, 7226.20.0000, and 7226.91.5000. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to this scope is dispositive. ^4
^4 For a complete description of the scope of the order, see the Preliminary Decision Memorandum.

Methodology
Commerce is conducting this review in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act). Export price is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying our conclusions, see the Preliminary Decision Memorandum. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly at https://access.trade.gov/public/FRNoticesListLayout.aspx. A list of the topics discussed in the Preliminary Decision Memorandum is attached as an appendix to this notice.

Preliminary Results of the Review
As a result of this review, we preliminarily determine that the following weighted-average dumping margin exists for the period May 1, 2022, through April 30, 2023:
Producer/ exporter | Weighted- average dumping margin (percent)
AG der Dillinger Hüttenwerke | 0.00

Disclosure and Public Comment
We intend to disclose the calculations performed for these preliminary results to interested parties within five days after the date of publication of this notice. ^5 Pursuant to 19 CFR 351.309(c), interested parties may submit case briefs no later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than five days after the date for filing case briefs. ^6 Interested parties who submit case or rebuttal briefs in this proceeding must submit: (1) a table of contents listing each issue; and (2) a table of authorities. ^7 All briefs must be filed electronically using ACCESS. An electronically filed document must be received successfully in its entirety in ACCESS by 5:00 p.m. Eastern Time on the established deadline.
^5 See 19 CFR 351.224(b).
^6 See 19 CFR 351.309(d); see also Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings, 88 FR 67069, 67077 (September 29, 2023) ( APO and Final Service Rule ).
^7 See 19 351.309(c)(2) and (d)(2).
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 briefs that should be limited to five pages total, including footnotes. In this review, we instead request that interested parties provide at the beginning of their briefs a public, executive summary for each issue raised in their briefs. ^8 Further, we request that interested parties limit their executive summary of each issue to no more than 450 words, not including citations. We intend to use the executive summaries as the basis of the comment summaries included in the issues and decision memorandum that will accompany the final results in this administrative review. We request that interested parties include footnotes for relevant citations in the executive summary of each issue. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^9
^8 We use the term “issue” here to describe an argument that Commerce would normally address in a comment of the Issues and Decision Memorandum.
^9 See APO and Final Service Rule.
Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS by 5:00 p.m. Eastern Time within 30 days after the date of publication of this notice. Requests should contain: (1) the party's name, address, and telephone number; (2) the number of participants; and (3) a list of issues to be discussed. Oral presentations at the hearing will be limited to issues raised in the briefs. If a request for a hearing is made, Commerce will inform parties of the scheduled date for the hearing. ^{10}
^{10} See 19 CFR 351.310(d).

Assessment Rates
Upon issuing the final results, Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), because Dillinger reported the entered value of its U.S. sales, we calculated importer-specific ad valorem duty assessment rates based on the ratio of the total amount of dumping calculated for the examined sales to the total entered value of those sales. Where either the respondent's weighted-average dumping margin is zero or de minimis within the meaning of 19 CFR 351.106(c)(1), or an importer-specific rate is zero or de minimis, we will instruct CBP to liquidate the appropriate entries without regard to antidumping duties.
Commerce's “automatic assessment” will apply to entries of subject merchandise during the POR produced by Dillinger for which it did not know that the merchandise it sold to an intermediary ( e.g., a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. ^{11}
^{11} For a full discussion of this practice, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
Commerce intends to issue assessment instructions to CBP no earlier than 35 days after the date of publication of the final results of this review in the Federal Register . If a timely summons is filed at the U.S. Court of International Trade, the assessment instructions will direct CBP not to liquidate relevant entries until the time for parties to file a request for a statutory injunction has expired ( i.e., within 90 days of publication).

Cash Deposit Requirements
The following deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) the cash deposit rate for Dillinger will be equal to the weighted-average dumping margin established in the final results of this review, except if the rate is less than 0.50 percent and, therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for previously investigated or reviewed companies not covered in this review, the cash deposit rate will continue to be the company-specific cash deposit rate published for the most recently completed segment of this proceeding in which the company participated; (3) if the exporter is not a firm covered in this review, or the less-than-fair-value investigation, but the producer is, then the cash deposit rate will be the cash deposit rate established for the most recently completed segment for the producer of the merchandise; and (4) the cash deposit rate for all other producers or exporters will be 20.99 percent, the all-others rate established in the Second Amended Final Determination. ^{12} These cash deposit requirements, when imposed, shall remain in effect until further notice.
^{12} See Certain Carbon and Alloy Steel Cut-to-Length Plate From the Federal Republic of Germany: Notice of Court Decision Not in Harmony With the Amended Final Determination of Antidumping Investigation; Notice of Second Amended Final Determination, 89 FR 1882, 1883 (January 11, 2024) ( Second Amended Final Determination ).

Notification to Importers
This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

Notification to Interested Parties
We are issuing and publishing these preliminary results in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: May 24, 2024.
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.

Appendix

List of Topics in the Preliminary Decision Memorandum
I. Summary
II. Background
III. Scope of the Order
IV. Discussion of the Methodology
V. Recommendation
DEPARTMENT OF COMMERCE
International Trade Administration
Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Advance Notification of Sunset Review

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

Background
Every five years, pursuant to the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) and the International Trade Commission automatically initiate and conduct reviews to determine whether revocation of a countervailing or antidumping duty order or termination of an investigation suspended under section 704 or 734 of the Act would be likely to lead to continuation or recurrence of dumping or a countervailable subsidy (as the case may be) and of material injury.

Upcoming Sunset Reviews for July 2024
Pursuant to section 751(c) of the Act, the following Sunset Reviews are scheduled for initiation in July 2024 and will appear in that month's Notice of Initiation of Five-Year Sunset Reviews (Sunset Review).
| Department contact
Antidumping Duty Proceedings
Hot-rolled Carbon Steel Flat Products from China, A-570-865 (4th Review) | Mary Kolberg, (202) 482-3936.
Hot-rolled Carbon Steel Flat Products from India, A-533-820 (4th Review) | Mary Kolberg, (202) 482-1785.
Hot-rolled Carbon Steel Flat Products from Indonesia, A-560-812 (4th Review) | Mary Kolberg, (202) 482-1785.
| Hot-rolled Carbon Steel Flat Products from Taiwan, A-583-835 (4th Review) | Mary Kolberg, (202) 482-1785.
Hot-rolled Carbon Steel Flat Products from Thailand, A-549-817 (4th Review) | Mary Kolberg, (202) 482-1785.
Hot-rolled Carbon Steel Flat Products from Ukraine, A-823-811 (4th Review) | Mary Kolberg, (202) 482-1785.
Laminated Woven Sacks from China, A-570-916 (3rd Review) | Thomas Martin, (202) 482-3936.
Persulfates from China, A-570-847 (5th Review) | Thomas Martin, (202) 482-3936.
Sodium Nitrite from China, A-570-925 (3rd Review) | Thomas Martin, (202) 482-3936.
Sodium Nitrite from Germany, A-428-841 (3rd Review) | Thomas Martin, (202) 482-3936.
Steel Propane Cylinders from China, A-570-086 (1st Review) | Mary Kolberg, (202) 482-1785.
Steel Propane Cylinders from Thailand, A-549-839 (1st Review) | Mary Kolberg, (202) 482-1785.
Steel Wire Garment Hangers from China, A-570-918 (3rd Review) | Thomas Martin, (202) 482-3936.
Countervailing Duty Proceedings
Hot-rolled Carbon Steel Flat Products from India, C-533-821 (4th Review) | Mary Kolberg, (202) 482-1785.
Hot-rolled Carbon Steel Flat Products from Indonesia, C-560-813 (4th Review) | Mary Kolberg, (202) 482-1785.
Hot-rolled Carbon Steel Flat Products from Thailand, C-549-818 (4th Review) | Jacqueline Arrowsmith, (202) 482-5255.
Laminated Woven Sacks from China, C-570-917 (3rd Review) | Jacqueline Arrowsmith, (202) 482-5255.
Sodium Nitrite from China, C-570-926 (3rd Review) | Jacqueline Arrowsmith, (202) 482-5255.
Steel Propane Cylinders from China, C-570-087 (1st Review) | Mary Kolberg, (202) 482-1785.
Suspended Investigations
No Sunset Review of suspended investigations is scheduled for initiation in July 2024
Commerce's procedures for the conduct of Sunset Review are set forth in 19 CFR 351.218. The Notice of Initiation of Five-Year ( Sunset) Review provides further information regarding what is required of all parties to participate in Sunset Review.
Pursuant to 19 CFR 351.103(c), Commerce will maintain and make available a service list for these proceedings. To facilitate the timely preparation of the service list(s), it is requested that those seeking recognition as interested parties to a proceeding contact Commerce in writing within 10 days of the publication of the Notice of Initiation.
Please note that if Commerce receives a Notice of Intent to Participate from a member of the domestic industry within 15 days of the date of initiation, the review will continue.
Thereafter, any interested party wishing to participate in the Sunset Review must provide substantive comments in response to the notice of initiation no later than 30 days after the date of initiation. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^1
^1 See Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings; Final Rule, 88 FR 67069 (September 29, 2023)
This notice is not required by statute but is published as a service to the international trading community.
Dated: May 21, 2024.
James Maeder,

Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations.
DEPARTMENT OF COMMERCE
International Trade Administration
[C-570-163]
Certain Glass Wine Bottles From the People's Republic of China: Preliminary Affirmative Countervailing Duy Determination and Preliminary Affirmative Determination of Critical Circumstances

AGENCY:
Enforcement and Compliance, International Trade Administration, Department of Commerce.

SUMMARY:
The U.S. Department of Commerce (Commerce) preliminarily determines that countervailable subsidies are being provided to producers and exporters of certain glass wine bottles from the People's Republic of China (China). The period of investigation (POI) is January 1, 2022, through December 31, 2022. Interested parties are invited to comment on this preliminary determination.

DATES:
Applicable June 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Preston Cox or Theodora Mattei, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-5041 or (202) 482-4834, respectively.

SUPPLEMENTARY INFORMATION:

Background
This preliminary determination is made in accordance with section 703(b) of the Tariff Act of 1930, as amended (the Act). Commerce published the notice of initiation of this countervailing duty (CVD) investigation on January 18, 2024. ^1 On March 8, 2024, Commerce postponed the preliminary determination until May 28, 2024. ^2
^1 See Certain Glass Wine Bottles from the People's Republic of China: Initiation of Countervailing Duty Investigation, 89 FR 4905 (January 18, 2024) ( Initiation Notice ).
^2 See Certain Glass Wine Bottles from the People's Republic of China: Postponement of Preliminary Determination in the Countervailing Duty Investigation, 89 FR 16723 (March 8, 2024).
For a complete description of events that followed the initiation of this investigation, see the Preliminary Decision Memorandum. ^3 A list of topics discussed in the Preliminary Decision Memorandum is included as Appendix II to this notice. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly at https://access.trade.gov/public/FRNoticesListLayout.aspx.
^3 See Memorandum, “Decision Memorandum for the Preliminary Affirmative Determination of the Countervailing Duty Investigation of Certain Glass Wine Bottles from the People's Republic of China,” dated concurrently with, and hereby adopted by, this notice (Preliminary Decision Memorandum).

Scope of the Investigation
The products covered by this investigation are certain glass wine bottles from China. For a complete description of the scope of this investigation, see Appendix I.

Scope Comments
In accordance with the Preamble to Commerce's regulations, ^4 the Initiation Notice set aside a period of time for parties to raise issues regarding product coverage ( i.e., scope). ^5 To date, numerous interested parties have commented on the scope of the antidumping duty (AD) and countervailing duty investigations as it appeared in the Initiation Notice. For a summary of the product coverage comments and rebuttal comments submitted to the record for this preliminary determination, and accompanying discussion and analysis of all comments received, see the Preliminary Scope Memorandum. ^6 We have preliminarily not made any changes to the scope language as it appeared in the Initiation Notice.
^4 See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997) ( Preamble ).
^5 See Initiation Notice.
^6 See Memorandum, “Less-than-Fair Value Investigations of Glass Wine Bottles from the People's Republic of China, Chile, and Mexico and Countervailing Duty Investigation of Glass Wine Bottles from the People's Republic of China: Preliminary Scope Decision Memorandum,” dated concurrently with, and hereby adopted by, this notice (Preliminary Scope Decision Memorandum).

Methodology
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, i.e., a financial contribution by an “authority” that gives rise to a benefit to the recipient, and that the subsidy is specific. ^7 For a full description of the methodology underlying our preliminary determination, see the Preliminary Decision Memorandum.
^7 See sections 771(5)(B) and (D) of the Act regarding financial contribution; section 771(5)(E) of the Act regarding benefit; and section 771(5A) of the Act regarding specificity.
Moreover, Commerce notes that, in making its findings of countervailability, it relied, in part, on facts available, and, because it finds that certain of the respondents and the Government of China failed to cooperate by not acting to the best of their abilities to respond to Commerce's requests for information, it drew an adverse inference where appropriate in selecting from among the facts otherwise available. ^8 For further information, see the “Use of Facts Otherwise Available and Adverse Inferences” section in the Preliminary Decision Memorandum.
^8 See sections 776(a) and (b) of the Act.

Preliminary Affirmative Determination of Critical Circumstances
In accordance with section 703(e)(1) of the Act, we preliminarily find that critical circumstances exist with respect to imports of subject merchandise for Shandong Changyu Glass Co., Ltd. (Shandong Changyu), the non-responsive companies, and all other producers and/or exporters. For a full discussion of our preliminary critical circumstances determination, see the “Critical Circumstances” section of the Preliminary Decision Memorandum.

All-Others Rate
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, de minimis, or based entirely under section 776 of the Act.
In this investigation, Commerce preliminarily calculated an individual estimated countervailable subsidy rate for Shandong Changyu, the only individually-examined exporter/producer in this investigation for which Commerce is calculating an estimated countervailable subsidy rate. Because the only individually calculated rate is not zero, de minimis, or based entirely on facts otherwise available, the estimated countervailable subsidy rate calculated for Shandong Changyu is the rate assigned to all other producers and exporters, pursuant to section 705(c)(5)(A)(i) of the Act.

Rate for Non-Responsive Companies
Eight potential exporters and/or producers of wine bottles from China did not respond to Commerce's quantity and value (Q&V) questionnaire ( i.e., the non-responsive companies). ^9 We find that, by not responding to the Q&V questionnaire, these companies withheld requested information and significantly impeded this proceeding. Thus, in reaching our preliminary determination, pursuant to sections 776(a)(2)(A) and (C) of the Act, we are basing the CVD subsidy rate for the non-responsive companies on facts otherwise available.
^9 The companies that failed to respond to Commerce's quantity and value questionnaire are: (1) Bright Glassware, (2) Boliva International Ltd.; (3) Shandong Dingxin Electronic; (4) Wenden Wensheng Glass Co., Ltd.; (5) Wuixi Hua Zhong Glass Co. Ltd.; (6) Yamamura Glass Qinhuangdao; (7) Xiamen Jane Jonson Co. Ltd.; and (8) Zibo Regal Glass Products Co. Ltd. We refer to these companies, collectively, as the “non-responsive companies.”
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 non-responsive 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 non-responsive 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, see “Use of Facts Otherwise Available and Adverse Inferences” in the Preliminary Determination Memorandum.

Preliminary Determination
Commerce preliminarily determines that the following estimated countervailable subsidy rates exist:
Company | Subsidy rate (percent ad valorem )
Shandong Changyu Glass Co., Ltd | 21.14
Boliva International Limited | * 202.70
Bright Glassware | * 202.70
Shandong Dingxin Electronic | * 202.70
Wenden Wensheng Glass Co., Ltd | * 202.70
Wuixi Hua Zhong Glass Co. Ltd | * 202.70
Xiamen Jane Jonson Co. Ltd | * 202.70
Yamamura Glass Qinhuangdao | * 202.70
Zibo Regal Glass Products Co. Ltd | * 202.70
All Others | 21.14
* Rate based on adverse facts available.

Disclosure
Commerce intends to disclose to interested parties the calculations performed in connection with this preliminary determination within five days of its public announcement or, if there is no public announcement, within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b).

Suspension of Liquidation
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 section entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register . Further, pursuant to 19 CFR 351.205(d), Commerce will instruct CBP to require a cash deposit equal to the rates indicated above.
Section 703(e)(2) of the Act provides that, given an affirmative determination of critical circumstances, any suspension of liquidation shall apply to unliquidated entries of merchandise entered, or withdrawn from warehouse, for consumption on or after the later of: (a) the date which is 90 days before the date on which the suspension of liquidation was first ordered; or (b) the date on which notice of initiation of the investigation was published. Commerce preliminarily finds that critical circumstances exist for imports of subject merchandise produced and/or exported by for Shandong Changyu, the non-responsive companies, and all other producers and/or exporters. In accordance with section 703(e)(2)(A) of the Act, the suspension of liquidation shall apply to unliquidated entries of merchandise from the exporters/producers identified in this paragraph that were entered, or withdrawn from warehouse, for consumption on or after the date which is 90 days before the publication of this notice.

Verification
As provided in section 782(i)(1) of the Act, Commerce intends to verify the information relied upon in making its final determination.

Public Comment
All interested parties are invited to comment on the preliminary scope decision made in this investigation, according to the schedule provided in the Preliminary Scope Decision Memorandum. The Preliminary Scope Decision Memorandum provides the schedule for parties to comment on the preliminary scope decision. 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 the case briefs, may be filed not later than five days after the date for filing case briefs. ^{10} Interested parties who submit case briefs or rebuttal briefs in this proceeding must submit: (1) a table of contents listing each issue; and (2) a table of authorities. ^{11}
^{10} See 19 CFR 351.309(d); see also Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings, 88 FR 67069, 67077 (September 29, 2023) ( APO and Service Final Rule ).
^{11} See 19 CFR 351.309(c)(2) and (d)(2).
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. Further, we request that interested parties limit their executive summary of each issue to no more than 450 words, not including citations. We intend to use the executive summaries as the basis of the comment summaries included in the issues and decision memorandum that will accompany the final determination in this investigation. We request that interested parties include footnotes for relevant citations in the executive summary of each issue. Note that Commerce has amended certain of its requirements pertaining to the service of documents in 19 CFR 351.303(f). ^{12}
^{12} See APO and Service Final Rule.
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 via ACCESS within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, and a list of the issues to be discussed. Oral presentations at the hearing will be limited to issues raised in the briefs. If a request for a hearing is made, parties will be notified of the time and date for the hearing. ^{13} Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.
^{13} See 19 CFR 351.310(d).

U.S. International Trade Commission Notification
In accordance with section 703(f) of the Act, Commerce will notify the U.S. International Trade Commission (ITC) of its 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 certain glass wine bottles from China are materially injuring, or threaten material injury to, the U.S. industry.

Notification to Interested Parties
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).
Dated: May 28, 2024.
Ryan Majerus,

Deputy Assistant Secretary for Policy and Negotiations, performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance.

Appendix I—Scope of the Investigation
The merchandise covered by the investigation is certain narrow neck glass bottles, with a nominal capacity of 740 milliliters (25.02 ounces) to 760 milliliters (25.70 ounces); a nominal total height between 24.8 centimeters (9.75 inches) to 35.6 centimeters (14 inches); a nominal base diameter between 4.6 centimeters (1.8 inches) to 11.4 centimeters (4.5 inches); and a mouth with an outer diameter of between 25 millimeters (.98 inches) to 37.9 millimeters (1.5 inches); frequently referred to as a “wine bottle.” In scope merchandise may include but is not limited to the following shapes: Bordeaux (also known as “Claret”), Burgundy, Hock, Champagne, Sparkling, Port, Provence, or Alsace (also known as “Germanic”). In scope glass bottles generally have an approximately round base and have shapes including but not limited to, straight-sided, a tapered slope from shoulder ( i.e., the sloping part of the bottle between the neck and the body) to base, or a long neck with sloping shoulders to a wider base. The scope includes glass bottles, whether or not clear, whether or not colored, with or without a punt ( i.e., an indentation on the underside of the bottle), and with or without design or functional enhancements (including, but not limited to, embossing, labeling, or etching). In scope merchandise is made of non-“free blown” glass, i.e., in scope merchandise is produced with the use of a mold and is distinguished by mold seams, joint marks, or parting lines. In scope merchandise is unfilled and may be imported with or without a closure, including a cork, stelvin (screw cap), crown cap, or wire cage and cork closure.
Excluded from the scope of the investigation are: (1) glass containers made of borosilicate glass, meeting United States Pharmacopeia requirements for Type 1 pharmaceutical containers; and (2) glass containers without a “finish” ( i.e., the section of a container at the opening including the lip and ring or collar, threaded or otherwise compatible with a type of closure, including but not limited to a cork, stelvin (screw cap), crown cap, or wire cage and cork closure).
Glass bottles subject to the investigation are specified within the Harmonized Tariff Schedule of the United States (HTSUS) under subheading 7010.90.5019. The HTSUS subheading is provided for convenience and customs purposes only. The written description of the scope of the investigation is dispositive.

Appendix II—List of Topics Discussed in the Preliminary Decision Memorandum
I. Summary
II. Background
III. Injury Test
IV. Analysis of China's Financial System
V. Diversification of China's Economy
VI. Critical Circumstances
VII. Use of Facts Otherwise Available and Adverse Inferences
VIII. Subsidies Valuation
IX. Benchmarks and Interest Rates
X. Analysis of Programs
XI. Recommendation
DEPARTMENT OF COMMERCE
International Trade Administration
[Docket No. 240530-0148]
Request for Comments on Commerce Supply Chain Risk Assessment and IPEF Supply Chains

AGENCY:
International Trade Administration, Department of Commerce.

ACTION:
Notice; request for public comments.

SUMMARY:
The Department of Commerce (Commerce) seeks public comment to inform its work on assessing and analyzing risk in global supply chains. This includes input into a determination of an initial list of “critical sectors” and “key goods” as provided under the Indo-Pacific Economic Framework for Prosperity (IPEF) Agreement Relating to Supply Chain Resilience (Supply Chain Agreement). The United States' initial list will be shared with the IPEF Supply Chain Council members and will inform work undertaken pursuant to the Agreement. Comments will also inform other analytical tools and methodologies developed by Commerce's Industry & Analysis unit to support resilient supply chains for U.S. industry.

DATES:
To be assured of consideration, submit any written comments by the June 21 deadline. Commerce may consider comments filed after the deadline.

ADDRESSES:
You may submit comments, identified by 240530-0148 by the following methods:
Online Submission (Strongly Preferred): Submit all electronic public comments via the Federal e-Rulemaking Portal. Go to https://www.regulations.gov and enter 240530-0148 in the Search.
Email Submission to IPEFSCA@trade.gov: Comments submitted by email should be machine-readable and should not be copy-protected.

FOR FURTHER INFORMATION CONTACT:
Kevin Doyle, Policy Advisor for IPEF, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Ave NW; telephone 202-779-0376; or emails at IPEFSCA@trade.gov.
Ahmad Khalil, Managing Director, Risk Assessment and Advanced Analytics, Supply Chain Center, International Trade Administration, Industry and Analysis unit, U.S. Department of Commerce, 1401 Constitution Ave NW; telephone 202-779-0376; or emails at supplychaincenter@trade.gov.
Please direct media inquiries to ITA's Office of Public Affairs at publicaffairs@trade.gov.

SUPPLEMENTARY INFORMATION:

Background
Building supply chain resilience is a top priority of the Department of Commerce, building on a long history of supply chain work led by the Industry & Analysis (I&A) unit in the International Trade Administration (ITA). I&A is comprised of a broad set of industry experts with unique commercial perspectives in understanding supply chains and informing and driving policy action. In 2023, the Department launched a first-of its-kind Supply Chain Center to serve as an analytic engine to help drive decision-making and policy action on efforts to strengthen supply chain resilience, leveraging I&A's deep industry expertise, quantitative data, and advanced analytics to help make the government's work on supply chains more proactive and impactful. The Center is facilitating collaboration across I&A, other parts of Commerce, and other government agencies to support a proactive approach by the U.S. government in getting ahead of supply chain challenges, to be strategic in setting priorities for policy focus and action based on data-driven risk analysis, and to serve as a force multiplier in improving the targeting and effectiveness of U.S. government investments. Across these efforts, the Department depends on close partnerships with stakeholders from government, industry, academia, labor, and civil society.

Department of Commerce Supply Chain Risk Assessment
Central to the Supply Chain Center's work are efforts to boost the U.S. government's ability to understand systemic supply chain risks by building a cross-sectoral risk assessment framework (the “tool”). The tool will utilize a comprehensive set of indicators to assess current or prospective supply chain risk across the U.S. economy, with an emphasis on risks to national security, including economic security, most relevant to the U.S. government. The goal is to help the U.S. government more comprehensively and systematically identify supply chain vulnerabilities and pursue in-depth analysis for actionable and evidence-based policy recommendations.
This is the first effort by the U.S. government to assess supply chain vulnerability across all major sectors of the economy. This tool will help the U.S. government to determine—at the sectoral, and eventually product, level—where there are hidden vulnerabilities that could be addressed through policy action by the U.S. government and/or public-private partnerships.
The supply chain risk assessment framework is an iterative tool. The latest version of the framework incorporates upwards of 40 indicators of risk that relate to a sector's criticality to the U.S. government, vulnerability to disruption, and resilience in the face of disruption.
Examples of criticality of a product or sector include products listed in the White House Critical and Emerging Technologies list, the products required for the Department of Defense industrial base, and products central to U.S. public health and safety, such as pharmaceuticals and certain nutritional foods.
The vulnerability indicators cover six categories of risk: geopolitical; economic; logistical; business/financial; technological; and environmental.
Resiliency indicators focus on how quickly a sector can bounce back from a disruption, considering levels of substitutability, unutilized capacity, and replacement of key inputs.
The Center has been consulting with relevant external stakeholders in the development of this tool as well, including reaching out to dozens of industry and academic experts. The vision and success of this framework depend on close collaboration with industry stakeholders, as well as those from government, academia, civil society, labor, and others, to gather insights, develop accurate assessments of risks and mitigation options, and then take targeted and coordinated action to advance U.S. supply chain resiliency and competitiveness.
The creation of an economy-wide risk tool is an important element of the Commerce Department's Supply Chain Center work, though not the only instance in which the Center is leveraging big data and the qualitative insights of industry experts and economists. The Center is also leveraging analytic tools for targeted scans of critical sectors; expanding its ability to model scenarios and evaluate the potential impacts of proposed policy actions; and deepening its proactive analysis through case studies and replicable and scalable frameworks and toolkits for supply chain analysis and policy action. The Center is also bolstering its ability to produce quick-turn analysis in the event of supply chain disruptions by building partnerships with academia, civil society, labor and others as well as standing playbooks that can help inform policy responses and industry engagement.

IPEF List of Critical Sectors and Key Goods
Commerce's supply chain resilience efforts are also being advanced through the Supply Chain Agreement. Launched in May 2022 with 13 regional partners—Australia, Brunei Darussalam, Fiji, India, Indonesia, Japan, the Republic of Korea, Malaysia, New Zealand, the Philippines, Singapore, Thailand, and Vietnam—IPEF seeks to establish a platform for long-term economic engagement and cooperation, and to tackle present-day challenges.
Negotiations among the 14 IPEF partners for the Supply Chain Agreement substantially concluded on May 27, 2023, and a signing ceremony of the Agreement was held on November 14 of that same year. The Supply Chain Agreement entered into force on February 24, 2024, after the fifth partner deposited its instrument of ratification, acceptance, or approval. As of May 6, 2024, a total of six partners—Japan, the United States, Singapore, Fiji, India, and the Republic of Korea—have deposited their instruments, in that order.
Parties to the Supply Chain Agreement intend to collaborate on initiatives aimed at strengthening the resilience and competitiveness of target supply chains, better preparing for and responding to supply chain disruptions, and enhancing the role of workers across these supply chains. To do this, the Supply Chain Agreement establishes three supply chain bodies tasked with facilitating various forms of cooperation—a Supply Chain Council, a Crisis Response Network, and a Labor Rights Advisory Board. Parties to the Supply Chain Agreement shall, and signatories that have not deposited an instrument of ratification, acceptance, or approval may designate representatives to these bodies to discuss and carry out this work.
Article 10 of the Supply Chain Agreement requires the development of initial lists of “critical sectors” and “key goods,” which will then be shared through the Supply Chain Council. The Parties can change or update these lists at any time. As the U.S. Government's representative to the Council, the Department of Commerce, through the International Trade Administration (ITA), is leading the process to prepare and submit this list on behalf of the United States, and intends to update the list periodically, as appropriate and as envisioned under the Supply Chain Agreement.
These lists will, among other things, inform discussions among the members of the IPEF Supply Chain Council on opportunities for collaboration under the Supply Chain Agreement through the IPEF Supply Chain Council. Such collaboration could take the form of actions to promote business matchmaking, encourage investment, or improve policy coordination in areas impacting supply chains, among others. The Council may establish teams to develop Action Plans to provide recommendations to promote resilience and competitiveness for critical sectors or key goods based on the lists provided. Those critical sectors and key goods that appear on three or more lists are eligible for the development of an Action Plan.
Article 1 of the Supply Chain Agreement provides the following definitions of “critical sectors” and “key goods”:
• critical sectors means sectors that produce goods and supply any related essential services critical to a Party's national security, public health and safety, or prevention of significant or widespread economic disruptions, as identified by that Party in accordance with Article 10;
• key goods means raw, in-process, or manufactured materials, articles, or commodities, the absence of which could have a significant effect on a Party's national security, public health and safety, or prevention of significant or widespread economic disruptions, as identified by that Party in accordance with Article 10;
Article 10 of the Supply Chain Agreement further outlines the factors intended to be considered in identifying respective critical sectors and key goods. These include:
(a) the impact of a potential shortage on its national security, public health and safety, or prevention of significant or widespread economic disruptions;
(b) the level of dependence on a single supplier or a single country, region, or geographic location;
(c) geographic factors including actual or potential transport constraints, especially for its island or remote regions;
(d) the availability and reliability of alternative suppliers or supply locations;
(e) the extent of imports required to meet domestic demand;
(f) the availability of domestic production capacity; or
(g) the extent of interconnectedness with other critical sectors or key goods.
The Department of Commerce recognizes the importance of a deliberative and inclusive review and selection process for identifying the United States' initial list of critical sectors and key goods under the Supply Chain Agreement.
To assist in these endeavors, Commerce requests information from the public on the topics provided below.

Request for Written Comments
Instructions: This notice is intended to improve Commerce's understanding of public views on how the Department and I&A should assess risk in global supply chains, including what indicators and data sets it should include in the development of an economy-wide risk assessment tool, and how to apply the factors outlined in the Supply Chain Agreement in its determination of the United States' initial list of critical sectors and key goods under the Supply Chain Agreement. This notice is a general solicitation for public comments and further sets forth specific topics for discussion and comment. Commerce seeks broad input from all interested stakeholders, including U.S. industry, researchers, labor organizations, academia, and civil society. Commenters are encouraged to address any or all of the following questions and may respond with general views on how to apply these factors or provide specific information about a specific sector or good. To the extent commenters choose to respond to the specific questions asked, responses may be formatted as the commenter prefers.
Comments will be reviewed by Commerce staff, including the Supply Chain Center, the Industry & Analysis business unit offices, the IPEF team, and, as appropriate, Commerce contractors, and may be used to inform the agency's work on supply chain risk analysis as outlined above, as well as in identifying the United States' initial list of critical sectors and key goods for cooperation under the Supply Chain Agreement. Commerce intends to share the information received with relevant U.S. government departments and agencies, consistent with the Biden-Harris Administration's whole-of-government approach to strengthening supply chains.

Topics

General Methodology Questions (To Inform Commerce's Supply Chain Risk Assessment Framework)
• What tools, approaches, and methodologies do you recommend that Commerce utilize in order to identify priority products and sectors at elevated risk of supply chain disruption, particularly those of relevance to the United States based on national security, including economic security?
• More specifically, what definitions, indicators, and data sets do you recommend that Commerce use to evaluate the following aspects of supply chain risk:
○ Criticality of the product or sector to the United States
○ Vulnerability of the product or sector to supply chain disruption
○ Resiliency of the product or sector in the face of a supply chain disruption
• What tools, approaches, and methodologies could Commerce use to assess a supply chain's areas of greatest vulnerability? How can those vulnerabilities be quantified and tracked over time?
• What factors influence your organization's evaluation of risk in your supply chains? What additional data, information, or analysis from the U.S. government would you view as valuable in this assessment?
• How should the U.S. government leverage technological advancements to foster data collection, analysis, and dissemination for both public and private entities?
• What data, indicia, or criteria might help Commerce identify those supply chains where the market would be least likely to prevent or quickly resolve a disruption?

IPEF-Related Questions (To Inform the U.S. List of Critical Sectors and Key Goods Under the Supply Chain Agreement)
• How should Commerce assess “significant or widespread economic disruptions” for purposes of the Supply Chain Agreement? What thresholds or metrics should Commerce consider in assessing the risk of such disruptions for the purposes of identifying critical sectors and key goods?
• Which, if any, of the factors listed in Article 10 of the Supply Chain Agreement should Commerce prioritize in making its determinations of critical sectors or key goods for cooperation under the Supply Chain Agreement? Please offer a justification.
• In your view, bearing in mind the seven factors outlined above, what sectors and goods best fit the criteria for “critical sectors” and “key goods” for cooperation under the Supply Chain Agreement and why?
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Dated: May 30, 2024.
Sharon H Yuan,

Counselor and Chief Negotiator for IPEF.
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
[RTID 0648-XD889]
Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to U.S. Navy Maintenance and Pile Replacement Project in Puget Sound, Washington

AGENCY:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

ACTION:
Notice; issuance of incidental harassment authorizations.

SUMMARY:
In accordance with the regulations implementing the Marine Mammal Protection Act (MMPA) as amended, notification is hereby given that NMFS has issued an incidental harassment authorization (IHA) to the United States Navy (Navy) to incidentally harass marine mammals during construction activities associated with the Naval Facilities Engineering Command Northwest (NAVFAC NW) Maintenance and Pile Replacement (MPR) project in Puget Sound, Washington.

DATES:
These authorizations are effective from July 1, 2024 through June 30, 2025 and July 1, 2025 through June 30, 2026.

ADDRESSES:
Electronic copies of the application and supporting documents, as well as a list of the references cited in this document, may be obtained online at: https://www.fisheries.noaa.gov/national/marine-mammal-protection/incidental-take-authorizations-construction-activities. In case of problems accessing these documents, please call the contact listed below.

FOR FURTHER INFORMATION CONTACT:
Kate Fleming, Office of Protected Resources, NMFS, (301) 427-8401.

SUPPLEMENTARY INFORMATION:

Background
The MMPA prohibits the “take” of marine mammals, with certain exceptions. Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361 et seq. ) direct the Secretary of Commerce (as delegated to NMFS) to allow, upon request, the incidental, but not intentional, taking of small numbers of marine mammals by U.S. citizens who engage in a specified activity (other than commercial fishing) within a specified geographical region if certain findings are made and either regulations are proposed or, if the taking is limited to harassment, a notice of a proposed IHA is provided to the public for review.
Authorization for incidental takings shall be granted if NMFS finds that the taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses (where relevant). Further, NMFS must prescribe the permissible methods of taking and other “means of effecting the least practicable adverse impact” on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stocks for taking for certain subsistence uses (referred to in shorthand as “mitigation”); and requirements pertaining to the monitoring and reporting of the takings. The definitions of all applicable MMPA statutory terms cited above are included in the relevant sections below.

Summary of Request
On October 5, 2023, NMFS received a request from the Navy for two consecutive 1-year IHAs to take marine mammals incidental to construction associated with the Navy's NAVFAC NW MPR project in Puget Sound, Washington. Following NMFS' review of the application, the Navy submitted a revised version on December 14, 2023, additional information on January 10, 2024, and the marine mammal monitoring plan on January 23, 2024. Final revisions to both the application and the marine mammal monitoring plan were provided on March 2, 2024. The application was deemed adequate and complete on February 27, 2024. The Navy's request is for take of 10 species of marine mammals by Level B harassment and, for harbor seal, Level B and Level A harassment. Neither the Navy nor NMFS expect serious injury or mortality to result from this activity. Therefore, IHAs are appropriate.
NMFS previously issued a regulation and associated Letters of Authorization (LOAs) to the Navy for related work (84 FR 15963, April 17, 2019); https://www.fisheries.noaa.gov/action/incidental-take-authorization-us-navy-marine-structure-maintenance-and-pile-replacement-wa ). The Navy complied with all the requirements ( e.g., mitigation, monitoring, and reporting) of the previous LOAs, and information regarding their monitoring results may be found in the Effects of Specified Activities on Marine Mammals and Their Habitat of the Federal Register Notice for the proposed IHA. Please refer to the notice of proposed IHAs (89 FR 25580, April 11, 2024).
There are no changes from the Proposed IHAs to the Final IHAs.

Description of the Specified Activity

Overview
Maintaining existing wharfs and piers is vital to sustaining the Navy's mission and ensuring readiness. To ensure continuance of necessary missions at the four installations, the Navy must conduct annual maintenance and repair activities at existing marine waterfront structures, including removal and replacement of piles of various types and sizes. The Navy refers to this program as the Marine Structure MPR program.
The activities that have the potential to take marine mammals by Level A harassment and Level B harassment include installation and/or removal of timber, concrete, and steel piles by vibratory and impact pile driving and down-the hole (DTH) drilling. Construction will span the course of 2 years, with the first year beginning on July 15, 2024, and lasting through July 14, 2025. The second year of construction activities will begin July 15, 2025, and continue through July 14, 2026.
A detailed description of the planned construction project is provided in the Federal Register notice for the proposed IHAs (89 FR 25580, April 11, 2024). Since that time no changes have been made to the planned activities. Therefore, a detailed description is not provided here. Please refer to that Federal Register notice for the description of the specific activity.

Comments and Responses
A notice of NMFS' proposal to issue an IHA to the Navy was published in the Federal Register on April 11, 2024 (89 FR 25580). That notice described, in detail, the Navy's activity, the marine mammal species that may be affected by the activity, and the anticipated effects on marine mammals. In that notice, we requested public input on the request for authorization described therein, our analyses, the proposed authorization, and any other aspect of the notice of proposed IHA, and requested that interested persons submit relevant information, suggestions, and comments. During the 30-day public comment period, the Bureau of Land Management noted that they “do not have additional comments to submit at this time.” NMFS received no other public comments.

Description of Marine Mammals in the Area of Specified Activities
Sections 3 and 4 of the application summarize available information regarding status and trends, distribution and habitat preferences, and behavior and life history of the potentially affected species. NMFS fully considered all of this information, and we refer the reader to these descriptions, instead of reprinting the information. Additional information regarding population trends and threats may be found in NMFS' Stock Assessment Reports (SARs; https://www.fisheries.noaa.gov/national/marine-mammal-protection/marine-mammal-stock-assessments ) and more general information about these species ( e.g., physical and behavioral descriptions) may be found on NMFS' website ( https://www.fisheries.noaa.gov/find-species ).
Table 1 lists all species or stocks for which take is expected and authorized for both IHAs, and summarizes information related to the population or stock, including regulatory status under the MMPA and Endangered Species Act (ESA) and potential biological removal (PBR), where known. PBR is defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population (as described in NMFS' SARs). While no serious injury or mortality is anticipated or authorized here, PBR and annual serious injury and mortality from anthropogenic sources are included here as gross indicators of the status of the species or stocks and other threats.
Marine mammal abundance estimates presented in this document represent the total number of individuals that make up a given stock or the total number estimated within a particular study or survey area. NMFS' stock abundance estimates for most species represent the total estimate of individuals within the geographic area, if known, that comprises that stock. For some species, this geographic area may extend beyond U.S. waters. All managed stocks in this region are assessed in NMFS' U.S. Alaska and Pacific SARs. All values presented in table 1 are the most recent available at the time of publication (including from the draft 2023 SARs) and are available online at: https://www.fisheries.noaa.gov/national/marine-mammal-protection/marine-mammal-stock-assessments.
Table 1—Marine Mammal Species ^4 Likely To Be Affected by the Specified Activities
Common name | Scientific name | Stock | ESA/MMPA status; strategic (Y/N) ^1 | Stock abundance (CV, N min , most recent abundance survey) ^2 | PBR | Annual M/SI ^3
Order Artiodactyla—Cetacea—Mysticeti (baleen whales)
Family Eschrichtiidae:
Gray Whale | Eschrichtius robustus | Eastern N Pacific | -, -, N | 26,960 (0.05, 25,849, 2016) | 801 | 131
Family Balaenopteridae (rorquals)
Humpback Whale | Megaptera novaeangliae | Central America/Southern Mexico—CA/OR/WA | E, D, Y | 1,494 (0.171, 1,284, 2021) | 3.5 | 14.9
| | Mainland Mexico—CA/OR/WA | T, D, Y | 3,477 (0.101, 3,185, 2018) | 43 | 22
| | Hawai'i | -, -, N | 11,278 (0.56, 7,265, 2020) | 127 | 27.09
Minke Whale | Balaenoptera acutorostrata | CA/OR/WA | -, -, N | 915 (0.792, 509, 2018) | 4.1 | 0.19
Odontoceti (toothed whales, dolphins, and porpoises)
Family Delphinidae:
Killer Whale | Orcinus orca | Eastern North Pacific Southern Resident | E, D, Y | 73 (N/A, 73, 2022) | 0.13 | 0
| | West Coast Transient | -, -, N | 349 ^5 (N/A, 349, 2018) | 3.5 | 0.4
Family Phocoenidae (porpoises):
Dall's Porpoise | Phocoenoides dalli | CA/OR/WA | -, -, N | 16,498 (0.61, 10,286, 2018) | 99 | ≥0.66
Harbor Porpoise | Phocoena phocoena | Washington Inland Waters | -, -, N | 11,233 (0.37, 8,308, 2015) | 66 | ≥7.2
| Order Carnivora—Pinnipedia
Family Otariidae (eared seals and sea lions):
CA Sea Lion | Zalophus californianus | U.S. | -, -, N | 257,606 (N/A, 233,515, 2014) | 14,011 | >321
Steller Sea Lion | Eumetopias jubatus | Eastern | -, -, N | 36,308 ^6 (N/A, 36,308, 2022) | 2,178 | 93.2
Family Phocidae (earless seals):
Harbor Seal | Phoca vitulina | Washington Inland Hood Canal | -, -, N | 3,363 (0.16, 2,940, 2019) | 88 | 2
| | Washington Northern Inland Waters | -, -, N | 16,451 (0.07, 15,462, 2019) | 928 | 40
Northern Elephant Seal | Mirounga angustirostris | CA Breeding | -, -, N | 187,386 (N/A, 85,369, 2013) | 5,122 | 13.7
^1 ESA status: Endangered (E), Threatened (T)/MMPA status: Depleted (D). A dash (-) indicates that the species is not listed under the ESA or designated as depleted under the MMPA. Under the MMPA, a strategic stock is one for which the level of direct human-caused mortality exceeds PBR or which is determined to be declining and likely to be listed under the ESA within the foreseeable future. Any species or stock listed under the ESA is automatically designated under the MMPA as depleted and as a strategic stock.
^2 NMFS marine mammal SARs online at: https://www.fisheries.noaa.gov/national/marine-mammal-protection/marine-mammal-stock-assessment-reports-region. CV is coefficient of variation; N min is the minimum estimate of stock abundance.
^3 These values, found in NMFS's SARs, represent annual levels of human-caused mortality plus serious injury from all sources combined ( e.g., commercial fisheries, ship strike). Annual M/SI often cannot be determined precisely and is in some cases presented as a minimum value or range.
^4 Information on the classification of marine mammal species can be found on the web page for The Society for Marine Mammalogy's Committee on Taxonomy ( https://marinemammalscience.org/science-and-publications/list-marine-mammal-species-subspecies/ ).
^5 Nest is based upon count of individuals identified from photo-ID catalogs in analysis of a subset of data from 1958-2018.
^6 Nest is best estimate of counts, which have not been corrected for animals at sea during abundance surveys. Estimates provided are for the U.S. only.
A detailed description of the species likely to be affected by the Navy's NAVFAC NW MPR project, including brief introductions to the species and relevant stocks as well as available information regarding population trends and threats, and information regarding local occurrence, were provided in the Federal Register notice for the proposed IHAs (89 FR 25580, April 11, 2024); since that time, we are not aware of any changes in the status of these species and stocks; therefore, detailed descriptions are not provided here. Please refer to that Federal Register notice for these descriptions. Please also refer to NMFS' website ( https://www.fisheries.noaa.gov/find-species ) for generalized species accounts.

Marine Mammal Hearing
Hearing is the most important sensory modality for marine mammals underwater, and exposure to anthropogenic sound can have deleterious effects. To appropriately assess the potential effects of exposure to sound, it is necessary to understand the frequency ranges marine mammals are able to hear. Not all marine mammal species have equal hearing capabilities ( e.g., Richardson et al., 1995; Wartzok and Ketten, 1999; Au and Hastings, 2008). To reflect this, Southall et al. (2007, 2019) recommended that marine mammals be divided into hearing groups based on directly measured (behavioral or auditory evoked potential techniques) or estimated hearing ranges (behavioral response data, anatomical modeling, etc. ). Note that no direct measurements of hearing ability have been successfully completed for mysticetes ( i.e., low-frequency cetaceans). Subsequently, NMFS (2018) described generalized hearing ranges for these marine mammal hearing groups. Generalized hearing ranges were chosen based on the approximately 65 decibel (dB) threshold from the normalized composite audiograms, with the exception for lower limits for low-frequency cetaceans where the lower bound was deemed to be biologically implausible and the lower bound from Southall et al. (2007) retained. Marine mammal hearing groups and their associated hearing ranges are provided in table 2.
Table 2—Marine Mammal Hearing Groups
[NMFS, 2018]
Hearing group | Generalized hearing range *
Low-frequency (LF) cetaceans (baleen whales) | 7 Hz to 35 kHz.
Mid-frequency (MF) cetaceans (dolphins, toothed whales, beaked whales, bottlenose whales) | 150 Hz to 160 kHz.
High-frequency (HF) cetaceans (true porpoises, Kogia, river dolphins, Cephalorhynchid, Lagenorhynchus cruciger & L. australis ) | 275 Hz to 160 kHz.
Phocid pinnipeds (PW) (underwater) (true seals) | 50 Hz to 86 kHz.
Otariid pinnipeds (OW) (underwater) (sea lions and fur seals) | 60 Hz to 39 kHz.
* Represents the generalized hearing range for the entire group as a composite ( i.e., all species within the group), where individual species' hearing ranges are typically not as broad. Generalized hearing range chosen based on ~65 dB threshold from normalized composite audiogram, with the exception for lower limits for LF cetaceans (Southall et al., 2007) and PW pinniped (approximation).
The pinniped functional hearing group was modified from Southall et al. (2007) on the basis of data indicating that phocid species have consistently demonstrated an extended frequency range of hearing compared to otariids, especially in the higher frequency range (Hemilä et al., 2006; Kastelein et al., 2009; Reichmuth et al., 2013).
For more detail concerning these groups and associated frequency ranges, please see NMFS (2018) for a review of available information.

Effects of Specified Activities on Marine Mammals and Their Habitat
The effects of underwater noise from the Navy's construction activities have the potential to result in behavioral harassment of marine mammals in the vicinity of the project area. The notice of the proposed IHAs (89 FR 25580, April 11, 2024) included a discussion of the effects of anthropogenic noise on marine mammals and the potential effects of underwater noise from the Navy's construction on marine mammals and their habitat. That information and analysis is referenced in this final IHA determination and is not repeated here; please refer to the notice of proposed IHAs (89 FR 25580, April 11, 2024).

Estimated Take
This section provides an estimate of the number of incidental takes authorized through the IHAs, which will inform both NMFS' consideration of “small numbers,” and the negligible impact determinations.
Harassment is the only type of take expected to result from these activities. Except with respect to certain activities not pertinent here, section 3(18) of 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).
Authorized takes will primarily be by Level B harassment, as use of the acoustic sources ( i.e., impact and vibratory pile driving and removal and DTH drilling) has the potential to result in disruption of behavioral patterns for individual marine mammals. There is also some potential for auditory injury (Level A harassment) to result, primarily for phocids because predicted auditory injury zones are larger than for mid-frequency cetacean species and/or otariids, and they can be difficult to detect. Auditory injury is unlikely to occur for mid, low, and high-frequency cetacean species and otariids. The planned mitigation and monitoring measures are expected to minimize the severity of the taking to the extent practicable.
As described previously, no serious injury or mortality is anticipated or authorized for this activity. Below, we describe how the take numbers are estimated.
For acoustic impacts, generally speaking, we estimate take by considering: (1) acoustic thresholds above which NMFS believes the best available science indicates marine mammals will be behaviorally harassed or incur some degree of permanent hearing impairment; (2) the area or volume of water that will be ensonified above these levels in a day; (3) the density or occurrence of marine mammals within these ensonified areas; and (4) the number of days of activities. We note that while these factors can contribute to a basic calculation to provide an initial prediction of potential takes, additional information that can qualitatively inform take estimates is also sometimes available ( e.g., previous monitoring results or average group size). Below, we describe the factors considered here in more detail and present the take estimates.

Acoustic Thresholds
NMFS recommends the use of acoustic thresholds that identify the received level of underwater sound above which exposed marine mammals would be reasonably expected to be behaviorally harassed (equated to Level B harassment) or to incur permanent threshold shift (PTS) of some degree (equated to Level A harassment).
Level B Harassment —Though significantly driven by received level, the onset of behavioral disturbance from anthropogenic noise exposure is also informed to varying degrees by other factors related to the source or exposure context ( e.g., frequency, predictability, duty cycle, duration of the exposure, signal-to-noise ratio, distance to the source), the environment ( e.g., bathymetry, other noises in the area, predators in the area), and the receiving animals (hearing, motivation, experience, demography, life stage, depth) and can be difficult to predict ( e.g., Southall et al., 2007, 2021; Ellison et al., 2012). Based on what the available science indicates and the practical need to use a threshold based on a metric that is both predictable and measurable for most activities, NMFS typically uses a generalized acoustic threshold based on received level to estimate the onset of behavioral harassment. NMFS generally predicts that marine mammals are likely to be behaviorally harassed in a manner considered to be Level B harassment when exposed to underwater anthropogenic noise above root-mean-squared pressure received levels (c) of 120 dB (re 1 μPa) for continuous ( e.g., vibratory pile driving, drilling) and above root mean square (RMS) sound pressure level (SPL) 160 dB re 1 μPa for non-explosive impulsive ( e.g., seismic airguns) or intermittent ( e.g., scientific sonar) sources. Generally speaking, Level B harassment take estimates based on these behavioral harassment thresholds are expected to include any likely takes by temporary threshold shift (TTS) as, in most cases, the likelihood of TTS occurs at distances from the source less than those at which behavioral harassment is likely. TTS of a sufficient degree can manifest as behavioral harassment, as reduced hearing sensitivity and the potential reduced opportunities to detect important signals (conspecific communication, predators, prey) may result in changes in behavior patterns that would not otherwise occur.
The Navy's activity includes the use of continuous (vibratory pile driving and removal and DTH drilling) and impulsive (impact pile driving and DTH drilling) sources, and therefore the RMS SPL thresholds of 120 and 160 dB re 1 μPa is applicable, respectively.
Level A harassment —NMFS' Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing (Version 2.0) (Technical Guidance, 2018) identifies dual criteria to assess auditory injury (Level A harassment) to five different marine mammal groups (based on hearing sensitivity) as a result of exposure to noise from two different types of sources (impulsive or non-impulsive). The Navy's activity includes the use of impulsive (impact pile driving and DTH drilling) and non-impulsive (vibratory pile driving and removal) sources.
These thresholds are provided in the table below. The references, analysis, and methodology used in the development of the thresholds are described in NMFS' 2018 Technical Guidance, which may be accessed at: https://www.fisheries.noaa.gov/national/marine-mammal-protection/marine-mammal-acoustic-technical-guidance.
Table 3—Thresholds Identifying the Onset of Permanent Threshold Shift
Hearing group | PTS onset acoustic thresholds * (received level) | Impulsive | Non-impulsive
Low-Frequency (LF) Cetaceans | Cell 1: L pk,flat : 219 dB; L E,LF,24h : 183 dB | Cell 2: L E,LF,24h : 199 dB.
Mid-Frequency (MF) Cetaceans | Cell 3: L pk,flat : 230 dB; L E,F,24h : 185 dB | Cell 4: L E,MF,24h : 198 dB.
High-Frequency (HF) Cetaceans | Cell 5: L pk,flat : 202 dB; L E,HF,24h : 155 dB | Cell 6: L E,HF,24h : 173 dB.
Phocid Pinnipeds (PW) (Underwater) | Cell 7: L pk,flat : 218 dB; L E,PW,24h : 185 dB | Cell 8: L E,PW,24h : 201 dB.
Otariid Pinnipeds (OW) (Underwater) | Cell 9: L pk,flat : 232 dB; L E,OW,24h : 203 dB | Cell 10: L E,OW,24h : 219 dB.
* Dual metric acoustic thresholds for impulsive sounds: Use whichever results in the largest isopleth for calculating PTS onset. If a non-impulsive sound has the potential of exceeding the peak sound pressure level thresholds associated with impulsive sounds, these thresholds should also be considered.
Note: Peak sound pressure ( L pk ) has a reference value of 1 µPa, and SEL cum ( L E ) has a reference value of 1µPa ^2 s. In this table, thresholds are abbreviated to reflect American National Standards Institute (ANSI) standards (ANSI, 2013). However, peak sound pressure is defined by ANSI as incorporating frequency weighting, which is not the intent for this Technical Guidance. Hence, the subscript “flat” is being included to indicate peak sound pressure should be flat weighted or unweighted within the generalized hearing range. The subscript associated with SEL cum thresholds indicates the designated marine mammal auditory weighting function (LF, MF, and HF cetaceans, and PW and OW pinnipeds) and that the recommended accumulation period is 24 hours. The SEL cum thresholds could be exceeded in a multitude of ways ( i.e., varying exposure levels and durations, duty cycle). When possible, it is valuable for action proponents to indicate the conditions under which these acoustic thresholds will be exceeded.

Ensonified Area
Here, we describe operational and environmental parameters of the activity that are used in estimating the area ensonified above the acoustic thresholds, including source levels and transmission loss (TL) coefficient.
The sound field in the project area is the existing background noise plus additional construction noise from the project. Marine mammals are expected to be affected via sound generated by the primary components of the project ( i.e., pile driving and removal and DTH drilling).
The project includes vibratory pile installation and removal, impact pile driving, and DTH drilling in year 1 and vibratory pile installation and removal and impact pile driving in year 2. Source levels for these activities are based on reviews of measurements of the same or similar types and dimensions of piles available in the literature. Source levels for each pile size and activity each year are presented in table 4. Source levels for vibratory installation and removal of piles of the same diameter are assumed to be the same.
NMFS recommends treating DTH systems as both impulsive and continuous, non-impulsive sound source type simultaneously. Thus, impulsive thresholds are used to evaluate Level A harassment, and continuous thresholds are used to evaluate Level B harassment. With regards to DTH mono-hammers, NMFS recommends proxy levels for Level A harassment based on available data regarding DTH systems of similar sized piles and holes (Heyvaert and Reyff, 2021) (table 5 and table 6 includes number of piles and duration each year; table 4 includes sound pressure and sound exposure levels for each pile type).
The Navy plans to use bubble curtains when impact driving steel piles (relevant to year 2 activities only). For the reasons described in the next paragraph, we assume here that use of the bubble curtain would result in a reduction of 8 dB from the assumed SPL (rms) and SPL (peak) source levels for these pile sizes, and reduce the applied source levels accordingly.
During the 2023 study at Naval Base Kitsap (NBK) Bremerton, the Navy conducted comparative measurements of source levels when impact driving steel piles with and without a bubble curtain. Underwater sound levels were measured at two locations during the installation of one 24-in diameter steel pile and four 36-in steel piles. The bubble curtain used during the measurements reduced median peak sound levels by between 8 and 12 dB, median RMS sound levels by 10 and 12 dB, and median single strike SEL sound levels by 7 and 8 dB. The analysis included in the proposed rule for the regulations preceding these IHAs (83 FR 9366, March 5, 2018) as well as results from the NBK Bangor Trident Support Facilities Explosive Handling Wharf study (Navy, 2013), are consistent with these findings. While proper set-up and operation of the system is critical, and variability in performance should be expected, we believe that in the circumstances evaluated here an effective attenuation performance of 8 dB is a reasonable assumption.
Table 4—Estimates of Mean Underwater Sound Levels Generated During Vibratory and Impact Pile Installation, DTH Drilling, and Vibratory Pile Removal for Year 1 and Year 2
Pile driving method | Pile type | Pile size | dB RMS | dB peak | dB SEL | Attenuation | Reference
Year 1
Impact | Concrete | 18-in | 170 | 184 | 159 | N/A | Navy 2015.
| | 24-in | 174 | 188 | 164 | N/A | Navy 2015.
Vibratory | Timber | 13-in | 161 | N/A | N/A | N/A | Greenbusch Group, Inc. 2019.
DTH | Concrete | 24-in | 167 | 184 | 159 | N/A | Heyvaert & Reyff 2021.
Year 2
Impact | Steel ^1 | 12 | 177 | 192 | 167 | −8 dB ^1 | Caltrans 2015, 2020.
| | 36 | 194 | 211 | 181 | −8 dB ^1 | Navy 2015b.
Vibratory | | 12 | 153 | N/A | N/A | N/A | Navy 2015b.
| | 24 | 161 | N/A | N/A | N/A | Navy 2015b.
| | | 36 | 166 | N/A | N/A | N/A | Navy 2015b.
Note: dB peak = peak sound level; DTH = down-the-hole drilling; rms = root mean square; SEL = sound exposure level.
^1 Values modeled for impact driving of 12-inch and 36-inch steel piles will be reduced by 8 dB for noise exposure modeling to account for attenuation from a bubble curtain.
TL is the decrease in acoustic intensity as an acoustic pressure wave propagates out from a source. TL parameters vary with frequency, temperature, sea conditions, current, source and receiver depth, water depth, water chemistry, and bottom composition and topography. The general formula for underwater TL is:
TL = B * Log10 ( R 1/ R 2),
where
TL = transmission loss in dB
B = transmission loss coefficient
R 1 = the distance of the modeled SPL from the driven pile, and
R 2 = the distance from the driven pile of the initial measurement
Absent site-specific acoustical monitoring with differing measured TL, a practical spreading value of 15 is used as the TL coefficient in the above formula. Site-specific TL data for the Puget Sound are not available; therefore, the default coefficient of 15 is used to determine the distances to the Level A harassment and Level B harassment thresholds.
The ensonified area associated with Level A harassment is more technically challenging to predict due to the need to account for a duration component. Therefore, NMFS developed an optional User Spreadsheet tool to accompany the Technical Guidance that can be used to relatively simply predict an isopleth distance for use in conjunction with marine mammal density or occurrence to help predict potential takes. We note that because of some of the assumptions included in the methods underlying this optional tool, we anticipate that the resulting isopleth estimates are typically overestimates of some degree, which may result in an overestimate of potential take by Level A harassment. However, this optional tool offers the best way to estimate isopleth distances when more sophisticated modeling methods are not available or practical. For stationary sources such as pile driving, the optional User Spreadsheet tool predicts the distance at which, if a marine mammal remained at that distance for the duration of the activity, it would be expected to incur PTS. Inputs used in the optional User Spreadsheet tool, and the resulting estimated isopleths, are reported below.
Table 5—User Spreadsheet Inputs, Year 1
| Vibratory | 13-in Timber | Installation or removal | Impact | 18-in Concrete | Installation | 24-in Concrete | Installation | DTH | 24-in Concrete | Installation
Spreadsheet Tab Used | A.1) Vibratory Pile Driving | E.1) Impact Pile Driving | E.1) Impact Pile Driving | E.2) DTH Drilling.
Source Level (SPL) | 161 RMS | 159 SEL | 164 SEL | 167 RMS, 159 SEL.
Transmission Loss Coefficient | 15 | 15 | 15 | 15.
Weighting Factor Adjustment (kHz) | 2.5 | 2 | 2 | 2.
Activity Duration per day (minutes) | 90 | | | 80.
Strike Rate per second | | | | 12.
Number of strikes per pile | | 1000 | 1000 |
Number of piles per day | 6 | 5 | 4 | 2.
Distance of sound pressure level measurement | 10 | 10 | 10 | 10.
Table 6—User Spreadsheet Inputs, Year 2
| Vibratory | 12-in Steel | Installation or removal | 24-in Steel | Installation or removal | 36-in Steel | Installation or removal | Impact | 12-in Steel; BC | Installation | 36-in Steel; BC | Installation
Spreadsheet Tab Used | A.1) Vibratory Pile Driving | A.1) Vibratory Pile Driving | A.1) Vibratory Pile Driving | E.1) Impact Pile Driving | E.1) Impact Pile Driving.
Source Level (SPL) | 153 RMS | 161 RMS | 166 RMS | 167 SEL | 181 SEL.
Transmission Loss Coefficient | 15 | 15 | 15 | 15 | 15.
Weighting Factor Adjustment (kHz) | 2.5 | 2.5 | 2.5 | 2 | 2.
Activity Duration per day (minutes) | 30 | 90 | 133 | N/A | N/A.
Number of strikes per pile | N/A | N/A | N/A | 1000 | 1000.
Number of piles per day | 2 | 6 | 4 | 2 | 4.
Distance of sound pressure level measurement | 10 | 10 | 10 | 10 | 10.
BC = Bubble Curtain.
Table 7—Level A Harassment and Level B Harassment Isopleths From Vibratory and Impact Pile Driving and DTH Drilling
Pile type | Level A harassment isopleths (m) | LF | MF | HF | PW | OW | Level B harassment isopleth (m) | Area of harassment zone (km ^2 )
Year 1
Vibratory:
13-inch timber | 8.9 | <1 | 13.2 | 5.4 | <1 | 5,412 | 16
Impact:
18-inch concrete | 73.3 | 2.6 | 87.4 | 39.3 | 2.9 | 46 | 0.007
24-inch concrete | 136.2 | 4.8 | 162.2 | 72.9 | 5.3 | 86 | 0.02
DTH:
24-inch concrete | 374.1 | 13.3 | 445.6 | 200.2 | 14.6 | 13,594 | 75
Year 2
Vibratory:
12-inch steel | 1.3 | <1 | <1 | <1 | <1 | 1,585 | 8
24-inch steel | 8.9 | <1 | 13.2 | 5.4 | <1 | 5,412 | 16
36-inch steel | 25.1 | 2.2 | 37.0 | 15.2 | 1.1 | 11,659 | 31
Impact:
12-inch steel | 39.8 | 1.4 | 47.4 | 21.3 | 1.6 | 39.8 | 0.005
36-inch steel | 542.1 | 19.3 | 645.8 | 290.1 | 21.1 | 541.2 | 0.92

Marine Mammal Occurrence
In this section, we provide information about the occurrence of marine mammals, including density or other relevant information that will inform the take calculations.
Available information regarding marine mammal occurrence in the vicinity of the four installations includes density information aggregated in the Navy's Marine Mammal Species Density Database (NMSDD; Navy, 2019) or site-specific survey information from particular installations ( e.g., local pinniped counts). More recent density estimates for harbor porpoise are available in Smultea et al. (2017) and Rone et al., (2024). First, for each installation we describe anticipated frequency of occurrence and the information deemed most appropriate for the exposure estimates. For all facilities, large whales (humpback whale, minke whale, and gray whale), killer whales (transient and resident), Dall's porpoise, and elephant seal are considered as occurring only rarely and unpredictably, on the basis of past sighting records. For these species, average group size is considered in concert with expected frequency of occurrence to develop the most realistic exposure estimate. Although certain species are not expected to occur at all at some facilities—for example, resident killer whales are not expected to occur in Hood Canal—the Navy has developed an overall take estimate and request for these species for each project year.
All species described above are considered as rare, unpredictably occurring species. A density-based analysis is used for harbor porpoise (table 8), while data from site-specific abundance surveys are used for California sea lion, Steller sea lion, and harbor seal at all installations. One exception is that for Steller sea lion at NBK Bremerton, a density-based analysis is used because local data have resulted in no observations of this species (Navy, 2023).
Table 8—Marine Mammal Densities
Species | Region | Density (June-February)
Harbor porpoise | Hood Canal (Bangor) | ^1 0.81
| East Whidbey Island (Everett) | ^2 0.75
| Sinclair Inlet (Bremerton) | ^2 0.53
| Vashon (Manchester) | ^2 0.25
Steller Sea Lion | Puget Sound—Fall/Winter | ^3 0.05
Sources: ^1 Rone et al., 2024; ^2 Smultea et al., 2017; ^3 Navy, 2019.

Take Estimation
Here, we describe how the information provided above is synthesized to produce a quantitative estimate of the take that is reasonably likely to occur and authorized.
To quantitatively assess exposure of marine mammals to noise from pile driving activities, the Navy plans three methods, to be used depending on the species' assumed spatial and temporal occurrence. For species with rare or infrequent occurrence at a given installation during the in-water work window, the likelihood of interaction was reviewed on the basis of past records of occurrence (described in Description of Marine Mammals in the Area of Specified Activities) and the potential maximum duration of work days at each installation, as well as total work days for all installations. Occurrence of the species in this category [ i.e., large whales, killer whales, elephant seal (all installations), and Dall's porpoise (Hood Canal only)] would not be anticipated to extend for multiple days. Except for southern resident killer whales (SRKW), the probable duration of all rare, unpredictably occurring species is assumed to be 2 days, roughly equivalent to one transit in and out of a project site. In the case of SRKW, the probable duration is assumed to be 1 day only, as SRKW have not been observed near naval installations during work completed previously at these installations. The calculation for species with rare or infrequent occurrence is:
Exposure estimate = expected group size × probable duration
For species that occur regularly but for which site-specific abundance information is not available, density estimates (table 8) were used to determine the number of animals potentially exposed on any one day of pile driving or removal. The calculation for density-based analysis of species with regular occurrence is:
Exposure estimate = N (density) × Zone of Influence (ZOI, area) × days of pile driving
For remaining species, site-specific abundance information ( i.e., primarily the mean of monthly average counts per surveys completed between 2008 and 2022) was used. In cases where documented presence of a given pinniped species was variable throughout year and the mean of monthly average count (2008-2022) was ≥1, the mean of monthly maximum counts of surveys completed between 2008 and 2022 was used:
Exposure estimate = Abundance × days of pile driving
Large Whales —For each species of large whale ( i.e., humpback whale, minke whale, and gray whale), we assume rare and infrequent occurrence at all installations. For all three species, if observed, they typically occur singly or in pairs. Therefore, for all three species, we assume that a pair of whales may occur in the vicinity of an installation for a total of 2 days. We do not expect that this would happen multiple times, and cannot predict where such an occurrence may happen, so propose to authorize take by Level B harassment of four of each large whale species each project year.
It is important to note that the Navy proposes to implement a shutdown of pile driving activity if any large whale is observed within any defined harassment zone (see Mitigation). Therefore, the IHAs are intended to provide insurance against the event that whales occur within Level B harassment zones that cannot be fully observed by monitors. As a result of this planned mitigation, we do not believe that Level A harassment is a likely outcome upon occurrence of any large whale. The calculated Level A harassment zone is a maximum of 374 m for DTH installation of 24-in concrete piles in year 1 and 542 m for impact installation of 36-in steel piles with a bubble curtain in year, and this requires that a whale be present at that range for the full duration of 1,000 pile strikes. Given the Navy's commitment to shut down upon observation of a large whale in any harassment zone, and the likelihood that the presence of a large whale in the vicinity of any Navy installation would be known due to reporting via Orca Network, we do not expect that any whale would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
Killer Whales —For transient killer whales, the take authorization is derived via the same process described above for large whales: we assume an average group size of six whales occurring for a period of 2 days. The resulting total authorization of take by Level B harassment of 12 for transient killer whales would also account for the low probability that a larger group occurred once. For SRKW, we assume an average group size of 20 whales occurring within the Level B harassment zone on 1 day each year. A group of 20 SRKW closely represents the average size of the pod most likely to occur near a Navy installation (the J pod), and corresponds to 75 percent of the average of all 3 pods that make up the stock. SRKW have not been observed near naval installations during work completed previously at these installations.
Similar to large whales, the Navy plans to implement shutdown of pile driving activity at any time that any killer whale is observed within any calculated harassment zone. We expect this to minimize the extent and duration of any behavioral harassment. Given the small size of calculated Level A harassment zones—maximum of 13 m for DTH in year 1, and 20 m for the worst-case scenario of impact-driven 36-in steel piles with a bubble curtain—we do not anticipate any potential for Level A harassment of killer whales.
Dall's Porpoise —We assume rare and infrequent occurrence of Dall's porpoise at all installations. If observed, they typically occur in groups of five (Smultea et al., 2017). Therefore, we assume that a group of Dall's porpoise may occur in the vicinity of an installation for a total of 2 days. We do not expect that this would happen multiple times, and cannot predict where such an occurrence may happen, so conservatively propose to authorize take by Level B harassment of a total of 10 Dall's porpoise each project year.
The Navy plans to implement shutdown of pile driving activity at any time if a Dall's porpoise is observed in the Level A harassment zone. The calculated Level A harassment zone is as large as 445 m for DTH of 24-in concrete in year 1 and as large as 646 m for impact driving of 36-in steel piles with a bubble curtain in year 2. Take by level A harassment would require that a porpoise be present at that range for the full duration of 1,000 pile strikes. Given the rarity of Dall's porpoise in the area, the Navy's commitment to shut down upon observation of a porpoise within the Level A harassment zone, and the likelihood that a porpoise would engage in aversive behavior prior to experiencing PTS, we do not expect that any porpoise would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
Harbor Porpoise —Level B exposure estimates for harbor porpoise were calculated for each installation each year using the appropriate density given in table 8, the largest appropriate Zone of Influence (ZOI) for each pile type, and the appropriate number of construction days.
• NBK Bangor: Pile driving is not planned at this installation in year 1. For year 2, using the Hood Canal sub-region density, 36 days of pile driving in year 2, and the largest ZOIs calculated for each pile type at this location (31 km ^2 for vibratory installation of 36-in steel piles) produces an estimate of 905 incidents of Level B harassment for harbor porpoise.
• NBK Bremerton: In year 1, using the Sinclair Inlet sub-region density, 31 days of pile driving, and the largest ZOI calculated for each pile type at this location (16 km ^2 for removal and installation of 13-in timber piles, 0.2 km for impact installation of 24-in concrete piles, and 0.07 km for impact installation of 18-in concrete) produces an estimate of 93 incidents of Level B harassment for harbor porpoise. In year 2, using the Sinclair Inlet sub-region density, 24 days of pile driving, and the largest ZOI calculated for each pile type at this location (16 km ^2 for vibratory removal and installation of 24-in steel piles) produces an estimate of 204 incidents of Level B harassment for harbor porpoise.
• NBK Manchester: In year 1, using the Vashon sub-region density, 37 days of pile driving, and the largest ZOI calculated for each pile type at this location (75.8 km ^2 for DTH of 24-in concrete piles) produces an estimate of 701 incidents of Level B harassment for harbor porpoise. There are no pile driving activities planned at this installation in year 2.
• Naval Station (NS) Everett: There are no pile driving activities planned at this installation in year 1. In year 2, using the East Whidbey sub-region density, 8 days of pile driving, and the largest ZOI calculated each pile type at this location (8 km ^2 ) produces an estimate of 24 incidents of Level B harassment for harbor porpoise.
The Navy plans to implement shutdown of pile driving activity at any time if a harbor porpoise is observed in the Level A harassment zone. As a result of this planned mitigation, we do not believe that Level A harassment is a likely outcome. There are two instances where the Level A harassment zone may extend beyond a distance where harbor porpoise may reliably be detected by protected species observers (PSOs). In year 1, the Level A harassment zone is 445 m during DTH drilling of 24-in concrete at NBK Manchester. In year 2, the Level A harassment zone is 645 m during impact driving of 36-in steel piles with a bubble curtain at NBK Bangor. However, Rone et al. (2024) reported a notable absence of harbor porpoise within 21 km ^2 in front of NBK Bangor. In both cases, harbor porpoise are uncommon in the area. Given the Navy's commitment to shut down upon observation of a porpoise within the Level A harassment zone, and the likelihood that a porpoise would engage in aversive behavior prior to experiencing PTS, we do not expect that any porpoise would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
Across all installations, we propose to authorize 794 takes by Level B harassment of harbor porpoise in year 1 and 1,157 takes by Level B harassment of harbor porpoise in year 2.
Steller Sea Lion —Level B harassment estimates for Steller sea lions were calculated for each installation using the appropriate density given in table 8 or site-specific abundance, the largest appropriate ZOI for each pile type at each installation, and the appropriate number of days. Please see Marine Mammal Monitoring Report at Navy Region Northwest Installations: 2008-2022 ( https://www.fisheries.noaa.gov/national/marine-mammal-protection/incidental-take-authorizations-construction-activities ) for details of site-specific abundance information (Navy, 2023).
• NBK Bangor: Steller sea lions are routinely seen hauled out from mid-September through May, with a maximum daily haulout count of 21 individuals in November (based on data collected between 2008 and 2022). Because the mean of monthly average counts per surveys between 2008-2022 was 1, we relied the average of the maximum count of hauled out Steller sea lions for each month in the in-water work window (July-January). The average of the monthly maximum counts during the in-water work window provides an estimate of 7.25 sea lions present per day. Using this value for 36 days in year 2 results in an estimate of 261 incidents of Level B harassment in year 2. There are no pile driving activities planned at this installation in year 1.
• NBK Bremerton: Steller sea lions have been documented only twice at this installation between 2008 and 2022. As such density values were used to estimate take at this location. Using the Puget Sound density value for fall-winter, 31 days of pile driving in year 1, and the largest ZOI calculated for each pile type at this location (16 km ^2 for removal and installation of 13-in timber piles, 0.2 km for impact installation of 24-in concrete piles, and 0.07 km for impact installation of 18-in concrete) produces an estimate of 9 incidents of Level B harassment for Steller sea lion in year 1. Using the Puget Sound density value for fall-winter, 24 days of pile driving in year 2, and the largest ZOI calculated for each pile type at this location (16 km ^2 for vibratory removal and installation of 24-in steel piles) produces an estimate of 18 incidents of Level B harassment for Steller sea lion in year 2.
• NBK Manchester: Steller sea lions are observed periodically at NBK Manchester since surveys began in 2012. We estimate take based on the monthly mean counts per surveys conducted from July to February, between 2012 and 2022, which provides an estimate of six Steller sea lions per day. In year 1, using this value for 37 days in results in an estimate of 222 incidents of Level B harassment. There are no pile driving activities planned at this installation in year 2.
• NS Everett: Steller sea lions were rarely observed at NS Everett between 2012 and 2022. All observations were of lone individuals hauled out on a Port Security Barrier (PSB) or in a nearby basin. We conservatively estimate that one Steller sea lion could occur within the project area per day. Using this value for 8 days in year 2 results in an estimate of 8 incidents of Level B harassment in year 2. There are no pile driving activities planned at this installation in year 1.
Given the small size of calculated Level A harassment zones—maximum of 15 m for the worst-case scenario of DTH-installed 24-in concrete piles in year 1 and maximum of 21 m for the worst-case scenario of impact-driven 36-in steel piles with the use of a bubble curtain in year 2—we do not anticipate any potential for Level A harassment of Steller sea lions.
Across all installations we propose to authorize take by 231 takes by Level B harassment of Steller sea lion in year 1 and 287 takes by Level B harassment of Steller sea lions in year 2.
California Sea Lion —Level B harassment estimates for California sea lions were calculated for each installation using the appropriate site-specific abundance, the largest appropriate ZOI for each pile type at each installation, and the appropriate number of days. Please see Marine Mammal Monitoring Report at Navy Region Northwest Installations: 2008-2022 ( https://www.fisheries.noaa.gov/national/marine-mammal-protection/incidental-take-authorizations-construction-activities ) for details of site-specific abundance information (Navy, 2023).
• NBK Bangor: California sea lions haul out in all months on floating PSB and on submarines docked at Delta Pier, with lower numbers in June through July. We estimate take based on the monthly mean counts per surveys conducted from July to January, between 2012 and 2022, which provides an estimate of 25 California sea lions per day. In year 2, using this value for 36 days results in an estimate of 900 incidents of Level B harassment in year 2. There are no pile driving activities planned at this installation in year 1.
• NBK Bremerton: California sea lions are routinely seen hauled out on floats at NBK Bremerton during most of the year. We estimate take based on the monthly mean count per surveys conducted from July through February, between 2010 and 2022, which provides an estimate of 98 California sea lions per day. In year 1, using this value for 31 days generates an estimate of 3,038 incidents of Level B harassment. In year 2, using this value for 24 days generates an estimate of 2,352 incidents of Level B harassment in year 2.
• NBK Manchester: California sea lions have been observed at this installation at least once each month of the year, with peak numbers occurring in October and November. Floats used as haulouts are periodically installed and removed, making numbers in the vicinity highly variable. We estimate take based on the monthly mean count per surveys conducted from July through February, between 2012 and 2022, which provides an estimate of 24 California sea lions per day. In year 1, using this value for 37 days generates an estimate of 1,274 incidents of Level B harassment. There are no pile driving activities planned at this installation in year 2.
• NS Everett: California sea lions have been observed every month of the year. We estimate take based on the monthly mean count per survey conducted from July through February between 2012 and 2022, which provides an estimate of 48 California sea lions per day. In year 2, using this value for 8 days in year 2 generates an estimate of 384 incidents of Level B exposures. There are no pile driving activities planned at this installation in year 1.
Given the small size of calculated Level A harassment zones—maximum of 15 m for the worst-case scenario of DTH-installed 24-in concrete piles in year 1 and maximum of 21 m for the worst-case scenario of impact-driven 36-in steel piles with the use of a bubble curtain in year 2—we do not anticipate any potential for Level A harassment of California sea lions.
Across all installations we propose to authorize 3,926 takes by Level B harassment of California sea lions in year 1 and 3,636 takes by Level B harassment of California sea lions in year 2.
Harbor Seal —Harbor seals are expected to occur year-round at all installations, with the greatest numbers expected at installations with nearby haul-out sites. Level B exposure estimates for harbor seals were calculated for each installation using the appropriate site-specific abundance, the largest appropriate ZOI for each pile type at each installation, and the appropriate number of days. Please see Marine Mammal Monitoring Report at Navy Region Northwest Installations: 2008-2022 ( https://www.fisheries.noaa.gov/national/marine-mammal-protection/incidental-take-authorizations-construction-activities ) for details of site-specific abundance information (Navy, 2023).
Harbor seals are expected to be the most abundant marine mammal at all installations, often occurring in and around existing in-water structures in a way that may restrict observers' ability to adequately observe seals and subsequently implement shutdowns. In addition, the calculated Level A harassment zones are significantly larger than those for sea lions, which may also be abundant at various installations at certain times of year. For harbor seals in year 1, the largest calculated Level A harassment zone is 200 m (compared with a maximum zone of 15 m for sea lions), calculated for the worst-case scenario of DTH-installed 24-in concrete piles (other scenarios range from 5-75 m). In year 2, the largest calculated Level A harassment zone is 290 m (compared with a maximum zone of 21 m for sea lions), calculated for the worst-case scenario of impact-driven 36-in steel piles with the use of a bubble curtain (other scenarios range from 1-21 m). Therefore, we assume that some Level A harassment is likely to occur for harbor seals and provide installation-specific estimates below.
• NBK Bangor: Harbor seals are year-round residents at NBK Bangor and have been identified at least once during each calendar month over several survey years. They have been observed swimming and hauled out on man-made structures including docks, catwalks under the dock at Marginal Pier, PSBs, and boats along the NBK Bangor waterfront, The Navy plans to place fencing around the catwalks at Marginal Pier, which may reduce harbor seal haulout opportunities at NBK Bangor. Because the mean of monthly average counts per surveys between 2008-2022 was <1, we estimate take by Level B harassment based on the mean maximum count per month of surveys conducted from July to January, between 2008 and 2022, which provides an estimate of 16 harbor seals per day. In year 2, using this value for 36 days results in an estimate of 576 incidents of Level B exposures. There are no pile driving activities planned at this installation in year 1.
The Level A harassment zone expected to occur during impact installation of 36-in steel at NBK Bangor is 290 m. Since the Navy plans to maintain a shutdown zone of at 180 m (see table 11), the Navy estimates and NMFS agrees that one seal per day (n = 20) could remain within the calculated Level A harassment zone for a sufficient period to accumulate enough energy to result in PTS. As such, we propose to authorize 20 incidents of take by Level A harassment.
• NBK Bremerton: Observations of harbor seals are intermittent at NBK Bremerton. They are primarily observed swimming in the water around piers and structures and less frequently hauled out on floats and docked submarines. Because the mean of monthly average counts per surveys between 2008-2022 was <1, we estimate take based on the mean maximum count per month of surveys from July to February, between 2010 and 2022, which provides an estimate of two harbor seals per day. In year 1, using this value for 31 days results in an estimate of 62 incidents of Level B exposures. In year 2, using this value for 24 days results in an estimate of 48 incidents of Level B harassment.
In year 1, the Level A harassment zone expected to occur during impact installation of 18-in steel at NBK Bremerton is 39 m and the Level A harassment zone expected to occur during impact installation of 24-in steel is 73 m. Although the Navy plans to shut down at distances slightly larger than these Level A harassment zones (see table 10), the Navy assumes and NMFS agrees that it is possible that one seal per day could go unobserved and remain within the calculated zone for a sufficient period to accumulate enough energy to result in PTS. As such, we propose to authorize 20 takes by Level A harassment. In year 2, the largest Level A harassment zone is much smaller (<10 m) and as such we do not expect take by Level A harassment to occur and we do not propose to authorize such take.
• NBK Manchester: No harbor seal haulouts have been identified at NBK Manchester, but seals regularly haul out at Orchard Rocks and are observed swimming through the project area. We estimate take based on the monthly mean count per survey conducted from July through February between 2020 and 2022 (Orchard Rocks was incorporated into surveys in 2020), which provides an estimate of 10 harbor seals per day. In year 1, using this value for 37 days results in an estimate of 370 incidents of Level B harassment. There are no pile driving activities planned at this installation in year 2.
The Level A harassment zone expected to occur during DTH installation of 24-in concrete at NBK Manchester is 200 m. Since the Navy plans to shut down at 150 m due to practicability concerns (see table 10), the Navy assumes and NMFS agrees that one seal per day (n = 37) could remain within the calculated zone for a sufficient period to accumulate enough energy to result in PTS. As such, we propose to authorize 37 incidents of take by Level A harassment.
• NS Everett: Harbor seals haul out year round on floats, riprap, and human structures at NS Everett. We estimate take based on the monthly mean count per survey conducted from July through February between 2019 and 2022 (the east side of East Waterway was incorporated into surveys in 2019), which provides an estimate of 266 harbor seals per day. In year 2, using this value for 8 days results in an estimate of 2,128 incidents of Level B harassment. There are no planned pile driving activities at this installation in year 1.
The largest Level A harassment zone expected to occur at NS Everett is 21 m and the Navy plans to shut down at this distance should a harbor seal be observed entering or within this zone. As such we do not expect take by Level A harassment to occur and we do not propose to authorize such take here.
Any individuals exposed to the higher levels associated with the potential for PTS closer to the source might also be behaviorally disturbed, however, for the purposes of quantifying take we do not count those exposures of one individual as both a Level A harassment take and a Level B harassment take, and therefore takes by Level B harassment calculated as described above are further modified to deduct the amount of take by Level A harassment. Therefore, in year 1, across all installations, NMFS proposes to authorize 57 takes by Level A harassment and 432 takes by Level B harassment for harbor seal, for a total of 489 takes. In year 2, across all installations, NMFS proposes to authorize 20 takes by Level A harassment and 2,752 takes by Level B harassment for harbor seal, for a total of 2,772 takes.
Northern Elephant Seal —Northern elephant seals are considered rare visitors to Puget Sound. However, solitary juvenile elephant seals have been known to sporadically haul out to molt in Puget Sound during spring and summer months. Because there are occasional sightings in Puget Sound, the Navy reasons that exposure of up to one seal to noise above Level B harassment thresholds could occur for a 2-day duration for a total of two takes by Level B harassment of northern elephant seals each year.
The total take authorization for all species each year is summarized in table 9 below. No authorization of take by Level A harassment is authorized except a total of 57 such incidents for harbor seals in year 1 and 20 such incidents for harbor seals in year 2.
Table 9—Take Authorization by Level B Harassment
Species | Stock | Year 1 | Level A harassment | Level B harassment | Take as a percentage of stock abundance | Year 2 | Level A harassment | Level B harassment | Take as a percentage of stock abundance
Humpback Whale | CenAmer./S Mex-CA-OR-WA | 0 | 0 | 0 | 0 | 0 | 0
| Mex-CA-OR-WA | | 1 | <1 | 0 | 1 | <1
| Hawai'i | | 3 | <1 | 0 | 3 | <1
Minke Whale | CA-OR-WA | 0 | 4 | <1 | 0 | 4 | <1
Gray Whale | Eastern N Pacific | 0 | 4 | <1 | 0 | 4 | <1
Killer Whale | W Coast Transient | 0 | 12 | 3 | 0 | 12 | 3
| E.N.P.—S Resident | 0 | 20 | 27 | 0 | 20 | 27
Harbor Porpoise | WA. Inland | 0 | 794 | 7 | 0 | 1,157 | 10
Dall's Porpoise | CA-OR-WA | 0 | 10 | <1 | 0 | 10 | <1
Steller Sea Lion | Eastern US | 0 | 231 | <1 | 0 | 287 | <1
California Sea Lion | US | 0 | 3,926 | 2 | 0 | 3,636 | 1.4
Northern Elephant Seal | CA Breeding | 0 | 2 | <1 | 0 | 2 | <1
Harbor Seal | WA N Inland | 57 | 375 | 4 | 0 | 2,176 | 13
| Hood Canal | 0 | 0 | 0 | 20 | 576 | 17

Mitigation
In order to issue an IHA under section 101(a)(5)(D) of the MMPA, NMFS must set forth the permissible methods of taking pursuant to the activity, and other means of effecting the least practicable impact on the species or stock and its habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance, and on the availability of the species or stock for taking for certain subsistence uses (latter not applicable for this action). NMFS regulations require applicants for incidental take authorizations to include information about the availability and feasibility (economic and technological) of equipment, methods, and manner of conducting the activity or other means of effecting the least practicable adverse impact upon the affected species or stocks, and their habitat (50 CFR 216.104(a)(11)).
In evaluating how mitigation may or may not be appropriate to ensure the least practicable adverse impact on species or stocks and their habitat, as well as subsistence uses where applicable, NMFS considers two primary factors:
(1) The manner in which, and the degree to which, the successful implementation of the measure(s) is expected to reduce impacts to marine mammals, marine mammal species or stocks, and their habitat. This considers the nature of the potential adverse impact being mitigated (likelihood, scope, range). It further considers the likelihood that the measure will be effective if implemented (probability of accomplishing the mitigating result if implemented as planned), the likelihood of effective implementation (probability implemented as planned); and
(2) The practicability of the measures for applicant implementation, which may consider such things as cost, and impact on operations.
Timing —As described previously, the Navy will adhere to in-water work windows designed for the protection of fish. These timing windows would also benefit marine mammals by limiting the annual duration of construction activities. At NBK Bangor, the Navy will adhere to a July 16 through January 15 window, while at the remaining facilities this window is extended to February 15 each project year.
On a daily basis, in-water construction activities will occur only during daylight hours (sunrise to sunset) except from July 16 to September 15, when impact pile driving will only occur starting 2 hours after sunrise and ending 2 hours before sunset in order to protect marbled murrelets ( Brachyramphus marmoratus ) during the nesting season. The exception is NBK Bremerton, where marbled murrelets do not occur.
Shutdown Zone —For all pile driving, removal, and DTH drilling, the Navy will implement shutdowns within designated zones. The purpose of a shutdown zone is generally to define an area within which shutdown of activity would occur upon sighting of a marine mammal (or in anticipation of an animal entering the defined area). For all pile driving activities, the Navy will establish a minimum shutdown zone with a radial distance of 10 m. This minimum zone is intended to prevent the already unlikely possibility of physical interaction with construction equipment and to establish a precautionary minimum zone with regard to acoustic effects. In most circumstances where the predicted Level A harassment zone exceeds the minimum zone, the Navy proposes to implement a shutdown zone greater or equal to the predicted Level A harassment zone (see tables 12 and 13). However, in cases where it would be challenging to detect marine mammals at the Level A harassment isopleth and frequent shutdowns would create practicability concerns ( e.g., for phocids during DTH at NBK Manchester in year 1 and impact pile driving at NBK Bangor in year 2), smaller shutdown zones have been established. In addition, the Navy proposes to implement shutdown upon observation of any large whales and killer whales within a calculated Level B harassment zone. Recognizing that the entirety of the Level B harassment zone cannot practicably be monitored, the Orca Network would be consulted prior to commencing pile driving each day, and pile driving would also be delayed or shutdown if low-frequency or mid-frequency cetaceans are reported near or approaching the Level B harassment zone. In all cases, predicted injury zones are calculated on the basis of cumulative sound exposure, as peak pressure source levels produce smaller predicted zones.
Finally, construction activities will be halted upon observation of a species for which incidental take is not authorized or a species for which incidental take has been authorized but the authorized number of takes has been met entering or within the harassment zone.
Table 10—Shutdown Zones, Year 1
Activity | Pile size/type | Shutdown zones (m) | LF | MF | HF | PW | OW | Level B harassment zone (m) | Level B monitoring zone (m)
Impact Installation | 18-in Concrete | 100 | 50 | 100 | 40 | 10 | 46 | N/A
| 24-in Concrete | 170 | 90 | 170 | 75 | 10 | 86 | N/A
Vibratory Installation or Removal | 13-in Timber | ^2 5,412 | ^2 5,412 | 15 | 10 | 10 | 5,412 | ^1 400
DTH | 24-in Concrete | ^2 13,594 | ^2 13,594 | ^3 450 | 150 | 20 | 13,594 | ^1 450
^1 Observers must be able to monitor at minimum the Level B monitoring zone prior to commencing vibratory pile driving and removal and DTH drilling.
^2 This shutdown zone likely extends beyond the distance that low- and mid-frequency cetaceans can be reliably detected. Observers will monitor this shutdown zone to the maximum extent possible based on the number and location of PSOs deployed and weather conditions.
^3 This shutdown zone likely extends beyond the distance that harbor porpoise can be reliably detected. However, harbor porpoise are uncommon near NKB Manchester, and it is likely that they would engage in aversive behavior prior to experiencing PTS. As such, we do not expect that any porpoise would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
Table 11—Shutdown Zones, Year 2
Activity | Pile size/type | Shutdown zones (m) | LF | MF | HF | PW | OW | Level B harassment zone (m) | Level B monitoring zone (m)
Impact Installation | 12-in Steel | 50 | 50 | 50 | 30 | 10 | 39.8 | N/A
| 36-in Steel | 650 | 650 | ^3 650 | 180 | 25 | 541.2 | N/A
Vibratory Installation or Removal | 12-in Steel | 1,585 | 1,585 | 10 | 10 | 10 | 1,585 | ^1 400
| 24-in Steel | ^2 5,412 | ^2 5,412 | 15 | 10 | 10 | 5,412 | ^1 400
| 36-in Steel | ^2 11,659 | ^2 11,659 | 40 | 20 | 10 | 11,659 | ^1 400
^1 Observers must be able to monitor at minimum the Level B monitoring zone prior to commencing vibratory pile driving and removal.
^2 This shutdown zone likely extends beyond the distance that low- and mid-frequency cetaceans can be reliably detected. Observers will monitor this shutdown zone to the maximum extent possible based on the number and location of deployed PSOs and weather conditions.
^3 This shutdown zone likely extends beyond the distance that harbor porpoise can be reliably detected. However, harbor porpoise were notably absent within 21 km ^2 in front of NKB Bangor (Rone et al., 2024) and it is likely that they would engage in aversive behavior prior to experiencing PTS. As such, we do not expect that any porpoise would be present within a Level A harassment zone for sufficient duration to actually experience PTS.
Protected Species Observers —The number and placement of PSOs during all construction activities (described in the Monitoring and Reporting section) would ensure that the entire shutdown zone is visible, except in cases when the shutdown zone is based on the Level B harassment zone (large whales and killer whales). In such cases, PSOs must be able to monitor at minimum the Level A harassment zone. The Navy will employ at least three PSOs for all pile driving and DTH drilling.
Monitoring for Level B Harassment —PSOs will monitor the shutdown zones and beyond to the extent that PSOs can see. Monitoring beyond the shutdown zones enables observers to be aware of and communicate the presence of marine mammals in the project areas outside the shutdown zones and thus prepare for a potential cessation of activity should the animal enter the shutdown zone. Additionally, prior to commencing pile driving, PSOs will contact Navy marine biologists or the Orca Network directly to obtain reports of large whales in the area.
In order to document observed incidents of harassment, PSOs record all marine mammal observations, regardless of location. The PSO's location and the location of the pile being driven are known, and the location of the animal may be estimated as a distance from the observer and then compared to the location from the pile. It may then be estimated whether the animal was exposed to sound levels constituting incidental harassment on the basis of predicted distances to relevant thresholds in post-processing of observational data, and a precise accounting of observed incidents of harassment created.
Pre and Post-Activity Monitoring —Prior to the start of daily in-water construction activity, or whenever a break in pile driving of 30 minutes or longer occurs, PSOs will observe the shutdown zone, Level A harassment zone, and Level B harassment zone (to the extent possible based on the number and location of PSOs and weather conditions) for a period of 30 minutes. Pre-start clearance monitoring must be conducted during periods of visibility sufficient for the lead PSO to determine that the shutdown zones and, during vibratory driving and removal and DTH drilling, the Level B monitoring zone, are clear of marine mammals. If these zones are obscured by fog or poor lighting conditions, in-water construction activity will not be initiated until the entire shutdown zone is visible. Pile driving may commence following 30 minutes of observation when the determination is made that the shutdown zones and, during vibratory driving and removal and DTH drilling, the Level B monitoring zone, are clear of marine mammals. If a marine mammal is observed entering or within these zones, pile driving activity must be delayed or halted. During vibratory driving and removal and DTH, the Navy will shut down upon any observation of large whales and killer whales. If pile driving is delayed or halted due to the presence of a marine mammal, the activity may not commence or resume until either the animal has voluntarily exited and been visually confirmed beyond the shutdown zone or 15 minutes have passed without re-detection of the animal.
The Navy also plans to take measures to ensure that killer whales and large cetaceans ( i.e., humpback whale, gray whale, and minke whale) are not located within the vicinity of the project area, including, but not limited to, contacting and/or reviewing the latest sightings data from the Orca Network and/or Center for Whale Research, including passive acoustic detections, to determine the location of the nearest marine mammal sightings.
Soft Start —The use of a soft start procedure is believed to provide additional protection to marine mammals by warning marine mammals or providing them with a chance to leave the area prior to the hammer operating at full capacity. The Navy will utilize soft start techniques for impact pile driving. We require an initial set of three strikes from the impact hammer at reduced energy, followed by a 30-second waiting period, then two subsequent three-strike sets. Soft start will be required at the beginning of each day's impact pile driving work and at any time following a cessation of impact pile driving of 30 minutes or longer; the requirement to implement soft start for impact driving is independent of whether vibratory driving has occurred within the prior 30 minutes. Soft start is not required during vibratory pile driving activities.
Bubble Curtain —A bubble curtain will be used for all impact driving of steel piles to attenuate noise. A bubble curtain will be employed during impact installation or proofing of steel pile where water depths are greater than 2 ft (0.67 m). Bubble curtains are not planned for installation of other pile types due to the relatively low source levels, as the requirement to deploy the curtain system at each driven pile results in a significantly lower production rate. Where a bubble curtain is used, the contractor will be required to turn it on prior to the soft start in order to flush fish from the area closest to the driven pile.
To avoid loss of attenuation from design and implementation errors, the Navy will require specific bubble curtain design specifications, including testing requirements for air pressure and flow at each manifold ring prior to initial impact hammer use, and a requirement for placement on the substrate. The bubble curtain must distribute air bubbles around 100 percent of the piling perimeter for the full depth of the water column. The lowest bubble ring shall be in contact with the mudline for the full circumference of the ring, and the weights attached to the bottom ring shall ensure 100 percent mudline contact. No parts of the ring or other objects shall prevent full mudline contact. The contractor shall also train personnel in the proper balancing of air flow to the bubblers, and must submit an inspection/performance report to the Navy for approval within 72 hours following the performance test. Corrections to the noise attenuation device to meet the performance standards shall occur prior to use for impact driving.
Based on our evaluation of the applicant's planned measures, NMFS has determined that the mitigation measures provide the means of effecting the least practicable impact on the affected species or stocks and their habitat, paying particular attention to rookeries, mating grounds, and areas of similar significance.

Monitoring and Reporting
In order to issue an IHA for an activity, section 101(a)(5)(D) of the MMPA states that NMFS must set forth requirements pertaining to the monitoring and reporting of such taking. The MMPA implementing regulations at 50 CFR 216.104(a)(13) indicate that requests for authorizations must include the suggested means of accomplishing the necessary monitoring and reporting that will result in increased knowledge of the species and of the level of taking or impacts on populations of marine mammals that are expected to be present while conducting the activities. Effective reporting is critical both to compliance as well as ensuring that the most value is obtained from the required monitoring.
Monitoring and reporting requirements prescribed by NMFS should contribute to improved understanding of one or more of the following:
• Occurrence of marine mammal species or stocks in the area in which take is anticipated ( e.g., presence, abundance, distribution, density);
• Nature, scope, or context of likely marine mammal exposure to potential stressors/impacts (individual or cumulative, acute or chronic), through better understanding of: (1) action or environment ( e.g., source characterization, propagation, ambient noise); (2) affected species ( e.g., life history, dive patterns); (3) co-occurrence of marine mammal species with the activity; or (4) biological or behavioral context of exposure ( e.g., age, calving or feeding areas);
• Individual marine mammal responses (behavioral or physiological) to acoustic stressors (acute, chronic, or cumulative), other stressors, or cumulative impacts from multiple stressors;
• How anticipated responses to stressors impact either: (1) long-term fitness and survival of individual marine mammals; or (2) populations, species, or stocks;
• Effects on marine mammal habitat ( e.g., marine mammal prey species, acoustic habitat, or other important physical components of marine mammal habitat); and
• Mitigation and monitoring effectiveness.
Visual Monitoring —Marine mammal monitoring must be conducted in accordance with the Marine Mammal Monitoring and Mitigation Plan. Marine mammal monitoring during pile driving and removal and DTH drilling must be conducted by NMFS-approved PSOs in a manner consistent with the following:
• PSOs must be independent of the activity contractor (for example, employed by a subcontractor), and have no other assigned tasks during monitoring periods;
• At least one PSO must have prior experience performing the duties of a PSO during construction activity pursuant to a NMFS-issued incidental take authorization;
• Other PSOs may substitute other relevant experience, education (degree in biological science or related field) or training for experience performing the duties of a PSO during construction activities pursuant to a NMFS-issued incidental take authorization;
• Where a team of three or more PSOs is required, a lead observer or monitoring coordinator will be designated. The lead observer will be required to have prior experience working as a marine mammal observer during construction activity pursuant to a NMFS-issued incidental take authorization; and
• PSOs must be approved by NMFS prior to beginning any activity subject to each IHA.
PSOs should also have the following additional qualifications:
• Ability to conduct field observations and collect data according to assigned protocols;
• Experience or training in the field identification of marine mammals, including identification of behaviors;
• Sufficient training, orientation, or experience with the construction operation to provide for personal safety during observations;
• Writing skills sufficient to prepare a report of observations including, but not limited to, the number and species of marine mammals observed; dates and times when in-water construction activities were conducted; dates, times, and reason for implementation of mitigation (or why mitigation was note implemented when required); and marine mammal behavior; and
• Ability to communicate orally, by radio or in person, with project personnel to provide real-time information on marine mammals observed in the area as necessary.
Visual monitoring will be conducted by a minimum of three trained PSOs positioned at suitable vantage points practicable ( e.g., from a small boat, the pile driving barge, on shore, piers, or any other suitable location). One PSO will have an unobstructed view of all water within the shutdown zone, and during vibratory pile driving and removal and DTH drilling, the Level B monitoring zone. Remaining PSOs will observe as much as the Level A and Level B harassment zones as possible.
Monitoring will be conducted 30 minutes before, during, and 30 minutes after all in water construction activities. In addition, PSOs will record all incidents of marine mammal occurrence, regardless of distance from activity, and will document any behavioral reactions in concert with distance from piles being driven or removed. Pile driving activities include the time to install or remove a single pile or series of piles, as long as the time elapsed between uses of the pile driving equipment is no more than 30 minutes.

Acoustic Monitoring
The Navy plans to conduct hydroacoustic monitoring for a subset of impact-driven steel piles for projects including more than three piles where a bubble curtain is used (relevant to year 2 project activities only).

Reporting
The Navy will submit a draft marine mammal monitoring report to NMFS within 90 days after the completion of pile driving activities, or 60 days prior to a requested date of issuance of any future IHAs for the project, or other projects at the same location, whichever comes first. The marine mammal monitoring report will include an overall description of work completed, a narrative regarding marine mammal sightings, and associated PSO data sheets. Specifically, the report will include:
• Dates and times (begin and end) of all marine mammal monitoring;
• Construction activities occurring during each daily observation period, including: (1) The number and type of piles that were driven and the method ( e.g., impact or vibratory); and (2) Total duration of driving time for each pile (vibratory driving) and number of strikes for each pile (impact driving);
• PSO locations during marine mammal monitoring;
• Environmental conditions during monitoring periods (at beginning and end of PSO shift and whenever conditions change significantly), including Beaufort sea state and any other relevant weather conditions including cloud cover, fog, sun glare, and overall visibility to the horizon, and estimated observable distance;
• Upon observation of a marine mammal, the following information: (1) Name of PSO who sighted the animal(s) and PSO location and activity at time of sighting; (2) Time of sighting; (3) Identification of the animal(s) ( e.g., genus/species, lowest possible taxonomic level, or unidentified), PSO confidence in identification, and the composition of the group if there is a mix of species; (4) Distance and location of each observed marine mammal relative to the pile being driven for each sighting; (5) Estimated number of animals (min/max/best estimate); (6) Estimated number of animals by cohort (adults, juveniles, neonates, group composition, etc. ); (7) Animal's closest point of approach and estimated time spent within the harassment zone; and (8) Description of any marine mammal behavioral observations ( e.g., observed behaviors such as feeding or traveling), including an assessment of behavioral responses thought to have resulted from the activity ( e.g., no response or changes in behavioral state such as ceasing feeding, changing direction, flushing, or breaching);
• Number of marine mammals detected within the harassment zones, by species; and
• Detailed information about implementation of any mitigation ( e.g., shutdowns and delays), a description of specific actions that ensued, and resulting changes in behavior of the animal(s), if any.
A final report must be prepared and submitted within 30 calendar days following receipt of any NMFS comments on the draft report. If no comments are received from NMFS within 30 calendar days of receipt of the draft report, the report will be considered final. All PSO data will be submitted electronically in a format that can be queried such as a spreadsheet or database and will be submitted with the draft marine mammal report.
In the event that personnel involved in the construction activities discover an injured or dead marine mammal, the Holder must report the incident to the Office of Protected Resources (OPR), NMFS ( PR.ITP.MonitoringReports@noaa.gov and itp.fleming@noaa.gov ) and the West Coast Regional Stranding Coordinator as soon as feasible. If the death or injury was clearly caused by the specified activity, the Holder must immediately cease the activities until NMFS OPR is able to review the circumstances of the incident and determine what, if any, additional measures are appropriate to ensure compliance with the terms of the IHAs. The Holder must not resume their activities until notified by NMFS. The report must include the following information:
• Time, date, and location (latitude/longitude) of the first discovery (and updated location information if known and applicable);
• Species identification (if known) or description of the animal(s) involved;
• Condition of the animal(s) (including carcass condition if the animal is dead);
• Observed behaviors of the animal(s), if alive;
• If available, photographs or video footage of the animal(s); and
• General circumstances under which the animal was discovered.

Negligible Impact Analysis and Determination
NMFS has defined negligible impact 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 (50 CFR 216.103). A negligible impact finding is based on the lack of likely adverse effects on annual rates of recruitment or survival ( i.e., population-level effects). An estimate of the number of takes alone is not enough information on which to base an impact determination. In addition to considering estimates of the number of marine mammals that might be “taken” through harassment, NMFS considers other factors, such as the likely nature of any impacts or responses ( e.g., intensity, duration), the context of any impacts or responses ( e.g., critical reproductive time or location, foraging impacts affecting energetics), as well as effects on habitat, and the likely effectiveness of the mitigation. We also assess the number, intensity, and context of estimated takes by evaluating this information relative to population status. Consistent with the 1989 preamble for NMFS' implementing regulations (54 FR 40338, September 29, 1989), the impacts from other past and ongoing anthropogenic activities are incorporated into this analysis via their impacts on the baseline ( e.g., as reflected in the regulatory status of the species, population size and growth rate where known, ongoing sources of human-caused mortality, or ambient noise levels).
To avoid repetition, the majority of our analysis applies to all the species listed in table 1, given that many of the anticipated effects of this project on different marine mammal stocks are expected to be relatively similar in nature. Where there are meaningful differences between species or stocks, or groups of species, in anticipated individual responses to activities, impact of expected take on the population due to differences in population status, or impacts on habitat, they are described independently in the analysis below.
Pile driving activities associated with the maintenance projects, as described previously, have the potential to disturb or displace marine mammals. Specifically, the specified activities may result in take, in the form of Level B harassment (behavioral disturbance) only (for all species other than harbor seal) from underwater sounds generated from pile driving. Potential takes could occur if individual marine mammals are present in the ensonified zone when pile driving is happening.
No serious injury or mortality would be expected even in the absence of the planned mitigation measures. For all species other than the harbor seal, no Level A harassment is anticipated given the nature of the activities, i.e., much of the anticipated activity would involve measures designed to minimize the possibility of injury. The potential for injury is small for cetaceans and sea lions, and is expected to be essentially eliminated through implementation of the mitigation measures—use of the bubble curtain for steel piles (relevant to year 2 only), soft start (for impact driving), and shutdown zones. Impact driving, as compared with vibratory driving, has source characteristics (short, sharp pulses with higher peak levels and much sharper rise time to reach those peaks) that are potentially injurious or more likely to produce severe behavioral reactions. Given sufficient notice through use of soft start, marine mammals are expected to move away from a sound source that is annoying prior to becoming potentially injurious or resulting in more severe behavioral reactions. Additionally, environmental conditions in inland waters are expected to generally be good, with calm sea states, and we expect conditions would allow a high marine mammal detection capability, enabling a high rate of success in implementation of shutdowns to avoid injury.
As described previously, there are multiple species that are considered rare in the project areas and for which we authorize limited take, by Level B harassment, of a single group for a minimal period of time in each authorization year (1 or 2 days).
ESA critical habitat for southern resident killer whale occurs in Puget Sound (see the Description of Marine Mammals in the Area of Specified Activities section of this notice). NMFS did not identify in-water sound levels as a separate essential feature of critical habitat, though anthropogenic sound is recognized as one of the primary threats to SRKW (NMFS, 2019). The exposure of SRKW to sound from the planned activities would be minimized by the required mitigation measures ( e.g., shutdown zones equivalent to the Level B harassment zones). The effects of the activities on SRKW habitat generally, such as sedimentation and impacts to availability of prey species, are expected to be limited both spatially and temporally, constrained to the immediate area around the pile driver(s) at each pier and returning to baseline levels quickly. Additionally, the timing of the in-water work window for the projects is intended to limit impacts to ESA-listed fishes, which would accordingly reduce potential impacts to SRKW prey.
Puget Sound is part of a biologically important area (BIA) for migrating gray whales (Calambokidis et al., 2015). However, gray whales in this area typically remain further north, primarily in the waters around Whidbey Island (Calambokidis et al., 2018) (an area where only 8 days of pile driving are planned). Therefore, even though the project areas overlap with the BIA, the infrequent occurrence of gray whales suggests that the projects would have minimal, if any, impact on the migration of gray whales, and would therefore not affect reproduction or survival.
Aside from the SRKW critical habitat and BIA for gray whales, there are no known important areas for other marine mammals, such as feeding or pupping areas. Therefore, we do not expect meaningful impacts to these species ( i.e., humpback whale, gray whale, minke whale, transient and resident killer whales, Dall's porpoise, and northern elephant seal) and find, for both the year 1 and year 2 IHAs, that the total marine mammal take from the specified activities will have a negligible impact on these marine mammal species.
For remaining species (harbor porpoise, California sea lion, Steller sea lion, and harbor seal), we discuss the likely effects of the specified activities in greater detail. Effects on individuals that are taken by Level B harassment, on the basis of reports in the literature as well as monitoring from other similar activities, will likely be limited to reactions such as increased swimming speeds, increased surfacing time, or decreased foraging (if such activity were occurring) ( e.g., Thorson and Reyff, 2006; HDR, Inc., 2012; Lerma, 2014). Most likely, individuals will simply move away from the sound source and be temporarily displaced from the areas of pile driving, although even this reaction has been observed primarily only in association with impact pile driving.
The Navy has conducted multi-year activities potentially affecting marine mammals, and typically involving greater or similar levels of activity than is contemplated here in various locations, such as San Diego Bay, and some of the installations considered herein (NBK Bangor, NBK Bremerton, NBK Manchester). Reporting from these activities has similarly reported no apparently consequential behavioral reactions or long-term effects on marine mammal populations (Lerma, 2014; Navy, 2016; Sandoval et al., 2022; Sandoval and Johnson, 2022; Hamer Environmental 2021; DoN, 2021 and 2022). Repeated exposures of individuals to relatively low levels of sound outside of preferred habitat areas are unlikely to significantly disrupt critical behaviors. Thus, even repeated Level B harassment of some small subset of the overall stock is unlikely to result in any significant realized decrease in viability for the affected individuals, and thus would not result in any adverse impact to the stock as a whole. Level B harassment will be reduced to the level of least practicable adverse impact through use of mitigation measures described herein and, if sound produced by project activities is sufficiently disturbing, animals are likely to simply avoid the area while the activity is occurring. While vibratory driving and DTH drilling associated with some project components may produce sound at distances of many kilometers from the pile driving site, thus intruding on higher-quality habitat, the project sites themselves and the majority of sound fields produced by the specified activities are within industrialized areas. Therefore, we expect that animals annoyed by project sound would simply avoid the area and use more-preferred habitats.
In addition to the expected effects resulting from authorized Level B harassment, we anticipate that harbor seals may sustain some limited Level A harassment in the form of auditory injury at two installations in year 1 (NBK Bremerton and NBK Manchester) and one installation in year 2 (NBK Bangor), assuming they remain within a given distance of the pile driving activity for the full number of pile strikes. However, seals in these locations that experience PTS would likely only receive slight PTS, i.e., minor degradation of hearing capabilities within regions of hearing that align most completely with the energy produced by pile driving, i.e., the low-frequency region below 2 kHz, not severe hearing impairment or impairment in the regions of greatest hearing sensitivity. If hearing impairment occurs, it is most likely that the affected animal would lose a few decibels in its hearing sensitivity, which in most cases is not likely to meaningfully affect its ability to forage and communicate with conspecifics. As described above, we expect that marine mammals would be likely to move away from a sound source that represents an aversive stimulus, especially at levels that would be expected to result in PTS, given sufficient notice through use of soft start.
The pile driving activities are also not expected to have significant adverse effects on these affected marine mammals' habitats. The activities may cause some fish to leave the area of disturbance, thus temporarily impacting marine mammals' foraging opportunities in a limited portion of the foraging range; but, because of the short duration of the activities and the relatively small area of the habitat that may be affected (with no known particular importance to marine mammals), the impacts to marine mammal habitat are not expected to cause significant or long-term negative consequences.
In combination, we believe that these factors, as well as the available body of evidence from other similar activities, demonstrate that the specified activities will have only minor, short-term effects on individuals that will not have any bearing on those individuals' fitness. Thus the specified activities are not expected to impact rates of recruitment or survival and will therefore have a negligible impact on those species or stocks.
In summary and as described above, the following factors primarily support our determination that the impacts resulting from this activity are not expected to adversely affect any of the species or stocks through effects on annual rates of recruitment or survival:
• No serious injury or mortality is anticipated or authorized;
• The anticipated incidents of Level B harassment consist of, at worst, temporary modifications in behavior;
• The additional impact of PTS of a slight degree to few individual harbor seals at two locations in year 1 and one location in year 2 is not anticipated to increase individual impacts to a point where any population-level impacts might be expected;
• The absence of any significant habitat within the industrialized project areas, including known areas or features of special significance for foraging or reproduction; and
• The presumed efficacy of the mitigation measures in reducing the effects of the specified activity to the level of least practicable adverse impact.
• The effects on species that serve as prey for marine mammals from the activities are expected to be short-term and, therefore, any associated impacts on marine mammal feeding are not expected to result in significant or long-term consequences for individuals, or to accrue to adverse impacts on their populations from either project;
• The ensonifed areas from both projects are very small relative to the overall habitat ranges of all species and stocks, and will not cause more than minor impacts in any ESA-designated critical habitat, BIAs or any other areas of known biological importance.
Based on the analysis contained herein of the likely effects of the specified activity on marine mammals and their habitat, and taking into consideration the implementation of the monitoring and mitigation measures, NMFS finds that the total marine mammal take from the activity, specific to each of the year 1 and year 2 IHAs, will have a negligible impact on all affected marine mammal species or stocks.

Small Numbers
As noted previously, only take of small numbers of marine mammals may be authorized under sections 101(a)(5)(A) and (D) of the MMPA for specified activities other than military readiness activities. The MMPA does not define small numbers and so, in practice, where estimated numbers are available, NMFS compares the number of individuals taken to the most appropriate estimation of abundance of the relevant species or stock in our determination of whether an authorization is limited to small numbers of marine mammals. When the predicted number of individuals to be taken is less than one-third of the species or stock abundance, the take is considered to be of small numbers. Additionally, other qualitative factors may be considered in the analysis, such as the temporal or spatial scale of the activities.
We propose to authorize incidental take of 14 marine mammal stocks each project year (table 9). The total amount of taking authorized is less than 1 percent for eight of these stocks in year 1 and year 2, equal or less than 10 percent for an additional four stocks in year 1 and three stocks in year 2, and equal or less than 27 percent for another stock in year 1 and three stocks in year 2, all of which we consider relatively small percentages and thus small numbers of marine mammals relative to the estimated overall population abundances for those stocks.
Based on the analysis contained herein of the activity (including the mitigation and monitoring measures) and the anticipated take of marine mammals, NMFS finds, for each of the year 1 and year 2 IHAs, that small numbers of marine mammals would be taken relative to the population size of the affected species or stocks.

Unmitigable Adverse Impact Analysis and Determination
There are no relevant subsistence uses of the affected marine mammal stocks or species implicated by this action. Therefore, NMFS has determined that the total taking of affected species or stocks would not have an unmitigable adverse impact on the availability of such species or stocks for taking for subsistence purposes.

Endangered Species Act
Section 7(a)(2) of the ESA of 1973 (16 U.S.C. 1531 et seq. ) requires that each Federal agency insure that any action it authorizes, funds, or carries out is not likely to jeopardize the continued existence of any endangered or threatened species or result in the destruction or adverse modification of designated critical habitat. To ensure ESA compliance for the issuance of IHAs, NMFS consults internally whenever we propose to authorize take for endangered or threatened species, in this case with the West Coast Regional Office.
NMFS is authorizing take of SRKW, as well as two distinct population segments (DPSs) of humpback whale (Central American/Southern Mexico-California-Oregon-Washington and Mainland Mexico-California-Oregon- Washington), which are listed under the ESA.
The NMFS OPR requested initiation of section 7 consultation with the NMFS West Coast Region (WCR) for the issuance of these IHAs. On April 29, 2024, WCR concluded that NMFS' current action remains covered by the programmatic Biological Opinion (WCRO-2016-00018) completed for the issuance of regulations preceding these IHAs (83 FR 9366, March 5, 2018), and that reinitiation of the consultation is not required. WCR specified that the new IHAs are consistent with the original effects analysis included in the original programmatic opinion, and OPR's action would not change the conclusions nor the effects of the proposed action as written in the Biological Opinion.

National Environmental Policy Act
To comply with the National Environmental Policy Act of 1969 (NEPA; 42 U.S.C. 4321 et seq. ) and NOAA Administrative Order (NAO) 216-6A, NMFS must evaluate our action ( i.e., the issuance of two consecutive IHAs) with respect to potential impacts on the human environment.
This action is consistent with categories of activities identified in Categorical Exclusion B4 (IHAs with no anticipated serious injury or mortality) of the Companion Manual for NAO 216-6A, which do not individually or cumulatively have the potential for significant impacts on the quality of the human environment and for which we have not identified any extraordinary circumstances that would preclude this categorical exclusion. Accordingly, NMFS has determined that the issuance of the IHAs qualifies to be categorically excluded from further NEPA review.

Authorization
NMFS has issued two consecutive IHAs to the Navy for the potential harassment of small numbers of 10 marine mammal species incidental to the NAVFAC NW MPR Project in Puget Sound, Washington, that includes the previously explained mitigation, monitoring, and reporting requirements.
Dated: May 28, 2024.
Kimberly Damon-Randall,

Director, Office of Protected Resources, National Marine Fisheries Service.
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
Hydrographic Services Review Panel

AGENCY:
National Ocean Service, National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.

ACTION:
Notice of solicitation of nominations for NOAA's Hydrographic Services Review Panel Federal Advisory Committee.

SUMMARY:
NOAA is seeking nominations for members to serve on the Hydrographic Services Review Panel (HSRP) Federal Advisory Committee. Nominations are due by February 21, 2025.

DATES:
Nominations for members to serve on the HSRP Federal Advisory Committee must be submitted by February 21, 2025, and will be kept on file and used for future HSRP vacancies. NOAA anticipates there will be five vacancies starting on January 1, 2026, each with a four-year term. Current members who may be eligible for a second term in 2026 must reapply. Pursuant to the Hydrographic Services Improvement Act, as amended (HSIA; 33 U.S.C. 892 et seq. ), NOAA maintains an active pool of HSRP candidates and solicits nominations for HSRP candidates once each year.

ADDRESSES:
Nominations will be accepted by email and should be sent to: Hydroservices.panel@noaa.gov . You will receive a confirmation response.

FOR FURTHER INFORMATION CONTACT:
NOAA HSRP Program Manager, Ashley Chappell, email Hydroservices.panel@noaa.gov or phone: 240-429-0293.

SUPPLEMENTARY INFORMATION:
Pursuant to the HSIA, NOAA shall solicit nominations for HSRP membership once each year (33 U.S.C. 892c). The HSRP advises the NOAA Administrator “on matters related to the responsibilities and authorities set forth in [the HSIA] and such other appropriate matters as the Administrator refers to the [HSRP] for review and advice.” (33 U.S.C. 892c(b)(1).) The NOAA Administrator's responsibilities and authorities include promoting safe, efficient, and environmentally sound marine transportation under the Coast and Geodetic Survey Act (CGSA; 33 U.S.C. 883 et seq. ). To promote safe, efficient, and environmentally sound marine transportation under the CGSA, the HSIA states that the NOAA Administrator shall,
1. acquire and disseminate hydrographic data and provide hydrographic services;
2. promulgate standards for hydrographic data and services;
3. ensure comprehensive geographic coverage of hydrographic services;
4. maintain a national database of hydrographic data, in cooperation with other appropriate Federal agencies;
5. provide hydrographic services in uniform, easily accessible formats; and
6. participate in the development of, and implement for the United States in cooperation with other appropriate Federal agencies, international standards for hydrographic data and services.
The HSRP has fifteen voting members appointed by the NOAA Administrator in accordance with the HSIA, 33 U.S.C. 892c. Voting members are individuals who, by reason of knowledge, experience, or training, are especially qualified in one or more disciplines relating to hydrographic data and services, marine transportation, port administration, vessel pilotage, coastal and fishery management, and other disciplines as determined appropriate by the NOAA Administrator. Two NOAA employees, the Directors of the National Geodetic Survey and the Center for Operational Oceanographic Products and Services, and the Co-Directors of the Center for Coastal and Ocean Mapping/Joint Hydrographic Center serve as non-voting members. The Director of the NOAA Office of Coast Survey serves as the Designated Federal Officer (DFO) along with two Alternate DFOs. Full-time officers or employees of the United States may not be appointed as voting members. Any voting member of the HSRP who is an applicant for or beneficiary of (as determined by the Administrator) any assistance under the HSIA shall disclose to the HSRP that relationship, and may not vote on any other matter pertaining to that assistance.
Voting members of the HSRP serve a four-year term, except that vacancy appointments are for the remainder of the unexpired term of the vacancy. Members serve at the Administrator's discretion and are subject to government ethics standards. Public meetings occur at least twice a year. Voting members receive compensation at a rate established by the Administrator, not to exceed the maximum daily rate payable under 5 U.S.C. 5376 when engaged in performing duties for the HSRP during the public meeting. Members are reimbursed for actual and reasonable travel expenses incurred in performing such duties according to Federal Travel Regulation.
Upon selection and agreement to serve on the HSRP, members become Special Government Employees (SGEs) of the United States Government. An SGE, as defined in 18 U.S.C. 202(a), is an officer or employee of an agency who is retained, designated, appointed, or employed to perform temporary duties, with or without compensation, not to exceed 130 days during any period of 365 consecutive days, either on a full time or intermittent basis. After the selection process is complete, applicants selected to serve on the HSRP must complete the following actions before they can be appointed as an HSRP member:
(a) Security Clearance (online Background Security Check process and fingerprinting conducted through NOAA's Office of Security and Office of Human Capital Services); and
(b) Confidential Financial Disclosure Report—SGEs are required to file a Confidential Financial Disclosure Report to avoid involvement in a real or apparent conflict of interest. You may find information on the Confidential Financial Disclosure Report: https://www.oge.gov/Web/oge.nsf/Resources/OGE+Form+450 .
In accordance with the Federal Advisory Committee Act (FACA), as amended (5 U.S.C. app.), and the pertinent FACA Implementing Regulations (41 CFR 102-3.30(c)), NOAA seeks a balanced HSRP membership. Subject matter expertise, with subjects as specified in the HSIA, is the primary criterion considered in the evaluation process. Professional sector representation (academia, industry, research, scientific institution, State and local government, Tribal interests, consultant, non-governmental organization, etc.), geographic expertise, experience working productively with committees and working groups, and leadership with navigation, observations, and positioning are other criteria that will be considered. The diverse membership of the HSRP ensures expertise reflecting the full breadth of the HSRP's responsibilities.
NOAA requests nominations from individuals meeting the criteria above. Nominees are required to submit four items; the nomination package should include all components, be submitted in Microsoft Word and/or PDF, and be no longer than eight pages. The four required items are,
1. A cover letter that responds to the Five Short Response Questions noted below and serves as a statement of interest to serve on the HSRP. Please highlight the nominee's specific area(s) of expertise related to the disciplines and fields described in 33 U.S.C. 892c(c).
2. A short biography of 300-400 words.
3. A resume of 3 pages maximum.
4. The nominee's full work and home contact information including: full name, work title, institutional affiliation, work and home mailing addresses, email address(es), phone number(s), and fax number. Please note preferred email, phone number and mailing address.

Five Short Response Questions for the Cover Letter
1. List your area(s) of expertise from the following list: Hydrographic data and services ( e.g., tides, currents, geodetic, and geospatial measurements), marine transportation, port administration, vessel pilotage, coastal and fishery management, and other disciplines in the oceanographic or marine science areas.
2. List the geographic region(s) of the country with which you primarily associate your expertise from the following list: Northeast, Mid-Atlantic, Southeast, Gulf of Mexico, Pacific Northwest, California, Hawaii, Pacific Islands, Alaska, Arctic, Great Lakes, Caribbean, National, and/or International.
3. Describe your leadership or professional experiences that you believe will contribute to the HSRP.
4. Describe your familiarity and experience with NOAA navigation, observations and positioning data, products, and services.
5. Generally describe the breadth and scope of your knowledge of stakeholders, users, or other groups who interact with NOAA and whose views and input you believe you can share with the HSRP.
Additional HSRP information, including past HSRP public meeting summary reports, agendas, presentations, transcripts, webinars, and other information is available online at https://www.nauticalcharts.noaa.gov/hsrp/ .
Authority: 33 U.S.C. 892 et seq.; 33 U.S.C. 883a et seq.
Benjamin K. Evans,

RDML, Director, Office of Coast Survey, National Ocean Service, National Oceanic and Atmospheric Administration.
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Project No. 15353-000]
Hybrid Renewables LLC; Notice of Preliminary Permit Application Accepted for Filing and Soliciting Comments, Motions To Intervene, and Competing Applications
On May 13, 2024, Hybrid Renewables LLC, filed an application for a preliminary permit, pursuant to section 4(f) of the Federal Power Act (FPA), proposing to study the feasibility of a hydropower project to be located at the U.S. Army Corps of Engineers' (Corps) Oologah Lake Dam near the Town of Oologah, in Rogers County, Oklahoma. The sole purpose of a preliminary permit, if issued, is to grant the permit holder priority to file a license application during the permit term. A preliminary permit does not authorize the permit holder to perform any land-disturbing activities or otherwise enter upon lands or waters owned by others without the owners' express permission.
The proposed Oologah Lake Dam Hydroelectric Project would consist of the following: (1) an steel extension to the existing dam's left outlet conduit that would house a control valve and connect to; (2) a 19-foot-diameter, 228-foot-long steel penstock; (3) the penstock would split into two 16.5-foot-diameter, 58-foot-long and 49-foot-long penstocks before entering; (4) an 80-foot-long, 19-foot-wide, powerhouse containing two turbine-generator units with a total capacity of 24.0 megawatts; (5) a 100-foot-long, 63-foot-wide concrete tailrace; and (6) a .37-mile-long, 138 kilovolt transmission line with a new substation at its end. The proposed project would have an estimated annual generation of 64,600 megawatt-hours.
Applicant Contact: Tafweez Elahee Chauhan, Hybrid Renewables LLC, 1530 Key Blvd., Suite 1104, Arlington, VA 22209; phone: (703)-526-9797.
FERC Contact: Michael Spencer; phone: (202) 502-6093, or by email at michael.spencer@ferc.gov .
Deadline for filing comments, motions to intervene, competing applications (without notices of intent), or notices of intent to file competing applications: 60 days from the issuance of this notice. Competing applications and notices of intent must meet the requirements of 18 CFR 4.36.
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 OPP@ferc.gov .
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, notices of intent, and competing applications using the Commission's eFiling system at https://ferconline.ferc.gov/eFiling.aspx . Commenters can submit brief comments up to 6,000 characters, without prior registration, using the eComment system at https://ferconline.ferc.gov/QuickComment.aspx . For assistance, please contact FERC Online Support at FERCOnlineSupport@ferc.gov, (866) 208-3676 (toll free), or (202) 502-8659 (TTY). In lieu of electronic filing, you may submit a paper copy. Submissions sent via the U.S. Postal Service must be addressed to: Debbie-Anne A. Reese, Acting Secretary, Federal Energy Regulatory Commission, 888 First Street NE, Room 1A, Washington, DC 20426. Submissions sent via any other carrier must be addressed to: Debbie-Anne A. Reese, Acting Secretary, Federal Energy Regulatory Commission, 12225 Wilkins Avenue, Rockville, Maryland 20852. The first page of any filing should include docket number P-15353-000.
More information about this project, including a copy of the application, can be viewed or printed on the “eLibrary” link of the Commission's website at https://elibrary.ferc.gov/eLibrary/search . Enter the docket number (P-15353) in the docket number field to access the document. For assistance, contact FERC Online Support.
Dated: May 28, 2024.
Debbie-Anne A. Reese,

Acting Secretary.
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
Combined Notice of Filings #1
Take notice that the Commission received the following electric corporate filings:
Docket Numbers: EC24-81-000.
Applicants: Tri-State Generation and Transmission Association, Inc.
Description: Application for Authorization Under Section 203 of the Federal Power Act of Tri-State Generation and Transmission Association, Inc.
Filed Date: 5/24/24.
Accession Number: 20240524-5228.
Comment Date: 5 p.m. ET 6/14/24.
Take notice that the Commission received the following exempt wholesale generator filings:
Docket Numbers: EG24-190-000.
Applicants: Keydet Solar Center, LLC.
Description: Keydet Solar Center, LLC submits Notice of Self-Certification of Exempt Wholesale Generator Status.
Filed Date: 5/28/24.
Accession Number: 20240528-5150.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: EG24-191-000.
Applicants: EMPOWER TXMX, LLC.
Description: Empower TXMX, LLC submits Notice of Self-Certification of Exempt Wholesale Generator Status.
Filed Date: 5/28/24.
Accession Number: 20240528-5279.
Comment Date: 5 p.m. ET 6/18/24.
Take notice that the Commission received the following electric rate filings:
Docket Numbers: ER10-1257-009.
Applicants: Wabash Valley Power Association, Inc.
Description: Emergency Motion to Intervene Out-of-Time, request that the Commission revoke Walley Power Association, Inc.'s blanket Section 204 authorization, and request for certain clarifications etc. of Citizens Electric Corporation.
Filed Date: 5/10/24.
Accession Number: 20240510-5193.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER10-1257-010.
Applicants: Wabash Valley Power Association, Inc.
Description: Notice of Non-Material Change in Status of Wabash Valley Power Association, Inc.
Filed Date: 5/28/24.
Accession Number: 20240528-5269.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER20-1992-005.
Applicants: Public Service Company of New Mexico.
Description: Compliance filing: Compliance with Commission Order to be effective 1/27/2020.
Filed Date: 5/24/24.
Accession Number: 20240524-5192.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: ER24-10-001.
Applicants: Idaho Power Company.
Description: Compliance filing: Order 2023-A Compliance Filing to be effective 1/1/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5189.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-1559-001.
Applicants: Puget Sound Energy, Inc.
Description: Compliance filing: Refiling of Order 2023-A Compliance—Annexes A and B to be effective 12/31/9998.
Filed Date: 5/24/24.
Accession Number: 20240524-5177.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: ER24-1651-001.
Applicants: Renew Home VPP, LLC.
Description: Tariff Amendment: Amendment to 1 to be effective 3/30/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5121.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2084-001.
Applicants: American Electric Power Service Corporation, PJM Interconnection, L.L.C.
Description: Tariff Amendment: American Electric Power Service Corporation submits tariff filing per 35.17(b): Amendment to CIAC, SA No. 6679 to be effective 5/23/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5137.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: ER24-2099-000.
Applicants: Pacific Gas and Electric Company.
Description: § 205(d) Rate Filing: May 2024 Western Interconnection Biannual Filing to be effective 8/1/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5135.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: ER24-2100-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Amendment to ISA, SA No. 5689; Queue No. AF1-193 (amend) to be effective 7/24/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5155.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: ER24-2101-000.
Applicants: Hardin Solar Energy III LLC.
Description: Baseline eTariff Filing: Shared Facilities Agreement to be effective 5/25/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5178.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: ER24-2102-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Amendment to WMPA SA No. 6374, Queue No. AG1-360 (amend) to be effective 7/29/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5138.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2103-000.
Applicants: Keydet Solar Center, LLC.
Description: Baseline eTariff Filing: Keydet Solar Center, LLC MBR Tariff to be effective 6/1/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5144.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2104-000.
Applicants: NSTAR Electric Company.
Description: § 205(d) Rate Filing: Amended and Restated Settlement Transmission Support Agreement to be effective 7/28/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5172.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2105-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Original NSA Service Agreement No. 7248, Queue No. AC2-015 to be effective 7/28/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5233.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2106-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Original GIA, Service Agreement No. 7247; AF1-228 to be effective 4/26/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5245.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2107-000.
Applicants: AEP Texas Inc.
Description: § 205(d) Rate Filing: AEPTX—Texas-New Mexico Power Company Facilities Development Agreement to be effective 5/15/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5257.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2108-000.
Applicants: Southwestern Public Service Company.
Description: § 205(d) Rate Filing: 2024-05-28 GSEC-RBEC-High Lonesome-IA-752-0.0.0 to be effective 7/27/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5258.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2109-000.
Applicants: Southwestern Public Service Company.
Description: § 205(d) Rate Filing: 2024-05-28 WFEC-CVEC-Hope-IA-755-0.0.0 to be effective 7/27/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5261.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2110-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Original GIA, Service Agreement No. 7242; AF1-229 to be effective 4/26/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5268.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2111-000.
Applicants: AEP Texas Inc.
Description: § 205(d) Rate Filing: AEPTX—Black Mountain Energy Storage II Interconnection Agreement to be effective 5/8/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5273.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2112-000.
Applicants: Public Service Company of New Mexico.
Description: § 205(d) Rate Filing: Phase Shifter Transformer—Rate Schedule No. 196 to be effective 5/10/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5280.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2113-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Original CSA, Service Agreement No. 7243; AF1-229 to be effective 4/26/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5283.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2114-000.
Applicants: Northern States Power Company, a Minnesota corporation.
Description: § 205(d) Rate Filing: 2024-05-28 CAPX2020 Brookings2 Joint Dev Agmt 749-0.1.0-Amnd to be effective 5/3/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5285.
Comment Date: 5 p.m. ET 6/18/24.
Docket Numbers: ER24-2115-000.
Applicants: PJM Interconnection, L.L.C.
Description: § 205(d) Rate Filing: Original CSA, Service Agreement No. 7244; AF1-229 to be effective 4/26/2024.
Filed Date: 5/28/24.
Accession Number: 20240528-5295.
Comment Date: 5 p.m. ET 6/18/24.
Take notice that the Commission received the following public utility holding company filings:
Docket Numbers: PH24-11-000.
Applicants: Dow Inc.
Description: Dow Inc. submits FERC 65-A Exemption Notification.
Filed Date: 5/28/24.
Accession Number: 20240528-5274.
Comment Date: 5 p.m. ET 6/18/24.
The filings are accessible in the Commission's eLibrary system ( https://elibrary.ferc.gov/idmws/search/fercgensearch.asp ) by querying the docket number.
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: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.
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 OPP@ferc.gov.
Dated: May 28, 2024.
Debbie-Anne A. Reese,

Acting Secretary.
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
[Docket No. ER24-2103-000]
Keydet Solar Center, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization
This is a supplemental notice in the above-referenced proceeding of Keydet Solar Center, LLC's application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is June 17, 2024.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov . To facilitate electronic service, persons with internet access who will eFile a document and/or be listed as a contact for an intervenor must create and validate an eRegistration account using the eRegistration link. Select the eFiling link to log on and submit the intervention or protests.
Persons unable to file electronically may mail similar pleadings to the Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC 20426. Hand delivered submissions in docketed proceedings should be delivered to Health and Human Services, 12225 Wilkins Avenue, Rockville, Maryland 20852.
In addition to publishing the full text of this document in the Federal Register , the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the internet through the Commission's Home Page ( http://www.ferc.gov ). From the Commission's Home Page on the internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.
User assistance is available for eLibrary and the Commission's website during normal business hours from FERC Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-8371, TTY (202)502-8659. Email the Public Reference Room at public.referenceroom@ferc.gov .
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 OPP@ferc.gov .
Dated: May 28, 2024.
Debbie-Anne A. Reese,

Acting Secretary.
DEPARTMENT OF ENERGY
Federal Energy Regulatory Commission
Combined Notice of Filings
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:

Filings Instituting Proceedings
Docket Numbers: PR24-60-000.
Applicants: Columbia Gas of Virginia Inc.
Description: Supplement to 03/18/2024 FERC Gas Tariff Filing of Columbia Gas of Virginia Inc.
Filed Date: 5/24/24.
Accession Number: 20240524-5216.
Comment Date: 5 p.m. ET 6/14/24.
Docket Numbers: RP24-776-000.
Applicants: Discovery Gas Transmission LLC.
Description: § 4(d) Rate Filing: Discovery Gas Transmission LLC's 2024 Fuel, Lost and Unaccounted for Filing to be effective 7/1/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5084.
Comment Date: 5 p.m. ET 6/5/24.
Docket Numbers: RP24-777-000.
Applicants: Rockies Express Pipeline LLC.
Description: § 4(d) Rate Filing: REX 2024-05-24 Negotiated Rate Agreement Amendment to be effective 5/25/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5134.
Comment Date: 5 p.m. ET 6/5/24.
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.

Filings in Existing Proceedings
Docket Numbers: RP24-391-001.
Applicants: Sabine Pipe Line LLC.
Description: Compliance filing: Compliance to 2012 to be effective 7/1/2024.
Filed Date: 5/24/24.
Accession Number: 20240524-5173.
Comment Date: 5 p.m. ET 6/5/24.
Docket Numbers: RP24-620-000.
Applicants: Trailblazer Pipeline Company LLC.
Description: Refund Report: TPC 2024 Annual Cash-Out Refund Report to be effective N/A.
Filed Date: 5/23/24.
Accession Number: 20240523-5207.
Comment Date: 5 p.m. ET 6/4/24.
Any person desiring to protest in any the above proceedings must file in accordance with Rule 211 of the Commission's Regulations (18 CFR 385.211) on or before 5:00 p.m. Eastern time on the specified comment date.
The filings are accessible in the Commission's eLibrary system ( https://elibrary.ferc.gov/idmws/search/fercgensearch.asp ) by querying the docket number.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.
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 OPP@ferc.gov.
Dated: May 28, 2024.
Debbie-Anne A. Reese,

Acting Secretary.
FEDERAL COMMUNICATIONS COMMISSION
[OMB 3060-XXXX; FR ID 223515]
Information Collection Being Submitted for Review and Approval to Office of Management and Budget

AGENCY:
Federal Communications Commission.

ACTION:
Notice and request for comments.

SUMMARY:
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.

DATES:
Written comments and recommendations for the proposed information collection should be submitted on or before July 3, 2024.

ADDRESSES:
Comments should be sent to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function. Your comment must be submitted into www.reginfo.gov per the above instructions for it to be considered. In addition to submitting in www.reginfo.gov also send a copy of your comment on the proposed information collection to Nicole Ongele, FCC, via email to PRA@fcc.gov and to Nicole.Ongele@fcc.gov. Include in the comments the OMB control number as shown in the SUPPLEMENTARY INFORMATION below.

FOR FURTHER INFORMATION CONTACT:
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 http://www.reginfo.gov/public/do/PRAMain, (2) look for the section of the web page called “Currently Under Review,” (3) click on the downward-pointing arrow in the “Select Agency” box below the “Currently Under Review” heading, (4) select “Federal Communications Commission” from the list of agencies presented in the “Select Agency” box, (5) click the “Submit” button to the right of the “Select Agency” box, (6) when the list of FCC ICRs currently under review appears, look for the Title of this ICR and then click on the ICR Reference Number. A copy of the FCC submission to OMB will be displayed.

SUPPLEMENTARY INFORMATION:
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.”
OMB Control Number: 3060-XXXX.
Title: Participation Information Collection for the IoT Labeling Program.
Form Number: N/A.
Type of Review: New information collection.
Respondents: Business or other for-profit; Not-for-profit institutions.
Number of Respondents and Responses: 312 respondents; 3,130 responses.
Estimated Time per Response: 14 hours.
Frequency of Response: One-time; On occasion; Recordkeeping and Annual reporting requirements.
Obligation to Respond: Voluntary. Statutory authority for this collection is contained in sections 1, 2, 4(i), 4(n), 302, 303(r), 312, 333, and 503, of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 154(n), 302a, 303(r), 312, 333, 503; the IoT Cybersecurity Improvement Act of 2020, 15 U.S.C. 278g-3a to 278g-3e.
Total Annual Burden: 42,700 hours.
Total Annual Cost: No Cost.
Needs and Uses: This collection will be submitted as a new collection after this 60-day comment period to the Office of Management and Budget (OMB) to obtain a full three-year clearance. The collection will advance the public interest and safety because it is the basis for the Commission's IoT Labeling Program, which will provide consumers with an easy-to-understand and quickly recognizable FCC IoT Label that includes the U.S. government certification mark (referred to as the Cyber Trust Mark) that provides assurances regarding the baseline cybersecurity of an IoT product, together with a QR code that directs consumers to a registry with specific information about the product. This collection will help consumers make better purchasing decisions, raise consumer confidence with regard to the cybersecurity of the IoT products they buy to use in their homes and their lives, and encourage manufacturers of IoT products to develop products with security-by-design principles in mind. In addition, consumers who purchase an IoT product that bears the FCC IoT Label can be assured that their product meets the minimum cybersecurity standards of the IoT Labeling Program, which in turn will strengthen the chain of connected IoT products in their own homes and as part of a larger national IoT ecosystem. In addition, the Order estimates that the program will save consumers at least $60 million annually from reduced time spent researching cybersecurity features of potential purchases.
Federal Communications Commission.
Katura Jackson,

Federal Register Liaison Officer.
FEDERAL ELECTION COMMISSION
Sunshine Act Meetings

TIME AND DATE:
Thursday, May 16, 2024, 10:00 a.m.

PLACE:
Hybrid Meeting: 1050 First Street NE Washington, DC (12th Floor) and Virtual.

STATUS:
The June 6, 2024 Open Meeting has been canceled.

CONTACT PERSON FOR MORE INFORMATION:
Judith Ingram, Press Officer; Telephone: (202) 694-1220.
Individuals who plan to attend in person and who require special assistance, such as sign language interpretation or other reasonable accommodations, should contact Laura E. Sinram, Secretary and Clerk, at (202) 694-1040 or secretary@fec.gov, at least 72 hours prior to the meeting date.
(Authority: Government in the Sunshine Act, 5 U.S.C. 552b)
Laura E. Sinram,

Secretary and Clerk of the Commission.
GENERAL SERVICES ADMINISTRATION
[OMB Control No. 3090-0291; Docket No. 2024-0001; Sequence No. 3]
Submission for OMB Review; Federal Funding Accountability and Transparency Act Sub-Award Reporting System (FSRS) Registration Requirements for Prime Grant Awardees

AGENCY:
Office of the Integrated Award Environment, General Services Administration (GSA).

ACTION:
Notice of request for public comments regarding an extension to an existing OMB clearance.

SUMMARY:
Under the provisions of the Paperwork Reduction Act of 1995, the Regulatory Secretariat Division will be submitting to the Office of Management and Budget (OMB) a request to review and approve a renewal of the currently approved information collection requirement regarding FSRS Registration Requirements for Prime Grant Awardees.

DATES:
Submit comments on or before July 3, 2024.

ADDRESSES:
Written comments and recommendations for this information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under Review—Open for Public Comments” or by using the search function.

FOR FURTHER INFORMATION CONTACT:
Ms. Salomeh Ghorbani, Director, IAE Outreach and Stakeholder Engagement Division, at 703-605-3467 or IAE_Admin@gsa.gov.

SUPPLEMENTARY INFORMATION:

A. Purpose
The Federal Funding Accountability and Transparency Act (Pub. L. 109-282, as amended by section 6202(a) of Pub. L. 110-252), known as FFATA or the Transparency Act, requires information disclosure of entities receiving Federal financial assistance through Federal awards such as Federal contracts, sub-contracts, grants and sub-grants, FFATA 2(a), (2), (i), (ii). The system that collects this information is called the FFATA Sub-award Reporting System (FSRS, www.fsrs.gov ). This information collection requires information necessary for prime awardee registration in FSRS to create a user log-in and enable sub-award reporting for their entity. To register in FSRS for a user log-in, an entity is required to provide their Unique Entity Identifier (UEI). FSRS then pulls core data about the entity from their System for Award Management (SAM) registration to include the legal business name, physical address, mailing address and Commercial and Government Entity (CAGE) code. The entity completes the FSRS registration by providing contact information within the entity for approval.
If a prime awardee has already registered in FSRS to report contracts-related Transparency Act financial data, a new log-in will not be required. In addition, if a prime awardee had a user account in the Electronic Subcontract Reporting System (eSRS), a new log-in will not be required.

B. Annual Reporting Burden
Respondents: 2,488.
Responses per Respondent: 1.
Total annual responses: 2,488.
Hours per Response: .5.
Total Burden Hours: 1,244.

C. Public Comments
A 60-day notice published in the Federal Register at 89 FR 14842 on February 29, 2024. One paper with multiple comments was received.
Comment: GSA received a comment on whether the GSA's estimate of the public burden of this collection of information is accurate.
Response: This information collection is specific to the burden of reporting entities registering to report in FSRS, not the actual subaward reporting. The burden of this registration activity is reasonable for the activity of registering in FSRS.
Comment: GSA received a comment on ways to enhance the quality, utility, and clarity of the information to be collected to aid pass-through entities (PTEs) in submitting reliable, high-quality data in FSRS. The comment provided suggestions on (1) improving FSRS FAQs by including screenshot and step-by-step instructions for questions with complex answers, (2) explain how to resolve “Another contractor is already designated as the prime contractor for this contract.” error and (3) provide dedicated technical support solely for FSRS and train support staff thoroughly on the FSRS system.
Response: FSRS and the Federal Service Desk have significant help materials and guides to assist users with reporting data into FSRS.gov. The Federal Service Desk has agents that can assist entities where they are unable to answer their question within the help content. GSA appreciates feedback on usability and user experience and considers it when making updates to the respective service or page so as to improve the site user experience.
Comment: GSA received a comment asking what are ways to minimize the burden of the collection of information.
Response: This information collection is specific to the burden of reporting entities registering to report in FSRS, not the actual subaward reporting. 2 CFR part 170 provides the regulatory guidance associated with reporting subawards that are input into FSRS.
Obtaining Copies of Proposals: Requesters may obtain a copy of the information collection documents from the General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW, Washington, DC 20405, telephone 202-501-4755. Please cite OMB Control No. 3090-0291, FSRS Registration Requirements for Prime Grant Awardees, in all correspondence.
Lois Mandell,

Director, Regulatory Secretariat Division, General Services Administration.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Agency for Healthcare Research and Quality
CDS Connect—Designing the Future of a National Hub for Clinical Decision Support: Request for Information

AGENCY:
Agency for Healthcare Research and Quality, Department of Health and Human Services.

ACTION:
Notice of Request for Information regarding a sustainment model for CDS Connect.

SUMMARY:
Clinical decision support (CDS) enables providers and others to implement up-to-date research findings quickly into their practice. In 2016, the Agency for Healthcare Research and Quality (AHRQ) supported the development of (CDS) by establishing CDS Connect, a platform to assist the healthcare community in creating and disseminating CDS artifacts. In 2023, AHRQ conducted a CDS Connect Challenge Competition to identify business models and platform enhancements that will allow CDS Connect to evolve its role as a national CDS hub. Based on the results of this Challenge Competition, AHRQ has issued the following Request for Information (RFI) to solicit ideas and identify possible collaborators for creating a new sustainment model (such as a Public Private Partnership [PPP] between AHRQ and a third-party organization) that ensures CDS Connect's future operations.

DATES:
Comments on this notice must be received on or before July 31, 2024.

ADDRESSES:
Interested parties may submit comments electronically to clinicaldecisionsupport@ahrq.hhs.gov with the subject “CDS Connect RFI.”

FOR FURTHER INFORMATION CONTACT:
Questions may be addressed to Mario Teran, MD, MSc, Division of Digital Healthcare Research in the Center for Evidence and Practice Improvement at AHRQ. Email: mario.teran@ahrq.hhs.gov. Telephone: 301-427-1498.

SUPPLEMENTARY INFORMATION:
The Agency for Healthcare Research and Quality (AHRQ) seeks public comment about strategies and approaches to advancing shareable, interoperable, and reusable clinical decision support (CDS) resources. AHRQ seeks comment on models and possible partnerships to strengthen and sustain CDS Connect as a national hub for clinical decision support. CDS Connect enables the creation of standards-based CDS resources (sometimes called CDS “artifacts”) and the integration of evidence-based care data into clinical practice through electronic health systems and applications.
Established in 2016, CDS Connect has steadily grown in functionality and use. It enjoys an active following of diverse stakeholders and users, including various electronic health record (EHR) developers, CDS developers, other health information technology (health IT), healthcare advocacy organizations, federal and local government representatives, clinicians, patients, and caregivers. CDS Connect offers a repository of CDS artifacts, a standards-based CDS Authoring Tool, and multiple open-source tools and resources (available on the CDS Connect Technical Resources web page).
In October 2023, AHRQ conducted a challenge competition to solicit innovative approaches and input on the future design and sustainability of CDS Connect. AHRQ obtained valuable insight and information from the competition, including identifying collaborative models that have the potential to sustain and further develop CDS Connect as a public resource. This Request for Information (RFI) incorporates vital takeaways from the challenge competition to help inform the public's responses to questions posed in the RFI. However, possible future models for CDS Connect are not limited to the ideas generated during the Challenge Competition; AHRQ encourages suggesting alternate and innovative approaches. AHRQ also welcomes information on any sustainment models that respondents feel are appropriate for AHRQ to consider, including collaborative relationships with industry, e.g., public-private partnerships.
The challenge competition identified several possible CDS Connect enhancements:
• Enhancing the user experience, including mechanisms for users to obtain support and provide feedback.
• Additional educational or training resources should be provided to support a variety of users.
• Leveraging, facilitating, and promoting CDS and health information technology standards.
• Artificial intelligence (AI) is introduced into CDS Connect, ranging from AI-based mechanisms to develop CDS artifacts to using large language models (LLMs) and AI-based artifact maintenance.
• Creating processes, standards, and tools to assist and accelerate CDS development through successive levels of computability and readiness for real-world implementation.
• Developing and making available a more significant number of executable CDS artifacts.
• Expanding the number of CDS artifacts at all levels in the repository.
• Integrating directly within EHR systems.
• Creating a “sandbox” allows potential users to sample, test, and deploy CDS artifacts in real-time scenarios before selecting/purchasing them.
The Challenge Competition highlighted several possible business models to enable long-term sustainability.
• Removing the restriction that CDS artifacts in the Repository be made available free of charge, allowing for revenue opportunities through fee-based services.
• Adopting standardized and commercial-friendly licensing and compensation models ( e.g., licensing to EHR and other CDS vendors to integrate artifacts into their systems; subscription-based fees for access to CDS artifacts or applications).
• Developing enhanced functionality and subscription models for different types of users ( e.g., individuals, EHR vendors, CDS vendors, nonprofit organizations, for-profit organizations).
• Requiring a one-time or ad hoc payment to use CDS Connect's services or products ( e.g., to access artifacts in the Repository or use the Authoring Tool).
• Offering different tiers of service capabilities at different costs, such as a “Freemium” model allowing access to publicly funded CDS Connect artifacts and a basic form of the Authoring Tool without charge, but imposing a cost for additional services ( e.g., possible built-out features) and support.
• Establishing a payment incentive for independent individuals, developers, EHR vendors, CDS vendors, or others; in turn, content can be offered to end users at a cost.
AHRQ is exploring collaborative initiatives with private industry, academia, and nonprofit entities to identify potential sustainment paths. AHRQ is interested in exploring a PPP to continue CDS Connect's operation and expansion.

List of Questions/Components
AHRQ invites stakeholders and other interested parties to submit ideas on the future of shareable, interoperable, and reusable CDS resources, particularly on sustainment models for CDS Connect. Submissions should address the qualifications of potential partnering organizations, the proposed governance structure of a PPP, the content of improvements to the CDS Connect platform, the business model (including costs), and community engagement.
Responses can also address the following questions:

Questions Related to CDS Connect

General
1. What areas of expertise are essential for potential partnering organizations to possess in a PPP with AHRQ to grow and sustain CDS Connect?
2. If submitting as a potential partnering organization, what are the organization's interests and expertise in CDS, health information technology, and/or healthcare modernization?

Value Proposition
3. What is the value of a platform like CDS Connect?
4. What can be done to improve the value of CDS Connect to clinicians, patients, CDS developers, and other stakeholders?

Governance
5. What governance structure and framework does the submitting organization envision for the PPP (or other sustainment model)?
6. How would the PPP (or other sustainment model) operate, accounting for the involvement of AHRQ, other federal agencies, or other potential external partners?

Content
7. What suggestions (if any) would be proposed to modify or enhance the CDS Connect Repository, CDS artifacts within the CDS Connect Repository, and/or the CDS Connect Authoring Tool?
8. If submitting as an organization, what other suggestions does the submitting organization have to modify or enhance CDS Connect's content and/or capabilities?
9. What existing infrastructure can support these suggested modifications or enhancements, or what additional infrastructure would be needed? What are the barriers or general feasibility issues to implementation?

Business Model
10. What business model(s) can ensure that CDS Connect remains sustainable ( e.g., a PPP or other sustainment model)?
11. If submitting as an organization, what are the submitting organization's suggested mechanisms of models for generating revenue that will enable a sustainable PPP (or other sustainment model)?
12. What are the anticipated project start-up costs for the proposed business model?

General Questions About CDS
1. How can CDS become more shareable, interoperable, and reusable, in particular, please identify:
a. Enablers;
b. Barriers;
c. Potential role(s) for AHRQ and other federal agencies;
d. Sustainable models for collaborative relationships among government agencies, academic institutions, private industry, non-profit organizations, patient advocacy groups, and other stakeholders.
2. What are sustainable approaches for scaling CDS, including AI-based methods, to under-served settings that may not have the staff and resources to develop CDS on their own or to purchase CDS resources ( e.g., modules, services) from their EHR provider or other health IT providers?

Who Should Respond
AHRQ welcomes responses from any stakeholders interested in the continued sustainment and growth of CDS Connect. AHRQ is interested in perspectives from:
• Private industry
• Participants of similar public-private collaboratives
• Developers and users of CDS, including academic institutions, clinicians, patients, payers, and research organizations
Acronyms
Acronym | Definition
AHRQ | Agency for Healthcare Research and Quality.
AI | Artificial Intelligence.
CDS | Clinical Decision Support.
CMS | Centers for Medicare & Medicaid Services (HHS).
EHR | Electronic Health Record.
FFRDC | Federally Funded Research and Development Center.
HHS | U.S. Department of Health and Human Services.
LLM | Large Language Model.
PCOR | Patient-centered outcomes research.
PPP | Public Private Partnership.
RFI | Request For Information.
Dated: May 23, 2024.
Marquita Cullom,

Associate Director.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[Document Identifiers: CMS-10454 and CMS-10858]
Agency Information Collection Activities: Submission for OMB Review; Comment Request

AGENCY:
Centers for Medicare & Medicaid Services, Health and Human Services (HHS).

ACTION:
Notice.

SUMMARY:
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), Federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including each proposed extension or reinstatement of an existing collection of information, and to allow a second opportunity for public comment on the notice. Interested persons are invited to send comments regarding the burden estimate or any other aspect of this collection of information, including the necessity and utility of the proposed information collection for the proper performance of the agency's functions, the accuracy of the estimated burden, ways to enhance the quality, utility, and clarity of the information to be collected, and the use of automated collection techniques or other forms of information technology to minimize the information collection burden.

DATES:
Comments on the collection(s) of information must be received by the OMB desk officer by July 3, 2024.

ADDRESSES:
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to www.reginfo.gov/public/do/PRAMain . Find this particular information collection by selecting “Currently under 30-day Review—Open for Public Comments” or by using the search function.
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, please access the CMS PRA website by copying and pasting the following web address into your web browser: https://www.cms.gov/Regulations-and-Guidance/Legislation/PaperworkReductionActof1995/PRA-Listing.

FOR FURTHER INFORMATION CONTACT:
William Parham at (410) 786-4669.

SUPPLEMENTARY INFORMATION:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to publish a 30-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension or reinstatement of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, CMS is publishing this notice that summarizes the following proposed collection(s) of information for public comment:
1. Type of Information Collection Request: Extension of a currently approved collection; Title of information Collection: Disclosure of State Rating Requirements; Use: The final rule “Patient Protection and Affordable Care Act; Health Insurance Market Rules; Rate Review” implements sections 2701, 2702, and 2703 of the Public Health Service Act (PHS Act), as added and amended by the Affordable Care Act, and sections 1302(e) and 1312(c) of the Affordable Care Act. The rule directs that States submit to CMS certain information about State rating and risk pooling requirements for their individual, small group, and large group markets, as applicable. Specifically, States will inform CMS of age rating ratios that are narrower than 3:1 for adults; tobacco use rating ratios that are narrower than 1.5:1; a State-established uniform age curve; geographic rating areas; whether premiums in the small and large group market are required to be based on average enrollee amounts (also known as composite premiums); and, in States that do not permit any rating variation based on age or tobacco use, uniform family tier structures and corresponding multipliers. In addition, States that elect to merge their individual and small group market risk pools into a combined pool will notify CMS of such election. This information will allow CMS to determine whether State-specific rules apply or Federal default rules apply. It will also support the accuracy of the federal risk adjustment methodology. Form Number: CMS-10454 (OMB control number 0938-1258); Frequency: Occasionally; Affected Public: State, Local, or Tribal Governments; Number of Respondents: 3; Total Annual Responses: 3; Total Annual Hours: 7.3. (For policy questions regarding this collection contact Russell Tipps at 301-869-3502.)
2. Type of Information Collection Request: New collection (Request for a new OMB control number); Title of Information Collection: Rebate Reduction Requests under Sections 11101 and 11102 of the Inflation Reduction Act; Use: Under the authority in sections 11101 and 11102 of the Inflation Reduction Act of 2022 (Pub. L. 117-169), the Centers for Medicare & Medicaid Services (CMS) is implementing the Medicare Part B Drug Inflation Rebate Program and the Medicare Part D Drug Inflation Rebate Program codified in section 1847A(i) and section 1860D-14B of the Social Security Act (“the Act”), respectively.
In accordance with section 1847A(i) of the Act, for calendar quarters beginning January 1, 2023, a manufacturer of a Part B rebatable drug will owe a rebate, to be deposited in the Federal Supplementary Medical Insurance Trust Fund, if the amount specified in section 1847A(i)(3)(A)(ii)(I) of the Act exceeds the inflation-adjusted payment amount, which is calculated as set forth in section 1847A(i)(3)(C) of the Act. A “Part B rebatable drug” means a single-source drug or biological product (as defined section 1847A(c)(6)(D) of the Act), including a biosimilar biological product (as defined section 1847A(c)(6)(H) of the Act) but excluding a qualifying biosimilar biological product (as defined section 1847A(b)(8)(B)(iii) of the Act), for which payment is made under Medicare Part B, except such term shall not include such a drug or biological product if, as determined by the Secretary, the average total allowed charges for such drug or biological product under Part B for a year per individual that uses such a drug or biological product are less than the applicable threshold; or that is a vaccine described in subparagraph (A) or (B) of section 1861(s)(10) of the Act.
In accordance with section 1860D-14B of the Act, for each 12-month applicable period, starting with the applicable period beginning October 1, 2022, a manufacturer of a Part D rebatable drug will owe a rebate, to be deposited in the Federal Supplementary Medical Insurance Trust Fund, if the annual manufacturer price exceeds the inflation-adjusted payment amount. Section 1860D-14B(g)(1)(A) of the Act defines a “Part D rebatable drug,” in part, as a drug or biological described at section 1860D-14B(g)(1)(C) that is a “covered Part D drug” as that term is defined in section 1860D-2(e) of the Act. The definition of a Part D rebatable drug includes generic drugs that meet certain statutory criteria (effectively sole source generics). The definition of a Part D rebatable drug does not include a drug or biological if, as determined by the Secretary, the “average annual total cost” for such drug or biological under Part D for a year per individual that uses such a drug or biological is less than the applicable threshold.
Sections 1847A(i)(3)(G)(ii) and 1860D-14B(b)(1)(C)(ii) of the Act require that CMS reduce or waive the inflation rebate amount owed (if any) for a Part B rebatable biosimilar biological product and generic Part D rebatable drug or biosimilar when CMS determines there is a severe supply chain disruption during a calendar quarter or applicable period, respectively, such as that caused by a natural disaster or other unique or unexpected event. CMS must also reduce or waive the inflation rebate amount owed (if any) for a generic Part D rebatable drug if CMS determines that without such reduction or waiver, the drug is likely to be in shortage in a subsequent applicable period, as required by section 1860D-14B(b)(1)(C)(iii) of the Act.
CMS does not have information necessary to determine whether manufacturers of Part B and Part D rebatable drugs should have their rebate amount reduced due to either a severe supply chain disruption or a likely shortage as required by sections 1847A(i)(3)(G)(ii), 1860D-14B(b)(1)(C)(ii), and 1860D-14B(b)(1)(C)(iii) of the Act. Some of the information and supporting documentation needed for CMS to make a determination regarding a severe supply chain disruption and the likelihood of a future shortage are held by manufacturers and are not available to CMS. As such, for CMS to determine whether there is a severe supply chain disruption or likelihood of future shortage, in accordance with sections 1847A(i)(3)(G)(ii), 1860D-14B(b)(1)(C)(ii), and 1860D-14B(b)(1)(C)(iii) of the Act, a manufacturer must submit to CMS a request for a rebate reduction along with supporting documentation. Form Number: CMS-10858 (OMB control number: 0938-new); Frequency: Once; Affected Public: Private Sector and Business or other for-profits; Number of Respondents: 10; Total Annual Responses: 10; Total Annual Hours: 310. (For policy questions regarding this collection contact Elisabeth Daniel at 667-290-8793.)
William N. Parham, III,

Director, Division of Information Collections and Regulatory Impacts, Office of Strategic Operations and Regulatory Affairs.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2023-N-5023]
Shanif Abdul Punjani: Final Debarment Order

AGENCY:
Food and Drug Administration, HHS.

ACTION:
Notice.

SUMMARY:
The Food and Drug Administration (FDA) is issuing an order under the Federal Food, Drug, and Cosmetic Act (FD&C Act) debarring Shanif Abdul Punjani for a period of 5 years from importing or offering for import any drug into the United States. FDA bases this order on a finding that Mr. Punjani was convicted of one felony count under Federal law for Conspiracy to Defraud the United States. The factual basis supporting Mr. Punjani's conviction, as described below, is conduct relating to the importation into the United States of a drug or controlled substance. Mr. Punjani was given notice of the proposed debarment and was given an opportunity to request a hearing to show why he should not be debarred. As of March 6, 2024 (30 days after receipt of the notice), Mr. Punjani had not responded. Mr. Punjani's failure to respond and request a hearing constitutes a waiver of his right to a hearing concerning this matter.

DATES:
This order is applicable June 3, 2024.

ADDRESSES:
Any application by Mr. Punjani for termination of debarment under section 306(d)(1) of the FD&C Act (21 U.S.C. 335a(d)(1)) may be submitted at any time as follows:

Electronic Submissions
• Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. An application submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because your application will be made public, you are solely responsible for ensuring that your application does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your application, that information will be posted on https://www.regulations.gov.
• If you want to submit an application with confidential information that you do not wish to be made available to the public, submit the application as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

Written/Paper Submissions
• Mail/Hand Delivery/Courier (for written/paper submissions): Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• For a written/paper application submitted to the Dockets Management Staff, FDA will post your application, as well as any attachments, except for information submitted, marked, and identified, as confidential, if submitted as detailed in “Instructions.”
Instructions: All applications must include the Docket No. FDA-2023-N-5023. Received applications will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through Friday, 240-402-7500.
• Confidential Submissions—To submit an application with confidential information that you do not wish to be made publicly available, submit your application 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 your application. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on https://www.regulations.gov. Submit both copies to the Dockets Management Staff. Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
Docket: For access to the docket, go to https://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday, 240-402-7500. Publicly available submissions may be seen in the docket.

FOR FURTHER INFORMATION CONTACT:
Jaime Espinosa, Division of Compliance and Enforcement, Office of Policy, Compliance, and Enforcement, Office of Regulatory Affairs, Food and Drug Administration, at 240-402-8743, or debarments@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

I. Background
Section 306(b)(1)(D) of the FD&C Act permits debarment of an individual from importing or offering for import any drug into the United States if FDA finds, as required by section 306(b)(3)(C) of the FD&C Act, that the individual has been convicted of a felony for conduct relating to the importation into the United States of any drug or controlled substance.
On August 16, 2023, Mr. Punjani was convicted as defined in section 306(l)(1) of the FD&C Act in the U.S. District Court for the Northern District of Georgia-Atlanta Division, when the court accepted his plea of guilty and entered judgment against him for the offense of Conspiracy to Defraud the United States in violation of 18 U.S.C. 371. The underlying facts supporting the conviction are as follows: As contained in the Information and the Government's Sentencing Statement from Mr. Punjani's case, in or about March 2019, and continuing until February 2021, he imported thousands of Aurogra 100mg Sildenafil tablets, which were male enhancement pills manufactured in India, but not authorized for sale in the United States. Sildenafil is the same active pharmaceutical ingredient (API) as that in the prescription drug Viagra. The FDA approved drugs containing the active ingredient sildenafil are only available by prescription, and may cause serious side effects for those suffering from cardiovascular disease, hypertension, bleeding disorders, and other related health conditions. The drugs Mr. Punjani imported and resold had not been approved by the FDA meaning that they did not have the same assurance of safety or efficacy as FDA approved drugs. Mr. Punjani would use commercial shippers to ship the tablets from India to his home where Mr. Punjani would organize them in order to resell them to wholesale businesses and convenience stores in Georgia. The labeling on the drugs Mr. Punjani resold did not contain adequate directions for use and he dispensed these prescription drugs without the prescription of a practitioner licensed by law to administer the drugs. At one point, Customs and Border Patrol (CBP) sent Mr. Punjani a notice warning him that pills he had offered for import had been seized because they were in violation of the FD&C Act. Mr. Punjani ignored this notice and others CBP and FDA later sent him. Ultimately Mr. Punjani imported thousands of illegal pills over several years.
As a result of this conviction, FDA sent Mr. Punjani, by certified mail, on January 30, 2024, a notice proposing to debar him for a 5-year period from importing or offering for import any drug into the United States. The proposal was based on a finding under section 306(b)(3)(C) of the FD&C Act that Mr. Punjani's felony conviction under Federal law for Conspiracy to Defraud the United States in violation of 18 U.S.C. 371, was for conduct relating to the importation into the United States of any drug or controlled substance because Mr. Punjani illegally imported and introduced unapproved and misbranded prescription drug products into interstate commerce. In proposing a debarment period, FDA weighed the considerations set forth in section 306(c)(3) of the FD&C Act that it considered applicable to Mr. Punjani's offense and concluded that the offense warranted the imposition of a 5-year period of debarment.
The proposal informed Mr. Punjani of the proposed debarment and offered him an opportunity to request a hearing, providing him 30 days from the date of receipt of the letter in which to file the request, and advised him that failure to request a hearing constituted a waiver of the opportunity for a hearing and of any contentions concerning this action. Mr. Punjani received the proposal and notice of opportunity for a hearing on February 5, 2024. Mr. Punjani failed to request a hearing within the timeframe prescribed by regulation and has, therefore, waived his opportunity for a hearing and waived any contentions concerning his debarment (21 CFR part 12).

II. Findings and Order
Therefore, the Assistant Commissioner, Office of Human and Animal Food Operations, under section 306(b)(3)(C) of the FD&C Act, under authority delegated to the Assistant Commissioner, finds that Mr. Shanif Abdul Punjani has been convicted of a felony under Federal law for conduct relating to the importation into the United States of any drug or controlled substance. FDA finds that the offense should be accorded a debarment period of 5 years as provided by section 306(c)(2)(A)(iii) of the FD&C Act.
As a result of the foregoing finding, Mr. Punjani is debarred for a period of 5 years from importing or offering for import any drug into the United States, effective (see DATES ). Pursuant to section 301(cc) of the FD&C Act (21 U.S.C. 331(cc)), the importing or offering for import into the United States of any drug by, with the assistance of, or at the direction of Mr. Punjani is a prohibited act.
Dated: May 29, 2024.
Lauren K. Roth,

Associate Commissioner for Policy.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2024-N-2462]
Pfizer, Inc., et al.; Withdrawal of Approval of 23 New Drug Applications

AGENCY:
Food and Drug Administration, HHS.

ACTION:
Notice.

SUMMARY:
The Food and Drug Administration (FDA or Agency) is withdrawing approval of 23 new drug applications (NDAs) from multiple applicants. The applicants notified the Agency in writing that the drug products were no longer marketed and requested that the approval of the applications be withdrawn.

DATES:
Approval is withdrawn as of July 3, 2024.

FOR FURTHER INFORMATION CONTACT:
Kimberly Lehrfeld, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6226, Silver Spring, MD 20993-0002, 301-796-3137, Kimberly.Lehrfeld@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:
The applicants listed in table 1 have informed FDA that these drug products are no longer marketed and have requested that FDA withdraw approval of the applications under the process in § 314.150(c) (21 CFR 314.150(c)). The applicants have also, by their requests, waived their opportunity for a hearing. Withdrawal of approval of an application or abbreviated application under § 314.150(c) is without prejudice to refiling.
Table 1—NDAs for Which Approval Is Withdrawn
Application No. | Drug | Applicant
NDA 012427 | Didrex (benzfetamine hydrogen chloride (HCl)) Tablets, 25 milligrams (mg) and 50 mg | Pfizer, Inc., 66 Hudson Boulevard East, New York, NY 10001.
NDA 016131 | Clomid (clomiphene citrate) Tablets, 50 mg | Sanofi US Services Inc., C/O Sanofi-Aventis U.S. LLC, 55 Corporate Dr., Bridgewater, NJ 08807.
NDA 016584 | Navane (thiothixene HCl) Capsules, 1 mg, 2 mg, 5 mg, 10 mg, and 20 mg | Do.
NDA 019032 | Tenex (guanfacine HCl) Tablets, 1 mg, 2 mg, and 3 mg | Promius Pharma, LLC, C/O Dr. Reddy's Laboratories Inc., 107 College Rd. East, Princeton, NJ 08540.
NDA 019776 | Concentraid (desmopressin acetate) Nasal Solution, 0.01% | Ferring Pharmaceuticals Inc., 100 Interpace Parkway, Parsippany, NJ 07054.
| NDA 019826 | Theophylline and Dextrose 5% Injections in Plastic Container, 40 mg/100 milliliters (mL), 80 mg/100 mL, 160 mg/100 mL, 200 mg/100 mL, 320 mg/100 mL, and 400 mg/100 mL | B. Braun Medical Inc, 901 Marcon Blvd., Allentown, PA 18109.
NDA 020659 | Norvir (ritonavir) Oral Solution, 80 mg/mL | AbbVie Inc. 1 N. Waugekan Rd., North Chicago, IL 60064.
NDA 020706 | Emadine (emedastine difumarate) Ophthalmic Solution, 0.05% | Novartis Pharmaceuticals Co., 1 Health Plaza, East Hanover, NJ 07936-1080
NDA 020884 | Aggrenox (aspirin and dipyridamole) Extended-Release Capsules, 25 mg/200 mg | Boehringer Ingelheim Pharmaceuticals, Inc., 900 Ridgebury Rd, Ridgefield, CT 06877.
NDA 020928 | Glucagon Injection, 1 mg/vial | Eli Lilly and Company, Lilly Corporate Center, Indianapolis, IN 46285.
NDA 020972 | Sustiva (efavirenz) Capsules, 50 mg, 100 mg, and 200 mg | Bristol-Myers Squibb Company, P.O. Box 4000, Princeton, NJ 08543-4000.
NDA 021400 | Levitra (vardenafil HCI) Tablets, 2.5 mg, 5 mg, 10 mg, and 20 mg | Bayer HealthCare Pharmaceuticals Inc.
NDA 021449 | Hepsera (adefovir dipivoxil) Tablets, 10 mg | Gilead Sciences, Inc., 333 Lakeside Dr., Foster City, CA 94404.
NDA 021623 | Synera (lidocaine and tetracaine) Patch, 70 mg/70 mg | Galen Specialty Pharma US, LLC, 25 Fretz Rd., Souderton, PA 18694.
NDA 022331 | Kapvay (clonidine HCl) Extended-Release Tablets, 0.1 mg and 0.2 mg Jenloga (clonidine HCl) Extended-Release Tablets, 0.1 mg and 0.2 mg | Concordia Pharmaceuticals, Inc C/O Cardinal Health Reg Sciences, 7400 West 110th St., Suite 150, Overland Park, KS 66210.
NDA 022343 | Efavirenz, Lamivudine and Tenofovir Disoproxil Fumarate Tablets, 600 mg/300 mg/300 mg | Aurobindo Pharma Limited C/O Aurobindo Pharma USA, Inc., 279 Princeton-Highstown Rd., East Windsor, NJ 08520.
NDA 022344 | Lamivudine and Tenofovir Disoproxil Fumarate Tablets, 300 mg/300 mg | Do.
NDA 200179 | Staxyn (vardenafil HCl) Orally Disintegrating Tablets, 10 mg | Bayer HealthCare Pharmaceuticals, Inc.
NDA 200671 | Durlaza (aspirin) Extended-Release Capsules, 162.5 mg | HESP LLC, 312 Farmington Ave., Farmington, CT 06032.
NDA 202158 | Radiogenix System (technetium Tc-99m generator) For the Production of Sodium Pertechnetate Tc 99m Injection, Intravenous, Intravesicular, and Ophthalmic Solution, 30-1153 millicurie/Generator | NorthStar Medical Radioisotopes, LLC, 1800 Gateway Blvd., Beloit, WI 53511.
NDA 205004 | Bortezomib Powder for Injection, 3.5 mg/vial | Fresenius Kabi USA, LLC, 3 Corporate Dr., Lake Zurich, IL 60047.
NDA 205787 | Evzio (naloxone HCl) Solution for Injection, 0.4 mg/0.4 mL | Kaleo, Inc., 111 Virginia St., Suite 300, Richmond, VA 23219.
NDA 209862 | Evzio (naloxone HCl) Auto-Injector for Injection, 2 mg/0.4 mL | Do.
Therefore, approval of the applications listed in table 1, and all amendments and supplements thereto, is hereby withdrawn as of July 3, 2024. Approval of each entire application is withdrawn, including any strengths and dosage forms included in the application but inadvertently missing from table 1. Introduction or delivery for introduction into interstate commerce of products listed in table 1 without an approved new drug application violates sections 505(a) and 301(d) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(a) and 331(d)). Drug products that are listed in table 1 that are in inventory on July 3, 2024 may continue to be dispensed until the inventories have been depleted or the drug products have reached their expiration dates or otherwise become violative, whichever occurs first.
Dated: May 29, 2024.
Lauren K. Roth,

Associate Commissioner for Policy.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Statement of Organization, Functions, and Delegations of Authority

AGENCY:
Food and Drug Administration, Department of Health and Human Services.

ACTION:
Notice.

SUMMARY:
The Food and Drug Administration (FDA), Office of the Commissioner, Headquarters organizations, and Centers have modified their organizational structure

DATES:
This organization was approved by the Secretary of Health and Human Services on March 5, 2024, and became effective on May 13, 2024.

FOR FURTHER INFORMATION CONTACT:
Yashika Rahaman, Director, Office of Planning, Evaluation, and Risk Management, Office of the Finance, Budget, Acquisitions and Planning, Food and Drug Administration, 10903 New Hampshire Avenue, WO32, Room 4216, Silver Spring, MD 20993, 301-796-4710.

SUPPLEMENTARY INFORMATION:
Part D, Chapter D-B, (Food and Drug Administration), the Statement of Organization, Functions, and Delegations of Authority for the Department of Health and Human Services (35 FR 3685, February 25, 1970; 60 FR 56606, November 9, 1995, 64 FR 36361, July 6, 1999, 72 FR 50112, August 30, 2007; 74 FR 41713, August 18, 2009, 76 FR 45270, July 28, 2011, and 84 FR 22854, May 20, 2019) is amended to reflect the approved Food and Drug Administration's Human Foods reorganization.
The Food and Drug Administration (FDA) is focused on transforming its organization structure to be more efficient, nimble, and ready for the future with the ever-changing and complex industries we regulate, including the emergence of new food and medical product technologies, the impacts of globalization, climate change and other factors that require FDA to quickly adapt to a consistently evolving world.
FDA carefully reviewed the findings and recommendations of the Reagan-Udall Foundation evaluation, an internal review of FDA's infant formula response and feedback from external and internal stakeholders during events such as listening sessions with FDA employees. The approved changes in the Human Foods Program (HFP) would allow us to fully realize the preventive vision laid out in the FDA Food Safety Modernization Act, elevate the importance of nutrition, strengthen local, state, and international partnerships, position the FDA to regulate innovative food and agricultural products more effectively, and uphold safety of the nation's food supply. The organizational changes impact other products that FDA regulates, such as medical products and cosmetics, by promoting more streamlined, efficient decision-making and strengthening the enterprise-wide structure to enhance collaboration across FDA.
The intent is to have a modernized FDA that optimizes resources to help the agency meet its public health mission; provide employees with clearer priorities and more career opportunities; and comply with recent legislation such as the Food and Drug Omnibus Reform Act of 2022 (FDORA) mandating the establishment of the Office of Critical Foods, and the Modernization of Cosmetics Regulation Act of 2022 (MoCRA) to ensure the safety of cosmetics products.
The reorganization establishes the HFP by realigning the functions of the Center for Food Safety and Applied Nutrition (CFSAN), Office of Food Policy and Response, as well as key functions from the Office of Regulatory Affairs (ORA) including human foods compliance, Human and Animal Food Laboratories, and State Partnerships to this new organization. The reorganization will also:
Realign ORA's compliance functions to Center for Biologics Evaluation and Research's Office of Compliance and Biologics Quality, Center for Devices and Radiological Health's Office of Product Evaluation and Quality, Center for Drug Evaluation and Research's Office of Compliance and its substructure organizations, and the Center for Veterinary Medicine's Office of Surveillance and Compliance.
Realign ORA's laboratory safety functions and resources as well as the Medical Product and Specialty Laboratories safety functions and resources to the Office of the Chief Scientist.
Retitle ORA to the Office of Inspections and Investigations (OII) and establish new inspection and investigation offices to focus on inspections, investigations, and imports as its core mission.
Realign emergency response functions and resources from the Office of Operations' Office of Security and Emergency Management to OII.
Realign select functions to strengthen the Office of the Commissioner (OC) and headquarter organizations, including:
Establish, within OC immediate organization, the Office of Enterprise Transformation to focus on key information technology transformation projects across FDA.
Realign the Office of Planning, Evaluation and Risk Management, within OC immediate organization, to focus on strategic initiatives for FDA.
Retitle the Office of Clinical Policy and Programs and realign functions to form the Office of the Chief Medical Officer.
Retitle the Office of External Affairs' Stakeholder Engagement Staff to Public Engagement Staff.
Realign select functions to strengthen the Office of Operations (OO) and substructure organizations, including:
Realign the Office of Executive Secretariat's Freedom of Information Staff functions and resources from the OC's Immediate Office to OO's Office of Enterprise Management Services (OEMS) to consolidate and streamline information disclosure operations.
Retitle OO's OEMS to the Office of Management and Enterprise Services (OMES). Restructure the organization by establishing two office level organizations: the Office of Disclosure, Information Governance, and Accessibility (ODIGA) and the Office of Management (OM) and substructure organizational components within OMES.
Retitle OO's Office of Security and Emergency Management (OSEM) to the Office of Security and Passport Operations (OSPO). Abolish the substructure organizations, and establish the Division of Personnel Security and Credentialing, the Division of Physical Security and Integration, and the Division of Resource Integration and Passport Operations.
Retitle OO's Office of Finance, Budget, Acquisitions and Planning (OFBAP) to the Office of Finance, Budget, and Acquisitions (OFBA).
Realign travel functions and resources from ORA to the Office of Financial Management within OFBA.
Abolish OO's Office of Facilities Engineering and Mission Support Services' (OFEMS) Employee Safety and Occupational Health Staff (ESOHS) and realign emergency safety and occupational health functions from OFEMS to the Office of the Chief Scientist (OCS).
Realign select functions to strengthen the OCS and substructure organizations, as follows:
Establish an Administrative Staff organizational component and realign functions and resources from within the immediate organization into this new component.
Realign the Informatics and Business Operations Staff from the ORA Office of Regulatory Science to the OCS immediate organization.
Merge the Office of Counter-Terrorism and Emerging Threats, and the Office of Regulatory Science and Innovation, to form the Office of Regulatory and Emerging Science. Establish the Communications and Outreach Staff, the Preparedness Research Staff and the Regulatory Science Staff to this new organization.
Merge the Office of Laboratory Safety and OO's ESOH within OFEMS to the organization titled as the Office of Occupational Safety and Health (OOSH). Within the OOSH, merge the functions of the former OO ESOH with those of the OCS Office of Laboratory Safety, and establish the Occupational Safety Staff and the Occupational Health Services Staff to this new organizational component.
Realign the Office of Cosmetics and Colors organization, including its Divisions and Branches, functions and resources, from CFSAN to OCS.
Establish the Office of Analytical and Regulatory Laboratories and realign resources from the ORA Office of Medical Products Laboratory Operations and substructure organizations, and realign functions from within the CFSAN Office of Regulatory Science to this new organization which will be a direct report to OCS.
Establish the Office of Specialty Laboratories and Enforcement Support and realign functions from the ORA's Office of Medical Products Laboratory Operations within the Office of Regulatory Science to this new organization which will be a direct report to OCS.
Establish the Office of Science and Laboratory Advancement and realign functions from ORA's Office of Safety within the Office of Regulatory Science to this new organization which will be a direct report to OCS.
DCA. ORGANIZATION. To reflect these changes, Part D, Section D-B, is replaced with the following:
The Office of the Commissioner is headed by the Commissioner of Food and Drugs, and includes the following organizational units:
Office of the Commissioner (DCA)
Office of the Chief Counsel (DCAA)
Office of the Executive Secretariat (DCAB)
Office of the Counselor to the Commissioner (DCAC)
Office of Digital Transformation (DCAD)
Strategy and Operations Staff (DCAD1)
Office of Information Management and Technology (DCADA)
Office of Technology and Delivery (DCADAA)
Delivery Management Support Staff (DCADAA1)
Division of Infrastructure Operations (DCADAAA)
Infrastructure Management Services Staff (DCADAAA1)
Implementation Branch (DCADAAA2)
Infrastructure Engineering Branch (DCADAAA3)
Systems Monitoring and Response Branch (DCADAAA4)
Systems Operations Branch (DCADAAA5)
Network and Communications Operations Branch (DCADAAA6)
Division of Application Services (DCADAAB)
Application Management Services Staff (DCADAAB1)
Data Management and Operations Branch (DCADAAB2)
Medical Products Branch (DCADAAB3)
OC, CVM, CTP Branch (DCADAAB4)
ORA, CFSAN Branch (DCADAAB5)
Enterprise Application Branch (DCADAAB6)
Office of Business and Customer Assurance (DCADAB)
Division of Business Partnership and Support (DCADABA)
Internet and Intranet Branch (DCADABA1)
Call Center Branch (DCADABA2)
Regional Support Branch (DCADABA3)
Property Receiving and Distribution Branch (DCADABA4)
Employee Resource and Information Center (DCADABA5)
Division of Management Services (DCADABB)
Office of Enterprise Portfolio Management (DCADAC)
Office of Information Security (DCADB)
Office of Data Analytics and Research (DCADC)
Data Staff (DCADC1)
Health Informatics Staff (DCADC2)
Knowledge Management Staff (DCADC3)
Office of Enterprise Transformation (DCAE)
Office of Planning, Evaluation, and Risk Management (DCAG)
Administrative Staff (DCAG1)
Strategic Planning and Change Management Staff (DCAG2)
Evaluation and Analytics Staff (DCAG3)
Enterprise Risk Management Staff (DCAG4)
Performance Management Staff (DCAG5)
DCBC. ORGANIZATION. The Office of Compliance and Biologics Quality within the Center for Biologics Evaluation and Research is headed by the Director for Compliance and Biologics Quality and includes the following organizational units:
Office of Compliance and Biologics Quality (DCBC)
Division of Case Management (DCBCA)
Blood and Tissue Compliance Branch (DCBCA1)
Advertising and Promotional Labeling Branch (DCBCA2)
Biological Drug and Device Compliance Branch 1 (DCBCA3)
Biological Drug and Device Compliance Branch 2 (DCBCA4)
Division of Inspections and Surveillance (DCBCB)
Program Surveillance Branch (DCBCB1)
Bioresearch Monitoring Branch (DCBCB2)
Field Surveillance Branch (DCBCB3)
Division of Manufacturing and Product Quality (DCBCC)
Product Release Branch (DCBCC1)
Manufacturing Review Branch 1 (DCBCC2)
Manufacturing Review Branch 2 (DCBCC3)
Manufacturing Review Branch 3 (DCBCC4)
Applications Review Branch (DCBCC5)
Division of Biological Standards and Quality Control (DCBCD)
Quality Assurance Branch (DCBCD2)
Laboratory of Microbiology, In-Vivo Testing and Standards Branch (DCBCD3)
Laboratory of Analytical Chemistry (DCBCD4)
Laboratory of Biochemistry, Virology, and Immunochemistry Branch (DCBCD5)
Laboratory of Blood Related Products Branch (DCBCD6)
DCDF. ORGANIZATION. The Office of Compliance within the Center for Drug Evaluation and Research is headed by the Director for Compliance and includes the following organization units:
Office of Compliance (DCDF)
Program Management and Analysis Staff (DCDF1)
Office of Manufacturing Quality (DCDFA)
Manufacturing Guidance and Policy Staff (DCDFA1)
Regulatory Compliance and Analysis Staff (DCDFA2)
Division of Drug Quality I (DCDFAA)
Division of Drug Quality II (DCDFAB)
Division of Drug Quality III (DCDFD)
Office of Unapproved Drugs and Labeling Compliance (DCDFB)
Division of Unapproved New Drugs and Labeling (DCDFBB)
Fraud Drugs Branch (DCDFBB2)
Prescription Drugs Branch (DCDFBB3)
Division of Labeling, Regulation, Regulation and Unapproved Drugs (DCDFBC)
Over-The-Counter Drug Branch (DCDFBC1)
Drug Registration and Listing Branch (DCDFBC2)
Office of Scientific Investigations (DCDFC)
Policy Staff (DCDFC1)
Division of Good Clinical Practice Compliance (DCDFCA)
Good Clinical Practice Enforcement Branch (DCDFCA1)
Good Clinical Practice Assessment Branch (DCDFCA2)
Division of Safety Compliance (DCDFCB)
Division of Enforcement and Post-market Safety (DCDFCC)
Compliance Enforcement Branch (DCDFCC1)
Post-marketing Safety Branch (DCDFCC2)
Division of Clinical Compliance Evaluation (DCDFCD)
Good Clinical Practice Compliance Oversight Branch DCDFCD1)
Good Clinical Practice Assessment Branch (DCDFCD2)
Office of Drug Security Integrity and Response (DCDFD)
Division of Global Drug Distribution and Policy (DCDFDA)
Imports Compliance Branch (DCDFDA3)
Exports Compliance Branch (DCDFDA4)
Division of Supply Chain Integrity (DCDFDB)
Incidents, Recalls, and Shortage Branch (DCDFDB3)
Supply Chain Security Branch (DCDFDB4)
Office of Program and Regulatory Operations (DCDFE)
Program and Regulatory Operations Staff 1 (DCDFE1)
Program and Regulatory Operations Staff 2 (DCDFE2)
Project Management and Coordination Staff 3 (DCDFE4)
Office of Compounding Quality and Compliance (DCDFF)
Division of Compounding I (DCDFFA)
Compounding Branch 1 (DCDFFA1)
Compounding Branch 2 (DCDFFA2)
Compounding Branch 3 (DCDFFA3)
Division of Compounding II (DCDFFB)
Compounding Branch 4 (DCDFFB2)
Compounding Branch 5 (DCDFFB3)
Compounding Branch 6 (DCDFFB4)
Division of Compounding Policy and Outreach (DCDFFC)
Compounding Branch 7 (DCDFFC3)
Compounding Branch 8 (DCDFFC4)
DCGD. ORGANIZATION. The Office of Surveillance and Compliance within the Center for Veterinary Medicine is headed by the Director of Surveillance and Compliance and includes the following organization units:
Office of Surveillance and Compliance (DCGD)
Regulatory Counsel Staff (DCGD1)
Business Management and Operations Staff (DCGD2)
Division of Pharmacovigilance and Surveillance (DCGDA)
Marketed Product Information Branch (DCGDA1)
Food Animal, BioPharm, Small Animal Antiparasitics and Endectocides Branch (DCGDA2)
Small Animal Antibiotics/Anesthectics/NSAIDS/Oncology/Others Branch (DCGDA3)
Division of Animal Food Ingredients (DCGDB)
Program-Business Branch (DCGDB1)
Biotechnology Branch (DCGDB2)
Chemistry Manufacturing and Controls (CMC) Tech Additives Branch (DCGDB3)
Nutrients Claims Branch (DCGDB4)
Division of Drug Compliance (DCGDC)
Drug and Devices—Veterinary Medical Support Branch (DCGDC1)
Drug and Devices-Compliance Support Branch (DCGDC2)
Bioresearch Monitoring (BIMO) and Current Good Manufacturing Practice (CGMP) Branch (DCGDC3)
Division of Food Compliance (DCGDE)
Complaints, Emergencies, and Recall Team (CERT) Branch (DCGDE1)
Field Operations and Investigations Branch (DCGDE2)
Regulatory Policy and Program Branch (DCGDE3)
Science Policy Branch (DCGDE4)
Compliance Action Branch (DCGDE5)
DCJ. ORGANIZATION. The Office of the Chief Medical Officer is headed by the Chief Medical Officer, and includes the following organization units:
Office of the Chief Medical Officer (DCJ)
Office of Clinical Policy (DCJA)
Office of Combination Products (DCJB)
Office of Orphan Products Development (DCJC)
Office of Pediatric Therapeutics (DCJD)
Office of Public Health Preparedness and Response (DCJE)
DCK. ORGANIZATION. The Office of External Affairs is headed by the Associate Commissioner for External Affairs, and includes the following organization units:
Office of External Affairs (DCK)
Operations Staff (DCK1)
Public Engagement Staff (DCK3)
Web and Digital Services Staff (DCK4)
Office of Editorial and Creative Services (DCKA)
Office of Media Affairs (DCKB)
DCN. ORGANIZATION. The Office of Operations is headed by the Deputy Commissioner for Operations and Chief Operations Officer and includes the following organization units:
Office of Operations (DCN)
Office of Management and Enterprise Services (DCNA)
Office of Disclosure, Information Governance, and Accessibility (DCNAF)
Division of Information Governance (DCNAFA)
eDiscovery Branch (DCNAFA1)
Records Management Branch (DCNAFA2)
Paperwork Reduction Act Branch (DCNAFA3)
Privacy Branch (DCNAFA4)
Dockets Management Branch (DCNAFA5)
Division of Information Disclosure (DCNAFB)
Freedom of Information Branch (DCNAFB1)
Disclosure Branch (DCNAFB2)
Division of Headquarters Freedom of Information (DCNAFC)
Division of Conflict Prevention, and Accessibility (DCNAFD)
Conflict Prevention and Resolution Branch (DCNAFD1)
Reasonable Accommodations Branch (DCNAFD2)
Office of Management (DCNAG)
Division of Resources Management (DCNAGA)
Office of the Commissioner Resource Management Branch (DCNAGA1)
Global Policy and Strategy Resource Management Branch (DCNAGA2)
Division of Human Capital (DCNAGB)
Human Capital Management Branch (DCNAGB1)
Human Capital Programs Branch (DCNAGB2)
Division of Acquisitions Management (DCNAGC)
Acquisitions Management Branch (DCNAGC1)
Acquisitions Support Branch (DCNAGC2)
Division of Management Services (DCNAGD)
Communications Branch (DCNAGD1)
Governance Branch (DCNAGD2)
Office of Ethics and Integrity (DCNB)
Office of Equal Employment Opportunity (DCNC)
Compliance Staff (DCNC1)
Office of Finance, Budget, and Acquisitions (DCNE)
Business Management Services Staff (DCNE1)
Office of Budget (DCNEA)
Division of Budget Formulation (DCNEAA)
Division of Budget Execution and Control (DCNEAB)
Division of Reorganizations and Delegations of Authority (DCNEAC)
Office of Acquisitions and Grants Services (DCNEB)
Training and Development Staff (DCNEB1)
Division of Acquisition Operations (DCNEBA)
Service Contracts Branch (DCNEBA1)
Contracts Operations Branch (DCNEBA2)
Scientific Support Branch (DCNEBA3)
Division of Acquisition Programs (DCNEBB)
Field Operations Branch (DCNEBB2)
Facilities Support Branch (DCNEBB3)
ORA Inspection Branch (DCNEBB4)
CTP Inspection Branch (DCNEBB5)
Division of Grants, Agreements and Acquisitions Support (DCNEBC)
Grants and Assistance Agreements Branch (DCNEBC1)
Contracts Administration Branch (DCNEBC4)
Division of Information Technology Acquisitions (DCNEBD)
Information Technology Acquisitions Branch (DCNEBD1)
Systems Technology Acquisitions Branch (DCNEBD2)
IT Strategic Support Branch (DCNEBD3)
Division of Policy, Systems and Program Support (DCNEBE)
Acquisitions Policy and Oversight Branch (DCNEBE2)
Innovation Systems and Data Quality Branch (DCNEBE3)
Office of Financial Management (DCNEC)
Financial Systems Support Staff (DCNEC1)
User Fee Support Staff (DCNEC2)
Operations Support Staff (DCNEC3)
Controls, Compliance and Oversight Staff (DCNEC4)
Division of Accounting (DCNECA)
Division of Payment Services (DCNECC)
Division of Travel Services (DCNECD)
Office of Facilities, Engineering and Mission Support Services (DCNG)
Jefferson Laboratories Complex Staff (DCNG1)
Facilities Program Staff (DCNG2)
Division of Operations Management and Community Relations (DCNGA)
Logistics and Transportation Management Branch (DCNGA1)
Facilities Maintenance and Operations Branch (DCNGA2)
Auxiliary Program Management Staff (DCNGA3)
Division of Planning, Engineering and Space Management (DCNGB)
Portfolio and Space Management Branch (DCNGB1)
Engineering Management Branch (DCNGB2)
Office of Security and Passport Operations (DCNH)
Special Operations Staff (DCNH1)
Division of Resource Integration and Passport Operations (DCNHC)
Resource Integration Branch (DCNHC1)
Passport Operations Branch (DCNHC2)
Division of Personnel Security and Credentialing (DCNHD)
Personnel Vetting Branch (DCNHD1)
Identity and Credentialing Services Branch (DCNHD2)
Division of Physical Security and Integration (DCNHE)
Physical Security Branch (DCNHE1)
Security Integration Branch (DCNHE2)
Office of Human Capital Management (DCNI)
Office of Talent Solutions (DCNJ)
Office of FDA Commissioned Corps (DCNK)
DCP. ORGANIZATION. The Office of the Chief Scientist is headed by the Chief Scientist and includes the following organization units:
Office of the Chief Scientist (DCP)
Advisory Committee Oversight and Management Staff (DCP1)
FDA Technology Transfer Program Staff (DCP2)
Administrative Management Staff (DCP3)
Informatics and Business Operations Staff (DCP4)
Office of Scientific Integrity (DCPD)
Office of Scientific Professional Development (DCPE)
National Center for Toxicological Research (DCPF)
Office of Occupational Safety and Health (DCPG)
Occupational Safety Staff (DCPG1)
Occupational Health Services Staff (DCPG2)
Office of Regulatory and Emerging Science (DCPH)
Regulatory Science Staff (DCPH1)
Preparedness Research Staff (DCPH2)
Communications and Outreach Staff (DCPH3)
Office of Cosmetics and Colors (DCPI)
Division of Color Certification and Technology (DCPIA)
Color Certification Branch (DCPIA1)
Color Technology Branch (DCPIA2)
Division of Cosmetics (DCPIB)
Cosmetics Regulatory Activities Branch (DCPIB1)
Cosmetics Regulatory Science Branch (DCPIB2)
Office of Analytical and Regulatory Laboratories (DCPJ)
Analytical and Regulatory Laboratories Staff (DCPJ1)
Detroit Medical Products Laboratory (DCPJA)
Irvine Medical Products Laboratory (DCPJB)
New York Medical Products Laboratory (DCPJC)
San Juan Medical Products Laboratory (DCPJD)
Tobacco Products Laboratory (DCPJE)
Office of Specialty Laboratories and Enforcement Support (DCPK)
National Forensic Chemistry Center (DCPKA)
Inorganic Branch (DCPKA1)
Organic Branch (DCPKA2)
Satellite Laboratory Branch (DCPKA3)
Winchester Engineering and Analytical Center (DCPKB)
Analytical Branch (DCPKB1)
Engineering Branch (DCPKB2)
Office of Science and Laboratory Advancement (DCPL)
Regulatory Operations Safety Staff (DCPL1)
DCR. ORGANIZATION. The Human Foods Program is headed by the Deputy Commissioner for Human Foods, and includes the following organizational units:
Human Foods Program (DCR)
Office of the Deputy Commissioner for Human Foods (DCRA)
Management Operations Staff (DCRA1)
Office of Executive Programs (DCRB)
Project and Portfolio Management Staff 1 (DCRB1)
Project and Portfolio Management Staff 2 (DCRB2)
Legislative and Program Issue Coordination and Executive Secretariat Staff (DCRB3)
Office of Strategic Programing (DCRC)
Office of Policy and International Engagement (DCRD)
Office of Policy, Regulations, and Information (DCRDA)
Regulation and Policy Development Staff (DCRDA1)
Government Information Policy Staff (DCRDA2)
Office of Policy Initiatives and Projects (DCRDB)
Office of International Engagement (DCRDC)
Public Health and Trade Staff (DCRDC1)
Regulatory Cooperation and Partnerships Staff (DCRDC2)
Office of Resource Management (DCRE)
Division of Budget and Planning (DCREA)
Budget Formulation Branch (DCREA1)
Budget Execution Branch (DCREA2)
Acquisition Liaison Branch (DCREA3)
Financial Operations Branch (DCREA4)
Division of Workforce Management (DCREB)
Recruitment Liaison Branch (DCREB1)
Workforce Policy and Programs Branch (DCREB2)
Staff College (DCREB3)
Division of Information Technology Management (DCREC)
Regulatory and Data Management Branch (DCREC1)
Scientific Computing and IT Support Branch (DCREC2)
Division of Safety and Facilities Management (DCRED)
Division of Travel Management and Operations Support (DCREE)
Division of Management Support and Analysis (DCREF)
Office of Communications, Education, and Engagement (DCRF)
Internal Communications Staff (DCRF1)
Division of External Communications and Consumer Education (DCRFA)
Strategic Communications Branch (DCRFA1)
Consumer Education Branch (DCRFA2)
Division of Public Engagement and Information (DCRFB)
Public Engagement Branch (DCRFB1)
Public Information Branch (DCRFB2)
Division of Web, Visual, and Virtual Communications (DCRFC)
Web Branch (DCRFC1)
Graphics and Virtual Collaboration Branch (DCRFC2)
Office of Surveillance Strategy and Risk Prioritization (DCRG)
Advisory and Operations Staff (DCRG1)
Division of Surveillance and Data Integration (DCRGA)
Surveillance Design Branch (DCRGA1)
Signal Detection and Bioinformatics Branch (DCRGA2)
Surveillance Systems Operations Branch (DCRGA3)
Data Integration Branch (DCRGA4)
Division of Risk Assessment and Prioritization (DCRGB)
Hazard Characterization and Assessment Branch (DCRGB1)
Exposure Assessment Branch (DCRGB2)
Risk Assessment and Ranking Branch (DCRGB3)
Division of Evaluation and Population Health Science (DCRGC)
Behavioral and Social Sciences Branch (DCRGC1)
Epidemiology and Medical Sciences Branch (DCRGC2)
Signal Coordination and Triage Branch (DCRGC3)
Office of Coordinated Outbreak Response, Evaluation and Emergency Preparedness (DCRH)
Division of Outbreak Data Management and Signals (DCRHA)
Division of Response (DCRHB)
Division of Preparedness and Emergency Programs (DCRHC)
Office of Compliance and Enforcement (DCRI)
Administrative Staff (DCRI1)
Compliance Initiatives Staff (DCRI2)
Office of Compliance Operations and Implementation (DCRIA)
Division of Compliance Operations (DCRIAA)
Compliance Operations Planning Branch (DCRIAA1)
Compliance Operations Analysis Branch (DCRIAA2)
Division of Compliance Implementation (DCRIAB)
Compliance Policy and Procedures Branch (DCRIAB1)
Compliance Programs and Assignments Branch (DCRIAB2)
Office of Enforcement (DCRIB)
Division of Critical Foods and Dietary Supplement Enforcement (DCRIBA)
Dietary Supplements Enforcement Branch (DCRIBA1)
Critical Foods and Labeling Enforcement Branch (DCRIBA2)
Division of Conventional Foods Enforcement (DCRIBB)
Conventional Foods Enforcement Branch 1(DCRIBB1)
Conventional Foods Enforcement Branch 2 (DCRIBB2)
Conventional Foods Enforcement Branch 3 (DCRIBB3)
Division of Produce and Imports Enforcement (DCRIBC)
Imports Enforcement Branch (DCRIBC1)
Produce Enforcement Branch (DCRIBC2)
Office of Compliance Intervention and Consultation (DCRIC)
Division of Recalls and Emerging Issues (DCRICA)
Recalls Branch (DCRICA1)
Emerging Issues Branch (DCRICA2)
Division of Compliance Consultation (DCRICB)
Compliance Consultation Branch 1 (DCRICB1)
Compliance Consultation Branch 2 (DCRICB2)
Office of Integrated Food Safety Systems Partnerships (DCRJ)
Partnerships Services Staff (DCRJ1)
Office of Domestic Partnerships (DCRJA)
Division of Domestic Partnership Coordination and Integration (DCRJAA)
Domestic Partnership Coordination and Integration Branch 1 (DCRJAA1)
Domestic Partnership Coordination and Integration Branch 2 (DCRJAA2)
Division of Domestic Partnership Investments (DCRJAB)
Human and Animal Branch (DCRJAB1)
Laboratory and Innovation Branch (DCRJAB2)
Produce Branch (DCRJAB3)
Office of Retailed Food Protection (DCRJB)
Division of Retail Food Protection Policy, Research, and Risk Assessment (DCRJBA)
Retail Food Protection Branch 1 (DCRJBA1)
Retail Food Protection Branch 2 (DCRJBA2)
Division of Retail Food Protection Implementation (DCRJBB)
Retail Food Protection Implementation Branch 1 (DCRJBB1)
Retail Food Protection Implementation Branch 2 (DCRJBB2)
Retail Food Protection Implementation Branch 3 (DCRJBB3)
Office of Food Chemical Safety, Dietary Supplements, and Innovation (DCRK)
Operations Staff (DCRK1)
Innovative Foods Staff (DCRK2)
Office of Pre-Market Additive Safety (DCRKA)
Division of Food Ingredients (DCRKAA)
Toxicology Review Branch (DCRKAA1)
Chemistry Evaluation Branch (DCRKAA2)
Regulatory Management Branch (DCRKAA3)
Division of Food Contact Substances (DCRKAB)
Toxicology Review Branch (DCRKAB1)
Chemistry Evaluation Branch (DCRKAB2)
Regulatory Management Branch (DCRKAB3)
Office of Post-Market Assessment (DCRKB)
Division of Chemical Contaminants (DCRKBA)
Division of Additives and Ingredients (DCRKBB)
Hazard Assessment and Analytics Branch (DCRKBB1)
Regulatory Management Branch (DCRKBB2)
Office of Dietary Supplement Programs (DCRKC)
Division of Policy and Regulatory Operations (DCRKCA)
Regulatory Operations Branch (DCRKCA1)
Policy and Communications Branch (DCRKCA2)
Division of Research and Evaluation (DCRKCB)
Identity and Status Branch (DCRKCB1)
Safety Evaluation Branch (DCRKCB2)
Nutrition Center of Excellence (DCRL)
Office of Nutrition and Food Labeling (DCRLA)
Division of Food Labeling and Standards (DCRLAA)
Labeling Regulations Implementation Branch (DCRLAA1)
Product Evaluation and Labeling Branch 1 (DCRLAA2)
Product Evaluation and Labeling Branch 2 (DCRLAA3)
Division of Nutrition Labeling, Science and Claims (DCRLAB)
Nutrition Assessment and Evaluation Branch (DCRLAB1)
Nutrition Science Review Branch (DCRLAB2)
Office of Critical Foods (DCRLB)
Infant Formula Pre-Market Review Staff (DCRLB1)
Office of Laboratory Operations and Applied Science (DCRM)
Office of Regulatory Testing and Surveillance (DCRMA)
Division of Science Program Coordination (DCRMAA)
Microbiology Branch (DCRMAA1)
Chemistry Branch (DCRMAA2)
Arkansas Human and Animal Food Laboratory (DCRMAB)
Arkansas Chemistry Branch (DCRMAB1)
Arkansas Microbiology Branch (DCRMAB2)
Atlanta Human and Animal Food Laboratory (DCRMAC)
Atlanta Chemistry Branch (DCRMAC1)
Atlanta Microbiology Branch (DCRMAC2)
Atlanta Nutrient Analysis Branch (DCRMAC3)
Denver Human and Animal Food Laboratory (DCRMAD)
Denver Chemistry Branch (DCRMAD1)
Denver Microbiology Branch (DCRMAD2)
Irvine Human and Animal Food Laboratory (DCRMAE)
Irvine Chemistry Branch (DCRMAE1)
Irvine Microbiology Branch (DCRMAE2)
Kansas City Human and Animal Food Laboratory (DCRMAF)
Kansas City Chemistry Branch 1 (DCRMAF1)
Kansas City Chemistry Branch 2 (DCRMAF2)
New York Human and Animal Food Laboratory (DCRMAG)
New York Chemistry Branch (DCRMAG1)
New York Microbiological Branch (DCRMAG2)
San Francisco Human and Animal Food Laboratory (DCRMAH)
San Francisco Chemistry Branch (DCRMAH1)
San Francisco Microbiology Branch (DCRMAH2)
Seattle Human and Animal Food Laboratory (DCRMAI)
Seattle Chemistry Branch (DCRMAI1)
Seattle Microbiology Branch (DCRMAI2)
Office of Applied Microbiology and Technology (DCRMB)
Division of Food and Environmental Safety (DCRMBA)
Environmental Microbiology Branch (DCRMBA1)
Virology and Parasitology Branch (DCRMBA2)
Microbial Methods Development Branch (DCRMBA3)
Division of Food Safety Genomics (DCRMBB)
Genomics Development and Application Branch (DCRMBB1)
Metagenomic Diversity and Ecology Branch (DCRMBB2)
Molecular Genetic Methods Branch (DCRMBB3)
Division of Food Processing Science and Technology (DCRMBC)
Chemistry and Process Engineering Branch (DCRMBC1)
Microbiology and Food Technology Branch (DCRMBC2)
Division of Seafood Science and Technology (DCRMBD)
Chemical Hazards Science Branch (DCRMBD1)
Microbiological Hazards Science Branch (DCRMBD2)
Office of Chemistry and Toxicology (DCRMC)
Division of Analytical Chemistry (DCRMCA)
Method Development Branch (DCRMCA1)
Spectroscopy and Mass Spectrometry Branch (DCRMCA2)
Division of Bioanalytical Chemistry (DCRMCB)
Bioanalytical Methods Branch (DCRMCB1)
Chemical Contaminants Branch (DCRMCB2)
Division of Toxicology (DCRMCC)
Predictive Toxicology Branch (DCRMCC1)
Systems Toxicology Branch (DCRMCC2)
Office of Scientific Coordination and Computational Sciences (DCRMD)
Senior Science Advisor Staff (DCRMD1)
Research Coordination Staff (DCRMD2)
GenomeTrakr and Computational Science Staff (DCRMD3)
Office of Quality Assessment and Management (DCRN)
Quality Assessment Staff (DCRN1)
Quality Management Staff (DCRN2)
Office of Microbiological Food Safety (DCRO)
Operations Staff (DCRO1)
Office of Dairy and Seafood Safety (DCROA)
Division of Dairy Safety (DCROAA)
Dairy Safety Policy Branch (DCROAA1)
Egg, Meat, and Laboratory Policy Branch (DCROAA2)
Dairy Operations East Branch (DCROAA3)
Dairy Operations West Branch (DCROAA4)
Division of Seafood Safety (DCROAB)
Shellfish and Aquaculture Policy Branch (DCROAB1)
Seafood Processing and Technology Policy Branch (DCROAB2)
Shellfish Operations Branch 1 (DCROAB3)
Shellfish Operations Branch 2 (DCROAB4)
Office of Produce Safety (DCROB)
Division of Fresh Produce Safety (DCROBA)
Fresh Produce Policy Branch (DCROBA1)
Produce Safety Engagement Branch (DCROBA2)
Division of Processed Food and Beverages Safety (DCROBB)
Processed Food and Beverages Policy Branch (DCROBB1)
Processed Produce Policy Branch (DCROBB2)
DCS. ORGANIZATION. The Office of Inspections and Investigations is headed by the Associate Commissioner for Inspections and Investigations, and includes the following organizational units:
Office of Inspections and Investigations (DCS)
Office of the Associate Commissioner for Inspections and Investigations (DCSA)
Division of Organizational Communication and Engagement (DCSAA)
Strategic Communication Staff (DCSAA1)
Executive Secretariat Staff (DCSAA2)
Office of Management (DCSB)
Office of Budget, Facilities and Travel Support (DCSBA)
Division of Financial Operations (DCSBAA)
Human and Animal Food Budget Execution Branch (DCSBAA1)
Budget Formulation Branch (DCSBAA2)
Medical Products and Tobacco Budget Execution Branch (DCSBAA3)
Division of Facilities and Property Management (DCSBAB)
Real Property Branch 1 (DCSBAB1)
Real Property Branch 2 (DCSBAB2)
Real Property Branch 3 (DCSBAB3)
Fleet and Personal Property Management Branch (DCSBAB4)
Real Property Branch 4 (DCSBAB5)
Real Property Branch 5 (DCSBAB6)
Real Property Branch 6 (DCSBAB7)
Division of Contracts and Grants (DCSBAC)
Operational Contracts and Agreements Branch 1 (DCSBAC1)
Operational Contracts and Agreements Branch 2 (DCSBAC2)
Division of Travel Operations (DCSBAD)
Domestic Travel Branch (DCSBAD1)
Foreign Travel Branch 1 (DCSBAD2)
Foreign Travel Branch 2 (DCSBAD3)
Foreign Travel Branch 3 (DCSBAD4)
Foreign Travel Branch 4 (DCSBAD5)
Office of Workforce Management (DCSBB)
Executive and Scientific Resource Staff (DCSBB1)
Division of Human Capital Staffing Services (DCSBBA)
Talent Acquisition Branch 1 (DCSBBA1)
Talent Acquisition Branch 2 (DCSBBA2)
Talent Acquisition Branch 3 (DCSBBA3)
Division of Human Capital Programs (DCSBBB)
Performance Management and Engagement Branch (DCSBBB1)
Management Analysis Branch (DCSBBB2)
Office of Animal Food Inspectorate (DCSC)
Division of Animal Food Inspectorate I (DCSCA)
Animal Food Investigations Branch 1 (DCSCA1)
Animal Food Investigations Branch 2 (DCSCA2)
Animal Food Investigations Branch 3 (DCSCA3)
Division of Animal Food Inspectorate II (DCSCB)
Animal Food Investigations Branch 1 (DCSCB1)
Animal Food Investigations Branch 2 (DCSCB2)
Animal Food Investigations Branch 3 (DCSCB3)
Office of Biologics Inspectorate (DCSD)
Biologics Global Operations Staff (DCSD1)
Division of Biologics Inspectorate I (DCSDB)
Biologics Investigations Branch 1 (DCSDB1)
Biologics Investigations Branch 2 (DCSDB2)
Biologics Investigations Branch 3 (DCSDB3)
Biologics Investigations Branch 4 (DCSDB4)
Division of Biologics Inspectorate II (DCSDC)
Biologics Investigations Branch 1 (DCSDC1)
Biologics Investigations Branch 2 (DCSDC2)
Biologics Investigations Branch 3 (DCSDC3)
Division of Biologics Inspectorate III (DCSDD)
Biologics Investigations Branch 1 (DCSDD1)
Biologics Investigations Branch 2 (DCSDD2)
Biologics Investigations Branch 3 (DCSDD3)
Division of Biotechnology Inspectorate (DCSDE)
Biotechnology Investigations Branch 1 (DCSDE1)
Biotechnology Investigations Branch 2 (DCSDE2)
Office of Bioresearch Monitoring Inspectorate (DCSE)
Division of Bioresearch Monitoring Global Operations (DCSEA)
Bioresearch Monitoring Foreign Investigations Branch 1 (DCSEA1)
Bioresearch Monitoring Foreign Investigations Branch 2 (DCSEA2)
Bioresearch Monitoring Inspectorate Expert Support Branch (DCSEA3)
Division of Bioresearch Monitoring Inspectorate I (DCSEB)
Bioresearch Monitoring Investigations Branch 1 (DCSEB1)
Bioresearch Monitoring Investigations Branch 2 (DCSEB2)
Bioresearch Monitoring Investigations Branch 3 (DCSEB3)
Bioresearch Monitoring Investigations Branch 4 (DCSEB4)
Division of Bioresearch Monitoring Inspectorate II (DCSEC)
Bioresearch Monitoring Investigations Branch 1 (DCSEC1)
Bioresearch Monitoring Investigations Branch 2 (DCSEC2)
Bioresearch Monitoring Investigations Branch 3 (DCSEC3)
Division of Bioresearch Monitoring Inspectorate III (DCSED)
Bioresearch Monitoring Investigations Branch 1 (DCSED1)
Bioresearch Monitoring Investigations Branch 2 (DCSED2)
Bioresearch Monitoring Investigations Branch 3 (DCSED3)
Division of Bioresearch Monitoring Inspectorate IV (DCSEF)
Bioresearch Monitoring Investigations Branch 1 (DCSEF1)
Bioresearch Monitoring Investigations Branch 2 (DCSEF2)
Bioresearch Monitoring Investigations Branch 3 (DCSEF3)
Office of Business Informatics and Solutions Management (DCSF)
Division of Import Business Informatics and Solutions (DCSFB)
Import Business Informatics Branch (DCSFB1)
Import Business Solutions Branch (DCSFB2)
Division of Regulatory Business Informatics and Solutions (DCSFC)
Regulatory Business Informatics Branch (DCSFC1)
Regulatory Business Solutions Branch (DCSFC2)
Division of Solutions Planning, Management and Governance (DCSFD)
Integrated Management and Investments Branch (DCSFD1)
Program Solutions and Services Branch (DCSFD2)
Division of Work Planning and Analytics (DCSFE)
Work Planning and Analytics Branch (DCSFE1)
Informatics and Process Quality Branch (DCSFE2)
Office of Criminal Investigations (DCSG)
Metro Washington Field Office (DCSGA)
Philadelphia Resident Unit (DCSGA1)
Chicago Field Office (DCSGB)
New York Field Office (DCSGC)
Boston, MA Resident Unit (DCSGC1)
Los Angeles Field Office (DCSGD)
San Francisco, CA Resident Unit (DCSGD1)
Miami Field Office (DCSGE)
San Juan, PR Resident Unit (DCSGE1)
Atlanta, GA Resident Unit (DCSGE2)
New Orleans, LA Resident Unit (DCSGE3)
Kansas City Field Office (DCSGF)
Dallas, TX Resident Unit (DCSGF1)
Office of Field Operations and Response (DCSH)
Organizational Quality Staff (DCSH1)
Office of Field Regulatory Operations (DCSHA)
Division of Field Enforcement (DCSHAA)
Health Fraud Inspectorate Branch (DCSHAA1)
Field Recall Effectiveness Branch (DCSHAA2)
Division of Inspectorate Policy (DCSHAB)
Food Inspectorate Policy Branch (DCSHAB1)
Medical Products and Tobacco Inspectorate Policy Branch (DCSHAB2)
Division of Tobacco Inspectorate (DCSHAC)
Tobacco Investigations Branch 1 (DCSHAC1)
Tobacco Investigations Branch 2 (DCSHAC2)
Office of Emergency Response (DCSHB)
Division of Emergency Response (DCSHBA)
Field Emergency Response Coordinators Branch 1 (DCSHBA1)
Field Emergency Response Coordinators Branch 2 (DCSHBA2)
Incident Coordination Branch (DCSHBA3)
Division of Emergency Preparedness and Support (DCSHBB)
Emergency Planning, Exercises and Evaluation Branch (DCSHBB2)
Program Operations and Coordination Branch (DCSHBB3)
Office of Training, Education, and Development (DCSI)
Division of Programmatic Training (DCSIA)
Programmatic Training Branch 1 (DCSIA1)
Programmatic Training Branch 2 (DCSIA2)
Division of Multi-Program, Leadership, and Management Training (DCSIB)
Multi-Program, Leadership, and Management Branch (DCSIB1)
Leadership, Management, and Mentoring Training Branch (DCSIB2)
Division of Instructional Systems and Technology (DCSIC)
Instructional Systems Branch (DCSIC1)
Learning Management Technology and Multimedia Branch (DCSIC2)
Certification Branch (DCSIC3)
Office of Human and Animal Drug Inspectorate (DCSJ)
Division of Human and Animal Drug Foreign Inspectorate (DCSJA)
Human and Animal Drug Foreign Investigations Branch 1 (DCSJA1)
Human and Animal Drug Foreign Investigations Branch 2 (DCSJA2)
Human and Animal Drug Foreign Operations Branch (DCSJA3)
Division of Human and Animal Drug Global Operations (DCSJB)
Human and Animal Drug Program Operations Branch (DCSJB1)
Human and Animal Drug Mutual Recognition Branch (DCSJB2)
Division of Human and Animal Drug Inspectorate I (DCSJC)
Human and Animal Drug Investigations Branch 1 (DCSJC1)
Human and Animal Drug Investigations Branch 2 (DCSJC2)
Human and Animal Drug Investigations Branch 3 (DCSJC3)
Human and Animal Drug Investigations Branch 4 (DCSJC4)
Human and Animal Drug Investigations Branch 5 (DCSJC5)
Division of Human and Animal Drug Inspectorate II (DCSJD)
Human and Animal Drug Investigations Branch 1 (DCSJD1)
Human and Animal Drug Investigations Branch 2 (DCSJD2)
Human and Animal Drug Investigations Branch 3 (DCSJD3)
Human and Animal Drug Investigations Branch 4 (DCSJD4)
Human and Animal Drug Investigations Branch 5 (DCSJD5)
Division of Human and Animal Drug Inspectorate III (DCSJE)
Human and Animal Drug Investigations Branch 1 (DCSJE1)
Human and Animal Drug Investigations Branch 2 (DCSJE2)
Human and Animal Drug Investigations Branch 3 (DCSJE3)
Human and Animal Drug Investigations Branch 4 (DCSJE4)
Human and Animal Drug Investigations Branch 5 (DCSJE5)
Division of Human and Animal Drug Inspectorate IV (DCSJF)
Human and Animal Drug Investigations Branch 1 (DCSJF1)
Human and Animal Drug Investigations Branch 2 (DCSJF2)
Human and Animal Drug Investigations Branch 3 (DCSJF3)
Human and Animal Drug Investigations Branch 4 (DCSJF4)
Human and Animal Drug Investigations Branch 5 (DCSJF5)
Division of Human and Animal Drug Inspectorate V (DCSJG)
Human and Animal Drug Investigations Branch 1 (DCSJG1)
Human and Animal Drug Investigations Branch 2 (DCSJG2)
Human and Animal Drug Investigations Branch 3 (DCSJG3)
Human and Animal Drug Investigations Branch 4 (DCSJG4)
Human and Animal Drug Investigations Branch 5 (DCSJG5)
Division of Human and Animal Drug Inspectorate VI (DCSJH)
Human and Animal Drug Investigations Branch 1 (DCSJH1)
Human and Animal Drug Investigations Branch 2 (DCSJH2)
Human and Animal Drug Investigations Branch 3 (DCSJH3)
Human and Animal Drug Investigations Branch 4 (DCSJH4)
Human and Animal Drug Investigations Branch 5 (DCSJH5)
Office of Human Food Inspectorate (DCSK)
Office of Human Food Inspectorate Central (DCSKA)
Division of Human Food Inspectorate Central I (DCSKAA)
Human Food Investigations Branch 1 (DCSKAA1)
Human Food Investigations Branch 2 (DCSKAA2)
Human Food Investigations Branch 3 (DCSKAA3)
Human Food Investigations Branch 4 (DCSKAA4)
Division of Human Food Inspectorate Central II (DCSKAB)
Human Food Investigations Branch 1 (DCSKAB1)
Human Food Investigations Branch 2 (DCSKAB2)
Human Food Investigations Branch 3 (DCSKAB3)
Human Food Investigations Branch 4 (DCSKAB4)
Human Food Investigations Branch 5 (DCSKAB5)
Division of Human Food Inspectorate Central III (DCSKAC)
Human Food Investigations Branch 1 (DCSKAC1)
Human Food Investigations Branch 2 (DCSKAC2)
Human Food Investigations Branch 3 (DCSKAC3)
Human Food Investigations Branch 4 (DCSKAC4)
Human Food Investigations Branch 5 (DCSKAC5)
Human Food Investigations Branch 6 (DCSKAC6)
Division of Human Food Inspectorate Central IV (DCSKAD)
Human Food Investigations Branch 1 (DCSKAD1)
Human Food Investigations Branch 2 (DCSKAD2)
Human Food Investigations Branch 3 (DCSKAD3)
Human Food Investigations Branch 4 (DCSKAD4)
Division of Human Food Inspectorate Central V (DCSKAE)
Human Food Investigations Branch 1 (DCSKAE1)
Human Food Investigations Branch 2 (DCSKAE2)
Human Food Investigations Branch 3 (DCSKAE3)
Human Food Investigations Branch 4 (DCSKAE4)
Human Food Investigations Branch 5 (DCSKAE5)
Office of Human Food Inspectorate East (DCSKB)
Division of Human Food Inspectorate East I (DCSKBA)
Human Food Investigations Branch 1 (DCSKBA1)
Human Food Investigations Branch 2 (DCSKBA2)
Human Food Investigations Branch 3 (DCSKBA3)
Human Food Investigations Branch 4 (DCSKBA4)
Human Food Investigations Branch 5 (DCSKBA5)
Division of Human Food Inspectorate East II (DCSKBB)
Human Food Investigations Branch 1 (DCSKBB1)
Human Food Investigations Branch 2 (DCSKBB2)
Human Food Investigations Branch 3 (DCSKBB3)
Human Food Investigations Branch 4 (DCSKBB4)
Division of Human Food Inspectorate East III (DCSKBC)
Human Food Investigations Branch 1 (DCSKBC1)
Human Food Investigations Branch 2 (DCSKBC2)
Human Food Investigations Branch 3 (DCSKBC3)
Human Food Investigations Branch 4 (DCSKBC4)
Division of Human Food Inspectorate East IV (DCSKBD)
Human Food Investigations Branch 1 (DCSKBD1)
Human Food Investigations Branch 2 (DCSKBD2)
Human Food Investigations Branch 3 (DCSKBD3)
Human Food Investigations Branch 4 (DCSKBD4)
Human Food Investigations Branch 5 (DCSKBD5)
Human Food Investigations Branch 6 (DCSKBD6)
Office of Human Food Inspectorate West (DCSKC)
Division of Human Food Inspectorate West I (DCSKCA)
Human Food Investigations Branch 1 (DCSKCA1)
Human Food Investigations Branch 2 (DCSKCA2)
Human Food Investigations Branch 3 (DCSKCA3)
Human Food Investigations Branch 4 (DCSKCA4)
Human Food Investigations Branch 5 (DCSKCA5)
Division of Human Food Inspectorate West II (DCSKCB)
Human Food Investigations Branch 1 (DCSKCB1)
Human Food Investigations Branch 2 (DCSKCB2)
Human Food Investigations Branch 3 (DCSKCB3)
Human Food Investigations Branch 4 (DCSKCB4)
Human Food Investigations Branch 5 (DCSKCB5)
Division of Human Food Inspectorate West III (DCSKCC)
Human Food Investigations Branch 1 (DCSKCC1)
Human Food Investigations Branch 2 (DCSKCC2)
Human Food Investigations Branch 3 (DCSKCC3)
Human Food Investigations Branch 4 (DCSKCC4)
Division of Human Food Inspectorate West IV (DCSKCD)
Human Food Investigations Branch 1 (DCSKCD1)
Human Food Investigations Branch 2 (DCSKCD2)
Human Food Investigations Branch 3 (DCSKCD3)
Human Food Investigations Branch 4 (DCSKCD4)
Office of Global and Specialty Human Food Inspectorate (DCSKD)
Human Food National Expert Staff (DCSKD1)
Division of Critical and Specialty Food (DCSKDA)
Critical Food Investigations Branch (DCSKDA1)
Food Defense Branch (DCSKDA2)
Human Food Program Expert Branch (DCSKDA3)
Emerging Food and Specialty Products Branch (DCSKDA4)
Division of Foreign Food Investigations and Global Operations (DCSKDB)
Foreign Food Investigations Branch 1 (DCSKDB1)
Foreign Food Investigations Branch 2 (DCSKDB2)
Foreign Food Investigations Branch 3 (DCSKDB3)
Foreign Food Operations Branch (DCSKDB4)
Foreign Food Coordination Branch (DCSKDB5)
Division of Produce Safety (DCSKDC)
Produce Safety Branch 1 (DCSKDC1)
Produce Safety Branch 2 (DCSKDC2)
Produce Safety Branch 3 (DCSKDC3)
Office of Import Operations (DCSL)
Division of Targeting and Analysis (DCSLA)
Division of Import Operations (DCSLB)
Import Operations Branch (DCSLB1)
Import Compliance Branch (DCSLB2)
Division of Analysis and Program Evaluation (DCSLC)
Program Development Branch (DCSLC1)
Import Technical Assistance Branch (DCSLC2)
Division of Southwest Imports (DCSLD)
Southwest Import Investigations Branch (DCSLD1)
Southwest Import Compliance Branch (DCSLD2)
Division of Southeast Imports (DCSLE)
Southeast Import Investigations Branch 1 (DCSLE1)
Southeast Import Investigations Branch 2 (DCSLE2)
Southeast Import Compliance Branch (DCSLE3)
Division of Northeast Imports (DCSLF)
Northeast Import Investigations Branch (DCSLF1)
Northeast Import Compliance Branch (DCSLF2)
Division of Northern Border Imports (DCSLG)
Northern Border Import Investigations Branch 1 (DCSLG1)
Northern Border Import Investigations Branch 2 (DCSLG2)
Northern Border Import Compliance Branch (DCSLG3)
Division of West Coast Imports (DCSLH)
West Coast Import Investigations Branch (DCSLH1)
West Coast Import Compliance Branch (DCSLH2)
Division of Planning and Public Response (DCSLI)
Office of Medical Device and Radiological Health Inspectorate (DCSM)
Division of Mammography and Radiological Health Inspectorate (DCSMA)
Mammography Operations Branch 1 (DCSMA1)
Mammography Operations Branch 2 (DCSMA2)
Division of Medical Device and Radiological Health Inspectorate I (DCSMB)
Medical Device and Radiological Health Investigations Branch 1 (DCSMB1)
Medical Device and Radiological Health Investigations Branch 2 (DCSMB2)
Medical Device and Radiological Health Investigations Branch 3 (DCSMB3)
Medical Device and Radiological Health Investigations Branch 4 (DCSMB4)
Division of Medical Device and Radiological Health Inspectorate II (DCSMC)
Medical Device and Radiological Health Investigations Branch 1 (DCSMC1)
Medical Device and Radiological Health Investigations Branch 2 (DCSMC2)
Medical Device and Radiological Health Investigations Branch 3 (DCSMC3)
Medical Device and Radiological Health Investigations Branch 4 (DCSMC4)
Medical Device and Radiological Health Investigations Branch 5 (DCSMC5)
Division of Medical Device and Radiological Health Inspectorate III (DCSMD)
Medical Device and Radiological Health Investigations Branch 1 (DCSMD1)
Medical Device and Radiological Health Investigations Branch 2 (DCSMD2)
Medical Device and Radiological Health Investigations Branch 3 (DCSMD3)
Medical Device and Radiological Health Investigations Branch 4 (DCSMD4)
Medical Device and Radiological Health Investigations Branch 5 (DCSMD5)
Division of Medical Device and Radiological Health Global Operations (DCSME)
Medical Device and Radiological Health Foreign Operations Branch (DCSME1)
Medical Device and Radiological Health Operations Branch (DCSME2)
Medical Device and Radiological Health Risk Mitigation and Response Branch (DCSME3)
Division of Medical Device and Radiological Health Inspectorate IV (DCSMF)
Medical Device and Radiological Health Investigations Branch 1 (DCSMF1)
Medical Device and Radiological Health Investigations Branch 2 (DCSMF2)
Medical Device and Radiological Health Investigations Branch 3 (DCSMF3)
Medical Device and Radiological Health Investigations Branch 4 (DCSMF4)

II. Delegations of Authority
Pending further delegation, directives, or orders by the Commissioner of Food and Drugs, all delegations and redelegations of authority made to officials and employees of affected organizational components will continue in them or their successors pending further redelegations, provided they are consistent with this reorganization.

III. Electronic Access
This reorganization is reflected in FDA's Staff Manual Guide (SMG). Persons interested in seeing the complete Staff Manual Guide can find it on FDA's website at: http://www.fda.gov/AboutFDA/ReportsManualsForms/StaffManualGuides/default.htm .
Authority: 44 U.S.C. 3101.
Xavier Becerra,

Secretary of Health and Human Services.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
[Docket No. FDA-2023-N-5345]
Michael Terry Little: Final Debarment Order

AGENCY:
Food and Drug Administration, HHS.

ACTION:
Notice.

SUMMARY:
The Food and Drug Administration (FDA) is issuing an order under the Federal Food, Drug, and Cosmetic Act (FD&C Act) debarring Michael Terry Little for a period of 5 years from importing or offering for import any drug into the United States. FDA bases this order on a finding that Mr. Little was convicted of one felony count under Federal law for introduction of unapproved new drugs in interstate commerce. The factual basis supporting Mr. Little's conviction, as described below, is conduct relating to the importation into the United States of a drug or controlled substance. Mr. Little was given notice of the proposed debarment and was given an opportunity to request a hearing to show why he should not be debarred. As of March 13, 2024 (30 days after receipt of the notice), Mr. Little had not responded. Mr. Little's failure to respond and request a hearing constitutes a waiver of his right to a hearing concerning this matter.

DATES:
This order is applicable June 3, 2024.

ADDRESSES:
Any application by Mr. Little for termination of debarment under section 306(d)(1) of the FD&C Act (21 U.S.C. 335a(d)(1)) may be submitted at any time as follows:

Electronic Submissions
• Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. An application submitted electronically, including attachments, to https://www.regulations.gov will be posted to the docket unchanged. Because your application will be made public, you are solely responsible for ensuring that your application does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your application, that information will be posted on https://www.regulations.gov.
• If you want to submit an application with confidential information that you do not wish to be made available to the public, submit the application as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

Written/Paper Submissions
• Mail/Hand Delivery/Courier (for written/paper submissions): Dockets Management Staff (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• For a written/paper application submitted to the Dockets Management Staff, FDA will post your application, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
Instructions: All applications must include the Docket No. FDA-2023-N-5345. Received applications will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at https://www.regulations.gov or at the Dockets Management Staff between 9 a.m. and 4 p.m., Monday through Friday, 240-402-7500.
• Confidential Submissions—To submit an application with confidential information that you do not wish to be made publicly available, submit your application 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 your application. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on https://www.regulations.gov. Submit both copies to the Dockets Management Staff. Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: https://www.govinfo.gov/content/pkg/FR-2015-09-18/pdf/2015-23389.pdf.
Docket: For access to the docket, go to https://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Dockets Management Staff, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852 between 9 a.m. and 4 p.m., Monday through Friday, 240-402-7500. Publicly available submissions may be seen in the docket.

FOR FURTHER INFORMATION CONTACT:
Jaime Espinosa, Division of Compliance and Enforcement, Office of Policy, Compliance, and Enforcement, Office of Regulatory Affairs, Food and Drug Administration, 240-402-8743, or debarments@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

I. Background
Section 306(b)(1)(D) of the FD&C Act permits debarment of an individual from importing or offering for import any drug into the United States if FDA finds, as required by section 306(b)(3)(C) of the FD&C Act, that the individual has been convicted of a felony for conduct relating to the importation into the United States of any drug or controlled substance.
On November 7, 2023, Mr. Little was convicted as defined in section 306(l)(1) of the FD&C Act, in the U. S. District Court for the District of Idaho when the court accepted his plea of guilty and entered judgment against him for the offense of Introduction of Unapproved New Drugs in Interstate Commerce in violation of 21 U.S.C. 331(d) and 333(a)(2) (sections 301(d) and 303(a)(2) of the FD&C Act). The underlying facts supporting the conviction are as follows: as charged in the Information and stated in the Plea Agreement, beginning in or about March 2018, and continuing to on or about January 2022, Mr. Little ran a business selling Selective Androgen Receptor Modulators (SARMs). SARMs are synthetic chemicals designed to mimic the effects of testosterone and other anabolic steroids. SARMs are new drugs under the FD&C Act that have not been reviewed by FDA for safety and effectiveness and have not been approved for marketing in the United States. Mr. Little primarily sold his SARM products via the website https://sarm.tech, under the name SARMTECH. Mr. Little imported the bulk ingredients from China which he then processed at his business location in Idaho. At Mr. Little's business location he used the imported bulk ingredients to manufacture the SARM products and he encapsulated, bottled, and prepared the products for shipment to his customers. To avoid government seizures of SARMs shipped to other countries, Mr. Little offered a stealth shipping option for an additional fee that intentionally mispackaged and falsely declared SARMs shipments as vitamins and supplements. Mr. Little sold at least $4,499,197.46 worth of SARMs between March 2018 and January 2022.
FDA sent Mr. Little, by certified mail, on February 5, 2024, a notice proposing to debar him for a 5-year period from importing or offering for import any drug into the United States. The proposal was based on a finding under section 306(b)(3)(C) of the FD&C Act that Mr. Little's felony conviction under Federal law for Introduction of Unapproved New Drugs in Interstate Commerce in violation of 21 U.S.C. 331(d) and 333(a)(2), was for conduct relating to the importation of any drug or controlled substance into the United States because Mr. Little illegally imported bulk ingredients for SARMs from China which he used as components to manufacture unapproved new drugs that he then distributed for sale to his customers. In proposing a debarment period, FDA weighed the considerations set forth in section 306(c)(3) of the FD&C Act that it considered applicable to Mr. Little's offense and concluded that the offense warranted the imposition of a 5-year period of debarment.
The proposal informed Mr. Little of the proposed debarment and offered him an opportunity to request a hearing, providing him 30 days from the date of receipt of the letter in which to file the request, and advised him that failure to request a hearing constituted a waiver of the opportunity for a hearing and of any contentions concerning this action. Mr. Little received the proposal and notice of opportunity for a hearing on February 12, 2024. Mr. Little failed to request a hearing within the timeframe prescribed by regulation and has, therefore, waived his opportunity for a hearing and waived any contentions concerning his debarment (21 CFR part 12).

II. Findings and Order
Therefore, the Assistant Commissioner, Office of Human and Animal Food Operations, under section 306(b)(3)(C) of the FD&C Act, under authority delegated to the Assistant Commissioner, finds that Mr. Michael Terry Little has been convicted of a felony under Federal law for conduct relating to the importation into the United States of any drug or controlled substance. FDA finds that the offense should be accorded a debarment period of 5 years as provided by section 306(c)(2)(A)(iii) of the FD&C Act.
As a result of the foregoing finding, Mr. Little is debarred for a period of 5 years from importing or offering for import any drug into the United States, effective (see DATES). Pursuant to section 301(cc) of the FD&C Act, the importing or offering for import into the United States of any drug by, with the assistance of, or at the direction of Mr. Little is a prohibited act.
Dated: May 29, 2024.
Lauren K. Roth,

Associate Commissioner for Policy.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
[Document Identifier: OS-0945-0005]
Agency Information Collection Request; 30-Day Public Comment Request

AGENCY:
Office of the Secretary, HHS

ACTION:
Notice.

SUMMARY:
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.

DATES:
Comments on the ICR must be received on or before July 3, 2024.

ADDRESSES:
Submit your comments to Sherrette.Funn@hhs.gov, PRA@hhs.gov, or by calling (202) 264-0041.

FOR FURTHER INFORMATION CONTACT:
When submitting comments or requesting information, please include the document identifier 0945-0005 and project title for reference to Sherrette A. Funn, the Reports Clearance Officer, email Sherrette.Funn@hhs.gov, PRA@hhs.gov, or call (202) 264-0041.

SUPPLEMENTARY INFORMATION:
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Title of the Collection: HIPAA Audit Review Survey.
Type of Collection: Reinstatement with Change of Previously Approved Collection.
OMB No. 0945-0005: Office for Civil Rights (OCR)—Health Information Privacy Division.
Abstract: This information collection consists of 39 online survey questions that will be sent to 207 covered entities and business associates that participated in the 2016-2017 OCR HIPAA Audits.
The survey will gather information relating to the effect of the audits on the audited entities and the entities' opinions about the audit process.
OCR is conducting a review of the 2016-2017 HIPAA Audits to determine its efficacy in assessing the HIPAA compliance efforts of covered entities.
As part of that review, the online survey will be used to:
• Measure the effect of the 2016-2017 HIPAA Audits on covered entities' and business associates' subsequent actions to comply with the HIPAA Rules.
• Provide entities with an opportunity to give feedback on the Audit and its features, such as the helpfulness of HHS' guidance materials and communications, the utility of the online submission portal, whether the Audit helped improve entity compliance, and the entities' responses to the Audit-report findings and recommendations.
• Provide OCR with information on the burden imposed on entities to collect audit-related documents and to respond to audit-related requests; and
• Seek feedback on the effect of the HIPAA Audit program on the entities' day-to-day business operations. The information, opinions, and comments collected using the online survey will be used to improve future OCR HIPAA Audits.
Type of Respondent: Privacy Officers, Security Officers, and/or Administrators of HIPAA covered entities and business associates.
Annualized Burden Hour Table
Type of respondent | Number of respondents | Number responses per respondent | Average burden per response (in hours) | Total burden hours
Covered Entity Privacy and Security Officer(s) or Administrators | 166 | 1 | 45/60 | 124.5
Business Associate Privacy and Security Officer(s) or Administrators | 41 | 1 | 45/60 | 30.75
Total | 207 | | | 155.25
Sherrette A. Funn,

Paperwork Reduction Act Reports Clearance Officer, Office of the Secretary.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
[Document Identifier: OS-0990-0260]
Agency Information Collection Request; 60-Day Public Comment Request

AGENCY:
Office of the Secretary, HHS.

ACTION:
Notice.

SUMMARY:
In compliance with the requirement of the Paperwork Reduction Act of 1995, the Office of the Secretary (OS), Department of Health and Human Services, is publishing the following summary of a proposed collection for public comment.

DATES:
Comments on the ICR must be received on or before August 2, 2024.

ADDRESSES:
Submit your comments to Sherrette.Funn@hhs.gov or by calling (202) 264-0041 and PRA@HHS.GOV.

FOR FURTHER INFORMATION CONTACT:
When submitting comments or requesting information, please include the document identifier 0990-0260-60D and project title for reference, to Sherrette A. Funn, email: Sherrette.Funn@hhs.gov, PRA@HHS.GOV or call (202) 264-0041 the Reports Clearance Officer.

SUPPLEMENTARY INFORMATION:
Interested persons are invited to send comments regarding this burden estimate or any other aspect of this collection of information, including any of the following subjects: (1) The necessity and utility of the proposed information collection for the proper performance of the agency's functions; (2) the accuracy of the estimated burden; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) the use of automated collection techniques or other forms of information technology to minimize the information collection burden.
Title of the Collection: Assurance of Compliance with Federal Policy/IRB Review/IRB Recordkeeping/Informed Consent/Consent Documentation.
Type of Collection: 3-year extension of a currently approved collection.

OMB No. 0990-0260
Abstract: The Office of the Assistant Secretary for Health, Office for Human Research Protections is requesting a three-year extension of the Protection of Human Subjects: Assurance of Compliance with Federal Policy/IRB Review/IRB Recordkeeping/Informed Consent/Consent Documentation, OMB No. 0990-0260.
Information reported to the Federal departments and agencies under the Common Rule with respect to a satisfactory assurance is used to ensure that an institution engaged in non-exempt research involving human subjects conducted or supported by a Common Rule department or agency has (1) established adequate administrative policies and procedures for protecting the rights and welfare of human subjects in research, and (2) accepts that responsibility. Other reporting requirements are used to: assess whether the institution is following the established procedures; ensure that Federal funds are not expended for unapproved human subjects research; and, determine if the approved status of an awarded grant, contract, or cooperative agreement should be reviewed, with the ultimate goal of maintaining or increasing human subject protections.
Likely Respondents: institutions and institutional review boards.

Annualized Burden Hour Tables
Table 1—Estimated Annual IRB Recordkeeping Burden
Common rule provision | Number of respondents | Number of responses per respondent | Total annual responses | Average burden per response | Total hours
.115 [Pre-2018 and 2018 Requirement]—Preparation and documentation of IRB activities | 6,000 | 16 | 96,000 | 12 | 1,152,000
Total | | | 96,000 | | 1,152,000
Table 2—Estimated Annual Third-Party Disclosure Burden
| Number of respondents | Number of disclosures per respondent | Total annual disclosures | Average burden per disclosure | Total hours
.109(d) [Pre-2018 and 2018 Requirements]—Written notification of IRB approval or disapproval of research | 6,000 | 25 | 150,000 | 0.5 | 75,000
.116(a) and (b) (Pre-2018 Requirements)/.116 (b), (c) and (d) [2018 Requirements]—Elements of informed consent and broad consent | 6,000 | 25 | 150,000 | 0.5 | 75,000
.116(h)—[2018 Requirements]—Posting clinical trial consent form | 425 | 5 | 2,125 | 0.5 | 1,063
.117(a) [Pre-2018 and 2018 Requirements]—Documentation of informed consent | 6,000 | 20 | 120,000 | 0.5 | 60,000
.117(c)(2) [Pre-2018 and 2018 Requirements]—Written statement about the research when informed consent documentation is waived | 6,000 | 5 | 30,000 | .5 | 15,000
Total | | | 452,125 | | 308,563
Sherrette A. Funn,

Paperwork Reduction Act Reports Clearance Officer, Office of the Secretary.
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Substance Abuse and Mental Health Services Administration
Current List of HHS-Certified Laboratories and Instrumented Initial Testing Facilities Which Meet Minimum Standards To Engage in Urine and Oral Fluid Drug Testing for Federal Agencies

AGENCY:
Substance Abuse and Mental Health Services Administration, HHS.

ACTION:
Notice.

SUMMARY:
The Department of Health and Human Services (HHS) notifies Federal agencies of the laboratories and Instrumented Initial Testing Facilities (IITFs) currently certified to meet the standards of the Mandatory Guidelines for Federal Workplace Drug Testing Programs (Mandatory Guidelines) using Urine and the laboratories currently certified to meet the standards of the Mandatory Guidelines using Oral Fluid.

FOR FURTHER INFORMATION CONTACT:
Anastasia Flanagan, Division of Workplace Programs, SAMHSA/CSAP, 5600 Fishers Lane, Room 16N06B, Rockville, Maryland 20857; 240-276- 2600 (voice); Anastasia.Flanagan@samhsa.hhs.gov (email).

SUPPLEMENTARY INFORMATION:
The Department of Health and Human Services (HHS) publishes a notice listing all HHS-certified laboratories and Instrumented Initial Testing Facilities (IITFs) in the Federal Register during the first week of each month, in accordance with section 9.19 of the Mandatory Guidelines for Federal Workplace Drug Testing Programs (Mandatory Guidelines) using Urine and section 9.17 of the Mandatory Guidelines using Oral Fluid. If any laboratory or IITF certification is suspended or revoked, the laboratory or IITF will be omitted from subsequent lists until such time as it is restored to full certification under the Mandatory Guidelines.
If any laboratory or IITF has withdrawn from the HHS National Laboratory Certification Program (NLCP) during the past month, it will be listed at the end and will be omitted from the monthly listing thereafter.
This notice is also available on the internet at https://www.samhsa.gov/workplace/drug-testing-resources/certified-lab-list .
HHS separately notifies Federal agencies of the laboratories and IITFs currently certified to meet the standards of the Mandatory Guidelines using Urine and of the laboratories currently certified to meet the standards of the Mandatory Guidelines using Oral Fluid.
The Mandatory Guidelines using Urine were first published in the Federal Register on April 11, 1988 (53 FR 11970), and subsequently revised in the Federal Register on June 9, 1994 (59 FR 29908); September 30, 1997 (62 FR 51118); April 13, 2004 (69 FR 19644); November 25, 2008 (73 FR 71858); December 10, 2008 (73 FR 75122); April 30, 2010 (75 FR 22809); January 23, 2017 (82 FR 7920); and on October 12, 2023 (88 FR 70768).
The Mandatory Guidelines using Oral Fluid were first published in the Federal Register on October 25, 2019 (84 FR 57554) with an effective date of January 1, 2020, and subsequently revised in the Federal Register on October 12, 2023 (88 FR 70814).
The Mandatory Guidelines were initially developed in accordance with Executive Order 12564 and section 503 of Public Law 100-71 and allowed urine drug testing only. The Mandatory Guidelines using Urine have since been revised, and new Mandatory Guidelines allowing for oral fluid drug testing have been published. The Mandatory Guidelines require strict standards that laboratories and IITFs must meet in order to conduct drug and specimen validity tests on specimens for Federal agencies. HHS does not allow IITFs to conduct oral fluid testing.
To become certified, an applicant laboratory or IITF must undergo three rounds of performance testing plus an on-site inspection. To maintain that certification, a laboratory or IITF must participate in a quarterly performance testing program plus undergo periodic, on-site inspections.
Laboratories and IITFs in the applicant stage of certification are not to be considered as meeting the minimum requirements described in the HHS Mandatory Guidelines using Urine and/or Oral Fluid. An HHS-certified laboratory or IITF must have its letter of certification from HHS/SAMHSA (formerly: HHS/NIDA), which attests that the test facility has met minimum standards. HHS does not allow IITFs to conduct oral fluid testing.

HHS-Certified Laboratories Approved To Conduct Oral Fluid Drug Testing
In accordance with the Mandatory Guidelines using Oral Fluid effective October 10, 2023 (88 FR 70814), the following HHS-certified laboratories meet the minimum standards to conduct drug and specimen validity tests on oral fluid specimens:
At this time, there are no laboratories certified to conduct drug and specimen validity tests on oral fluid specimens.

HHS-Certified Instrumented Initial Testing Facilities Approved To Conduct Urine Drug Testing
In accordance with the Mandatory Guidelines using Urine effective February 1, 2024 (88 FR 70768), the following HHS-certified IITFs meet the minimum standards to conduct drug and specimen validity tests on urine specimens:
Dynacare*, 6628 50th Street NW, Edmonton, AB Canada T6B 2N7, 780-784-1190 (Formerly: Gamma-Dynacare Medical Laboratories)

HHS-Certified Laboratories Approved To Conduct Urine Drug Testing
In accordance with the Mandatory Guidelines using Urine effective February 1, 2024 (88 FR 70768), the following HHS-certified laboratories meet the minimum standards to conduct drug and specimen validity tests on urine specimens:
Alere Toxicology Services, 1111 Newton St., Gretna, LA 70053, 504-361-8989/800-433-3823 (Formerly: Kroll Laboratory Specialists, Inc., Laboratory Specialists, Inc.)
Alere Toxicology Services, 450 Southlake Blvd., Richmond, VA 23236, 804-378-9130 (Formerly: Kroll Laboratory Specialists, Inc., Scientific Testing Laboratories, Inc.; Kroll Scientific Testing Laboratories, Inc.)
Clinical Reference Laboratory, Inc., 8433 Quivira Road, Lenexa, KS 66215-2802, 800-445-6917
Desert Tox, LLC, 5425 E Bell Rd, Suite 125, Scottsdale, AZ 85254, 602-457-5411/623-748-5045
DrugScan, Inc., 200 Precision Road, Suite 200, Horsham, PA 19044, 800-235-4890
Dynacare*, 245 Pall Mall Street, London, ONT, Canada N6A 1P4, 519-679-1630 (Formerly: Gamma-Dynacare Medical Laboratories)
ElSohly Laboratories, Inc., 5 Industrial Park Drive, Oxford, MS 38655, 662-236-2609
LabOne, Inc. d/b/a Quest Diagnostics, 10101 Renner Blvd., Lenexa, KS 66219, 913-888-3927/800-873-8845 (Formerly: Quest Diagnostics Incorporated; LabOne, Inc.; Center for Laboratory Services, a Division of LabOne, Inc.)
Laboratory Corporation of America, 1225 NE 2nd Ave., Portland, OR 97232, 503-413-5295/800-950-5295 (Formerly: Legacy Laboratory Services Toxicology MetroLab)
Laboratory Corporation of America Holdings, 7207 N. Gessner Road, Houston, TX 77040, 713-856-8288/800-800-2387
Laboratory Corporation of America Holdings, 69 First Ave., Raritan, NJ 08869, 908-526-2400/800-437-4986 (Formerly: Roche Biomedical Laboratories, Inc.)
Laboratory Corporation of America Holdings, 1904 TW Alexander Drive, Research Triangle Park, NC 27709, 919-572-6900/800-833-3984 (Formerly: LabCorp Occupational Testing Services, Inc., CompuChem Laboratories, Inc.; CompuChem Laboratories, Inc., A Subsidiary of Roche Biomedical Laboratory; Roche CompuChem Laboratories, Inc., A Member of the Roche Group)
Laboratory Corporation of America Holdings, 1120 Main Street, Southaven, MS 38671, 866-827-8042/800-233-6339 (Formerly: LabCorp Occupational Testing Services, Inc.; MedExpress/National Laboratory Center)
MedTox Laboratories, Inc., 402 W. County Road D, St. Paul, MN 55112, 651-636-7466/800-832-3244
Minneapolis Veterans Affairs Medical Center, Forensic Toxicology Laboratory, 1 Veterans Drive, Minneapolis, MN 55417, 612-725-2088, Testing for Veterans Affairs (VA) Employees Only
Omega Laboratories, Inc.*, 2150 Dunwin Drive, Unit 1 & 2, Mississauga, ON, Canada L5L 5M8, 289-919-3188
Pacific Toxicology Laboratories, 9348 DeSoto Ave., Chatsworth, CA 91311, 800-328-6942 (Formerly: Centinela Hospital Airport Toxicology Laboratory)
Phamatech, Inc., 15175 Innovation Drive, San Diego, CA 92128, 888-635-5840
Quest Diagnostics Incorporated, 400 Egypt Road, Norristown, PA 19403, 610-631-4600/877-642-2216 (Formerly: SmithKline Beecham Clinical Laboratories; SmithKline Bio-Science Laboratories)
US Army Forensic Toxicology Drug Testing Laboratory, 2490 Wilson St., Fort George G. Meade, MD 20755-5235, 301-677-7085, Testing for Department of Defense (DoD) Employees Only
* The Standards Council of Canada (SCC) voted to end its Laboratory Accreditation Program for Substance Abuse (LAPSA) effective May 12, 1998. Laboratories certified through that program were accredited to conduct forensic urine drug testing as required by U.S. Department of Transportation (DOT) regulations. As of that date, the certification of those accredited Canadian laboratories continued under DOT authority. The responsibility for conducting quarterly performance testing plus periodic on-site inspections of those LAPSA-accredited laboratories was transferred to the U.S. HHS, with the HHS' NLCP contractor continuing to have an active role in the performance testing and laboratory inspection processes. Other Canadian laboratories wishing to be considered for the NLCP may apply directly to the NLCP contractor just as U.S. laboratories do.
Upon finding a Canadian laboratory to be qualified, HHS will recommend that DOT certify the laboratory as meeting the minimum standards of the current Mandatory Guidelines published in the Federal Register . After receiving DOT certification, the laboratory will be included in the monthly list of HHS-certified laboratories and participate in the NLCP certification maintenance program. DOT established this process in July 1996 (61 FR 37015) to allow foreign laboratories to participate in the DOT drug testing program.
Anastasia D. Flanagan,

Public Health Advisor, Division of Workplace Programs.
DEPARTMENT OF HOMELAND SECURITY
Office of the Secretary
[Docket No. DHS-2024-0015]
Department of Homeland Security Data Privacy and Integrity Advisory Committee: Request for Applicants for Appointment

AGENCY:
Department of Homeland Security (DHS).

ACTION:
Request for applicants for appointment to the Department of Homeland Security Data Privacy and Integrity Advisory Committee.

SUMMARY:
The U.S. Department of Homeland Security seeks applicants for appointment to the Data Privacy and Integrity Advisory Committee.

DATES:
Applications for membership must reach the Department of Homeland Security Privacy Office via email or fax within 45 days of the date of this notice.

ADDRESSES:
To apply for membership, please submit the documents described below to Sandra L. Taylor, Designated Federal Officer, DHS Data Privacy and Integrity Advisory Committee, by either of the following methods:
• Email: PrivacyCommittee@hq.dhs.gov. Include Docket Number (DHS-2024-0015) in the subject line of the message.
• Fax: (202) 343-4010.

FOR FURTHER INFORMATION CONTACT:
Sandra L. Taylor, Designated Federal Officer, DHS Data Privacy and Integrity Advisory Committee, Department of Homeland Security, 2707 Martin Luther King Jr. Ave. SE, Mail Stop 0655, Washington, DC 20598-0655, by telephone (202) 343-1717, by fax (202) 343-4010, or by email PrivacyCommittee@hq.dhs.gov.

SUPPLEMENTARY INFORMATION:
The DHS Data Privacy and Integrity Advisory Committee is an advisory committee established in accordance with the Federal Advisory Committee Act (FACA), 5 U.S.C. ch. 10. The Committee was established by the Secretary of Homeland Security under 6 U.S.C. 451. The Committee provides advice at the request of the Secretary and the Chief Privacy Officer on programmatic, policy, operational, security, administrative, and technological issues within DHS that relate to personally identifiable information (PII) and data integrity, transparency, and other privacy-related matters. The duties of the Committee are solely advisory in nature. In developing its advice and recommendations, the Committee may, consistent with FACA, conduct studies, inquiries, or briefings in consultation with individuals and groups in the private sector and/or other governmental entities. The Committee holds at least one public meeting per calendar year.
Committee Membership: The DHS Privacy Office is seeking applicants for terms of three years from the date of appointment. Members are appointed by and serve at the pleasure of the Secretary of the U.S. Department of Homeland Security. Members must be specially qualified to serve on the Committee by virtue of their education, training, and experience in the fields of data protection, privacy, cybersecurity, and/or emerging technologies. Members are expected to actively participate in Committee and Subcommittee activities and to provide material input into Committee research and recommendations. Pursuant to the FACA, the Committee's Charter requires that Committee membership be balanced to include:
1. Individuals currently working in higher education, state or local government, or not-for-profit organizations;
2. Individuals currently working in for-profit organizations including at least one who shall be familiar with the data privacy-related issues addressed by small- to medium-sized enterprises;
3. Individuals currently working in for-profit organizations, including at least one who shall be familiar with data privacy-related issues addressed by large-sized and/or multinational enterprises; and
4. Other individuals, as determined appropriate by the Secretary.
Committee members serve as Special Government Employees (SGE) as defined in section 202(a) of title 18 U.S.C. As such, they are subject to Federal conflict of interest laws and government-wide standards of conduct regulations. Members must annually file a New Entrant Confidential Financial Disclosure Report (OGE Form 450) for review and approval by Department ethics officials. DHS may not release these reports or the information in them to the public except under an order issued by a Federal court or as otherwise permitted under the Privacy Act (5 U.S.C. 552a) or Freedom of Information Act (FOIA) (5 U.S.C. 552). Committee members are also required to obtain and retain at least a secret-level security clearance as a condition of their appointment. Members are not compensated for their service on the Committee; however, while attending meetings or otherwise engaged in Committee business, members may receive travel expenses and per diem in accordance with Federal travel regulations.
Committee History and Activities: Individuals interested in applying for Committee membership should review the history of the Committee's work. The Committee's charter and current membership, transcripts of Committee meetings, and Committee reports and recommendations to the Department are posted on the Committee's web page on the DHS Privacy Office website ( www.dhs.gov/privacy ).
Applying for Membership: To apply for membership on the DHS Data Privacy and Integrity Advisory Committee, please submit the following documents to Sandra L. Taylor, Designated Federal Officer, at the address provided below within 45 days of the date of this notice:
1. A current resume and
2. A letter that explains your qualifications for service on the Committee and describes in detail how your experience is relevant to the Committee's work.
Your resume and letter will be weighed equally in the application review process. Please note that individuals who are registered as Federal lobbyists are not eligible to serve on Federal advisory committees in an individual capacity. See “Revised Guidance on Appointment of Lobbyists to Federal Advisory Committees, Boards, and Commissions,” 79 FR 47482 (Aug. 13, 2014). If you are or were registered as a Federal lobbyist, you are not eligible to apply for membership on the DHS Data Privacy and Integrity Advisory Committee unless you have filed a bone fide de-registration, been de-listed by your employer as an active lobbyist reflecting the actual cessation of lobbying activities, or not appeared on a quarterly lobbying report for three consecutive quarters because of actual cessation of lobbying activities. Applicants selected for membership will be required to certify, pursuant to 28 U.S.C. 1746, that they are not currently registered as Federal lobbyists. Pursuant to the Committee's Charter, individuals who are not U.S. citizens or legal permanent residents of the United States are not eligible to serve on the DHS Data Privacy and Integrity Advisory Committee.
Please send your documents to Sandra L. Taylor, Designated Federal Officer, DHS Data Privacy and Integrity Advisory Committee, by either of the following methods:
• Email: PrivacyCommittee@hq.dhs.gov or
• Fax: (202) 343-4010.

Privacy Act Statement: DHS's Use of Your Information
Authority: DHS requests that you voluntarily submit this information under its following authorities: the Federal Records Act, 44 U.S.C. 3101; the FACA, 5 U.S.C. ch. 10; and the Privacy Act of 1974, 5 U.S.C. 552a.
Principal Purposes: When you apply for appointment to the DHS Data Privacy and Integrity Advisory Committee, DHS collects your name, contact information, and any other personal information that you submit in conjunction with your application. DHS will use this information to evaluate your candidacy for Committee membership. If you are chosen to serve as a Committee member, your name will appear in publicly-available Committee documents, membership lists, and Committee reports.
Routine Uses and Sharing: In general, DHS will not use the information you provide for any purpose other than the principal purpose(s) for which it was provided and will not share this information within or outside the agency. In certain circumstances, DHS may share this information on a case-by-case basis as required by law or as necessary for a specific purpose, as described in the DHS/ALL-009 Department of Homeland Security Advisory Committees System of Records Notice (October 3, 2008, 73 FR 57639).
Effects of Not Providing Information: You may choose not to provide the requested information or to provide only some of the information DHS requests. If you choose not to provide some or all of the requested information, DHS may not be able to consider your application for appointment to the Data Privacy and Integrity Advisory Committee.
Accessing and Correcting Information: If you are unable to access or correct this information by using the method that you originally used to submit it, you may submit a Privacy Act and FOIA request in writing to the DHS Chief FOIA Officer at foia@hq.dhs.gov. Additional instructions are available at http://www.dhs.gov/foiaandintheDHS/ALL-009 Department of Homeland Security Advisory Committees System of Records Notice (October 3, 2008, 73 FR 57639) referenced above.
Mason C. Clutter,

Chief Privacy Officer, Department of Homeland Security.
DEPARTMENT OF HOMELAND SECURITY
U.S. Citizenship and Immigration Services
[CIS No. 2775-24; DHS Docket No. USCIS-2024-0004]
Retirement of Forms by Mail Service

AGENCY:
U.S. Citizenship and Immigration Services, Department of Homeland Security.

ACTION:
Notice.

SUMMARY:
Through this notice, the Department of Homeland Security (DHS), United States Citizenship and Immigration Services (USCIS) announces the retirement of the Forms by Mail service on July 18, 2024. The Forms by Mail service provides paper copies of available USCIS forms by mail to individuals who submit a request online using the uscis.gov website (accessible at https://www.uscis.gov/forms/forms-information/forms-by-mail ) or by mail. Forms by Mail is no longer needed because all USCIS forms and instructions are available on the uscis.gov website to download, print, and complete, and many forms may be filed electronically at https://www.uscis.gov/file-online/forms-available-to-file-online. Ending Forms by Mail is intended to allow USCIS to use the resources that it requires on more essential tasks.

DATES:
USCIS will not accept forms requests received through the uscis.gov website or by mail after July 18, 2024.

ADDRESSES:
Mary Zimmerman, Supervisor, Intake and Processing Unit, Central Operations Branch, Office of Intake and Document Production, U.S. Citizenship and Immigration Services, Department of Homeland Security, 124 Leroy Road, Williston, VT 05495.

FOR FURTHER INFORMATION CONTACT:
Mary Zimmerman, Supervisor, Intake and Processing Unit, Central Operations Branch, Office of Intake and Document Production, U.S. Citizenship and Immigration Services, Department of Homeland Security, 124 Leroy Road, Williston, VT 05495 or by phone at 802-309-0284.

SUPPLEMENTARY INFORMATION:
On April 5, 1978, the Immigration and Naturalization Service (Legacy INS) published a final rule amending the regulations at 8 CFR part 299 to provide guidance on the issuance of agency forms to the public. See 43 FR 14304. The goal of this final rule was to facilitate distribution of agency forms to individuals, groups, and practitioners, which benefited the public during a time when these forms were not immediately accessible. Id. at 14303.
As a result of the 1978 final rule, Legacy INS created the Forms by Mail service. Under 8 CFR 299.2, USCIS may, but is not required to, provide physical copies of forms to the person for whom the form is intended or a representative of the intended user. See 8 CFR 299.2 (stating “Any officer or employee of the Service may issue official application or petition and related forms to the person for whose use the form is intended or to a person identified as a representative of the intended user in the quantity required for filing the application or petition and related forms.”) (emphasis added). Through the USCIS Forms by Mail service, individuals may request physical copies of blank forms to file applications or petitions with USCIS. ^1 While most of these form requests are initiated by individuals who completed an online form request on the uscis.gov website, USCIS also responds to form requests received through physical mail. USCIS has administered the Forms by Mail service for over 30 years.
^1 See Department of Homeland Security, United States Citizenship and Immigration Services, Forms By Mail available at https://www.uscis.gov/forms/forms-information/forms-by-mail (last viewed Apr. 15, 2024).
Since fiscal year (FY) 2019, form requests submitted through the USCIS Forms by Mail service have decreased by over 500%. ^2 USCIS attributes this decreased demand to the availability of all agency forms on the USCIS website, in addition to the increasing electronic filing options for many applications and petitions. Individuals who access the USCIS forms online are assured they have the most current form versions, which minimizes the number of immigration benefit requests that USCIS otherwise would have to reject based on an outdated or incorrect form version.
^2 Records of the USCIS, Office of Intake and Document Production, Document Management Division.
In addition, USCIS spends over $35,000 annually to manage the Forms by Mail program, including employees' salaries, postage, and other materials. ^3 Forms by Mail also requires specialized mailing equipment and software to manage the distribution of the forms. USCIS has determined that these resources would be better used in delivering services that are in demand.
^3 Records of the USCIS, Office of Intake and Document Production, Document Management Division.
Before deciding to retire the Forms by Mail Service, USCIS assessed whether there were reliance interests, whether they were significant, and weighed such interests against the benefits of and rationale behind making this change along with competing policy concerns. DHS reviewed data such as the number of forms requests received through the Forms by Mail service in recent years. DHS has not received any indication that stakeholders do not have access to the internet, a computer, a printer, or online filing capabilities. The total number of requests made through Forms by Mail in FY23 was 10,783 and in FY23 USCIS had over 7.7 million paper filings. Therefore, DHS determined that there are not significant reliance interests in the Forms by Mail service, and to the extent that such reliance interests exist, the competing policy concerns, including the human resources and operational and financial costs savings from retiring the Forms by Mail service, outweigh any potential reliance interest. DHS concluded there are no alternatives to retiring the program that would meet the competing policy concerns. Nevertheless, USCIS is providing 45 days advance notice in this notice before the Forms by Mail service is retired to mitigate any reliance interests and facilitate adjustment to other avenues to obtain forms. Therefore, after considering the decreasing demand for the USCIS Forms by Mail service, the availability of USCIS forms on the uscis.gov website, and the operational and financial costs of the Forms by Mail service, USCIS has decided to retire the Forms by Mail Service. USCIS will also post a notice on the Forms by Mail web page ^4 and on social media announcing that we will end the service in 45 days. After July 18, 2024, USCIS will no longer physically mail forms to stakeholders and will direct any form request or similar inquiry to the uscis.gov website.
^4 See Department of Homeland Security, United States Citizenship and Immigration Services, Forms By Mail available at https://www.uscis.gov/forms/forms-information/forms-by-mail (last viewed Apr. 15, 2024).
Ur M. Jaddou,

Director, U.S. Citizenship and Immigration Services, Department of Homeland Security.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-7086-N-10]
60-Day Notice of Proposed Information Collection: Multifamily Housing Mortgage and Housing Assistance Restructuring Program (Mark-to-Market); OMB Control No.: 2502-0533

AGENCY:
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, Department of Housing and Urban Development (HUD).

ACTION:
Notice.

SUMMARY:
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.

DATES:
Comments Due Date: July 18, 2024.

ADDRESSES:
Interested persons are invited to submit comments regarding this proposal. Written comments and recommendations for the proposed information collection can be sent within 60 days of publication of this notice to www.reginfo.gov/public/do/PRAMain . Find this particular information collection by selecting “Currently under 60-day Review—Open for Public Comments” or by using the search function. Interested persons are also invited to submit comments regarding this proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street SW, Room 8210, Washington, DC 20410-5000; telephone (202) 402-3577 (this is not a toll-free number) or email: PaperworkReductionActOffice@hud.gov .

FOR FURTHER INFORMATION CONTACT:
Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street, SW, Washington, DC 20410; email; Colette.Pollard@hud.gov or telephone 202-402-3400. This is not a toll-free number. HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech and communication disabilities. To learn more about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs . Copies of available documents submitted to OMB may be obtained from Ms. Pollard.

SUPPLEMENTARY INFORMATION:
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.

A. Overview of Information Collection
Title of Information Collection: Multifamily Housing Mortgage and Housing Assistance Restructuring Program (Mark-to-Market).
OMB Approval Number: 2502-0533.
Type of Request: Reinstatement, with change, of previously approved collection for which approval has expired.
Form Numbers: Mark-to-Market (M2M)—HUD-9624, HUD-9625, OPG 3.1, OPG 3.2, OPG 3.3, OPG 3.4, OPG 4.1, OPG 4.2, OPG 4.3, OPG 4.4, OPG 4.7, OPG 4.8, OPG 4.10, OPG 4.11, OPG 4.12, OPG 5.4, OPG 5.5, OPG 6.5, OPG 7.4, OPG 7.6, OPG 7.8, OPG 7.11, OPG 7.12, OPG 7.13, OPG 7.14, OPG 7.16, OPG 7.21, OPG 7.22, OPG 7.23, OPG 7.25, OPG 9.10, OPG 9.11, OPG 11.1.
Post M2M documents—Accommodation Agreement (Debt Assignment), Agreement of Assignment of MRN/CRN from QNP (Acquiring Purchaser), Agreement of Assignment of MRN/CRN to QNP (Acquiring Purchaser), Allonge—CRN Assignment from QNP, Allonge—CRN Assignment to QNP, Allonge—MRN Assignment from QNP, Allonge—MRN Assignment to QNP, Assignment, Assumption and Modification of M2M Use Agreement (QNP-Non-Exception Rents), Assignment, Assumption and Modification of M2M Use Agreement (QNP Exception Rents), Assignment, Assumption, and Modification of M2M Use Agreement (Not QNP), General Guidance Memorandum (GGM) Exhibits (Exhibit 1: Assignment and Assumption of M2M Use Agreement, Exhibit 2: Subordination Agreement Mortgage Loan to M2M Use Agreement, Exhibit 3A: Modification of M2M Use Agreement, Exhibit 3B: Assignment, Assumption and Modification of M2M Use Agreement (Not QNP), Exhibit 4: Release from Land Records of Accommodation Agreement).
Description of the need for the information and proposed use: The Mark to Market (M2M) Program is authorized under the Multifamily Assisted Housing Reform and Affordability Act of 1997, modified, and extended from time to time, including by the Mark to Market Extension Act of 2001. M2M or the “FHA-Insured Multifamily Housing Mortgage and Housing Assistance Restructuring Program” was originally authorized by Title V of the Departments of Veterans Affairs and Housing and Urban Development and Independent Agencies Appropriations Act of 1998 (Pub. L. 105-65, 111 Stat. 1384, October 27, 1997). Title V created a statutory program directed at FHA-insured multifamily projects that have project-based Section 8 contracts with above-market rents.
The information collection is used to determine the eligibility of FHA-insured or formerly insured multifamily properties for participation in the M2M program and the terms on which such participation should occur. The collection is also used to structure the closing of debt restructures that are finalized under the program, to track the post-closing performance of the restructures, to evaluate the performance of the Agency's Participating Administrative Entities (PAEs) in undertaking restructures on the Agency's behalf as the Agency agent, and to facilitate subsequent transactions involving the restructured properties under the Post-M2M program. Post-M2M is an extended component of the M2M program and addresses the processing of owner requests to refinance or to sell a property that has received the benefits of a debt restructuring under M2M or M2M Program's predecessor program, the Portfolio Reengineering Demonstration Program (Demo Program).
Respondents: Owners, Contractors and Tenants.
Estimated Number of Respondents: 60.
Estimated Number of Responses: 1,591.
Frequency of Response: On Occasion.
Average Hours per Response: 35.
Total Estimated Burdens: 2,079.
Information collection | Number of respondents | Frequency of response | Responses per annum | Burden hour per response | Annual burden hours | Hourly cost per response | Annual cost
2502-0533 | 60 | On Occasion | 1,591 | 35 | 2,079 | $53 | $108,373.75

B. Solicitation of Public Comment
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
HUD encourages interested parties to submit comment in response to these questions.

C. Authority
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35.
Jeffrey D. Little,

General Deputy Assistant Secretary, Office of Housing.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-7086-N-12]
60-Day Notice of Proposed Information Collection: Local Appeals to Single-Family Mortgage Limits; OMB Control No.: 2502-0302

AGENCY:
Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.

ACTION:
Notice.

SUMMARY:
HUD is seeking approval from the Office of Management and Budget (OMB) for the information collection described below. In accordance with the Paperwork Reduction Act, HUD is requesting comment from all interested parties on the proposed collection of information. The purpose of this notice is to allow for 60 days of public comment.

DATES:
Comments Due Date: August 2, 2024.

ADDRESSES:
Interested persons are invited to submit comments regarding this proposal.
Written comments and recommendations for the proposed information collection can be sent within 60 days of publication of this notice to www.reginfo.gov/public/do/PRAMain. Find this particular information collection by selecting “Currently under 60-day Review—Open for Public Comments” or by using the search function. Interested persons are also invited to submit comments regarding this proposal by name and/or OMB Control Number and should be sent to: Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street SW, Room 8210, Washington, DC 20410; telephone (202) 402-3577 (this is not a toll-free number) or email: PaperworkReductionActOffice@hud.gov.

FOR FURTHER INFORMATION CONTACT:
Colette Pollard, Reports Management Officer, REE, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC, Room 8210, 20410; email Colette.Pollard@hud.gov, telephone (202) 402-3400. This is not a toll-free number. HUD welcomes and is prepared to receive calls from individuals who are deaf or hard of hearing, as well as individuals with speech or communication disabilities. To learn more about how to make an accessible telephone call, please visit https://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs.
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.

SUPPLEMENTARY INFORMATION:
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.

A. Overview of Information Collection
Title of Information Collection: Local Appeals to Single-Family Mortgage Limits.
OMB Approval Number: 2502-0302.
Type of Request: Extension.
Form Number: N/A.
Description of the need for the information and proposed use: Any interested party may submit a request for the mortgage limits to be increased in a particular area if they believe that the present limit does not accurately reflect the higher sales prices in that area. Any request for an increase must be accompanied by sufficient housing sales price data to justify higher limits.
This allows HUD the opportunity to examine additional data to confirm or adjust the set loan limit for a particular area.
Respondents: Business and other for-profit.
Estimated Number of Respondents: 1.
Estimated Number of Responses: 1.
Frequency of Response: 1.
Average Hours per Response: 7.
Total Estimated Burdens: 7.

B. Solicitation of Public Comment
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) The accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Ways to enhance the quality, utility, and clarity of the information to be collected; and (4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.
HUD encourages interested parties to submit comments in response to these questions.

C. Authority
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. chapter 35.
Jeffrey D. Little,

General Deputy Assistant Secretary for Housing.
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
[Docket No. FWS-HQ-IA-2024-0078; FXIA16710900000-245-FF09A30000]
Foreign Endangered Species; Receipt of Permit Applications

AGENCY:
Fish and Wildlife Service, Interior.

ACTION:
Notice of receipt of permit applications; request for comments.

SUMMARY:
We, the U.S. Fish and Wildlife Service, invite the public to comment on applications to conduct certain activities with foreign species that are listed as endangered under the Endangered Species Act (ESA). With some exceptions, the ESA prohibits activities with listed species unless Federal authorization is issued that allows such activities. The ESA also requires that we invite public comment before issuing permits for any activity otherwise prohibited by the ESA with respect to any endangered species.

DATES:
We must receive comments by July 3, 2024.

ADDRESSES:
Obtaining Documents: The applications, application supporting materials, and any comments and other materials that we receive will be available for public inspection at https://www.regulations.gov in Docket No. FWS-HQ-IA-2024-0078.
Submitting Comments: When submitting comments, please specify the name of the applicant and the permit number at the beginning of your comment. You may submit comments by one of the following methods:
• internet: https://www.regulations.gov. Search for and submit comments on Docket No. FWS-HQ-IA-2024-0078.
• U.S. mail: Public Comments Processing, Attn: Docket No. FWS-HQ-IA-2024-0078; U.S. Fish and Wildlife Service Headquarters, MS: PRB/3W; 5275 Leesburg Pike; Falls Church, VA 22041-3803.
For more information, see Public Comment Procedures under SUPPLEMENTARY INFORMATION .

FOR FURTHER INFORMATION CONTACT:
Timothy MacDonald, by phone at 703-358-2185 or via email at DMAFR@fws.gov. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures

A. How Do I Comment on Submitted Applications?
We invite the public and local, State, Tribal, and Federal agencies to comment on these applications. Before issuing any of the requested permits, we will take into consideration any information that we receive during the public comment period.
You may submit your comments and materials by one of the methods in ADDRESSES . We will not consider comments sent by email or to an address not in ADDRESSES . We will not consider or include in our administrative record comments we receive after the close of the comment period (see DATES ).
When submitting comments, please specify the name of the applicant and the permit number at the beginning of your comment. Provide sufficient information to allow us to authenticate any scientific or commercial data you include. The comments and recommendations that will be most useful and likely to influence agency decisions are: (1) Those supported by quantitative information or studies; and (2) those that include citations to, and analyses of, the applicable laws and regulations.

B. May I Review Comments Submitted by Others?
You may view and comment on others' public comments at https://www.regulations.gov unless our allowing so would violate the Privacy Act (5 U.S.C. 552a) or Freedom of Information Act (5 U.S.C. 552).

C. Who Will See My Comments?
If you submit a comment at https://www.regulations.gov, your entire comment, including any personal identifying information, will be posted on the website. If you submit a hardcopy comment that includes personal identifying information, such as your address, phone number, or email address, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. Moreover, all submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, will be made available for public disclosure in their entirety.

II. Background
To help us carry out our conservation responsibilities for affected species, and in consideration of section 10(c) of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531 et seq. ), we invite public comments on permit applications before final action is taken. With some exceptions, the ESA prohibits certain activities with listed species unless Federal authorization is issued that allows such activities. Permits issued under section 10(a)(1)(A) of the ESA allow otherwise prohibited activities for scientific purposes or to enhance the propagation or survival of the affected species. Service regulations regarding prohibited activities with endangered species, captive-bred wildlife registrations, and permits for any activity otherwise prohibited by the ESA with respect to any endangered species are available in title 50 of the Code of Federal Regulations in part 17.

III. Permit Applications
We invite comments on the following applications.

Applicant: The Peregrine Fund, Boise, ID; Permit No. PER10200447
The applicant requests authorization to import biological samples from wild and captive-born owls from the order Strigiformes and falcons from the order Falconiformes for the purpose of scientific research. This notification covers activities to be conducted by the applicant over a 5-year period.

Applicant: Kootenai Tribe of Idaho, Bonners Ferry, ID; Permit No. PER10215681
The applicant requests authorization to export live juvenile white sturgeon ( Acipenser transmontanus ) captive-bred from broodstock of the Kootenai River population to Nelson, British Colombia, Canada, for the purpose of enhancing the propagation or survival of the species through re-introduction. This notification covers activities to be conducted by the applicant over a 5-year period.

Applicant: Phoenix Herpetological Society, Scottsdale, AZ; Permit No. PER2258448
The applicant requests a permit to export one male and one female captive-bred American crocodile ( Crocodylus acutus ) and one male and one female captive-bred African dwarf crocodile ( Osteolaemus tetraspis tetraspis or O. t. osborni ), for the purpose of enhancing the propagation or survival of the species. This notification is for a single export.

Applicant: Southwest Fisheries Science Center, La Jolla, CA; Permit No. PER10272760
The applicant requests reissuance of a permit to import and export biological samples collected from wild and captive-bred Kemp's ridley sea turtle ( Lepidochelys kempii ), hawksbill sea turtle ( Eretmochelys imbricata ), leatherback sea turtle ( Dermochelys coriacea ), green sea turtle ( Chelonia mydas ), loggerhead sea turtle ( Caretta caretta ), and olive ridley sea turtle ( Lepidochelys olivacea ) for the purpose of scientific research. Samples are collected from live or salvaged specimens. This notification covers activities to be conducted by the applicant over a 5-year period.

Applicant: Safari West, Santa Rosa, CA; Permit No. PER10129477
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for the following species, to enhance the propagation or survival of the species. This notification covers activities to be conducted by the applicant over a 5-year period.
Common name | Scientific name
Northern bald ibis | Geronticus eremita.
Ring-tailed lemur | Lemur catta.
Black-and-white ruffed lemur | Varecia variegata.
Red-ruffed lemur | Varecia rubra.
Cheetah | Acinonyx jubatus.
Southern white rhinoceros | Ceratotherium simum simum.

Applicant: Avian Preservation and Education Conservancy, Jacksonville, FL; Permit No. PER10257506
The applicant requests a captive-bred wildlife registration under 50 CFR 17.21(g) for red siskin ( Carduelis cucullata ), to enhance the propagation or survival of the species. This notification covers activities to be conducted by the applicant over a 5-year period.

Applicant: Gunner B. Peterson, Burnt Cabins, PA; Permit No. PER10276124
The applicant requests a permit to import a sport-hunted trophy of male bontebok ( Damaliscus pygargus pygargus ) culled from a captive herd maintained under the management program of the Republic of South Africa, for the purpose of enhancing the propagation or survival of the species.

IV. Next Steps
After the comment period closes, we will make decisions regarding permit issuance. If we issue permits to any of the applicants listed in this notice, we will publish a notice in the Federal Register . You may locate the notice announcing the permit issuance by searching https://www.regulations.gov for the permit number listed above in this document. For example, to find information about the potential issuance of Permit No. 12345A, you would go to regulations.gov and search for “12345A”.

V. Authority
We issue this notice under the authority of the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq. ), and its implementing regulations.
Timothy MacDonald,

Government Information Specialist, Branch of Permits, Division of Management Authority.
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
[FWS-HQ-MB-2024-0075; FXMB12330900000-245-FF09M13000; OMB Control Number 1018-0135]
Agency Information Collection Activities; Electronic Federal Duck Stamp Program

AGENCY:
Fish and Wildlife Service, Interior.

ACTION:
Notice of information collection; request for comment.

SUMMARY:
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Fish and Wildlife Service (Service), are proposing to revise a currently approved information collection.

DATES:
Interested persons are invited to submit comments on or before August 2, 2024.

ADDRESSES:
Send your comments on the information collection request (ICR) by one of the following methods (please reference “1018-0135” in the subject line of your comments):
• Internet (preferred): https://www.regulations.gov. Follow the instructions for submitting comments on Docket No. FWS-HQ-MB-2024-0075.
• U.S. mail: Service Information Collection Clearance Officer, U.S. Fish and Wildlife Service, 5275 Leesburg Pike, MS: PRB (JAO/3W), Falls Church, VA 22041-3803.

FOR FURTHER INFORMATION CONTACT:
To request additional information about this ICR, contact Madonna L. Baucum, Service Information Collection Clearance Officer, by email at Info_Coll@fws.gov, or by telephone at (703) 358-2503. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.

SUPPLEMENTARY INFORMATION:
In accordance with the Paperwork Reduction Act (PRA, 44 U.S.C. 3501 et seq. ) and its implementing regulations at 5 CFR 1320.8(d)(1), all information collections require approval by the Office of Management and Budget (OMB). We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number.
As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other Federal agencies to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, 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) How might the agency 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, e.g., permitting electronic submission of response.
Comments that you submit in response to this notice are a matter of public record. We will include or summarize each comment in our request to OMB to approve this ICR. 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.
Abstract: On March 16, 1934, Congress passed, and President Franklin D. Roosevelt signed, the Migratory Bird Hunting Stamp Act (16 U.S.C. 718a et seq. ). Popularly known as the Duck Stamp Act, it requires all migratory waterfowl hunters 16 years of age or older to buy a Federal migratory bird hunting and conservation stamp (Federal Duck Stamp) annually. The stamps are a vital tool for wetland conservation. Ninety-eight cents out of every dollar generated by the sale of Federal Duck Stamps is used for the purchase or lease wetland habitat for protection in the National Wildlife Refuge System. The Federal Duck Stamp program is one of the most successful conservation programs ever initiated and is a highly effective way to conserve America's natural resources. Besides serving as a hunting permit and a conservation tool, a current year's Federal Duck Stamp also serves as an entrance pass for national wildlife refuges where admission is charged. Duck Stamps and products that bear stamp images are also popular collector's items.
The Electronic Duck Stamp Act of 2005 (Pub. L. 109-266) required the Secretary of the Interior to conduct a 3-year pilot program, under which States could issue electronic Federal Duck Stamps. This pilot program was made permanent with the passage of the Permanent Electronic Duck Stamp Act of 2013 (Pub. L. 113-239). The Duck Stamp Modernization Act of 2023 (Modernization Act; Pub. L. 118-25) removed the temporary nature of the electronic stamp certificate, making the electronic stamp valid from the time of purchase through the next June 30. The electronic stamp can be stored either digitally or printed and carried as a hard copy. The Modernization Act also stipulates that a physical stamp would be mailed to all electronic stamp purchasers after March 10.
Today anyone, regardless of their State or country of residence, is able to purchase an electronic Duck Stamp through any State that participates in the program. The electronic stamp is issued as a certificate or proof of purchase and is valid from the date of purchase until the end of the Federal Duck Stamp year, which ends on June 30. Thus the electronic stamp is available for immediate use by the purchaser. Because it can be stored either digitally or by printing out and carrying a hard copy, customers are less likely to lose their proof of purchase. Customers no longer have to receive the actual physical stamp in the mail if they purchase an electronic stamp to comply with the law.
Eight States participated in the pilot program beginning in 2007. At the end of the pilot, we provided a report to Congress outlining the successes of the program. The program improved public participation by increasing the ability of the public to obtain required Federal Duck Stamps.
Under our authorities in 16 U.S.C. 718 et seq., we continued the Electronic Duck Stamp Program in the eight States that participated in the pilot and enrolled other interested States. Currently, the program includes 30 participating States. Several additional States have indicated interest in participating.
With the passage of the Modernization Act and to mitigate several challenges faced by the Service in implementing the program, Memorandums of Understanding (MOU) signed between the States and the Service must be reviewed, rewritten, and signed to reflect changes in the law and address several issues which reflect on the accountability, transparency, and effectiveness of the electronic Duck Stamp.
Interested States must apply, using Form 3-2341, based on their ability to meet the responsibilities as outlined in the updated MOU. We will use the information provided in the application to determine a State's eligibility to participate in the program and willingness to comply with the requirements of issuing an electronic stamp. Information includes, but is not limited to:
• Information verifying the current systems the State uses to sell hunting, fishing, and other associated licenses and products.
• Applicable State laws, regulations, or policies that authorize the use of electronic systems to issue licenses.
• Examples and explanations of the codes the State proposes to use to create and endorse the unique identifier for the individual to whom each stamp is issued.
• Mockup copy of the printed version of the State's proposed electronic stamp, including a description of how attention will be drawn to customer support information and identifying features of the licensee to be specified on the permit.
• Description of all fees the State will charge for issuance of an electronic stamp and how these will be conveyed to the customer.
• Description of the process the State will use to account for and transfer the amounts collected by the State that are required to be transferred under the program.
• Manner in which the State will transmit electronic stamp customer data.
Each State approved to participate in the program must provide the following information, on a regular basis (not to exceed 7 days post purchase), to the Service-approved stamp distribution company, to enable that company to issue the physical stamp and to collect funds owed to the Service:
• Full name (first, middle, last, and any prefixes/suffixes), and complete mailing address of each individual who purchases an electronic stamp from the State.
• Date of e-stamp purchase.

Proposed Revisions
Changes to Form 3-2341, “Application and Instructions to Participate in the Electronic Federal Duck Stamp Program” include:
• change in effective date from September 1, 20##, to July 1, 20## (field is customizable each year), to coincide with the Duck Stamp issue date;
• removal of Application Deadline;
• update the Background of the Electronic Federal Duck Stamp Program;
• update website contact information;
• request for transparent description of all charges assessed to each customer for the purchase of an Electronic Federal Duck Stamp and how they will be relayed to the customer;
• removal of language reflecting the past temporary nature of the Electronic Federal Duck Stamp; and
• request for information allowing the Service to measure any challenges to the diversity and number of interested Electronic Federal Duck Stamp purchasers.
Changes to the example Memorandum of Understanding (MOU) referenced in Form 3-2341 include:
• Section I—Authority: Update to authorities to add the Modernization Act.
• Section II—Background: Update details to include dollar and acreage figures, as well as details regarding changes required by the Modernization Act,
• Section IV—Responsibilities of the Parties: Update the requirements of the Service to include:
○ mailing of physical stamps on or after March 10 of each year;
○ monthly invoicing for e-stamp purchases;
○ clarification of the review of handling charges to include monitoring for cost efficiencies, consistencies, accuracies, and transparency.
Update the requirements for the States to:
○ assist the Service in promoting the art, tradition, and history of the printed pictorial stamp;
○ provide an online electronic stamp option for at least 9 months covering the period of August 1 through April 30;
○ issue an electronic certificate and a proof of purchase that can be carried digitally or on paper which is readily available for inspection with supporting identification by all authorized individuals ( i.e., fee collection or law enforcement officers);
○ clarify that both the certificate and the receipt of purchase will contain and display a secure, unique identifier for the individual to whom it is issued, specify that the e-stamp is valid until June 30 of the year printed on the physical stamp, statement that the e-stamp is both non-refundable and non-transferable, information that a physical stamp will be mailed after March 10, and contact information for the Service's stamp fulfillment center in the event of questions;
○ clarify that the State will not provide or replicate a digital image of the Federal Duck Stamp itself as proof of purchase;
○ require the State provide the customer with a breakdown of all fees the State is charging related to their purchased e-stamp;
○ inform and provide the customer with assistance in the event they need to reprint or otherwise retrieve the State issued proof of purchase in digital or physical form;
○ inform customers that all sales of the electronic Federal Duck Stamp are final and non-refundable;
○ Promptly send the required information for all customers who have purchased an e-stamp to the Service's designated stamp fulfillment center within a maximum of 7 days of purchase by customer (preferably on a daily basis);
○ State will be invoiced at the end of the month for all sales of Federal Duck Stamps sold through the State's licensing system during the month and partial payments or payments on a quarterly or annual basis will not be allowed; and
○ Provide the Service and their Distributor with any updates to laws, regulations or policies related to the State's electronic licensing system.
• Section V—General Provisions: We added distributors to the list of required acknowledgements in program material publicity and clarified in person or virtual meetings apply to both individually scheduled or regularly scheduled meetings.
• Section VII—Period of MOU: We updated the dates from 2022-2025 to 2025-2028 and included a caveat that the MOU may be extended; added a clarification that either party may ask for a meeting to discuss issues; and a clause stating that in the event that the agreement is terminated for cause, the Service may require the State to reapply to be enrolled in the program.
Upon request, copies of the draft Form 3-2341 and example MOU are available by sending a request to the Service Information Collection Clearance Officer at Info_Coll@fws.gov.
Title of Collection: Electronic Federal Duck Stamp Program.
OMB Control Number: 1018-0135.
Form Number: Form 3-2341.
Type of Review: Revision of a currently approved collection.
Respondents/Affected Public: State fish and wildlife agencies.
Respondent's Obligation: Required to obtain or retain a benefit.
Frequency of Collection: One time for applications, and an average of once every 7 days per respondent for fulfillment reports.
Total Estimated Annual Nonhour Burden Cost: None.
Activity/requirement | Estimated number of annual respondents | Estimated number of annual responses | Completion time per response (hours) | Estimated total annual burden hours
Application (FWS Form 3-2341) | 6 | 6 | 40 | 240
Fulfillment Reports | 33 | 1,353 | 1 | 1,353
Totals | 39 | 1,359 | | 1,593
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 authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).
Madonna Baucum,

Information Collection Clearance Officer, U.S. Fish and Wildlife Service.
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
[Docket No. FWS-R3-ES-2024-0023; FXES11140300000-245-FF03E00000]
Receipt of an Application for an Amended Incidental Take Permit Amendment for the Great Pathfinder Habitat Conservation Plan, Hamilton and Boone Counties, IA; Categorical Exclusion

AGENCY:
Fish and Wildlife Service, Interior.

ACTION:
Notice of availability; request for comments and information.

SUMMARY:
We, the U.S. Fish and Wildlife Service, have received an application from Great Pathfinder Wind LLC (applicant), to amend an existing incidental take permit under the Endangered Species Act, for its Great Pathfinder Wind Project. We request public comment on the application, which includes the applicant's proposed amended habitat conservation plan, and the Service's preliminary determination that the proposed permitting action may be eligible for a categorical exclusion pursuant to the Council on Environmental Quality's National Environmental Policy Act (NEPA) regulations, the Department of the Interior's (DOI) NEPA regulations, and the DOI Departmental Manual. To make this preliminary determination, we prepared a draft environmental action statement and low-effect screening form, both of which are also available for public review. We invite comment from the public and local, State, Tribal, and Federal agencies.

DATES:
We will accept comments received or postmarked on or before July 3, 2024.

ADDRESSES:
Obtaining Documents: The documents this notice announces, as well as any comments and other materials that we receive, will be available for public inspection online in Docket No. FWS-R3-ES-2024-0023 at https://www.regulations.gov.
Submitting Comments: If you wish to submit comments on any of the documents, you may do so in writing by one of the following methods:
• Online: https://www.regulations.gov. Follow the instructions for submitting comments on Docket No. FWS-R3-ES-2024-0023.
• U.S. mail: Submit comments by U.S. mail to Public Comments Processing, Attn: Docket No. FWS-R3-ES-2024-0023; U.S. Fish and Wildlife Service; 5275 Leesburg Pike, MS: PRB/3W; Falls Church, VA 22041-3803.

FOR FURTHER INFORMATION CONTACT:
Kraig McPeek, Field Supervisor, Illinois-Iowa Ecological Services Field Office, by email at Kraig_mcpeek@fws.gov, or by telephone at 309-757-5800, extension 214; or Andrew Horton, Regional HCP Coordinator, by email at andrew_horton@fws.gov, or by telephone at 612-713-5337. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.

SUPPLEMENTARY INFORMATION:
We, the U.S. Fish and Wildlife Service (Service), have received an application from Great Pathfinder Wind LLC (applicant), to amend an existing incidental take permit (ITP) under the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531 et seq. ), for its Great Pathfinder Wind Project (project). If approved, the amended ITP would add authorization of incidental take of a proposed endangered species, the tricolored bat ( Perimyotis subflavus ), to the currently existing authorizations to incidentally take the Indiana bat ( Myotis sodalis ) and northern long-eared bat ( Myotis septentrionalis ), both of which are federally listed as endangered. The applicant has prepared a proposed habitat conservation plan (HCP) amendment that describes the actions and measures that the applicant would implement to avoid, minimize, and mitigate incidental take of the tricolored bat. We also announce the availability of a draft environmental action statement and low-effect screening form, which has been prepared in response to the permit application in accordance with the requirements of the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq. ). We request public comment on the application and associated documents.

Background
Section 9 of the Endangered Species Act of 1973, as amended (ESA; 16 U.S.C. 1531 et seq. ), and its implementing regulations prohibit the “take” of animal species listed as endangered or threatened. “Take” is defined under the ESA as to “harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect [listed animal species], or to attempt to engage in such conduct” (16 U.S.C. 1538). However, under section 10(a) of the ESA, we may issue permits to authorize incidental take of listed species. “Incidental take” is defined by the ESA as take that is incidental to, and not the purpose of, carrying out an otherwise lawful activity. Regulations governing incidental take permits for endangered and threatened species, respectively, are found in the Code of Federal Regulations (CFR) at 50 CFR 17.22 and 50 CFR 17.32.

Applicant's Proposed Project
The applicant requests to amend their current 6-year ITP (ESPER0627303). The proposed HCP amendment, if approved, would add authorization to incidentally take the proposed endangered tricolored bat ( Perimyotis subflavus ) to the remaining 5 years of the current ITP. The applicant determined that take is reasonably certain to occur incidental to operation of the 66 wind turbines at the project. The proposed conservation strategy in the applicant's proposed HCP amendment is designed to avoid, minimize, and mitigate the impacts of the covered activity on the covered species. The biological goals and objectives are to minimize potential take of Indiana bats, northern long-eared bats, and tricolored bats through on-site minimization measures and to provide habitat conservation measures for all covered to offset any impacts from operations of the project. The HCP amendment provides on-site avoidance and minimization measures, which include turbine operational adjustments. The estimated level of take from the project amendment is 15 tricolored bats. To offset the impacts of the taking tricolored bats, the applicant proposes to protect known maternity colony habitat or contribute to a white-nose treatment research mitigation fund, if available.

National Environmental Policy Act
The issuance of an ITP is a Federal action that triggers the need for compliance with NEPA. The Service has made a preliminary determination that the applicant's proposed amended project, and the proposed mitigation measures, would individually and cumulatively have a minor effect on the covered species and the human environment. Therefore, we have preliminarily determined that the proposed ESA section 10(a)(1)(B) permit would be a low-effect ITP that individually or cumulatively would have a minor effect on the species and may qualify for application of a categorical exclusion pursuant to the Council on Environmental Quality's NEPA regulations, DOI's NEPA regulations, and the DOI Departmental Manual. A low-effect ITP is one that would result in (1) minor or nonsignificant effects on species covered in the HCP; (2) nonsignificant effects on the human environment; and (3) impacts that, when added together with the impacts of other past, present, and reasonable foreseeable actions, would not result in significant cumulative effects to the human environment.

Next Steps
The Service will evaluate the application and the comments received to determine whether to issue the requested ITP. We will also conduct an intra-Service consultation pursuant to section 7 of the ESA to evaluate the effects of the proposed take. After considering the preceding and other matters, we will determine whether the permit issuance criteria of section 10(a)(1)(B) of the ESA have been met. If met, the Service will issue the requested amended ITP to the applicant.

Request for Public Comments
The Service invites comments and suggestions from all interested parties during a 30-day public comment period (see DATES ). In particular, information and comments regarding the following topics are requested:
1. The effects that implementation of any alternative under this proposed amendment could have on the human environment;
2. Whether or not the significance of the impact on various aspects of the human environment has been adequately analyzed in this proposed amendment;
3. Any threats to the tricolored bat that may influence their populations over the life of the ITP that are not addressed in the proposed HCP amendment or screening form; and
4. Any other information pertinent to evaluating the effects of the proposed amendment on the human environment.

Availability of Public Comments
You may submit comments by one of the methods shown under ADDRESSES . We will post on https://www.regulations.gov all public comments and information received electronically or via hardcopy. All comments received, including names and addresses, will become part of the administrative record associated with this action. 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 request in your comment that we withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so. All submissions from organizations or businesses, and from individuals identifying themselves as representatives or officials of organizations or businesses, will be made available for public disclosure in their entirety.

Authority
We provide this notice under section 10(c) of the ESA (16 U.S.C. 1531 et seq. ) and its implementing regulations (50 CFR 17.22) and NEPA (42 U.S.C. 4321 et seq. ) and its implementing regulations (40 CFR 1500-1508; 43 CFR part 46).
Lori Nordstrom,

Assistant Regional Director, Ecological Services.
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
[FWS-HQ-MB-2024-N029; FXMB123109CITY0-245-FF09M20200; OMB Control Number 1018-0183]
Agency Information Collection Activities; Submission to the Office of Management and Budget; Urban Bird Treaty Program Requirements

AGENCY:
Fish and Wildlife Service, Interior.

ACTION:
Notice of information collection; request for comment.

SUMMARY:
In accordance with the Paperwork Reduction Act of 1995, we, the U.S. Fish and Wildlife Service (Service), are proposing to renew a currently approved information collection without change.

DATES:
Interested persons are invited to submit comments on or before July 3, 2024.

ADDRESSES:
Written comments and recommendations for the proposed information collection should be submitted within 30 days of publication of this notice at https://www.reginfo.gov/public/do/PRAMain . Find this particular information collection by selecting “Currently under Review—Open for Public Comments” or by using the search function. Please provide a copy of your comments to the Service Information Collection Clearance Officer, U.S. Fish and Wildlife Service, MS: PRB (JAO/3W), 5275 Leesburg Pike, Falls Church, VA 22041-3803 (mail); or by email to Info_Coll@fws.gov . Please reference 1018-0183 in the subject line of your comments.

FOR FURTHER INFORMATION CONTACT:
To request additional information about this ICR, contact Madonna L. Baucum, Service Information Collection Clearance Officer, by email at Info_Coll@fws.gov, or by telephone at (703) 358-2503. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.

SUPPLEMENTARY INFORMATION:
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C. 3501 et seq. ) and 5 CFR 1320.8(d)(1), we provide the general public and other Federal agencies with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
On January 26, 2024, we published in the Federal Register (89 FR 5255) a notice of our intent to request that OMB approve this information collection. In that notice, we solicited comments for 60 days, ending on March 26, 2024. In an effort to increase public awareness of, and participation in, our public commenting processes associated with information collection requests, the Service also published the Federal Register notice on Regulations.gov (Docket No. FWS-HQ-MB-2024-0006). We received the following comments in response to that notice:
Comment 1: Anonymous electronic comment received 02/02/2024 via Regulations.gov (FWS-HQ-MB-2024-0006-0002): I recommend we keep all public lands in public hands, and continually add more lands to the public holding. The forest service land exchange in Summit County CO was a massive mistake and should never have happened. Summit County should have prevented the over development of second, third or more homes in the mountain valley. Over development, property investment speculation has brought more problems than just a housing shortage for workers. The Forest Service should have put the problem right on the county who should use eminent domain on hotels and condominiums to solve their problem.
Now you have radicals like Mike Lee of Utah who wants to give public lands to developers to continue to over develop Salt Lake Valley. The state of Utah has for decades failed to clean the air and created a water shortage by over developing. The Federal government should not contribute to the problems created by the State government. The public lands in urban, rural, and suburban areas should always have the priority of open space for wildlife.
Agency Response to Comment 1: The commenter did not address the information collection requirements; therefore, no response is required.
Comment 2: Anonymous electronic comment received 03/17/2024 via Regulations.gov (FWS-HQ-MB-2024-0006-0003): Please do your best to protect these birds and to care for them well.
Agency Response to Comment 2: The commenter did not address the information collection requirements; therefore, no response is required.
Comment 3: Electronic comment received 03/25/2024 via Regulations.gov (FWS-HQ-MB-2024-0006-0004) from Kyara Garcia Rodriguez: The Forest Service plays a crucial role in the management and protection of national forests and grasslands, which are essential for conserving biodiversity, storing carbon, regulating water quality, and promoting outdoor recreation. These ecosystems serve as homes for numerous plant and animal species, including those that are at risk of extinction. Through their responsible care, the Forest Service helps to guarantee the sustainable utilization of natural resources, lessen the effects of climate change, and preserve the ecological harmony of these significant landscapes.
The Urban Bird Treaty Program Requirements are crucial for supporting bird conservation in urban areas, where factors like habitat loss and pollution threaten bird populations. The program fosters partnerships between federal agencies, local governments, and community organizations to safeguard bird species, preserve urban habitats, and involve residents in conservation efforts. Recognizing the significance of the Urban Bird Treaty, Program emphasizes the importance of urban bird conservation and encourages collaborative efforts to address the unique challenges faced by birds in cities. Prioritizing the protection of urban bird populations can help preserve biodiversity, enhance urban ecosystems, and strengthen the bond between people and nature in urban settings.
Agency Response to Comment 3: No action was taken as this comment is a statement of support for the program.
As part of our continuing effort to reduce paperwork and respondent burdens, we are again soliciting comments from the public and other Federal agencies on the proposed ICR that is described below. We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, 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) How might the agency 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, e.g., permitting electronic submission of response.
Comments that you submit in response to this notice are a matter of public record. 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.
Abstract: The Urban Bird Treaty Program (UBT Program) is administered through the Service's Migratory Bird Program, under the authority of the Fish and Wildlife Coordination Act (16 U.S.C. 661-667e). The UBT Program supports partnerships of public and private organizations and individuals working to conserve migratory birds and their habitats in urban areas for the benefit of these species and the people that live in urban areas. The UBT partners' habitat conservation activities help to ensure that more natural areas, including forests, grasslands, wetlands, and meadows, are available in urban areas, so that historically excluded and underserved communities can have improved access to green space and opportunities to engage in habitat restoration and community science as well as bird-related recreation and educational programs. These habitat restoration activities, especially urban forest conservation, also contribute to climate resiliency by reducing the amount of carbon dioxide in the atmosphere. Lights-out programs in UBT cities help reduce energy costs and greenhouse gas emissions by reducing the use of electricity when people and businesses turn off their lights between dusk and dawn during the fall and spring periods of bird migration in order to reduce bird collisions with building glass.
The Service designates UBT cities or municipalities through a process in which applicants submit a nomination package, including a letter of intention and an implementation plan, for approval by the Service's Migratory Bird Program. Within 3 months, the Service reviews the package, makes any necessary recommendations for changes, and then decides to either approve or reject the package. If rejected, the city can reapply the following year. In most cases, when the Service designates a new city partner, the Service and the new city partner hold a signing ceremony, during which a representative from both the Service and the city sign a nonbinding document that states the importance of conserving birds and their habitats to the health and well-being of people that live in and visit the city. To maintain this city partner designation, the city must submit information on the activities it has carried out to meet the goals of the UBT Program, including those related to bird habitat conservation, bird hazard reduction, and bird-related community education and engagement. By helping make cities healthier places for birds and people, the UBT Program contributes to the Administration's priorities of justice and racial equity, climate resiliency, and the President's Executive Order 14008 to protect 30 percent of the Nation's land and 30 percent of its ocean areas by 2030.
The UBT program benefits city partners in many ways, including:
• Helps city partners achieve their goals for making cities healthier places for birds and people.
• Provides opportunities to share and learn from other city partners' tools, tactics, successes, and challenges, to advance city partners' urban bird conservation efforts.
• Strengthens the cohesion and effectiveness of the partnerships by coming together and working under the banner of the UBT Program.
• Gives city partners improved access to funding through the National Fish and Wildlife Foundation's Five Star and Urban Waters Restoration grant program, as UBT cities receive priority in this program.
• Helps partners garner additional funds through other urban conservation grant programs that have shared goals and objectives.
• Helps partners achieve green building credits, reduced energy costs, green space requirements, environmental equity, and other sustainability goals.
• Promotes the livability and sustainability of partner cities by spreading the word about the city's UBT Federal designation and all the benefits of a green and bird-friendly city.
We collect the following information from prospective and successful applicants in conjunction with the UBT Program:
• Nomination Letter —A prospective applicant must submit a letter of intention from the city's partnership that details its commitment to urban bird conservation and community engagement in bird-related education, recreation, conservation, science, and monitoring. Support and involvement by the city government are required.
• Implementation Plan —The required implementation plan should contain the following (see the UBT Program Guidebook at https://www.fws.gov/media/us-fish-wildlife-service-urban-bird-treaty-program-guidebook-v4-making-cities-healthier for full descriptions of requirements):
—Detailed description of the importance of the city to migrating, nesting, and overwintering birds and bird habitats; human population size of the city; and socioeconomic profile of the human communities present and those targeted for education and engagement programs.
—Map of the geographic area that is being nominated for designation.
—List of individuals and organizations active in the partnership, and their contact information.
—The mission, goals, and objectives of the partnership applying for designation, organized by the three UBT goal categories.
—Description of accomplishments ( e.g., activities, products, outcomes) that have been completed over the last 2-3 years, the audiences and communities reached/engaged through those activities, and the partner organizations that have achieved them, organized by UBT goal categories.
—Description of goals, objectives, activities, actions, and tools/products that are being planned for the next 3-5 years under the UBT designation; the objectives to be accomplished; the audiences and communities targeted for engagement; and the partners who will complete the work, organized by UBT goal categories.
• Ad Hoc Reports —The Service will also request information updates on an ongoing basis, on UBT city points of contact, activities and events, and other information about urban bird conservation in the city, as needed by the Service for storytelling, promotion, and internal programmatic communications, education, and outreach.
• Biennial Reporting —For each goal category, the Service requires city partners to provide biennial metrics, as well as written and photographic descriptions of activities. To maintain their city's designation by ensuring that they are actively working to achieve the goals of the UBT Program, city partners are required to submit this information.
We will use the information collected for storytelling purposes to promote the urban bird conservation work of city partners, and to enable the Migratory Bird Program to develop UBT Program accomplishment reports and other communications tools to share with the public and the conservation community at large. The reporting requirement ensures that the UBT city designation is meaningful and that city partners are accountable for the efforts that they agreed to undertake to earn their designation. Additionally, we will use the information to promote the UBT Program to other interested city partners and the benefits of urban bird conservation generally.
The public may request copies of documents referenced in this information collection by sending a request to the Service Information Collection Clearance Officer in ADDRESSES , above.
Title of Collection: Urban Bird Treaty Program Requirements.
OMB Control Number: 1018-0183.
Form Number: None.
Type of Review: Extension of a currently approved collection.
Respondents/Affected Public: Nonprofits; colleges, universities, and schools; museums, zoos, and aquaria; local community groups; private businesses; and municipal, State, and Tribal governments involved in urban bird conservation in UBT cities.
Total Estimated Number of Annual Respondents: 55.
Total Estimated Number of Annual Responses: 121.
Estimated Completion Time per Response: Varies from 3 hours to 80 hours, depending on activity.
Total Estimated Number of Annual Burden Hours: 2,400.
Respondent's Obligation: Required to obtain or retain a benefit.
Frequency of Collection: One-time submission of nomination letter; one-time submission of implementation plan; on occasion for information updates; and biennial reporting.
Total Estimated Annual Nonhour Burden Cost: None.
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 authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).
Madonna Baucum,

Information Collection Clearance Officer, U.S. Fish and Wildlife Service.
DEPARTMENT OF THE INTERIOR
Bureau of Indian Affairs
[245A2100DD/AAKC001030/A0A501010.999900; OMB Control Number 1076-0177]
Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Tribal Energy Development Capacity Program

AGENCY:
Bureau of Indian Affairs, Interior.

ACTION:
Notice of information collection; request for comment.

SUMMARY:
In accordance with the Paperwork Reduction Act of 1995, we, the Office of the Assistant Secretary—Indian Affairs (AS-IA) are proposing to renew an information collection.

DATES:
Interested persons are invited to submit comments on or before July 3, 2024.

ADDRESSES:
Written comments and recommendations for the proposed information collection request (ICR) should be sent within 30 days of publication of this notice to the Office of Information and Regulatory Affairs (OIRA) through https://www.reginfo.gov/public/do/PRA/icrPublicCommentRequest?ref_nbr=202212-1076-006 or by visiting https://www.reginfo.gov/public/do/PRAMain and selecting “Currently under Review—Open for Public Comments” and then scrolling down to the “Department of the Interior.”

FOR FURTHER INFORMATION CONTACT:
To request additional information about this ICR, contact Steven Mullen, Information Collection Clearance Officer, Office of Regulatory Affairs and Collaborative Action—Indian Affairs, U.S. Department of the Interior, 1001 Indian School Road NW, Suite 229, Albuquerque, New Mexico 87104; comments@bia.gov; (202) 924-2650. Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. You may also view the ICR at https://www.reginfo.gov/public/Forward?SearchTarget=PRA&textfield=1076-0177.

SUPPLEMENTARY INFORMATION:
In accordance with the Paperwork Reduction Act of 1995 (PRA, 44 U.S.C. 3501 et seq. ) and 5 CFR 1320.8(d)(1), we provide the general public, and other Federal agencies, with an opportunity to comment on new, proposed, revised, and continuing collections of information. This helps us assess the impact of our information collection requirements and minimize the public's reporting burden. It also helps the public understand our information collection requirements and provide the requested data in the desired format.
A Federal Register notice with a 60-day public comment period soliciting comments on this collection of information was published on January 5, 2023 (88 FR 879). No comments were received.
As part of our continuing effort to reduce paperwork and respondent burdens, we are again soliciting comments from the public and other Federal agencies on the proposed ICR that is described below. We are especially interested in public comment addressing the following:
(1) Whether or not the collection of information is necessary for the proper performance of the functions of the agency, including whether or not the information will have practical utility;
(2) The accuracy of our estimate of the burden for this collection of information, 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) How might the agency 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, e.g., permitting electronic submission of response.
Comments that you submit in response to this notice are a matter of public record. 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.
Abstract: The Energy Policy Act of 2005 authorizes the Secretary of the Interior to provide assistance to Indian Tribes and Tribal energy resource development organizations for energy development and appropriates funds for such projects on a year-to-year basis. See 25 U.S.C. 3502. When funding is available, the Office of Indian Energy and Economic Development (IEED) may solicit proposals for projects for building capacity for Tribal energy resource development on Indian land from Tribal energy resource development organizations and Indian Tribes, including Alaska Native regional and village corporations under the TEDC program. For the purposes of this program, “Indian land” includes: all land within the boundaries of an Indian reservation, pueblo, or rancheria; any land outside those boundaries that is held by the United States in trust for a Tribe or individual Indian or by a Tribe or individual Indian with restrictions on alienation; and land owned by an Alaska Native regional or village corporation.
Title of Collection: Tribal Energy Development Capacity Program.
OMB Control Number: 1076-0177.
Form Number: None.
Type of Review: Extension of a currently approved collection.
Respondents/Affected Public: Indian Tribes and Tribal energy resource development organizations under 25 U.S.C. 3502.
Total Estimated Number of Annual Respondents: 51 per year, on average.
Total Estimated Number of Annual Responses: 84, on average (40 applications per year, 44 progress reports).
Estimated Completion Time per Response: 40 hours per application; 1.5 hours per progress report.
Total Estimated Number of Annual Burden Hours: 1,666 hours (1,600 for applications and 66 for progress reports).
Respondent's Obligation: Required to Obtain a Benefit.
Frequency of Collection: Once per year for applications; 4 times per year for progress reports.
Total Estimated Annual Nonhour Burden Cost: $0.
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 authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).
Steven Mullen,

Information Collection Clearance Officer, Office of Regulatory Affairs and Collaborative Action—Indian Affairs.
DEPARTMENT OF THE INTERIOR
Bureau of Indian Affairs
[245A2100DD/AAKC001030/A0A501010.999900]
Advisory Board of Exceptional Children

AGENCY:
Bureau of Indian Affairs, Interior

ACTION:
Notice of meeting.

SUMMARY:
The Bureau of Indian Education (BIE) is announcing that the Advisory Board for Exceptional Children will hold a one-day online meeting. The purpose of the meeting is to meet the mandates of the Individuals with Disabilities Education Act of 2004 (IDEA) for Indian children with disabilities.

DATES:
The BIE Advisory Board meeting will be held Tuesday, June 18, 2024, from 10:10 a.m. to 4:00 p.m. MST. There will also be a 2-hour training for board members only, Tuesday, June 18, 2024, from 8:00 a.m. to 10:00 p.m. MST.

ADDRESSES:
This meeting will be conducted online. To attend, participants may use this link to register: https://www.zoomgov.com/meeting/register/vJItdeGrqj4tE1oyFLOYDCyPdIuS5bEh3uE Attendees register once and can attend one or both meeting events. After registering, you will receive a confirmation email containing information about joining the meeting.
Comments: Public comments can be emailed to the DFO at Jennifer.davis@bie.edu; or faxed to (602) 265-0293 Attention: Jennifer Davis, DFO; or mailed or hand delivered to the Bureau of Indian Education, Attention: Jennifer Davis, DFO, 2600 N. Central Ave., 12th floor, Suite 250, Phoenix, AZ 85004.

FOR FURTHER INFORMATION CONTACT:
Jennifer Davis, Designated Federal Officer, Bureau of Indian Education, 2600 N. Central Ave., 12th floor, Suite 250, Phoenix, AZ 85004, Jennifer.Davis@bie.edu, or mobile phone (202) 860-7845.

SUPPLEMENTARY INFORMATION:
In accordance with the Federal Advisory Committee Act (5 U.S.C. 10), the BIE is announcing the Advisory Board will hold its next meeting online. The Advisory Board was established under the Individuals with Disabilities Act of 2004 (20 U.S.C. 1400 et seq. ) to advise the Secretary of the Interior, through the Assistant Secretary-Indian Affairs, on the needs of Indian children with disabilities. All meetings, including virtual sessions, are open to the public in their entirety.

Meeting Agenda Items
The following agenda items will be for the June 18, 2024, meeting:
• The Technical Assistance for Excellence in Special Education (TAESE) will provide a 2-hour training session for BIE Advisory Board members only, 8:00 a.m. to 10:00 a.m. MST.
• The BIE's Division of Performance and Accountability will provide Special Education updates about: BIE Summer Trainings (Principal Leadership Academy, Interactive Data Workshop, Fiscal Management); BIE Annual Performance Data; and the BIE Special Education Policy & Procedures Handbook.
• The entire afternoon session from 12:10 to 4:00 p.m. MST, the Advisory Board will work on identifying priority topics for the annual report, wrap-up important decisions, discuss outstanding tasks, and discuss next steps.
• A Public Comment Session will be offered to the general public on Tuesday, June 18, 2024, from 10:15 a.m. to 4:00 p.m. MST. Public comments can be provided verbally via webinar or in writing using the chat box throughout the public meeting. Public comments can also be emailed to the DFO at Jennifer.Davis@bie.edu; or faxed to (602) 265-0293 Attention: Jennifer Davis, DFO; or mailed or hand delivered to the Bureau of Indian Education, Attention: Jennifer Davis, DFO, 2600 N. Central Ave. 12th floor, Suite 250, Phoenix, Arizona 85004.

Accommodation Requests
Please make requests in advance for sign language interpreter services, assistive listening devices, language translation services or other reasonable accommodations. Please contact the person listed in the section titled FOR FURTHER INFORMATION CONTACT at least seven (7) business days prior to the meeting to give the Department of the Interior sufficient time to process your request. All reasonable accommodation requests are managed on a case-by-case basis.
Individuals in the United States who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.
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.
Authority: 5 U.S.C. ch. 10.
Bryan Newland,

Assistant Secretary—Indian Affairs.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038015; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: Oregon Health & Sciences University, Portland, OR

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), Oregon Health & Sciences University (OHSU) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains in this notice may occur on or after July 3, 2024.

ADDRESSES:
Alice Cuprill Comas, Oregon Health & Sciences University, 3181 SW Sam Jackson Park Road, Portland, OR 97239, telephone (503) 494-5222, email legal@ohsu.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of OHSU, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at least, two individuals have been reasonably identified. In 1978, the human remains were removed from the Cholick site (35MU1), possibly by Bob Morrow. They were housed at OHSU's School of Dentistry until 2001, when they were transferred to the university's Historical Collections & Archives Medical Museum Collection.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.

Determinations
OHSU has determined that:
• The human remains described in this notice represent the physical remains of two individuals of Native American ancestry.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Confederated Tribes and Bands of the Yakama Nation; Confederated Tribes of Siletz Indians of Oregon; Confederated Tribes of the Grand Ronde Community of Oregon; Confederated Tribes of the Umatilla Indian Reservation; and the Confederated Tribes of the Warm Springs Reservation of Oregon.

Requests for Repatriation
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, OHSU must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. OHSU is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038011; PPWOCRADN0-PCU00RP14.R50000]
Notice of Intended Repatriation: University of Nebraska State Museum, University of Nebraska-Lincoln, Lincoln, NE

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of Nebraska State Museum intends to repatriate certain cultural items that meet the definition of objects of cultural patrimony and that have a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the cultural items in this notice may occur on or after July 3, 2024.

ADDRESSES:
Taylor Ronquillo NAGPRA Project Manager, University of Nebraska State Museum, University of Nebraska of Nebraska-Lincoln, 645 N 14th Street, Lincoln, NE 68588, telephone (402) 472-6592, email tronquillo2@unl.edu and Susan Weller NAGPRA Coordinator, University of Nebraska State Museum, University of Nebraska of Nebraska-Lincoln, 645 N 14th Street, Lincoln, NE 68588, telephone (402) 472-0577, email sweller2@unl.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the University of Nebraska State Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
A total of 24 cultural items have been requested for repatriation. The 24 objects of cultural patrimony are three Cradleboards, 11 Moccasins, five Bags, one Blanket Stap, two Leggings, one Fragment of beaded band, and one Purse. The 24 cultural items were removed from the Plains Region of Northern America: two items were removed from Wyoming; two items were removed from Montana and two items were removed from South Dakota. Other than state location, there is no additional data for these items. On May 24, 2021, the UNSM obtained ownership of 1,355 objects from the Joslyn Art Museum (JAM). JAM obtained ownership of this collection from the Omaha Public Library on December 10, 2020. Among these 1,355 objects were 24 cultural items from the Plains Region of Northern America.

Determinations
The University of Nebraska State Museum has determined that:
• The 24 objects of cultural patrimony described in this notice have ongoing historical, traditional, or cultural importance central to the Native American group, including any constituent sub-group (such as a band, clan, lineage, ceremonial society, or other subdivision), according to the Native American traditional knowledge of an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural items described in this notice and the Northern Cheyenne Tribe of the Northern Cheyenne Indian Reservation, Montana.

Requests for Repatriation
Additional, written requests for repatriation of the cultural items in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the cultural items in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the University of Nebraska State Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of cultural items are considered a single request and not competing requests. The University of Nebraska State Museum is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3004 and the implementing regulations, 43 CFR 10.9.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038008; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: San Diego State University, San Diego, CA

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), San Diego State University (SDSU) has completed an inventory of human remains and associated funerary objects and has determined that there is a cultural affiliation between the human remains and associated funerary objects and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains and associated funerary objects in this notice may occur on or after July 3, 2024.

ADDRESSES:
Jaime Lennox, San Diego State University, 5500 Campanile Drive, San Diego, CA 92182, telephone (619)594-4575, email jlennox@sdsu.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of SDSU, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at least, two individuals have been reasonably identified. The 16,994 associated funerary objects are: 8,244 shell fragments and beads; 4,027 lithic fragments and tools; 36 ceramic sherds; 980 charcoal fragments; 1,082 fire affected rock fragments; 116 groundstone fragments; 2,449 faunal fragments; 15 asphaltum fragments; two ochre fragments; two glass fragments; one soil sample; one concretion fragment; six wood fragments; and 33 non-cultural stones. Site SDI-18009 (Lomas Santa Fe) is located in San Diego County, CA, and was excavated by environmental consultants David Smith and Associates in 1972. SDSU received the collection resulting from this excavation in 1973 and was accessioned into the SDSU assemblage as CMP-SDSU-0025.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. The 3,588 associated funerary objects are: 3,530 faunal fragments; 41 shell fragments; and 17 vegetal fragment. Site SDI-5443 (W-654; Rimbach/Sorrento Valley; Lion Research Site; Village of Ystagua) is located in San Diego County, CA. SDSU received the collection removed from SDI-5443 at an unknown date by an unknown individual and was accessioned into the SDSU assemblage as CMP-SDSU-0819.
Based on the information available, human remains representing, at least, one individual have been reasonably identified. The 952 associated funerary objects are 942 faunal fragments and 10 shell fragments. Site SDI-4513/SDI-4609/SDI-5443 (W-654; 1992-17; Rimbach/Sorrento Valley; Lion Research Site; Village of Ystagua) is located in San Diego County, CA. SDSU received the collection removed from SDI-4513/SDI-4609/SDI-5443 at an unknown date by an unknown individual and was accessioned into the SDSU assemblage as CMP-SDSU-0822.
Based on the information available, human remains representing, at least, nine individuals have been reasonably identified. The 16,818 associated funerary objects are: 117 vegetal flotation samples; three floral samples; 159 ochre fragments; 176 baked clay fragments; 110 wood fragments; 22 mica fragments; 14 graphite fragments; 85 lots of charcoal fragments; 17 unidentified vegetal fragments; one steatite fragment; two sand concentrations; one insect husk; one seed; 6,446 lithics; 395 groundstone fragments; one metate; 3,665 faunal fragments; 4,828 ceramic sherds; 16 soil samples; 80 fire affected rock fragments; 44 shell beads and fragments; and 635 historic items including glass sherds, metal fragments and nails. Site SDI-945 (W-835; Cuyamaca Rancho State Park) is located in San Diego County, CA. The collection removed from site SDI-945 resulted from a 1999 archaeological field school conducted by SDSU. The collection was accessioned into the SDSU assemblage as CMP-SDSU-0824.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is reasonably identified by the geographical location or acquisition history of the human remains and associated funerary objects described in this notice.

Determinations
SDSU has determined that:
• The human remains described in this notice represent the physical remains of 13 individuals of Native American ancestry.
• The 38,352 objects described in this notice are reasonably believed to have been placed intentionally with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Campo Band of Diegueno Mission Indians of the Campo Indian Reservation, California; Capitan Grande Band of Diegueno Mission Indians of California (Barona Group of Capitan Grande Band of Mission Indians of the Barona Reservation, California; Viejas (Baron Long) Group of Capitan Grande Band of Mission Indians of the Viejas Reservation, California); Ewiiaapaayp Band of Kumeyaay Indians, California; Iipay Nation of Santa Ysabel, California; Inaja Band of Diegueno Mission Indians of the Inaja and Cosmit Reservation, California; Jamul Indian Village of California; La Posta Band of Diegueno Mission Indians of the La Posta Indian Reservation, California; Manzanita Band of Diegueno Mission Indians of the Manzanita Reservation, California; Mesa Grande Band of Diegueno Mission Indians of the Mesa Grande Reservation, California; San Pasqual Band of Diegueno Mission Indians of California; and the Sycuan Band of the Kumeyaay Nation.

Requests for Repatriation
Written requests for repatriation of the human remains and associated funerary objects in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains and associated funerary objects in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, SDSU must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains and associated funerary objects are considered a single request and not competing requests. SDSU is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038009; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: Auburn University, Auburn, AL

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), Auburn University has completed an inventory of human remains and associated funerary objects and has determined that there is a cultural affiliation between the human remains and associated funerary objects and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains and associated funerary objects in this notice may occur on or after July 3, 2024.

ADDRESSES:
Michael Walters, Auburn University, 7030 Haley Center, Auburn, AL 36849, telephone (334) 844-8300, email mcw0121@auburn.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of Auburn University, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing at least five individuals have been identified. The 6,067 associated funerary objects are 5,720 beads, two lots of beads, 16 ceramic sherds, one lot of ceramic sherds, eight lots of charcoal, one clay pipe, one potter's clay, 60 pieces of daub, three lots of fabric, three lots of faunal bone, one lot of fiber, six pieces of glass, 34 lots of lithics, 109 lots of metal items, 13 metal bracelets, eight metal broaches/buckles, five metal gorgets, one metal musket ball, seven metal thimbles, one cast-iron kettle, seven metal earrings, one iron ring, one lot of iron scissors, one lot of metal pins, one silver piece, two triangles, four peach pits, 10 lots of red pigment, seven lots of plant material, 20 seeds, two lots of seeds, one lot of shell fragments, three lots of soil samples, one lot of wood, two unidentified objects, and four lots of unidentified objects. The human remains and associated funerary objects were removed from Hickory Ground (1EE89x1) in Elmore County, AL, by Dr. John Cottier of Auburn University and Dr. Craig Sheldon of Auburn University at Montgomery in 1992 and 1994. Auburn University received the collection at an unknown date. Hickory Ground is culturally affiliated to Poarch Band of Creek Indians and The Muscogee (Creek) Nation. No known hazardous substances were used to treat the human remains or associated funerary objects.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains and associated funerary objects described in this notice.

Determinations
Auburn University has determined that:
• The human remains described in this notice represent the physical remains of five individuals of Native American ancestry.
• The 6,067 objects described in this notice are reasonably believed to have been placed intentionally with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Poarch Band of Creek Indians and The Muscogee (Creek) Nation.

Requests for Repatriation
Written requests for repatriation of the human remains and associated funerary objects in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains and associated funerary objects in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, Auburn University must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains and associated funerary objects are considered a single request and not competing requests. Auburn University is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038020; PPWOCRADN0-PCU00RP14.R50000]
Notice of Intended Repatriation: Minnesota Historical Society, St. Paul, MN

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Minnesota Historical Society (MNHS) intends to repatriate a certain cultural item that meets the definition of an object of cultural patrimony and that has a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the cultural item in this notice may occur on or after July 3, 2024.

ADDRESSES:
Cecily Marcus, Minnesota Historical Society, 345 West Kellogg Boulevard, Saint Paul, MN 55102, telephone (651) 259-3123, email cecily.marcus@mnhs.org.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the Minnesota Historical Society, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
A total of one cultural item has been requested for repatriation. The one object of cultural patrimony is a Beaver Chilkat Robe (S'igeidi Naaxein), MHS #10,000.804, held by MNHS. The item was purchased in 1946 from the Alaska Native Service, Juneau, AK, by Frederick and Elizabeth Ayer for sale at the Mille Lacs Trading Post in Mille Lacs, MN; donated to the Minnesota Historical Society by Jeanette Ayer in 1959. The robe was woven by Ms. Mary Willard (Tlingit name Aklé, of the Kaawaantaan clan, Gooch Hit (Wolf House), Klukwan) as an item for purchase.

Determinations
The Minnesota Historical Society has determined that:
• The one object of cultural patrimony described in this notice has ongoing historical, traditional, or cultural importance central to the Native American group, including any constituent sub-group (such as a band, clan, lineage, ceremonial society, or other subdivision), according to the Native American traditional knowledge of an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural item described in this notice and the Angoon Community Association and the Central Council of the Tlingit & Haida Indian Tribes.

Requests for Repatriation
Additional, written requests for repatriation of the cultural item in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the cultural item in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the Minnesota Historical Society must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the cultural item are considered a single request and not competing requests. The Minnesota Historical Society is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3004 and the implementing regulations, 43 CFR 10.9.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038010; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: University of Southern California, Los Angeles, CA

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of Southern California (U.S.C.) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains in this notice may occur on or after July 3, 2024.

ADDRESSES:
Bethany Montagano, University of Southern California, 3551 Trousdale Parkway, Suite 102, Los Angeles, CA 90089, telephone (626) 787-2696, email bethany.montagano@pam.usc.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of U.S.C., and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at least, one individual have been reasonably identified. On an unknown date, the individual was likely removed from an area east of The Dalles, Oregon or eastern Washington along the Columbia River. The individual was then housed at a museum at Northwestern University. When the museum was dismantled, a faculty member at the School of Medicine gave this individual to a colleague, Dr. Mikel Snow, at the University of Miami School of Medicine, between 1973 to 1975. The individual traveled with Dr. Snow to the U.S.C. campus and was housed in their office until May 2022, when the individual was identified during a campus-wide collections review. U.S.C. has no knowledge of any potentially hazardous substances used to treat the individual. No associated funerary objects are present.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.

Determinations
U.S.C. has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Confederated Tribes and Bands of the Yakama Nation; Confederated Tribes of the Umatilla Indian Reservation; Confederated Tribes of the Warm Springs Reservation of Oregon; and the Nez Perce Tribe.

Requests for Repatriation
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice and, if joined to a request from one or more of the Indian Tribes, the Wanapum Band of Priest Rapids, a non-federally recognized Indian group.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or an Indian Tribe or Native Hawaiian organization with cultural affiliation.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, U.S.C. must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. U.S.C. is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038013; PPWOCRADN0-PCU00RP14.R50000]
Notice of Intended Repatriation: California State University, Sacramento, Sacramento, CA

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the California State University, Sacramento intends to repatriate certain cultural items that meet the definition of objects of cultural patrimony and that have a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the cultural items in this notice may occur on or after July 3, 2024.

ADDRESSES:
Dr. Mark Wheeler, Senior Advisor to President Luke Wood, California State University, Sacramento, 6000 J Street Sacramento, CA 95819, telephone (916) 460-0490, email mark.wheeler@csus.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the California State University, Sacramento, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
A total of 291 cultural items have been requested for repatriation.
In 1956-1959, archaeologists associated with Sacramento State College (now California State University, Sacramento) removed cultural items from several localities prior to the construction of Monticello Dam by the US Bureau of Reclamation. The resulting collections were subsequently housed at California State University, Sacramento under accession 81-183. The 19 objects of cultural patrimony from CA-NAP-47 are faunal remains, flaked stone, and ground stone objects. The 19 objects of cultural patrimony from NAP-79 are faunal remains, flaked stone, ground stone, and unmodified stone objects. The three objects of cultural patrimony from NAP-88 are ground stone objects. The 16 objects of cultural patrimony from NAP-99 are faunal remains, flaked stone objects, and unmodified stone. The one object of cultural patrimony from NAP-100 is a biface. The one object of cultural patrimony from NAP-108 is a projectile point. The 38 objects of cultural patrimony from NAP-109 are flaked and ground stone objects, a shell bead, and unmodified stone. The five objects of cultural patrimony from NAP-112 are ground stone objects. The two objects of cultural patrimony from NAP-113 are flaked and unmodified stone. The three objects of cultural patrimony from S-NAP-3 are ground stone objects. The 21 objects of cultural patrimony for S-NAP-4 are baked clay objects, flaked and ground stone objects, and unmodified stone. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
At an unknown date, California State University, Sacramento came into possession of objects from CA-SOL-30 (accession 81-383). The 25 objects of cultural patrimony are flaked stone, ground stone, modified stone, modified shell, modified bone, and thermally-altered rock. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
In 1981, archaeologists associated with California State University, Sacramento collected objects during survey and monitoring work at CA-SOL-55 (accession 81-102). The 26 objects of cultural patrimony are flaked stone and ground stone objects. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
In 1980, a student associated with California State University, Sacramento collected objects from CA-SOL-281 (accession 81-102). The 112 objects of cultural patrimony are faunal remains, flaked stone, thermally-altered rock, and unmodified stone and concretions. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.

Determinations
The California State University, Sacramento has determined that:
• The 291 objects of cultural patrimony described in this notice have ongoing historical, traditional, or cultural importance central to the Native American group, including any constituent sub-group (such as a band, clan, lineage, ceremonial society, or other subdivision), according to the Native American traditional knowledge of an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural items described in this notice and the Yocha Dehe Wintun Nation, California.

Requests for Repatriation
Additional, written requests for repatriation of the cultural items in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the cultural items in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the California State University, Sacramento must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the cultural items are considered a single request and not competing requests. The California State University, Sacramento is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3004 and the implementing regulations, 43 CFR 10.9.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038016; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: Field Museum, Chicago, IL

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Field Museum has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribe in this notice.

DATES:
Repatriation of the human remains in this notice may occur on or after July 3, 2024.

ADDRESSES:
June Carpenter, NAGPRA Director, Field Museum, 1400 S Lake Shore Drive, Chicago, IL 60605, telephone (312) 665-7820, email jcarpenter@fieldmuseum.org.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the Field Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at least, one individual have been reasonably identified. No associated funerary objects are present. The human remains are hair clippings belonging to one individual, identified with the tribal designation “Warm Spring” (Field Museum catalog number 193216.11). Field Museum staff believe they were collected under the direction of Franz Boas and Frederick Ward Putnam for the 1893 World's Columbian Exposition in Chicago. The hair clippings were accessioned into the Field Museum's collection in 1939. No information regarding the individual's name, sex, age, or geographic location has been found. There is no known presence of any potentially hazardous substances.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.

Determinations
The Field Museum has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Confederated Tribes of the Warm Springs Reservation of Oregon.

Requests for Repatriation
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the Field Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The Field Museum is responsible for sending a copy of this notice to the Indian Tribe identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.9, § 10.10, and § 10.14.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038017; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: Field Museum, Chicago, IL

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Field Museum has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains in this notice may occur on or after July 3, 2024.

ADDRESSES:
June Carpenter, NAGPRA Director, Field Museum, 1400 S. Lake Shore Drive, Chicago, IL 60605, telephone (312) 665-7820, email jcarpenter@fieldmuseum.org .

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the Field Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at least, one individual have been reasonably identified. No associated funerary objects are present. The human remain is a hair clipping belonging to one individual, identified with the tribal designation “Shoshone” (Field Museum catalog number 193211.1). Field Museum staff believe the hair clipping was collected under the direction of Franz Boas and Frederick Ward Putnam for the 1893 World's Columbian Exposition in Chicago. The hair clippings were accessioned into the Field Museum's collection in 1939. No information regarding the individual's name, sex, age, or geographic location has been found. There is no known presence of any potentially hazardous substances.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.

Determinations
The Field Museum has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Eastern Shoshone Tribe of the Wind River Reservation, Wyoming; Ely Shoshone Tribe of Nevada; Lone Pine Paiute-Shoshone Tribe; Shoshone-Bannock Tribes of the Fort Hall Reservation; Shoshone-Paiute Tribes of the Duck Valley Reservation, Nevada; and the Yomba Shoshone Tribe of the Yomba Reservation, Nevada.

Requests for Repatriation
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the Field Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The Field Museum is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.9, § 10.10, and § 10.14.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038021; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: Peabody Museum of Archaeology and Ethnology, Harvard University, Cambridge, MA

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the Peabody Museum of Archaeology and Ethnology, Harvard University (PMAE) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice. The human remains were collected at the Sherman Institute, Riverside County, CA.

DATES:
Repatriation of the human remains in this notice may occur on or after July 3, 2024.

ADDRESSES:
Jane Pickering, Peabody Museum of Archaeology and Ethnology, Harvard University, 11 Divinity Avenue, Cambridge, MA 02138, telephone (617) 496-2374, email jpickering@fas.harvard.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the PMAE, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at minimum, one individual was collected at the Sherman Institute, Riverside County, CA. The human remains are hair clippings collected from one individual who was recorded as being 22 years old and identified as “Suquamish.” Samuel H. Gilliam took the hair clippings at the Sherman Institute between 1930 and 1933. Gilliam sent the hair clippings to George Woodbury, who donated the hair clippings to the PMAE in 1935. No associated funerary objects are present.

Cultural Affiliation
Based on the available information and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains described in this notice.

Determinations
The PMAE has determined that:
• The human remains described in this notice represent the physical remains of one individual of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Suquamish Indian Tribe of the Port Madison Reservation.

Requests for Repatriation
Written requests for repatriation of the human remains in this notice must be sent to the Responsible Official identified in ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the PMAE must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The PMAE is responsible for sending a copy of this notice to the Indian Tribe identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038012; PPWOCRADN0-PCU00RP14.R50000]
Notice of Intended Repatriation: University of Nebraska State Museum, University of Nebraska-Lincoln, Lincoln, NE

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of Nebraska State Museum intends to repatriate certain cultural items that meet the definition of unassociated funerary objects and that have a cultural affiliation with the Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the cultural items in this notice may occur on or after July 3, 2024.

ADDRESSES:
Taylor Ronquillo NAGPRA Project Manager, University of Nebraska State Museum, University of Nebraska of Nebraska-Lincoln, 645 N 14th Street, Lincoln, NE 68588, telephone (402) 472-6592, email tronquillo2@unl.edu and Susan Weller NAGPRA Coordinator, University of Nebraska State Museum, University of Nebraska of Nebraska-Lincoln, 645 N 14th Street, Lincoln, NE 68588, telephone (402) 472-0577, email sweller2@unl.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the University of Nebraska State Museum, and additional information on the determinations in this notice, including the results of consultation, can be found in the summary or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
A total of four cultural item has been requested for repatriation.
One of unassociated funerary objects is one lot of beads. This item was donated by J.W. Markin in 1937 to UNSM. The museum was not provided with any additional information.
One unassociated funerary object is one lot of beads. This item was donated by C.B. Shultz and the LeMar Field Party in 1928. The exact excavation site is described as: “One mile south, 3 miles west of Republican City.” Field notes state “dug some Indian material from old sacrificial burial grounds.”
One unassociated funerary object is one necklace. This item was donated by Thomas and Delta Cain in 1991. The museum was not provided with any other information. This item is eight pieces of shell formed into disc-shaped beads.
One unassociated funerary object is one lot of beads. This item was donated to UNSM by J.W. Markin in 1937. No other information was given to the museum.

Determinations
The University of Nebraska State Museum has determined that:
• The four unassociated funerary objects described in this notice are reasonably believed to have been placed intentionally with or near human remains, and are connected, either at the time of death or later as part of the death rite or ceremony of a Native American culture according to the Native American traditional knowledge of a lineal descendant, Indian Tribe, or Native Hawaiian organization. The unassociated funerary objects have been identified by a preponderance of the evidence as related to human remains, specific individuals, or families, or removed from a specific burial site or burial area of an individual or individuals with cultural affiliation to an Indian Tribe or Native Hawaiian organization.
• There is a reasonable connection between the cultural items described in this notice and the Pawnee Nation of Oklahoma.

Requests for Repatriation
Additional, written requests for repatriation of the cultural items in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the cultural items in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the University of Nebraska State Museum must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of cultural items are considered a single request and not competing requests. The University of Nebraska State Museum is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice and to any other consulting parties.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3004 and the implementing regulations, 43 CFR 10.9.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038019; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: University of New Hampshire, Durham, NH

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the University of New Hampshire (UNH) has completed an inventory of human remains and has determined that there is a cultural affiliation between the human remains and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains in this notice may occur on or after July 3, 2024.

ADDRESSES:
Dr. Michele Dillon, University of New Hampshire, COLA Dean's Office, Murkland Hall Rm 110, Durham, NH 03824, telephone (603) 862-2062, email Michele.Dillon@unh.edu .

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the University of New Hampshire, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
Based on the information available, human remains representing, at least, four individuals have been reasonably identified. On an unknown date, the human remains were acquired by Laurence Crosbie (Crosby), a teacher at Phillips Exeter Academy (PEA), which is located in Exeter, New Hampshire. Sometime in the 1980s, the individuals were received by the University of New Hampshire (UNH) from Phillips Exeter Academy. Crosbie frequently collected in the New England area and was active in the New Hampshire Archaeological Society (which he co-founded), the Massachusetts Archaeological Society, and the Connecticut Archaeological Society. Based on the available information, the individuals were likely removed from the coastal New England region. UNH has no knowledge or record of any potentially hazardous substances being used to treat the human remains.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is reasonably identified by the geographical location or acquisition history of the human remains in this notice.

Determinations
The University of New Hampshire has determined that:
• The human remains described in this notice represent the physical remains of four individuals of Native American ancestry.
• There is a reasonable connection between the human remains described in this notice and the Delaware Nation, Oklahoma; Delaware Tribe of Indians; Mashantucket Pequot Indian Tribe; Mashpee Wampanoag Tribe; Mi'kmaq Nation ( previously listed as Aroostook Band of Micmacs); Mohegan Tribe of Indians of Connecticut; Narragansett Indian Tribe; Passamaquoddy Tribe; Penobscot Nation; Shinnecock Indian Nation; and the Wampanoag Tribe of Gay Head (Aquinnah).

Requests for Repatriation
Written requests for repatriation of the human remains in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the University of New Hampshire must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains are considered a single request and not competing requests. The University of New Hampshire is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
National Park Service
[NPS-WASO-NAGPRA-NPS0038014; PPWOCRADN0-PCU00RP14.R50000]
Notice of Inventory Completion: California State University, Sacramento, Sacramento, CA

AGENCY:
National Park Service, Interior.

ACTION:
Notice.

SUMMARY:
In accordance with the Native American Graves Protection and Repatriation Act (NAGPRA), the California State University, Sacramento has completed an inventory of human remains and associated funerary objects and has determined that there is a cultural affiliation between the human remains and associated funerary objects and Indian Tribes or Native Hawaiian organizations in this notice.

DATES:
Repatriation of the human remains and associated funerary objects in this notice may occur on or after July 3, 2024.

ADDRESSES:
Dr. Mark Wheeler, Senior Advisor to President Luke Wood, California State University, Sacramento, 6000 J Street Sacramento, CA 95819, telephone (916) 460-0490, email mark.wheeler@csus.edu.

SUPPLEMENTARY INFORMATION:
This notice is published as part of the National Park Service's administrative responsibilities under NAGPRA. The determinations in this notice are the sole responsibility of the California State University, Sacramento, and additional information on the determinations in this notice, including the results of consultation, can be found in the inventory or related records. The National Park Service is not responsible for the determinations in this notice.

Abstract of Information Available
In 1956-1959, archaeologists associated with Sacramento State College (now California State University, Sacramento) removed human remains and objects from CA-NAP-52, CA-NAP-74, CA-NAP-87, CA-NAP-94, CA-NAP-97, and CA-NAP-98 prior to the construction of Monticello Dam by the US Bureau of Reclamation. The resulting collections were subsequently housed at California State University, Sacramento under accessions 81-183, 81-184, and 81-185. Based on the information available, human remains representing, at least, two individuals have been reasonably identified from CA-NAP-52. The 127 associated funerary objects from the site include faunal remains, flaked and ground stone objects, modified bone, and shell beads and ornaments. Based on the information available, human remains were recovered from CA-NAP-74 prior to 1956 by another institution. The one associated funerary object is a ground stone mortar. Based on the information available, human remains representing, at least, one individual has been reasonably identified from CA-NAP-87. The 75 associated funerary objects include faunal remains, flaked and ground stone objects, modified bone, and unmodified stone. Based on the information available, human remains representing, at least, nine individuals have been reasonably identified from CA-NAP-94. The 5,710 associated funerary objects include faunal and floral remains; flaked and ground stone objects; modified bone, shell, and stone objects; pigments; soils; thermally-altered rock; quartz crystals; unmodified stone; and historic objects. Based on the information available, human remains representing, at least, nine individuals have been reasonably identified from CA-NAP-97. The 69 associated funerary objects include faunal remains, flaked and ground stone objects, modified bone, shell beads, unmodified stone, and soils. Based on the information available, human remains representing, at least, 19 individuals have been reasonably identified from CA-NAP-98. The 4,079 associated funerary objects include baked clay objects; faunal and floral remains; flaked and ground stone objects; modified bone, shell and stone; pigment; ash; soils; thermally-altered rock; quartz crystals; unmodified stone; and historic objects. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
Based on the information available, human remains representing, at least, one individual has been reasonably identified from an unknown location(s) in Napa County. The 346 associated funerary objects include faunal and floral remains, flaked stone, and ground stone objects. These objects and human remains were found within Napa County collections (accession 81-183) without site provenience and are reasonably believed to derive from Napa County.
Based on the information available, human remains were recovered from CA-NAP-26 in by another institution in the 1950s. In 1960, a student of Sacramento State College surface collected objects from the location (accession 81-392). The 72 associated funerary objects include faunal remains and flaked stone objects. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.
Based on the information available, human remains representing, at least, one individual has been reasonably identified from an unknown location in Green Valley, Solano County. The five associated funerary objects include faunal remains, floral remains, and unmodified stone. The remains and objects were donated to California State University, Sacramento by a private individual under accession 1980-5. An unknown number of objects may be missing from the collection, and California State University, Sacramento continues to look for them.

Cultural Affiliation
Based on the information available and the results of consultation, cultural affiliation is clearly identified by the information available about the human remains and associated funerary objects described in this notice.

Determinations
The California State University, Sacramento has determined that:
• The human remains described in this notice represent the physical remains of 42 individuals of Native American ancestry.
• The 10,484 objects described in this notice are reasonably believed to have been placed intentionally with or near individual human remains at the time of death or later as part of the death rite or ceremony.
• There is a reasonable connection between the human remains and associated funerary objects described in this notice and the Cachil DeHe Band of Wintun Indians of the Colusa Indian Community of the Colusa Rancheria, California; Kletsel Dehe Wintun Nation of the Cortina Rancheria ( previously listed as Kletsel Dehe Band of Wintun Indians); and the Yocha Dehe Wintun Nation, California.

Requests for Repatriation
Written requests for repatriation of the human remains and associated funerary objects in this notice must be sent to the authorized representative identified in this notice under ADDRESSES . Requests for repatriation may be submitted by:
1. Any one or more of the Indian Tribes or Native Hawaiian organizations identified in this notice.
2. Any lineal descendant, Indian Tribe, or Native Hawaiian organization not identified in this notice who shows, by a preponderance of the evidence, that the requestor is a lineal descendant or a culturally affiliated Indian Tribe or Native Hawaiian organization.
Repatriation of the human remains and associated funerary objects in this notice to a requestor may occur on or after July 3, 2024. If competing requests for repatriation are received, the California State University, Sacramento must determine the most appropriate requestor prior to repatriation. Requests for joint repatriation of the human remains and associated funerary objects are considered a single request and not competing requests. The California State University, Sacramento is responsible for sending a copy of this notice to the Indian Tribes and Native Hawaiian organizations identified in this notice.
Authority: Native American Graves Protection and Repatriation Act, 25 U.S.C. 3003, and the implementing regulations, 43 CFR 10.10.
Dated: May 22, 2024.
Melanie O'Brien,

Manager, National NAGPRA Program.
DEPARTMENT OF THE INTERIOR
Bureau of Reclamation
[RR040U2000, XXXR4081G3, RX.05940913.FY19400]
Public Meeting of the Glen Canyon Dam Adaptive Management Work Group

AGENCY:
Bureau of Reclamation, Interior.

ACTION:
Notice of public meeting.

SUMMARY:
In accordance with the Federal Advisory Committee Act of 1972, the Bureau of Reclamation (Reclamation) is publishing this notice to announce that a Federal Advisory Committee meeting of the Glen Canyon Dam Adaptive Management Work Group (AMWG) will take place. The meeting is open to the public.

DATES:
The meeting will be held in-person and virtually on Wednesday, August 21, 2024, from 9:30 a.m. to approximately 5:00 p.m. (PDT); and Thursday, August 22, 2024, from 8:30 a.m. to approximately 3:30 p.m. (PDT).

ADDRESSES:
The in-person meeting will be held at the Shrine of the Ages, Grand Canyon South Rim.
The virtual meeting held on Wednesday, August 21, 2024, may be accessed at https://rec.webex.com/rec/j.php?MTID=m7b1f0953a3691a239cb8fd17a1bc612b; Meeting Number: 2826 064 1335, Password: AMP21.
The virtual meeting held on Thursday, August 22, 2024, may be accessed at https://rec.webex.com/rec/j.php?MTID=ma6065cbb933a2eb2552007c42c71b531; Meeting Number: 2827 908 6068, Password: AMP22.

FOR FURTHER INFORMATION CONTACT:
Mr. William Stewart, Bureau of Reclamation, telephone (385) 622-2179, email at wstewart@usbr.gov . Individuals who are deaf, deafblind, hard of hearing, or have a speech disability may dial 711 (TTY, TDD, or TeleBraille) to access telecommunications relay services. Individuals outside the United States should use the relay services offered within their country to make international calls to the point-of-contact in the United States.

SUPPLEMENTARY INFORMATION:
The Glen Canyon Dam Adaptive Management Program (GCDAMP) was implemented as a result of the Record of Decision on the Operation of Glen Canyon Dam Final Environmental Impact Statement to comply with consultation requirements of the Grand Canyon Protection Act (Pub. L. 102-575) of 1992. The AMWG makes recommendations to the Secretary of the Interior concerning Glen Canyon Dam operations and other management actions to protect resources downstream of Glen Canyon Dam, consistent with the Grand Canyon Protection Act. The AMWG meets two to three times a year.
Agenda: The AMWG will meet to receive updates on: (1) current basin hydrology and water year 2024 operations; (2) experiments considered for implementation in 2024; (3) the status of threatened and endangered species; and (4) the new Triennial Work Plan recommendation to the Secretary. The AMWG will also discuss other administrative and resource issues pertaining to the GCDAMP. To view a copy of the agenda and documents related to the above meeting, please visit Reclamation's website at https://www.usbr.gov/uc/progact/amp/amwg.html .
Meeting Accessibility/Special Accommodations: The meeting is open to the public. Please make requests in advance for sign language interpreter services, assistive listening devices, or other reasonable accommodations. We ask that you contact Mr. William Stewart (see FOR FURTHER INFORMATION CONTACT section of this notice) at least seven (7) business days prior to the meeting to give the Department of the Interior sufficient time to process your request. All reasonable accommodation requests are managed on a case-by-case basis.
Public Disclosure of Comments: Time will be allowed on both days for any individual or organization wishing to make extemporaneous and/or formal oral comments. Depending on the number of persons wishing to speak, and the time available, the time for individual comments may be limited. Interested parties should contact Mr. William Stewart (see FOR FURTHER INFORMATION CONTACT ) for placement on the public speaker list for this meeting. Members of the public may also choose to submit written comments by emailing them to wstewart@usbr.gov . Due to time constraints during the meeting, the AMWG is not able to read written public comments. All written comments will be made part of the public record and will be provided to the AMWG members.
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.
Authority: 5 U.S.C. ch. 10.
William Stewart,

Adaptive Management Group Chief, Upper Colorado Basin—Interior Region 7.
INTERNATIONAL TRADE COMMISSION
[Investigation No. 337-TA-1325]
Certain Soft Projectile Launching Devices, Components Thereof, Ammunition, and Products Containing Same; Notice of Commission Determination To Review in Part a Final Initial Determination of Violation of Section 337; Schedule for Filing Written Submissions on Remedy, the Public Interest, and Bonding; Extension of the Target Date

AGENCY:
U.S. International Trade Commission.

ACTION:
Notice.

SUMMARY:
Notice is hereby given that the U.S. International Trade Commission has determined to review in part a final initial determination (“Final ID”) issued by the presiding administrative law judge (“ALJ”) finding a violation of section 337 of the Tariff Act of 1930. The Commission requests briefing from the parties on the issues under review and from the parties, interested government agencies, and interested persons on remedy, the public interest, and bonding based on the schedule set forth below. The target date is extended to April 15, 2024.

FOR FURTHER INFORMATION CONTACT:
Robert Needham, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 708-5468. Copies of non-confidential documents filed in connection with this investigation may be viewed on the Commission's electronic docket (EDIS) at https://edis.usitc.gov. For help accessing EDIS, please email EDIS3Help@usitc.gov. General information concerning the Commission may also be obtained by accessing its internet server at https://www.usitc.gov. Hearing-impaired persons are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on (202) 205-1810.

SUPPLEMENTARY INFORMATION:
The Commission instituted this investigation on August 26, 2022, based on a complaint filed by complainants Hasbro, Inc. of Pawtucket, Rhode Island (“Hasbro”), and Spin Master, Inc. of Los Angeles, California (“Spin Master”) (together, “Complainants”). 87 FR 52595-96 (Aug. 26, 2022). The complaint, as supplemented, alleges a violation of section 337 of the Tariff Act of 1930, as amended,19 U.S.C. 1337 (“section 337”), based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain soft projectile launching devices, components thereof, ammunition, and products containing same by reason of the infringement of one or more of claims 1-15 and 17-21 of U.S. Patent No. 8,371,282 (“the '282 patent”) and claims 1-6 and 10-15 of U.S. Patent No. 8,640,683 (“the '683 patent”). Id. at 52595. The complaint further alleges that an industry in the United States exists or is in the process of being established. Id. The notice of investigation names as respondents Shenzhen Yi Jin Electronics Science of Shenzhen City, China, Guangdong Yu Lee Technology Corp. of Dongguan City, China, Yu Lee Company Ltd. of Tsuen Wan, Hong Kong, and Gel Blaster Inc. f/k/a Gel Blaster, LLC of Austin, Texas (together, “the Gel Blaster Respondents”); S-Beam Precision Products Ltd. of Zhongshan City, China, Splat-R-Ball, LLC of Rogers, Arkansas, and Daisy Manufacturing Company of Rogers, Arkansas (together, “the Splat-R-Ball Respondents”); and Prime Time Toys Ltd. of Kwun Tong, Hong Kong, Prime Time Toys LLC of Pompton Lakes, New Jersey, and Easebon Services Ltd. of Kwun Tong, Hong Kong (together, “PTT”) (collectively, “Respondents”). Id. The Office of Unfair Import Investigations (“OUII”) is a party to the investigation. Id. at 52595-96.
Complainants originally asserted that Respondents violated section 337 based on infringement of claims 1-15 and 17-21 of the '282 patent and claims 1-6 and 10-15 of the '683 patent. Id. at 52595. The Commission previously terminated the investigation with respect to claims 1-7, 9-15, 17, 18, and 21 of the '282 patent and claims 1-4, 6, 10-12, 13 and 15 of the '683 patent based on Complainants' partial withdrawal of the complaint. Order No. 10 (Oct. 25, 2022), unreviewed by Comm'n Notice (Nov. 16, 2022); Order No. 21 (Jan. 18, 2023), unreviewed by Comm'n Notice (Feb. 14, 2023); Order No. 44 (May 17, 2023), unreviewed by Comm'n Notice (May 30, 2023). Accordingly, at the time of the evidentiary hearing, claims 8, 19, and 20 of the '282 patent and claims 5 and 14 of the '683 patent remained at issue.
On November 10, 2022, Complainants and Respondents stipulated that the '282 and '683 patents share a common specification and describe projectile launchers, soft projectiles made with “super absorbent polymers,” and systems comprised of projectile launchers and soft projectiles. Technology Stipulation (Nov. 10, 2022).
On November 21, 2022, Respondents stipulated that the importation requirement is satisfied. On May 16, 2023, Complainants and Respondents stipulated that the technical prong of the domestic industry requirement is satisfied under the ALJ's construction of “super absorbent polymer.” On May 18, 2023, the parties stipulated regarding the disclosure of prior art.
On March 27, 2023, the ALJ issued a claim construction order. Order No. 28 (Mar. 27, 2023). The ALJ held an evidentiary hearing on May 19, and 22-23, 2023.
On April 27, 2023, the ALJ granted a motion for a summary determination that Respondents infringed claims 6, 8, 19, and 20 of the '282 patent and claims 1, 5, and 11 of the '683 patent. Order No. 37 (Apr. 27, 2023). Shortly thereafter, the Commission terminated the Gel Blaster Respondents and Splat-R-Ball Respondents based on settlement. Order No. 42 (May 17, 2023), unreviewed by Comm'n Notice (May 30, 2023); Order No. 45 (May 19, 2023), unreviewed by Comm'n Notice (May 30, 2023). Also, as noted above, the Commission subsequently terminated the investigation with respect to claim 6 of the '282 patent and claims 1, and 11 of the '683 patent. The Commission affirmed the finding of infringement against PTT regarding claims 8, 19, and 20 of the '282 patent and claims 5 of the '683 patent but determined to review and vacate as moot the findings with respect to the Gel Blaster Respondents, Splat-R-Ball Respondents, and the withdrawn claims. Comm'n Notice (May 30, 2023).
On October 25, 2023, the ALJ issued the Final ID finding a violation of section 337 with respect to claims 8, 19, and 20 of the '282 patent and claims 5 and 14 of the '683 patent. Final ID at ii-iii. Specifically, the Final ID notes that the Commission already found that “the Accused Blasters ( i.e., blaster kits with blasters and ammunition)” directly infringe claims 8, 19, and 20 of the '282 patent and claim 5 of the '683 patent, and that PTT stipulated that the accused products directly infringe claim 14. Id. at 21-22, 38-39. The Final ID finds that PTT also induces and contributes to infringement with respect to those claims. Id. at 25-30, 39-41. The Final ID further finds that Complainants have satisfied the technical prong of the domestic industry requirement with respect to claims 8, 19, and 20 of the '282 patent and claims 5 and 14 of the '683 patent. Id. at 31-36, 41-44. Additionally, the Final ID finds that the asserted claims are not invalid as obvious under 35 U.S.C. 103 due to PTT's failure to provide a motivation to combine the references at issue and Complainants' showing on secondary considerations. Id. at 44-91. Finally, the Final ID finds that Complainants failed to show that a domestic industry exists, but that Complainants did show that a domestic industry is in the process of being established. Id. at 91-117.
On October 26, 2023, the Commission requested comments from the public and interested government agencies regarding any public interest issues raised by the ALJ's RD. See 88 FR 74510-11 (Oct. 31, 2023). The Commission received no comments from the public or government agencies and received no comments from the parties on the public interest pursuant to Commission Rule 210.50(a)(4). 19 CFR 210.50(a)(4).
On November 6, 2023, PTT filed a petition for review challenging the Final ID's findings that: (1) PTT failed to provide motivations to combine prior art to support a finding of obviousness; (2) secondary considerations support a finding of nonobviousness; and (3) Complainants showed an industry in the process of being established. Also on November 6, 2023, Complainants filed a contingent petition for review of the Final ID's finding that Complainants failed to show that a domestic industry exists. On November 14. 2023, the Complainants and PTT filed responses opposing each other's petitions, and OUII filed a response opposing both petitions.
Having examined the record of this investigation, including the Final ID, the petitions for review, and the responses thereto, the Commission has determined to review the Final ID in part. Specifically, the Commission has determined to review the Final ID's findings on obviousness and the economic prong of the domestic industry requirement. The Commission has determined not to review the remainder of the Final ID. The Commission has also determined to extend the target date to April 15, 2024.
In connection with its review, the Commission requests briefing on the following issue. The parties are requested to brief their positions with reference to the applicable law, the existing evidentiary record, and the parties' submissions during the investigation.
Please identify and discuss with citations to the record whether any argument or evidence was presented to the ALJ that a significant and unusual development(s) existed after the complaint was filed in this matter that may justify consideration of post-complaint evidence to support Complainants' domestic industry claim. See, e.g., Certain Televisions, Remote Controls, and Components Thereof, Inv. No. 337-TA-1263, Comm'n Op. at 20-21 (Nov. 30, 2022) (Public Vers.).
In connection with the final disposition of this investigation, the Commission may (1) issue an order that could result in the exclusion of the subject articles from entry into the United States, and/or (2) issue cease and desist order(s) that could result in the respondents being required to cease and desist from engaging in unfair acts in the importation and sale of such articles. Accordingly, the Commission is interested in receiving written submissions that address the form of remedy, if any, that should be ordered. If a party seeks exclusion of an article from entry into the United States for purposes other than entry for consumption, the party should so indicate and provide information establishing that activities involving other types of entry either are adversely affecting it or likely to do so. For background, see Certain Devices for Connecting Computers via Telephone Lines, Inv. No. 337-TA-360, USITC Pub. No. 2843, Comm'n Op. at 7-10 (December 1994).
If the Commission contemplates some form of remedy, it must consider the effects of that remedy upon the public interest. The factors the Commission will consider include the effect that an exclusion order and/or a cease and desist order would have on (1) the public health and welfare, (2) competitive conditions in the U.S. economy, (3) U.S. production of articles that are like or directly competitive with those that are subject to investigation, and (4) U.S. consumers. The Commission is therefore interested in receiving written submissions that address the aforementioned public interest factors in the context of this investigation.
If the Commission orders some form of remedy, the U.S. Trade Representative, as delegated by the President, has 60 days to approve, disapprove, or take no position on the Commission's action. See Presidential Memorandum of July 21, 2005, 70 FR 43251 (July 26, 2005). During this period, the subject articles would be entitled to enter the United States under bond, in an amount determined by the Commission and prescribed by the Secretary of the Treasury. The Commission is therefore interested in receiving submissions concerning the amount of the bond that should be imposed if a remedy is ordered.
Written Submissions: The Commission requests that the parties to the investigation file written submissions on the issues identified in this notice. The Commission encourages parties to the investigation, interested government agencies, and any other interested parties to file written submissions on the issues of remedy, the public interest, and bonding. Such submissions should address the recommended determination by the ALJ on remedy and bonding, which issued on October 25, 2023. The Commission further requests that Complainants and OUII submit proposed remedial orders, state the date when the asserted patents expire, provide the HTSUS subheadings under which the subject articles are imported, and supply a list of known importers of the subject article. The written submissions, exclusive of any exhibits, must not exceed 20 pages, and must be filed no later than close of business on February 13, 2024. Reply submissions must not exceed 10 pages and must be filed no later than the close of business on February 20, 2024. No further submissions on these issues will be permitted unless otherwise ordered by the Commission.
Persons filing written submissions must file the original document electronically on or before the deadlines stated above. The Commission's paper filing requirements in 19 CFR 210.4(f) are currently waived. 85 FR 15798 (March 19, 2020). Submissions should refer to the investigation number (Inv. No. 337-TA-1325) in a prominent place on the cover page and/or the first page. ( See Handbook for Electronic Filing Procedures, https://www.usitc.gov/documents/handbook_on_filing_procedures.pdf ). Persons with questions regarding filing should contact the Secretary, (202) 205-2000.
Any person desiring to submit a document to the Commission in confidence must request confidential treatment by marking each document with a header indicating that the document contains confidential information. This marking will be deemed to satisfy the request procedure set forth in Rules 201.6(b) and 210.5(e)(2) (19 CFR 201.6(b) & 210.5(e)(2)). Documents for which confidential treatment by the Commission is properly sought will be treated accordingly. A redacted non-confidential version of the document must also be filed simultaneously with any confidential filing. All information, including confidential business information and documents for which confidential treatment is properly sought, submitted to the Commission for purposes of this investigation may be disclosed to and used: (i) by the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission including under 5 U.S.C. appendix 3; or (ii) by U.S. Government employees and contract personnel, solely for cybersecurity purposes. All contract personnel will sign appropriate nondisclosure agreements. All nonconfidential written submissions will be available for public inspection on EDIS.
The Commission vote for this determination took place on January 30, 2024.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
Original Issued Date: January 30, 2024.
Issued: May 29, 2024.
Lisa Barton,

Secretary to the Commission.
INTERNATIONAL TRADE COMMISSION
[Investigation Nos. 701-TA-452 and 731-TA-1129-1130 (Third Review)]
Raw Flexible Magnets From China and Taiwan; Institution of Five-Year Reviews

AGENCY:
International Trade Commission.

ACTION:
Notice.

SUMMARY:
The Commission hereby gives notice that it has instituted reviews pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the antidumping and countervailing duty orders on raw flexible magnets from China and Taiwan would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.

DATES:
Instituted June 3, 2024. To be assured of consideration, the deadline for responses is July 3, 2024. Comments on the adequacy of responses may be filed with the Commission by August 9, 2024.

FOR FURTHER INFORMATION CONTACT:
Alexis Yim (202-708-1446), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server ( https://www.usitc.gov ). The public record for this proceeding may be viewed on the Commission's electronic docket (EDIS) at https://edis.usitc.gov.

SUPPLEMENTARY INFORMATION:
Background. —On September 17, 2008, the Department of Commerce (“Commerce”) published antidumping and countervailing duty orders on imports of raw flexible magnets from China and an antidumping duty order on raw flexible magnets from Taiwan (73 FR 53847-53850). Commerce issued a continuation of the antidumping and countervailing duty orders on imports of raw flexible magnets from China and Taiwan following Commerce's and the Commission's first five-year reviews, effective February 5, 2014 (79 FR 6886), and second five-year reviews, effective July 23, 2019 (84 FR 35369). The Commission is now conducting third reviews pursuant to section 751(c) of the Act, as amended (19 U.S.C. 1675(c)), to determine whether revocation of the orders would be likely to lead to continuation or recurrence of material injury to the domestic industry within a reasonably foreseeable time. Provisions concerning the conduct of this proceeding may be found in the Commission's Rules of Practice and Procedure at 19 CFR part 201, subparts A and B, and 19 CFR part 207, subparts A and F. The Commission will assess the adequacy of interested party responses to this notice of institution to determine whether to conduct full or expedited reviews. The Commission's determinations in any expedited reviews will be based on the facts available, which may include information provided in response to this notice.
Definitions. —The following definitions apply to these reviews:
(1) Subject Merchandise is the class or kind of merchandise that is within the scope of the five-year reviews, as defined by Commerce.
(2) The Subject Countries in these reviews are China and Taiwan.
(3) The Domestic Like Product is the domestically produced product or products which are like, or in the absence of like, most similar in characteristics and uses with, the Subject Merchandise. In its original determinations and expedited first and second five-year review determinations, the Commission found a single Domestic Like Product consisting of raw flexible magnets coextensive with Commerce's scope.
(4) The Domestic Industry is the U.S. producers as a whole of the Domestic Like Product, or those producers whose collective output of the Domestic Like Product constitutes a major proportion of the total domestic production of the product. In its original determinations and its expedited first and second five-year review determinations, the Commission defined a single Domestic Industry consisting of all U.S. producers of raw flexible magnets.
(5) An Importer is any person or firm engaged, either directly or through a parent company or subsidiary, in importing the Subject Merchandise into the United States from a foreign manufacturer or through its selling agent.
Participation in the proceeding and public service list. —Persons, including industrial users of the Subject Merchandise and, if the merchandise is sold at the retail level, representative consumer organizations, wishing to participate in the proceeding as parties must file an entry of appearance with the Secretary to the Commission, as provided in § 201.11(b)(4) of the Commission's rules, no later than 21 days after publication of this notice in the Federal Register . The Secretary will maintain a public service list containing the names and addresses of all persons, or their representatives, who are parties to the proceeding.
Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Limited disclosure of business proprietary information (BPI) under an administrative protective order (APO) and APO service list. —Pursuant to § 207.7(a) of the Commission's rules, the Secretary will make BPI submitted in this proceeding available to authorized applicants under the APO issued in the proceeding, provided that the application is made no later than 21 days after publication of this notice in the Federal Register . Authorized applicants must represent interested parties, as defined in 19 U.S.C. 1677(9), who are parties to the proceeding. A separate service list will be maintained by the Secretary for those parties authorized to receive BPI under the APO.
Certification. —Pursuant to § 207.3 of the Commission's rules, any person submitting information to the Commission in connection with this proceeding must certify that the information is accurate and complete to the best of the submitter's knowledge. In making the certification, the submitter will acknowledge that information submitted in response to this request for information and throughout this proceeding or other proceeding may be disclosed to and used: (i) by the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission including under 5 U.S.C. Appendix 3; or (ii) by U.S. government employees and contract personnel, solely for cybersecurity purposes. All contract personnel will sign appropriate nondisclosure agreements.
Written submissions. —Pursuant to § 207.61 of the Commission's rules, each interested party response to this notice must provide the information specified below. The deadline for filing such responses is 5:15 p.m. on July 3, 2024. Pursuant to § 207.62(b) of the Commission's rules, eligible parties (as specified in Commission rule 207.62(b)(1)) may also file comments concerning the adequacy of responses to the notice of institution and whether the Commission should conduct expedited or full reviews. The deadline for filing such comments is 5:15 p.m. on August 9, 2024. All written submissions must conform with the provisions of § 201.8 of the Commission's rules; any submissions that contain BPI must also conform with the requirements of §§ 201.6, 207.3, and 207.7 of the Commission's rules. The Commission's Handbook on Filing Procedures, available on the Commission's website at https://www.usitc.gov/documents/handbook_on_filing_procedures.pdf, elaborates upon the Commission's procedures with respect to filings. Also, in accordance with §§ 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the proceeding must be served on all other parties to the proceeding (as identified by either the public or APO service list as appropriate), and a certificate of service must accompany the document (if you are not a party to the proceeding you do not need to serve your response).
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS, https://edis.usitc.gov ). No in-person paper-based filings or paper copies of any electronic filings will be accepted until further notice.
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 24-5-603, expiration date June 30, 2026. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Inability to provide requested information. —Pursuant to § 207.61(c) of the Commission's rules, any interested party that cannot furnish the information requested by this notice in the requested form and manner shall notify the Commission at the earliest possible time, provide a full explanation of why it cannot provide the requested information, and indicate alternative forms in which it can provide equivalent information. If an interested party does not provide this notification (or the Commission finds the explanation provided in the notification inadequate) and fails to provide a complete response to this notice, the Commission may take an adverse inference against the party pursuant to § 776(b) of the Act (19 U.S.C. 1677e(b)) in making its determinations in the reviews.
Information to be provided in response to this notice of institution: If you are a domestic producer, union/worker group, or trade/business association; import/export Subject Merchandise from more than one Subject Country; or produce Subject Merchandise in more than one Subject Country, you may file a single response. If you do so, please ensure that your response to each question includes the information requested for each pertinent Subject Country. As used below, the term “firm” includes any related firms.
Those responding to this notice of institution are encouraged, but not required, to visit the USITC's website at https://usitc.gov/reports/response_noi_worksheet, where one can download and complete the “NOI worksheet” Excel form for the subject proceeding, to be included as attachment/exhibit 1 of your overall response.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the Domestic Like Product, a U.S. union or worker group, a U.S. importer of the Subject Merchandise, a foreign producer or exporter of the Subject Merchandise, a U.S. or foreign trade or business association (a majority of whose members are interested parties under the statute), or another interested party (including an explanation). If you are a union/worker group or trade/business association, identify the firms in which your workers are employed or which are members of your association.
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping and countervailing duty orders on the Domestic Industry in general and/or your firm/entity specifically. In your response, please discuss the various factors specified in section 752(a) of the Act (19 U.S.C. 1675a(a)) including the likely volume of subject imports, likely price effects of subject imports, and likely impact of imports of Subject Merchandise on the Domestic Industry.
(5) A list of all known and currently operating U.S. producers of the Domestic Like Product. Identify any known related parties and the nature of the relationship as defined in section 771(4)(B) of the Act (19 U.S.C. 1677(4)(B)).
(6) A list of all known and currently operating U.S. importers of the Subject Merchandise and producers of the Subject Merchandise in each Subject Country that currently export or have exported Subject Merchandise to the United States or other countries after 2018.
(7) A list of 3-5 leading purchasers in the U.S. market for the Domestic Like Product and the Subject Merchandise (including street address, World Wide Web address, and the name, telephone number, fax number, and Email address of a responsible official at each firm).
(8) A list of known sources of information on national or regional prices for the Domestic Like Product or the Subject Merchandise in the U.S. or other markets.
(9) If you are a U.S. producer of the Domestic Like Product, provide the following information on your firm's operations on that product during calendar year 2023, except as noted (report quantity data in pounds and value data in U.S. dollars, f.o.b. plant). If you are a union/worker group or trade/business association, provide the information, on an aggregate basis, for the firms in which your workers are employed/which are members of your association.
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the Domestic Like Product accounted for by your firm's(s') production;
(b) Capacity (quantity) of your firm to produce the Domestic Like Product (that is, the level of production that your establishment(s) could reasonably have expected to attain during the year, assuming normal operating conditions (using equipment and machinery in place and ready to operate), normal operating levels (hours per week/weeks per year), time for downtime, maintenance, repair, and cleanup, and a typical or representative product mix);
(c) the quantity and value of U.S. commercial shipments of the Domestic Like Product produced in your U.S. plant(s);
(d) the quantity and value of U.S. internal consumption/company transfers of the Domestic Like Product produced in your U.S. plant(s); and
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the Domestic Like Product produced in your U.S. plant(s) (include both U.S. and export commercial sales, internal consumption, and company transfers) for your most recently completed fiscal year (identify the date on which your fiscal year ends).
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the Subject Merchandise from any Subject Country, provide the following information on your firm's(s') operations on that product during calendar year 2023 (report quantity data in pounds and value data in U.S. dollars). If you are a trade/business association, provide the information, on an aggregate basis, for the firms which are members of your association.
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of Subject Merchandise from each Subject Country accounted for by your firm's(s') imports;
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of Subject Merchandise imported from each Subject Country; and
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of Subject Merchandise imported from each Subject Country.
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the Subject Merchandise in any Subject Country, provide the following information on your firm's(s') operations on that product during calendar year 2023 (report quantity data in pounds and value data in U.S. dollars, landed and duty-paid at the U.S. port but not including antidumping or countervailing duties). If you are a trade/business association, provide the information, on an aggregate basis, for the firms which are members of your association.
(a) Production (quantity) and, if known, an estimate of the percentage of total production of Subject Merchandise in each Subject Country accounted for by your firm's(s') production;
(b) Capacity (quantity) of your firm(s) to produce the Subject Merchandise in each Subject Country (that is, the level of production that your establishment(s) could reasonably have expected to attain during the year, assuming normal operating conditions (using equipment and machinery in place and ready to operate), normal operating levels (hours per week/weeks per year), time for downtime, maintenance, repair, and cleanup, and a typical or representative product mix); and
(c) the quantity and value of your firm's(s') exports to the United States of Subject Merchandise and, if known, an estimate of the percentage of total exports to the United States of Subject Merchandise from each Subject Country accounted for by your firm's(s') exports.
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the Domestic Like Product that have occurred in the United States or in the market for the Subject Merchandise in each Subject Country after 2018, and significant changes, if any, that are likely to occur within a reasonably foreseeable time. Supply conditions to consider include technology; production methods; development efforts; ability to increase production (including the shift of production facilities used for other products and the use, cost, or availability of major inputs into production); and factors related to the ability to shift supply among different national markets (including barriers to importation in foreign markets or changes in market demand abroad). Demand conditions to consider include end uses and applications; the existence and availability of substitute products; and the level of competition among the Domestic Like Product produced in the United States, Subject Merchandise produced in each Subject Country, and such merchandise from other countries.
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the Domestic Like Product and Domestic Industry; if you disagree with either or both of these definitions, please explain why and provide alternative definitions.
Authority: This proceeding is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to § 207.61 of the Commission's rules.
By order of the Commission.
Issued: May 28, 2024.
Lisa Barton,

Secretary to the Commission.
INTERNATIONAL TRADE COMMISSION
[Investigation No. 731-TA-990 (Fourth Review)]
Non-Malleable Cast Iron Pipe Fittings From China; Institution of a Five-Year Review

AGENCY:
International Trade Commission.

ACTION:
Notice.

SUMMARY:
The Commission hereby gives notice that it has instituted a review pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the antidumping duty order on non-malleable cast iron pipe fittings from China would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.

DATES:
Instituted June 3, 2024. To be assured of consideration, the deadline for responses is July 3, 2024. Comments on the adequacy of responses may be filed with the Commission by August 9, 2024.

FOR FURTHER INFORMATION CONTACT:
Kenneth Gatten (202-708-1447), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server ( https://www.usitc.gov ). The public record for this proceeding may be viewed on the Commission's electronic docket (EDIS) at https://edis.usitc.gov.

SUPPLEMENTARY INFORMATION:
Background. —On April 7, 2003, the Department of Commerce (“Commerce”) issued an antidumping duty order on imports of non-malleable cast iron pipe fittings from China (68 FR 16765). Commerce issued a continuation of the antidumping duty order on imports of non-malleable cast iron pipe fittings from China following Commerce's and the Commission's first five-year reviews, effective August 15, 2008 (73 FR 47887), second five-year reviews, effective February 12, 2014 (79 FR 8437), and third five-year reviews, effective July 9, 2019 (84 FR 32722). The Commission is now conducting a fourth review pursuant to section 751(c) of the Act, as amended (19 U.S.C. 1675(c)), to determine whether revocation of the order would be likely to lead to continuation or recurrence of material injury to the domestic industry within a reasonably foreseeable time. Provisions concerning the conduct of this proceeding may be found in the Commission's Rules of Practice and Procedure at 19 CFR part 201, subparts A and B, and 19 CFR part 207, subparts A and F. The Commission will assess the adequacy of interested party responses to this notice of institution to determine whether to conduct a full or expedited review. The Commission's determination in any expedited review will be based on the facts available, which may include information provided in response to this notice.
Definitions. —The following definitions apply to this review:
(1) Subject Merchandise is the class or kind of merchandise that is within the scope of the five-year review, as defined by Commerce.
(2) The Subject Country in this review is China.
(3) The Domestic Like Product is the domestically produced product or products which are like, or in the absence of like, most similar in characteristics and uses with, the Subject Merchandise. In its original determination and its expedited first, second, and third five-year review determinations, the Commission defined a single Domestic Like Product consisting of non-malleable cast iron pipe fittings corresponding to Commerce's scope.
(4) The Domestic Industry is the U.S. producers as a whole of the Domestic Like Product, or those producers whose collective output of the Domestic Like Product constitutes a major proportion of the total domestic production of the product. In its original determination and its expedited first, second, and third five-year review determinations, the Commission defined the Domestic Industry as all domestic producers of non-malleable cast iron pipe fittings.
(5) An Importer is any person or firm engaged, either directly or through a parent company or subsidiary, in importing the Subject Merchandise into the United States from a foreign manufacturer or through its selling agent.
Participation in the proceeding and public service list. —Persons, including industrial users of the Subject Merchandise and, if the merchandise is sold at the retail level, representative consumer organizations, wishing to participate in the proceeding as parties must file an entry of appearance with the Secretary to the Commission, as provided in § 201.11(b)(4) of the Commission's rules, no later than 21 days after publication of this notice in the Federal Register . The Secretary will maintain a public service list containing the names and addresses of all persons, or their representatives, who are parties to the proceeding.
Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Limited disclosure of business proprietary information (BPI) under an administrative protective order (APO) and APO service list. —Pursuant to § 207.7(a) of the Commission's rules, the Secretary will make BPI submitted in this proceeding available to authorized applicants under the APO issued in the proceeding, provided that the application is made no later than 21 days after publication of this notice in the Federal Register . Authorized applicants must represent interested parties, as defined in 19 U.S.C. 1677(9), who are parties to the proceeding. A separate service list will be maintained by the Secretary for those parties authorized to receive BPI under the APO.
Certification. —Pursuant to § 207.3 of the Commission's rules, any person submitting information to the Commission in connection with this proceeding must certify that the information is accurate and complete to the best of the submitter's knowledge. In making the certification, the submitter will acknowledge that information submitted in response to this request for information and throughout this proceeding or other proceeding may be disclosed to and used: (i) by the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission including under 5 U.S.C. Appendix 3; or (ii) by U.S. government employees and contract personnel, solely for cybersecurity purposes. All contract personnel will sign appropriate nondisclosure agreements.
Written submissions. —Pursuant to § 207.61 of the Commission's rules, each interested party response to this notice must provide the information specified below. The deadline for filing such responses is 5:15 p.m. on July 3, 2024. Pursuant to § 207.62(b) of the Commission's rules, eligible parties (as specified in Commission rule 207.62(b)(1)) may also file comments concerning the adequacy of responses to the notice of institution and whether the Commission should conduct an expedited or full review. The deadline for filing such comments is 5:15 p.m. August 9, 2024. All written submissions must conform with the provisions of § 201.8 of the Commission's rules; any submissions that contain BPI must also conform with the requirements of §§ 201.6, 207.3, and 207.7 of the Commission's rules. The Commission's Handbook on Filing Procedures, available on the Commission's website at https://www.usitc.gov/documents/handbook_on_filing_procedures.pdf, elaborates upon the Commission's procedures with respect to filings. Also, in accordance with §§ 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the proceeding must be served on all other parties to the proceeding (as identified by either the public or APO service list as appropriate), and a certificate of service must accompany the document (if you are not a party to the proceeding you do not need to serve your response).
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS, https://edis.usitc.gov ). No in-person paper-based filings or paper copies of any electronic filings will be accepted until further notice.
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 24-5-601, expiration date June 30, 2026. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Inability to provide requested information. —Pursuant to § 207.61(c) of the Commission's rules, any interested party that cannot furnish the information requested by this notice in the requested form and manner shall notify the Commission at the earliest possible time, provide a full explanation of why it cannot provide the requested information, and indicate alternative forms in which it can provide equivalent information. If an interested party does not provide this notification (or the Commission finds the explanation provided in the notification inadequate) and fails to provide a complete response to this notice, the Commission may take an adverse inference against the party pursuant to § 776(b) of the Act (19 U.S.C. 1677e(b)) in making its determination in the review.
Information to be provided in response to this notice of institution: As used below, the term “firm” includes any related firms.
Those responding to this notice of institution are encouraged, but not required, to visit the USITC's website at https://usitc.gov/reports/response_noi_worksheet, where one can download and complete the “NOI worksheet” Excel form for the subject proceeding, to be included as attachment/exhibit 1 of your overall response.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the Domestic Like Product, a U.S. union or worker group, a U.S. importer of the Subject Merchandise, a foreign producer or exporter of the Subject Merchandise, a U.S. or foreign trade or business association (a majority of whose members are interested parties under the statute), or another interested party (including an explanation). If you are a union/worker group or trade/business association, identify the firms in which your workers are employed or which are members of your association.
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the antidumping duty order on the Domestic Industry in general and/or your firm/entity specifically. In your response, please discuss the various factors specified in section 752(a) of the Act (19 U.S.C. 1675a(a)) including the likely volume of subject imports, likely price effects of subject imports, and likely impact of imports of Subject Merchandise on the Domestic Industry.
(5) A list of all known and currently operating U.S. producers of the Domestic Like Product. Identify any known related parties and the nature of the relationship as defined in § 771(4)(B) of the Act (19 U.S.C. 1677(4)(B)).
(6) A list of all known and currently operating U.S. importers of the Subject Merchandise and producers of the Subject Merchandise in the Subject Country that currently export or have exported Subject Merchandise to the United States or other countries after 2018.
(7) A list of 3-5 leading purchasers in the U.S. market for the Domestic Like Product and the Subject Merchandise (including street address, World Wide Web address, and the name, telephone number, fax number, and Email address of a responsible official at each firm).
(8) A list of known sources of information on national or regional prices for the Domestic Like Product or the Subject Merchandise in the U.S. or other markets.
(9) If you are a U.S. producer of the Domestic Like Product, provide the following information on your firm's operations on that product during calendar year 2023, except as noted (report quantity data in short tons and value data in U.S. dollars, f.o.b. plant). If you are a union/worker group or trade/business association, provide the information, on an aggregate basis, for the firms in which your workers are employed/which are members of your association.
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the Domestic Like Product accounted for by your firm's(s') production;
(b) Capacity (quantity) of your firm to produce the Domestic Like Product (that is, the level of production that your establishment(s) could reasonably have expected to attain during the year, assuming normal operating conditions (using equipment and machinery in place and ready to operate), normal operating levels (hours per week/weeks per year), time for downtime, maintenance, repair, and cleanup, and a typical or representative product mix);
(c) the quantity and value of U.S. commercial shipments of the Domestic Like Product produced in your U.S. plant(s);
(d) the quantity and value of U.S. internal consumption/company transfers of the Domestic Like Product produced in your U.S. plant(s); and
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the Domestic Like Product produced in your U.S. plant(s) (include both U.S. and export commercial sales, internal consumption, and company transfers) for your most recently completed fiscal year (identify the date on which your fiscal year ends).
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the Subject Merchandise from the Subject Country, provide the following information on your firm's(s') operations on that product during calendar year 2023 (report quantity data in short tons and value data in U.S. dollars). If you are a trade/business association, provide the information, on an aggregate basis, for the firms which are members of your association.
(a) The quantity and value (landed, duty-paid but not including antidumping duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of Subject Merchandise from the Subject Country accounted for by your firm's(s') imports;
(b) the quantity and value (f.o.b. U.S. port, including antidumping duties) of U.S. commercial shipments of Subject Merchandise imported from the Subject Country; and
(c) the quantity and value (f.o.b. U.S. port, including antidumping duties) of U.S. internal consumption/company transfers of Subject Merchandise imported from the Subject Country.
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the Subject Merchandise in the Subject Country, provide the following information on your firm's(s') operations on that product during calendar year 2023 (report quantity data in short tons and value data in U.S. dollars, landed and duty-paid at the U.S. port but not including antidumping duties). If you are a trade/business association, provide the information, on an aggregate basis, for the firms which are members of your association.
(a) Production (quantity) and, if known, an estimate of the percentage of total production of Subject Merchandise in the Subject Country accounted for by your firm's(s') production;
(b) Capacity (quantity) of your firm(s) to produce the Subject Merchandise in the Subject Country (that is, the level of production that your establishment(s) could reasonably have expected to attain during the year, assuming normal operating conditions (using equipment and machinery in place and ready to operate), normal operating levels (hours per week/weeks per year), time for downtime, maintenance, repair, and cleanup, and a typical or representative product mix); and
(c) the quantity and value of your firm's(s') exports to the United States of Subject Merchandise and, if known, an estimate of the percentage of total exports to the United States of Subject Merchandise from the Subject Country accounted for by your firm's(s') exports.
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the Domestic Like Product that have occurred in the United States or in the market for the Subject Merchandise in the Subject Country after 2018, and significant changes, if any, that are likely to occur within a reasonably foreseeable time. Supply conditions to consider include technology; production methods; development efforts; ability to increase production (including the shift of production facilities used for other products and the use, cost, or availability of major inputs into production); and factors related to the ability to shift supply among different national markets (including barriers to importation in foreign markets or changes in market demand abroad). Demand conditions to consider include end uses and applications; the existence and availability of substitute products; and the level of competition among the Domestic Like Product produced in the United States, Subject Merchandise produced in the Subject Country, and such merchandise from other countries.
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the Domestic Like Product and Domestic Industry; if you disagree with either or both of these definitions, please explain why and provide alternative definitions.
Authority: This proceeding is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to § 207.61 of the Commission's rules.
By order of the Commission.
Issued: May 24, 2024.
Sharon Bellamy,

Supervisory Hearings and Information Officer.
INTERNATIONAL TRADE COMMISSION
[Investigation Nos. 701-TA-690-691 and 731-TA-1619-1625 and 731-TA-1627 (Final)]
Paper Shopping Bags From Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam; Scheduling of the Final Phase of the Antidumping and Countervailing Duty Investigations

AGENCY:
United States International Trade Commission.

ACTION:
Notice.

DATES:
May 24, 2024.

FOR FURTHER INFORMATION CONTACT:
Andres Andrade ((202) 205-2078), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on (202) 205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205-2000. General information concerning the Commission may also be obtained by accessing its internet server ( https://www.usitc.gov ). The public record for these investigations may be viewed on the Commission's electronic docket (EDIS) at https://edis.usitc.gov.

SUPPLEMENTARY INFORMATION:
Effective January 3, 2024, the Commission established a general schedule for the conduct of the final phase of its investigations on paper shopping bags from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, Turkey, and Vietnam ^1 following preliminary determinations by the U.S. Department of Commerce (“Commerce”) that imports of paper shopping bags from China and India were being subsidized by the governments of China and India and that imports of paper shopping bags from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, Turkey, and Vietnam were being sold in the United States at less than fair value (“LTFV”). ^2 Notice of the scheduling of the final phase of the Commission's investigations and of a public hearing 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 Federal Register on January 18, 2024, (89 FR 3424). The Commission conducted its hearing on March 14, 2024.
^1 89 FR 3424, January 18, 2024.
^2 88 FR 76180, 88 FR 76185, November 6, 2024; and 89 FR 319, 89 FR 321, 89 FR 325, 89 FR 331, 89 FR 333, 89 FR 336, 89 FR 339, 89 FR 341, and 89 FR 344, January 3, 2024
The Commission subsequently issued its final determination that an industry in the United States was materially injured by reason of imports of paper shopping bags from Turkey that Commerce had determined were sold at LTFV in the United States. ^3 Commerce issued its final affirmative determinations that imports of paper shopping bags from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam were being sold at LTFV in the United States and that imports of paper shopping bags from China and India were being subsidized by the governments of China and India. ^4 Accordingly, the Commission currently is issuing a supplemental schedule for its antidumping and countervailing duty investigations on imports of product from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam.
^3 89 FR 19295, March 18, 2024.
^4 89 FR 45841, 89 FR 45823, 89 FR 45843, 89 FR 45826, 89 FR 45821, 89 FR 45845, 89 FR 45832, 89 FR 45839, 89 FR 45829, 89 FR 45834, May 24, 2024.
This supplemental schedule is as follows: the deadline for filing supplemental party comments on Commerce's final antidumping and countervailing duty determinations is 5:15 p.m. on May 31, 2024. Supplemental party comments may address only Commerce's final antidumping and countervailing duty determinations regarding imports of product from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam. These supplemental final comments may not contain new factual information and may not exceed five (5) pages in length. The supplemental staff report in the final phase of these investigations regarding subject imports from Cambodia, China, Colombia, India, Malaysia, Portugal, Taiwan, and Vietnam will be placed in the nonpublic record on June 17, 2024; and a public version will be issued thereafter.
For further information concerning these investigations see the Commission's notice cited above and the Commission's Rules of Practice and Procedure, part 201, subparts A and B (19 CFR part 201), and part 207, subparts A and C (19 CFR part 207).
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, https://edis.usitc.gov ). No in-person paper-based filings or paper copies of any electronic filings will be accepted until further notice.
Additional written submissions to the Commission, including requests pursuant to section 201.12 of the Commission's rules, shall not be accepted unless good cause is shown for accepting such submissions, or unless the submission is pursuant to a specific request by a Commissioner or Commission staff.
In accordance with sections 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the investigation must be served on all other parties to the investigation (as identified by either the public or BPI service list), and a certificate of service must be timely filed. The Secretary will not accept a document for filing without a certificate of service.
Authority: This proceeding is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to section 207.21 of the Commission's rules.
By order of the Commission.
Issued: May 28, 2024.
Lisa Barton,

Secretary to the Commission.
INTERNATIONAL TRADE COMMISSION
[Investigation Nos. 701-TA-606 and 731-TA-1416 (Review)]
Quartz Surface Products From China; Institution of a Five-Year Review

AGENCY:
United States International Trade Commission.

ACTION:
Notice.

SUMMARY:
The Commission hereby gives notice that it has instituted a review pursuant to the Tariff Act of 1930 (“the Act”), as amended, to determine whether revocation of the countervailing and antidumping duty orders on quartz surface products from China would be likely to lead to continuation or recurrence of material injury. Pursuant to the Act, interested parties are requested to respond to this notice by submitting the information specified below to the Commission.

DATES:
Instituted June 3, 2024. To be assured of consideration, the deadline for responses is July 3, 2024. Comments on the adequacy of responses may be filed with the Commission by August 9, 2024.

FOR FURTHER INFORMATION CONTACT:
Julie Duffy (202-708-2579), Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436. Hearing-impaired persons can obtain information on this matter by contacting the Commission's TDD terminal on 202-205-1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server ( https://www.usitc.gov ). The public record for this proceeding may be viewed on the Commission's electronic docket (EDIS) at https://edis.usitc.gov.

SUPPLEMENTARY INFORMATION:
Background. —On July 11, 2019, the Department of Commerce (“Commerce”) issued countervailing and antidumping duty orders on imports of quartz surface products from China (84 FR 33053). The Commission is conducting a review pursuant to section 751(c) of the Act, as amended (19 U.S.C. 1675(c)), to determine whether revocation of the orders would be likely to lead to continuation or recurrence of material injury to the domestic industry within a reasonably foreseeable time. Provisions concerning the conduct of this proceeding may be found in the Commission's Rules of Practice and Procedure at 19 CFR part 201, subparts A and B, and 19 CFR part 207, subparts A and F. The Commission will assess the adequacy of interested party responses to this notice of institution to determine whether to conduct a full review or an expedited review. The Commission's determination in any expedited review will be based on the facts available, which may include information provided in response to this notice.
Definitions. —The following definitions apply to this review:
(1) Subject Merchandise is the class or kind of merchandise that is within the scope of the five-year review, as defined by Commerce.
(2) The Subject Country in this review is China.
(3) The Domestic Like Product is the domestically produced product or products which are like, or in the absence of like, most similar in characteristics and uses with, the Subject Merchandise. In its original determination, the Commission defined the Domestic Like Product as a single domestic like product including not fabricated slabs of quartz surface products, fabricated quartz surface products, custom-finished fully fabricated quartz surface products, and quartz glass products, that are co-extensive with the scope.
(4) The Domestic Industry is the U.S. producers as a whole of the Domestic Like Product, or those producers whose collective output of the Domestic Like Product constitutes a major proportion of the total domestic production of the product. In its original determination, the Commission defined the Domestic Industry as all producers of quartz surface products, which includes both quartz slab producers and stand-alone fabricators of quartz surface products.
(5) The Order Date is the date that the countervailing and antidumping duty orders under review became effective. In this review, the Order Date is July 11, 2019.
(6) An Importer is any person or firm engaged, either directly or through a parent company or subsidiary, in importing the Subject Merchandise into the United States from a foreign manufacturer or through its selling agent.
Participation in the proceeding and public service list. —Persons, including industrial users of the Subject Merchandise and, if the merchandise is sold at the retail level, representative consumer organizations, wishing to participate in the proceeding as parties must file an entry of appearance with the Secretary to the Commission, as provided in § 201.11(b)(4) of the Commission's rules, no later than 21 days after publication of this notice in the Federal Register . The Secretary will maintain a public service list containing the names and addresses of all persons, or their representatives, who are parties to the proceeding.
Former Commission employees who are seeking to appear in Commission five-year reviews are advised that they may appear in a review even if they participated personally and substantially in the corresponding underlying original investigation or an earlier review of the same underlying investigation. The Commission's designated agency ethics official has advised that a five-year review is not the same particular matter as the underlying original investigation, and a five-year review is not the same particular matter as an earlier review of the same underlying investigation for purposes of 18 U.S.C. 207, the post-employment statute for Federal employees, and Commission rule 201.15(b) (19 CFR 201.15(b)), 79 FR 3246 (Jan. 17, 2014), 73 FR 24609 (May 5, 2008). Consequently, former employees are not required to seek Commission approval to appear in a review under Commission rule 19 CFR 201.15, even if the corresponding underlying original investigation or an earlier review of the same underlying investigation was pending when they were Commission employees. For further ethics advice on this matter, contact Charles Smith, Office of the General Counsel, at 202-205-3408.
Limited disclosure of business proprietary information (BPI) under an administrative protective order (APO) and APO service list. —Pursuant to § 207.7(a) of the Commission's rules, the Secretary will make BPI submitted in this proceeding available to authorized applicants under the APO issued in the proceeding, provided that the application is made no later than 21 days after publication of this notice in the Federal Register . Authorized applicants must represent interested parties, as defined in 19 U.S.C. 1677(9), who are parties to the proceeding. A separate service list will be maintained by the Secretary for those parties authorized to receive BPI under the APO.
Certification. —Pursuant to § 207.3 of the Commission's rules, any person submitting information to the Commission in connection with this proceeding must certify that the information is accurate and complete to the best of the submitter's knowledge. In making the certification, the submitter will acknowledge that information submitted in response to this request for information and throughout this proceeding or other proceeding may be disclosed to and used: (i) by the Commission, its employees and Offices, and contract personnel (a) for developing or maintaining the records of this or a related proceeding, or (b) in internal investigations, audits, reviews, and evaluations relating to the programs, personnel, and operations of the Commission including under 5 U.S.C. Appendix 3; or (ii) by U.S. government employees and contract personnel, solely for cybersecurity purposes. All contract personnel will sign appropriate nondisclosure agreements.
Written submissions. —Pursuant to § 207.61 of the Commission's rules, each interested party response to this notice must provide the information specified below. The deadline for filing such responses is on or before 5:15 p.m. on July 3, 2024. Pursuant to § 207.62(b) of the Commission's rules, eligible parties (as specified in Commission rule 207.62(b)(1)) may also file comments concerning the adequacy of responses to the notice of institution and whether the Commission should conduct an expedited or full review. The deadline for filing such comments is on or before 5:15 p.m. on August 9, 2024. All written submissions must conform with the provisions of § 201.8 of the Commission's rules; any submissions that contain BPI must also conform with the requirements of §§ 201.6, 207.3, and 207.7 of the Commission's rules. The Commission's Handbook on Filing Procedures, available on the Commission's website at https://www.usitc.gov/documents/handbook_on_filing_procedures.pdf, elaborates upon the Commission's procedures with respect to filings. Also, in accordance with §§ 201.16(c) and 207.3 of the Commission's rules, each document filed by a party to the proceeding must be served on all other parties to the proceeding (as identified by either the public or APO service list as appropriate), and a certificate of service must accompany the document (if you are not a party to the proceeding you do not need to serve your response).
Please note the Secretary's Office will accept only electronic filings at this time. Filings must be made through the Commission's Electronic Document Information System (EDIS, https://edis.usitc.gov ). No in-person paper-based filings or paper copies of any electronic filings will be accepted until further notice.
No response to this request for information is required if a currently valid Office of Management and Budget (“OMB”) number is not displayed; the OMB number is 3117 0016/USITC No. 24-5-602, expiration date June 30, 2026. Public reporting burden for the request is estimated to average 15 hours per response. Please send comments regarding the accuracy of this burden estimate to the Office of Investigations, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436.
Inability to provide requested information. —Pursuant to § 207.61(c) of the Commission's rules, any interested party that cannot furnish the information requested by this notice in the requested form and manner shall notify the Commission at the earliest possible time, provide a full explanation of why it cannot provide the requested information, and indicate alternative forms in which it can provide equivalent information. If an interested party does not provide this notification (or the Commission finds the explanation provided in the notification inadequate) and fails to provide a complete response to this notice, the Commission may take an adverse inference against the party pursuant to § 776(b) of the Act (19 U.S.C. 1677e(b)) in making its determination in the review.
Information to be Provided in Response to this Notice of Institution: As used below, the term “firm” includes any related firms.
Those responding to this notice of institution are encouraged, but not required, to visit the USITC's website at https://usitc.gov/reports/response_noi_worksheet, where one can download and complete the “NOI worksheet” Excel form for the subject proceeding, to be included as attachment/exhibit 1 of your overall response.
(1) The name and address of your firm or entity (including World Wide Web address) and name, telephone number, fax number, and Email address of the certifying official.
(2) A statement indicating whether your firm/entity is an interested party under 19 U.S.C. 1677(9) and if so, how, including whether your firm/entity is a U.S. producer of the Domestic Like Product, a U.S. union or worker group, a U.S. importer of the Subject Merchandise, a foreign producer or exporter of the Subject Merchandise, a U.S. or foreign trade or business association (a majority of whose members are interested parties under the statute), or another interested party (including an explanation). If you are a union/worker group or trade/business association, identify the firms in which your workers are employed or which are members of your association.
(3) A statement indicating whether your firm/entity is willing to participate in this proceeding by providing information requested by the Commission.
(4) A statement of the likely effects of the revocation of the countervailing and antidumping duty orders on the Domestic Industry in general and/or your firm/entity specifically. In your response, please discuss the various factors specified in § 752(a) of the Act (19 U.S.C. 1675a(a)) including the likely volume of subject imports, likely price effects of subject imports, and likely impact of imports of Subject Merchandise on the Domestic Industry.
(5) A list of all known and currently operating U.S. producers of the Domestic Like Product. Identify any known related parties and the nature of the relationship as defined in § 771(4)(B) of the Act (19 U.S.C. 1677(4)(B)).
(6) A list of all known and currently operating U.S. importers of the Subject Merchandise and producers of the Subject Merchandise in each Subject Country that currently export or have exported Subject Merchandise to the United States or other countries since the Order Date.
(7) A list of 3-5 leading purchasers in the U.S. market for the Domestic Like Product and the Subject Merchandise (including street address, World Wide Web address, and the name, telephone number, fax number, and Email address of a responsible official at each firm).
(8) A list of known sources of information on national or regional prices for the Domestic Like Product or the Subject Merchandise in the U.S. or other markets.
(9) If you are a U.S. producer of the Domestic Like Product, provide the following information on your firm's operations on that product during calendar year 2023, except as noted (report quantity data in square feet and value data in U.S. dollars, f.o.b. plant). If you are a union/worker group or trade/business association, provide the information, on an aggregate basis, for the firms in which your workers are employed/which are members of your association.
(a) Production (quantity) and, if known, an estimate of the percentage of total U.S. production of the Domestic Like Product accounted for by your firm's(s') production;
(b) Capacity (quantity) of your firm to produce the Domestic Like Product (that is, the level of production that your establishment(s) could reasonably have expected to attain during the year, assuming normal operating conditions (using equipment and machinery in place and ready to operate), normal operating levels (hours per week/weeks per year), time for downtime, maintenance, repair, and cleanup, and a typical or representative product mix);
(c) the quantity and value of U.S. commercial shipments of the Domestic Like Product produced in your U.S. plant(s);
(d) the quantity and value of U.S. internal consumption/company transfers of the Domestic Like Product produced in your U.S. plant(s); and
(e) the value of (i) net sales, (ii) cost of goods sold (COGS), (iii) gross profit, (iv) selling, general and administrative (SG&A) expenses, and (v) operating income of the Domestic Like Product produced in your U.S. plant(s) (include both U.S. and export commercial sales, internal consumption, and company transfers) for your most recently completed fiscal year (identify the date on which your fiscal year ends).
(10) If you are a U.S. importer or a trade/business association of U.S. importers of the Subject Merchandise from the Subject Country, provide the following information on your firm's(s') operations on that product during calendar year 2023 (report quantity data in square feet and value data in U.S. dollars). If you are a trade/business association, provide the information, on an aggregate basis, for the firms which are members of your association.
(a) The quantity and value (landed, duty-paid but not including antidumping or countervailing duties) of U.S. imports and, if known, an estimate of the percentage of total U.S. imports of Subject Merchandise from the Subject Country accounted for by your firm's(s') imports;
(b) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. commercial shipments of Subject Merchandise imported from the Subject Country; and
(c) the quantity and value (f.o.b. U.S. port, including antidumping and/or countervailing duties) of U.S. internal consumption/company transfers of Subject Merchandise imported from the Subject Country.
(11) If you are a producer, an exporter, or a trade/business association of producers or exporters of the Subject Merchandise in the Subject Country, provide the following information on your firm's(s') operations on that product during calendar year 2023 (report quantity data in square feet and value data in U.S. dollars, landed and duty-paid at the U.S. port but not including antidumping or countervailing duties). If you are a trade/business association, provide the information, on an aggregate basis, for the firms which are members of your association.
(a) Production (quantity) and, if known, an estimate of the percentage of total production of Subject Merchandise in the Subject Country accounted for by your firm's(s') production;
(b) Capacity (quantity) of your firm(s) to produce the Subject Merchandise in the Subject Country (that is, the level of production that your establishment(s) could reasonably have expected to attain during the year, assuming normal operating conditions (using equipment and machinery in place and ready to operate), normal operating levels (hours per week/weeks per year), time for downtime, maintenance, repair, and cleanup, and a typical or representative product mix); and
(c) the quantity and value of your firm's(s') exports to the United States of Subject Merchandise and, if known, an estimate of the percentage of total exports to the United States of Subject Merchandise from the subject Country accounted for by your firm's(s') exports.
(12) Identify significant changes, if any, in the supply and demand conditions or business cycle for the Domestic Like Product that have occurred in the United States or in the market for the Subject Merchandise in the Subject Country since the Order Date, and significant changes, if any, that are likely to occur within a reasonably foreseeable time. Supply conditions to consider include technology; production methods; development efforts; ability to increase production (including the shift of production facilities used for other products and the use, cost, or availability of major inputs into production); and factors related to the ability to shift supply among different national markets (including barriers to importation in foreign markets or changes in market demand abroad). Demand conditions to consider include end uses and applications; the existence and availability of substitute products; and the level of competition among the Domestic Like Product produced in the United States, Subject Merchandise produced in the Subject Country, and such merchandise from other countries.
(13) (OPTIONAL) A statement of whether you agree with the above definitions of the Domestic Like Product and Domestic Industry; if you disagree with either or both of these definitions, please explain why and provide alternative definitions.
Authority: This proceeding is being conducted under authority of title VII of the Tariff Act of 1930; this notice is published pursuant to § 207.61 of the Commission's rules.
By order of the Commission.
Issued: May 29, 2024.
Lisa Barton,

Secretary to the Commission.
DEPARTMENT OF JUSTICE
Office of Justice Programs
[OJP (OJJDP) Docket No. 1825]
Meeting of the Coordinating Council on Juvenile Justice and Delinquency Prevention

AGENCY:
Coordinating Council on Juvenile Justice and Delinquency Prevention.

ACTION:
Notice of meeting.

SUMMARY:
The Coordinating Council on Juvenile Justice and Delinquency Prevention announces its next meeting.

DATES:
Thursday, June 27, 2024, at 1 p.m.-4 p.m. ET.

ADDRESSES:
The meeting will take place at the Department of Justice, 810 7th St. NW, Washington, DC.

FOR FURTHER INFORMATION CONTACT:
Visit the website for the Coordinating Council at www.juvenilecouncil.gov or contact Maegen Barnes, Project Manager/Federal Contractor, by telephone (732) 948-8862, email at Maegen.Currie@usdoj.gov; or Julie Herr, Designated Federal Official (DFO), OJJDP, by telephone at (202) 598-6885, email at Julie.Herr@usdoj.gov. Please note that the above phone numbers are not toll free.

SUPPLEMENTARY INFORMATION:
The Coordinating Council on Juvenile Justice and Delinquency Prevention (“Council”), established by statute in the Juvenile and Delinquency Prevention Act of 1974 section 206(a) (34 U.S.C. 11116(a)), will meet to carry out its advisory functions. Information regarding this meeting will be available on the Council's web page at www.juvenilecouncil.gov. This meeting will be open to the public for in-person attendance or via online video conference. Prior registration is required (see below). In addition, meeting documents will be viewable via this website including meeting announcements, agendas, minutes, and reports.
Although designated agency representatives may attend in lieu of members, the Council's formal membership consists of the following secretaries and/or agency officials; Attorney General (Chair), Administrator of the Office of Juvenile Justice and Delinquency Prevention (Vice Chair), Secretary of Health and Human Services, Assistant Secretary for Mental Health and Substance Use, Secretary of the Interior, Secretary of Labor, Secretary of Education, Secretary of Housing and Urban Development, Director of the Office of National Drug Control Policy, Chief Executive Officer of AmeriCorps and the Director for the U.S. Immigration and Customs Enforcement. Ten additional members are appointed by the President of the United States, the Speaker of the U.S. House of Representatives, the U.S. Senate Majority Leader and the Chairman of the Committee on Indian Affairs of the Senate. Further agencies that take part in Council activities include the Departments of Agriculture and Defense and the Consumer Financial Protection Bureau.
Council meeting agendas are available on www.juvenilecouncil.gov. Agendas will generally include: (a) Opening remarks and introductions; (b) Presentations of agency work or other topical areas of interest; and (c) Subcommittee reports and discussion of Council priorities.
All members of the public who wish to attend must register in advance. To attend virtually, please register at the WebEx registration site, by no later than Friday, June 21, 2024. Those who prefer to attend in person must register at www.juvenilecouncil.gov. Should issues arise with online registration, or to register via email, please contact Maegen Barnes, Senior Program Manager/Federal Contractor (see above for contact information). If submitting registrations by email, attendees should include all of the following: Name, Title, Organization/Affiliation, Full Address, Phone Number, and Email.
Interested parties may submit written comments and questions in advance to Maegen Barnes, Senior Program Manager/Federal Contractor (contact information above). All comments and questions should be submitted no later than 5:00 p.m. ET on Wednesday, June 19, 2024.
The Council will limit public statements if they are found to be duplicative. Written questions submitted by public attendees may also be considered by the Council, time permitting.
Julie Herr,

Designated Federal Official, Office of Juvenile Justice and Delinquency Prevention.
LEGAL SERVICES CORPORATION
Sunshine Act Meetings

TIME AND DATE:
The Finance Committee of the Legal Services Corporation Board of Directors will meet virtually on June 11, 2024. The meeting will commence at 11:30 a.m. EDT and will continue until the conclusion of the Committee's agenda.

PLACE:
Public Notice of Virtual Meeting: LSC will conduct the June 11, 2024 meeting via Zoom.
Public Observation: Unless otherwise noted herein, the Finance Committee meeting will be open to public observation via Zoom. Members of the public who wish to participate remotely in the public proceedings may do so by following the directions provided below.

Directions for Open Sessions

June 11, 2024
To join the Zoom meeting by computer, please use this link.
• https://lsc-gov.zoom.us/j/82495594135?pwd=SwpG9IcWZK3wAaZad1Y3HS6kp8VyMz.1
• Meeting ID: 824 9559 4135
• Passcode: 61124
To join the Zoom meeting by telephone, please dial one of the following numbers:
○ 301 715 8592 (Washington, DC)
○ +1 646 876 9923 (New York)
○ +1 312 626 6799 (Chicago)
○ +1 253 215 8782 (Tacoma)
○ +1 346 248 7799 (Houston)
○ +1 408 638 0968 (San Jose)
○ Meeting ID: 824 9559 4135
○ Passcode: 61124
Once connected to Zoom, please immediately mute your computer or telephone. Members of the public are asked to keep their computers or telephones muted to eliminate background noise. To avoid disrupting the meetings, please refrain from placing the call on hold if doing so will trigger recorded music or other sound.
From time to time, the Finance Committee Chair may solicit comments from the public. To participate in the meeting during public comment, use the `raise your hand' or `chat' functions in Zoom and wait to be recognized by the Chair before stating your questions and/or comments.

STATUS:
Open.

MATTERS TO BE CONSIDERED:
1. Approval of Meeting Agenda
2. Public Comment Regarding LSC's Fiscal Year 2026 Budget Request
3. Public Comment on Other Matters
4. Consider and Act on Other Business
5. Consider and Act on Adjournment of Meeting

CONTACT PERSON FOR MORE INFORMATION:
Cheryl DuHart, Administrative Coordinator, at (202) 295-1621. Questions may also be sent by electronic mail to duhartc@lsc.gov .
Non-Confidential Meeting Materials: Non-confidential meeting materials will be made available in electronic format at least 24 hours in advance of the meeting on the LSC website, at https://www.lsc.gov/about-lsc/board-meeting-materials .
(Authority: 5 U.S.C. 552b.)
Dated: May 29, 2024.
Stefanie Davis,

Deputy General Counsel, Legal Services Corporation.
POSTAL REGULATORY COMMISSION
[Docket Nos. MC2024-321 and CP2024-329; MC2024-322 and CP2024-330; MC2024-323 and CP2024-331]
New Postal Products

AGENCY:
Postal Regulatory Commission.

ACTION:
Notice.

SUMMARY:
The Commission is noticing a recent Postal Service filing for the Commission's consideration concerning a negotiated service agreement. This notice informs the public of the filing, invites public comment, and takes other administrative steps.

DATES:
Comments are due: June 5, 2024.

ADDRESSES:
Submit comments electronically via the Commission's Filing Online system at http://www.prc.gov. Those who cannot submit comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives.

FOR FURTHER INFORMATION CONTACT:
David A. Trissell, General Counsel, at 202-789-6820.

SUPPLEMENTARY INFORMATION:

Table of Contents
I. Introduction
II. Docketed Proceeding(s)

I. Introduction
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the Market Dominant or the Competitive product list, or the modification of an existing product currently appearing on the Market Dominant or the Competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's website ( http://www.prc.gov ). Non-public portions of the Postal Service's request(s), if any, can be accessed through compliance with the requirements of 39 CFR 3011.301. ^1
^1 See Docket No. RM2018-3, Order Adopting Final Rules Relating to Non-Public Information, June 27, 2018, Attachment A at 19-22 (Order No. 4679).
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern Market Dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3030, and 39 CFR part 3040, subpart B. For request(s) that the Postal Service states concern Competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3035, and 39 CFR part 3040, subpart B. Comment deadline(s) for each request appear in section II.

II. Docketed Proceeding(s)
1. Docket No(s).: MC2024-321 and CP2024-329; Filing Title: USPS Request to Add Priority Mail Express, Priority Mail & USPS Ground Advantage Contract 79 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: May 28, 2024; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: June 5, 2024.
2. Docket No(s).: MC2024-322 and CP2024-330; Filing Title: USPS Request to Add Priority Mail Express, Priority Mail & USPS Ground Advantage Contract 80 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: May 28, 2024; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: June 5, 2024.
3. Docket No(s).: MC2024-323 and CP2024-331; Filing Title: USPS Request to Add Priority Mail & USPS Ground Advantage Contract 269 to Competitive Product List and Notice of Filing Materials Under Seal; Filing Acceptance Date: May 28, 2024; Filing Authority: 39 U.S.C. 3642, 39 CFR 3040.130 through 3040.135, and 39 CFR 3035.105; Public Representative: Christopher C. Mohr; Comments Due: June 5, 2024.
This Notice will be published in the Federal Register .
Erica A. Barker,

Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100233; File No. SR-NYSEARCA-2024-44]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 3, To List and Trade Shares of the Grayscale Ethereum Mini Trust
May 28, 2024.
On May 21, 2024, NYSE Arca, Inc. (“NYSE Arca” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) ^1 and Rule 19b-4 thereunder, ^2 a proposed rule change to list and trade shares of the Grayscale Ethereum Mini Trust (ETH) under NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares). On May 22, 2024, the Exchange filed Amendment No. 2 to the proposed rule change, which replaced and superseded the proposed rule change as originally filed. ^3 On May 23, 2024, the Exchange filed Amendment No. 3 to the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the Exchange. Amendment No. 3 replaced and superseded the proposed rule change, as modified by Amendment No. 2, in its entirety. The Commission is publishing this notice to solicit comments on the proposed rule change, as modified by Amendment No. 3, from interested persons.
^1 15 U.S.C. 78s(b)(1).
^2 17 CFR 240.19b-4.
^3 The Exchange filed Amendment No. 1 to the proposed rule change on May 21, 2024 but subsequently withdrew Amendment No. 1 on May 22, 2024.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to list and trade shares of the following under NYSE Arca Rule 8.201-E: Grayscale Ethereum Mini Trust (ETH) (the “Trust”). This Amendment No. 3 to SR-NYSEARCA-2024-44 replaces Amendment No. 2 to SR-NYSEARCA-2024-44 and supersedes such filing in its entirety. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change

1. Purpose
Under NYSE Arca Rule 8.201-E, the Exchange may propose to list and/or trade pursuant to unlisted trading privileges “Commodity-Based Trust Shares.” ^4 The Exchange proposes to list and trade shares (“Shares”) ^5 of the Trust pursuant to NYSE Arca Rule 8.201-E. ^6
^4 Commodity-Based Trust Shares are securities issued by a trust that represent investors' discrete identifiable and undivided beneficial ownership interest in the commodities deposited into the Trust.
^5 The Shares are expected to be listed under the ticker symbol “ETH.”
^6 On April 23, 2024, the Trust filed a registration statement on Form S-1 under the Securities Act (File No. 333-278878) (the “Registration Statement”). The descriptions of the Trust and Shares contained herein are based, in part, on the Registration Statement. The Registration Statement is not yet effective, and the Shares will not trade on the Exchange until such time that the Registration Statement is effective.
The sponsor of the Trust is Grayscale Investments, LLC (“Sponsor”), a Delaware limited liability company. The Sponsor is a wholly owned subsidiary of Digital Currency Group, Inc. (“Digital Currency Group”). The trustee for the Trust is Delaware Trust Company (“Trustee”). The custodian for the Trust is Coinbase Custody Trust Company, LLC (“Custodian”). ^7 The administrator and transfer agent of the Trust is BNY Mellon Asset Servicing, a division of The Bank of New York Mellon (the “Transfer Agent”). The distribution and marketing agent for the Trust will be Foreside Fund Services, LLC (the “Marketing Agent”). The index provider for the Trust is CoinDesk Indices, Inc. (the “Index Provider”).
^7 According to the Registration Statement, Digital Currency Group owns a minority interest in Coinbase, Inc., which is the parent company of the Custodian, representing less than 1.0% of its equity.
The Trust is a Delaware statutory trust, formed on April 23, 2024, that operates pursuant to a trust agreement between the Sponsor and the Trustee (“Trust Agreement”). The Trust has no fixed termination date.

Operation of the Trust
According to the Registration Statement, the Trust's assets consist solely of ether (“Ether”). ^8
^8 The Trust will not hold cash or engage a cash custodian other than in connection with creations and redemptions. The Trust may from time to time come into possession of Incidental Rights and/or IR Virtual Currency by virtue of its ownership of Ethereum, generally through a fork in the Ethereum Blockchain, an airdrop offered to holders of Ethereum or other similar event. “Incidental Rights” are rights to acquire, or otherwise establish dominion and control over, any virtual currency or other asset or right, which rights are incident to the Trust's ownership of Ethereum and arise without any action of the Trust, or of the Sponsor or Trustee on behalf of the Trust. “IR Virtual Currency” is any virtual currency tokens, or other asset or right, acquired by the Trust through the exercise (subject to the applicable provisions of the Trust Agreement) of any Incidental Right. Although the Trust is permitted to take certain actions with respect to Incidental Rights and IR Virtual Currency in accordance with its Trust Agreement, at this time the Trust will prospectively irrevocably abandon any Incidental Rights and IR Virtual Currency. In the event the Trust seeks to change this position, the Exchange would file a subsequent proposed rule change with the Commission.
Each Share represents a proportional interest, based on the total number of Shares outstanding, in each of the Trust's assets as determined by reference to the Index Price, ^9 less the Trust's expenses and other liabilities (which include accrued but unpaid fees and expenses). The Sponsor expects that the market price of the Shares will fluctuate over time in response to the market prices of Ether. In addition, because the Shares reflect the estimated accrued but unpaid expenses of the Trust, the number of Ether represented by a Share will gradually decrease over time as the Trust's Ether are used to pay the Trust's expenses.
^9 The “Index Price” means the U.S. dollar value of an Ether derived from the Digital Asset Trading Platforms that are reflected in the CoinDesk Ether Price Index (ETX), calculated at 4:00 p.m., New York time, on each business day. For purposes of the Trust Agreement, the term Ether Index Price has the same meaning as the Index Price as defined herein.
The activities of the Trust are limited to (i) issuing “Baskets” (as defined below) in exchange for Ether transferred to the Trust as consideration in connection with creations, (ii) transferring or selling Ether as necessary to cover the “Sponsor's Fee” ^{10} and/or certain Trust expenses, (iii) transferring Ether in exchange for Baskets surrendered for redemption (subject to obtaining regulatory approval from the Commission and approval of the Sponsor), (iv) causing the Sponsor to sell Ether on the termination of the Trust, and (v) engaging in all administrative and security procedures necessary to accomplish such activities in accordance with the provisions of the Trust Agreement, the Custodian Agreement, the Index License Agreement, and the Participant Agreements (each as defined below). ^{11}
^{10} The Sponsor's Fee means a fee, payable in Ether, which accrues daily in U.S. dollars at an annual rate that is a percentage of the NAV Fee Basis Amount of the Trust as of 4:00 p.m., New York time, on each day, provided that for a day that is not a business day, the calculation of the Sponsor's Fee will be based on the NAV Fee Basis Amount from the most recent business day, reduced by the accrued and unpaid Sponsor's Fee for such most recent business day and for each day after such most recent business day and prior to the relevant calculation date. The Sponsor's Fee will be determined upon listing on the Exchange. The “NAV Fee Basis Amount” is calculated in the manner set forth under “Valuation of Ether and Determination of NAV” below.
^{11} Neither the Trust, nor the Sponsor, nor the Custodian, nor any other person associated with the Trust will, directly or indirectly, engage in action where any portion of the Trust's Ether becomes subject to Ethereum proof-of-stake validation or is used to earn additional Ether or generate income or other earnings.
The Trust will not be actively managed. It will not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the market prices of Ether.

Investment Objective
According to the Registration Statement, and as further described below, the Trust's investment objective is for the value of the Shares (based on Ether per Share) to reflect the value of the Ether held by the Trust, determined by reference to the Index Price, less the Trust's expenses and other liabilities. While an investment in the Shares is not a direct investment in Ether, the Shares are designed to provide investors with a cost-effective and convenient way to gain investment exposure to Ether. Generally speaking, a substantial direct investment in Ether may require expensive and sometimes complicated arrangements in connection with the acquisition, security and safekeeping of the Ether and may involve the payment of substantial fees to acquire such Ether from third-party facilitators through cash payments of U.S. dollars. Because the value of the Shares is correlated with the value of Ether held by the Trust, it is important to understand the investment attributes of, and the market for, Ether.
The Trust uses the Index Price to calculate its “NAV,” which is the aggregate value, expressed in U.S. dollars, of the Trust's assets (other than U.S. dollars or other fiat currency), less the U.S. dollar value of the Trust's expenses and other liabilities calculated in the manner set forth under “Valuation of Ether and Determination of NAV.” “NAV per Share” is calculated by dividing NAV by the number of Shares then outstanding.

Valuation of Ether and Determination of NAV
The following is a description of the material terms of the Trust Agreement as they relate to valuation of the Trust's Ether and the NAV calculations. ^{12}
^{12} While the Sponsor uses the terminology “NAV” in this filing, the term used in the Trust Agreement is “Digital Asset Holdings.”
On each business day at 4:00 p.m., New York time, or as soon thereafter as practicable (the “Evaluation Time”), the Sponsor will evaluate the Ether held by the Trust and calculate and publish the NAV of the Trust. To calculate the NAV, the Sponsor will:
1. Determine the Index Price as of such business day.
2. Multiply the Index Price by the Trust's aggregate number of Ether owned by the Trust as of 4:00 p.m., New York time, on the immediately preceding day, less the aggregate number of Ether payable as the accrued and unpaid Sponsor's Fee as of 4:00 p.m., New York time, on the immediately preceding day.
3. Add the U.S. dollar value of Ether, calculated using the Index Price, receivable under pending creation orders, if any, determined by multiplying the number of the Baskets represented by such creation orders by the Basket Amount and then multiplying such product by the Index Price. ^{13}
^{13} “Baskets” and “Basket Amount” have the meanings set forth in “Creation and Redemption of Shares” below.
4. Subtract the U.S. dollar amount of accrued and unpaid Additional Trust Expenses, if any. ^{14}
^{14} “Additional Trust Expenses” are any expenses incurred by the Trust in addition to the Sponsor's Fee that are not Sponsor-paid expenses, including, but not limited to, (i) taxes and governmental charges, (ii) expenses and costs of any extraordinary services performed by the Sponsor (or any other service provider) on behalf of the Trust to protect the Trust or the interests of shareholders, (iii) any indemnification of the Custodian or other agents, service providers or counterparties of the Trust, (iv) the fees and expenses related to the listing, quotation or trading of the Shares on any marketplace or other alternative trading system, as determined by the Sponsor, on which the Shares may then be listed, quoted or traded, including but not limited to, NYSE Arca, Inc. (including legal, marketing and audit fees and expenses) to the extent exceeding $600,000 in any given fiscal year and (v) extraordinary legal fees and expenses, including any legal fees and expenses incurred in connection with litigation, regulatory enforcement or investigation matters.
5. Subtract the U.S. dollar value of the Ether, calculated using the Index Price, to be distributed under pending redemption orders, if any, determined by multiplying the number of Baskets to be redeemed represented by such redemption orders by the Basket Amount and then multiplying such product by the Index Price (the amount derived from steps 1 through 5 above, the “NAV Fee Basis Amount”).
6. Subtract the U.S. dollar amount of the Sponsor's Fee that accrues for such business day, as calculated based on the NAV Fee Basis Amount for such business day.
In the event that the Sponsor determines that the primary methodology used to determine the Index Price is not an appropriate basis for valuation of the Trust's Ether, the Sponsor will utilize the cascading set of rules as described in “Determination of the Index Price When Index Price is Unavailable” below.

Ether and the Ethereum Network ^{15}
^{15} The description of Ether and the Ethereum Network in this section was provided by the Sponsor and is based on the Registration Statement.
According to the Registration Statement, Ether is a digital asset that is created and transmitted through the operations of the peer-to-peer “Ethereum Network,” a decentralized network of computers that operates on cryptographic protocols. No single entity owns or operates the Ethereum Network, the infrastructure of which is collectively maintained by a decentralized user base. The Ethereum Network allows people to exchange tokens of value, called Ether, which are recorded on a public transaction ledger known as a blockchain. Ether can be used to pay for goods and services, including computational power on the Ethereum Network, or it can be converted to fiat currencies, such as the U.S. dollar, at rates determined on “Digital Asset Markets” ^{16} or in individual end-user-to-end-user transactions under a barter system.
^{16} A “Digital Asset Market” is a “Brokered Market,” “Dealer Market,” “Principal-to-Principal Market” or “Exchange Market,” as each such term is defined in the Financial Accounting Standards Board Accounting Standards Codification Master Glossary. The “Digital Asset Trading Platform Market” is the global trading platform market for the trading of Ether, which consists of transactions on electronic Digital Asset Trading Platforms. A “Digital Asset Trading Platform” is an electronic marketplace where trading participants may trade, buy and sell Ether based on bid-ask trading. The largest Digital Asset Trading Platforms are online and typically trade on a 24-hour basis, publishing transaction price and volume data.
Furthermore, the Ethereum Network also allows users to write and implement smart contracts—that is, general-purpose code that executes on every computer in the network and can instruct the transmission of information and value based on a sophisticated set of logical conditions. Using smart contracts, users can create markets, store registries of debts or promises, represent the ownership of property, move funds in accordance with conditional instructions and create digital assets other than Ether on the Ethereum Network. Smart contract operations are executed on the Ethereum Blockchain in exchange for payment of Ether. The Ethereum Network is one of a number of projects intended to expand blockchain use beyond just a peer-to-peer money system.
The Ethereum Network went live on July 30, 2015. Unlike other digital assets, such as Bitcoin, which are solely created through a progressive mining process, 72.0 million Ether were created in connection with the launch of the Ethereum Network. At the time of the network launch, a non-profit called the Ethereum Foundation was the sole organization dedicated to protocol development.
The Ethereum Network is decentralized in that it does not require governmental authorities or financial institution intermediaries to create, transmit, or determine the value of Ether. Rather, following the initial distribution of Ether, Ether is created, burned, and allocated by the Ethereum Network protocol through a process that is currently subject to an issuance and burn rate. The value of Ether is determined by the supply of and demand for Ether on the Digital Asset Trading Platforms or in private end-user-to-end-user transactions.
New Ether are created and rewarded to the validators of a block in the Ethereum Blockchain for verifying transactions. The Ethereum Blockchain is effectively a decentralized database that includes all blocks that have been validated, and it is updated to include new blocks as they are validated. Each Ether transaction is broadcast to the Ethereum Network and, when included in a block, recorded in the Ethereum Blockchain. As each new block records outstanding Ether transactions, and outstanding transactions are settled and validated through such recording, the Ethereum Blockchain represents a complete, transparent and unbroken history of all transactions of the Ethereum Network.
Among other things, Ether is used to pay for transaction fees and computational services ( i.e., smart contracts) on the Ethereum Network; users of the Ethereum Network pay for the computational power of the machines executing the requested operations with Ether. Requiring payment in Ether on the Ethereum Network incentivizes developers to write quality applications and increases the efficiency of the Ethereum Network because wasteful code costs more, while also ensuring that the Ethereum Network remains economically viable by compensating for contributed computational resources.

Smart Contracts and Development on the Ethereum Network
Smart contracts are programs that run on a blockchain that can execute automatically when certain conditions are met. Smart contracts facilitate the exchange of anything representative of value, such as money, information, property, or voting rights. Using smart contracts, users can send or receive digital assets, create markets, store registries of debts or promises, represent ownership of property or a company, move funds in accordance with conditional instructions and create new digital assets.
Development on the Ethereum Network involves building more complex tools on top of smart contracts, such as decentralized apps (“DApps”); organizations that are autonomous, known as decentralized autonomous organizations (“DAOs”); and entirely new decentralized networks. For example, a company that distributes charitable donations on behalf of users could hold donated funds in smart contracts that are paid to charities only if the charity satisfies certain pre-defined conditions.
Moreover, the Ethereum Network has also been used as a platform for creating new digital assets and conducting their associated initial coin offerings. As of December 31, 2023, a majority of digital assets were built on the Ethereum Network, with such assets representing a significant amount of the total market value of all digital assets.
More recently, the Ethereum Network has been used for decentralized finance (“DeFi”) or open finance platforms, which seek to democratize access to financial services, such as borrowing, lending, custody, trading, derivatives and insurance, by removing third-party intermediaries. DeFi can allow users to lend and earn interest on their digital assets, exchange one digital asset for another and create derivative digital assets such as stablecoins, which are digital assets pegged to a reserve asset such as fiat currency. Over the course of 2023, between $20 billion and $30 billion worth of digital assets were locked up as collateral on DeFi platforms on the Ethereum Network. ^{17}
^{17} DeFiLlama, “Ethereum Total Value Locked,” https://defillama.com/chain/Ethereum.
In addition, the Ethereum Network and other smart contract platforms have been used for creating non-fungible tokens, or “NFTs.” Unlike digital assets native to smart contract platforms which are fungible and enable the payment of fees for smart contract execution. Instead, NFTs allow for digital ownership of assets that convey certain rights to other digital or real-world assets. This new paradigm allows users to own rights to other assets through NFTs, which enable users to trade them with others on the Ethereum Network. For example, an NFT may convey rights to a digital asset that exists in an online game or a DApp, and users can trade their NFT in the DApp or game, and carry them to other digital experiences, creating an entirely new free-market, internet-native economy that can be monetized in the physical world.

Overview of the Ethereum Network's Operations
In order to own, transfer, or use Ether directly on the Ethereum Network (as opposed to through an intermediary, such as a custodian), a person generally must have internet access to connect to the Ethereum Network. Ether transactions may be made directly between end-users without the need for a third-party intermediary. To prevent the possibility of double-spending Ether, a user must notify the Ethereum Network of the transaction by broadcasting the transaction data to its network peers. The Ethereum Network provides confirmation against double-spending by memorializing every transaction in the Ethereum Blockchain, which is publicly accessible and transparent. This memorialization and verification against double-spending is accomplished through the Ethereum Network validation process, which adds “blocks” of data, including recent transaction information, to the Ethereum Blockchain.

Summary of an Ether Transaction
Prior to engaging in Ether transactions directly on the Ethereum Network, a user generally must first install on its computer or mobile device an Ethereum Network software program that will allow the user to generate a private and public key pair associated with an Ether address, commonly referred to as a “wallet.” The Ethereum Network software program and the Ether address also enable the user to connect to the Ethereum Network and transfer Ether to, and receive Ether from, other users.
Each Ethereum Network address, or wallet, is associated with a unique “public key” and “private key” pair. To receive Ether, the Ether recipient must provide its public key to the party initiating the transfer. This activity is analogous to a recipient for a transaction in U.S. dollars providing a routing address in wire instructions to the payor so that cash may be wired to the recipient's account. The payor approves the transfer to the address provided by the recipient by “signing” a transaction that consists of the recipient's public key with the private key of the address from where the payor is transferring the Ether. The recipient, however, does not make public or provide to the sender its related private key.
Neither the recipient nor the sender reveal their private keys in a transaction, because the private key authorizes transfer of the funds in that address to other users. Therefore, if a user loses his or her private key, the user may permanently lose access to the Ether contained in the associated address. Likewise, Ether is irretrievably lost if the private key associated with them is deleted and no backup has been made. When sending Ether, a user's Ethereum Network software program must validate the transaction with the associated private key. In addition, since every computation on the Ethereum Network requires processing power, there is a transaction fee involved with the transfer that is paid by the payor. The resulting digitally validated transaction is sent by the user's Ethereum Network software program to the Ethereum Network validators to allow transaction confirmation.
Ethereum Network validators record and confirm transactions when they validate and add blocks of information to the Ethereum Blockchain. In proof-of-stake, validators compete to be randomly selected to validate transactions. When a validator is selected to validate a block, it creates that block, which includes data relating to (i) the verification of newly submitted and accepted transactions and (ii) a reference to the prior block in the Ethereum Blockchain to which the new block is being added. The validator becomes aware of outstanding, unrecorded transactions through the data packet transmission and distribution discussed above.
Upon the addition of a block included in the Ethereum Blockchain, the Ethereum Network software program of both the spending party and the receiving party will show confirmation of the transaction on the Ethereum Blockchain and reflect an adjustment to the Ether balance in each party's Ethereum Network public key, completing the Ether transaction. Once a transaction is confirmed on the Ethereum Blockchain, it is irreversible.
Some Ether transactions are conducted “off-blockchain” and are therefore not recorded in the Ethereum Blockchain. These “off-blockchain transactions” involve the transfer of control over, or ownership of, a specific digital wallet holding Ether or the reallocation of ownership of certain Ether in a pooled-ownership digital wallet, such as a digital wallet owned by a Digital Asset Trading Platform. In contrast to on-blockchain transactions, which are publicly recorded on the Ethereum Blockchain, information and data regarding off-blockchain transactions are generally not publicly available. Therefore, off-blockchain transactions are not truly Ether transactions in that they do not involve the transfer of transaction data on the Ethereum Network and do not reflect a movement of Ether between addresses recorded in the Ethereum Blockchain. For these reasons, off-blockchain transactions are subject to risks, as any such transfer of Ether ownership is not protected by the protocol behind the Ethereum Network or recorded in, and validated through, the blockchain mechanism.

Creation of New Ether

Initial Creation of Ether
Unlike other digital assets such as Bitcoin, which are solely created through a progressive mining process, 72.0 million Ether were created in connection with the launch of the Ethereum Network. The initial 72.0 million Ether were distributed as follows:
Initial Distribution: 60.0 million Ether, or 83.33% of the supply, was sold to the public in a crowd sale conducted between July and August 2014 that raised approximately $18 million.
Ethereum Foundation: 6.0 million Ether, or 8.33% of the supply, was distributed to the Ethereum Foundation for operational costs.
Ethereum Developers: 3.0 million Ether, or 4.17% of the supply, was distributed to developers who contributed to the Ethereum Network.
Developer Purchase Program: 3.0 million Ether, or 4.17% of the supply, was distributed to members of the Ethereum Foundation to purchase at the initial crowd sale price.
Following the launch of the Ethereum Network, Ether supply initially increased through a progressive mining process. Following the introduction of EIP-1559, described below, Ether supply and issuance rate varies based on factors such as recent use of the network.

Proof-of-Work Mining Process
Prior to September 2022, Ethereum operated using a proof-of-work consensus mechanism. Under proof-of-work, in order to incentivize those who incurred the computational costs of securing the network by validating transactions, there was a reward given to the computer that was able to create the latest block on the chain. Every 14 seconds, on average, a new block was added to the Ethereum Blockchain with the latest transactions processed by the network, and the computer that generated this block was awarded a variable amount of Ether, depending on use of the network at the time. In certain mining scenarios, Ether was sometimes sent to another miner if they were also able to find a solution, but their block was not included. This scenario is referred to as an uncle/aunt reward. Due to the nature of the algorithm for block generation, this process (generating a “proof-of-work”) was guaranteed to be random. The process by which a digital asset was “mined” resulted in new blocks being added to such digital asset's blockchain and new digital assets being issued to the miners. Prior to the Merge upgrade, described below, computers on the Ethereum Network engaged in a set of prescribed complex mathematical calculations in order to add a block to the Ethereum Blockchain and thereby confirm Ether transactions included in that block's data.

Proof-of-Stake Process
In the second half of 2020, the Ethereum Network began the first of several stages of an upgrade that was initially known as “Ethereum 2.0” and eventually became known as the “Merge” to transition the Ethereum Network from a proof-of-work consensus mechanism to a proof-of-stake consensus mechanism. The Merge was completed on September 15, 2022, and the Ethereum Network has operated on a proof-of-stake model since such time.
Unlike proof-of-work, in which miners expend computational resources to compete to validate transactions and are rewarded coins in proportion to the amount of computational resources expended, in proof-of-stake, miners (sometimes called validators) risk or “stake” coins to compete to be randomly selected to validate transactions and are rewarded coins in proportion to the amount of coins staked. Any malicious activity, such as validating multiple blocks, disagreeing with the eventual consensus, or otherwise violating protocol rules, results in the forfeiture or “slashing” of a portion of the staked coins. Proof-of-stake is viewed as more energy efficient and scalable than proof-of-work and is sometimes referred to as “virtual mining.” As of December 31, 2023, every 12 seconds, approximately, a new block is added to the Ethereum Blockchain with the latest transactions processed by the network, and the validator that generated this block is awarded Ether.

Limits on Ether Supply
The rate at which new Ether are issued and put into circulation is expected to vary. As of December 31, 2023, following the Merge, approximately 2,400 Ether are issued per day, though the issuance rate varies based on the number of validators on the network. In addition, the issuance of new Ether could be partially or completely offset by the burn mechanism introduced by the EIP-1559 modification, under which Ether are removed from supply at a rate that varies with network usage. On occasion, the Ether supply has been deflationary over a 24-hour period as a result of the burn mechanism. The attributes of the new consensus algorithm are subject to change, but in sum, the new consensus algorithm and related modifications reduced total new Ether issuances and could turn the Ether supply deflationary over the long term.
As of December 31, 2023, approximately 120 million Ether were outstanding. ^{18}
^{18} CoinMarketCap, “Ethereum,” https://coinmarketcap.com/currencies/ethereum/.

Modifications to the Ether Protocol
The Ethereum Network is an open source project with no official developer or group of developers that controls it. However, the Ethereum Network's development has historically been overseen by the Ethereum Foundation and other core developers. The Ethereum Foundation and core developers are able to access and alter the Ethereum Network source code and, as a result, they are responsible for quasi-official releases of updates and other changes to the Ethereum Network's source code.
For example, in 2019, the Ethereum Network completed a network upgrade called Metropolis that was designed to enhance the usability of the Ethereum Network and was introduced in two stages. The first stage, called Byzantium, was implemented in October 2017. The purpose of Byzantium was to increase the network's privacy, security, and scalability and reduce the block reward from 5.0 Ether to 3.0 Ether. The second stage, called Constantinople, was implemented in February 2019, along with another upgrade, called St. Petersburg. Another network upgrade, called Istanbul, was implemented in December 2019. The purpose of Istanbul was to make the network more resistant to denial of service attacks, enable greater Ether and Zcash interoperability as well as other Equihash-based proof-of-work digital assets, and to increase the scalability and performance for solutions on zero-knowledge privacy technology like SNARKs and STARKs. The purpose of these upgrades was to prepare the Ethereum Network for the introduction of a proof-of-stake algorithm and reduce the block reward from 3.0 Ether to 2.0 Ether. In the second half of 2020, the Ethereum Network began the first of several stages of an upgrade culminating in the Merge. The Merge amended the Ethereum Network's consensus mechanism to include proof-of-stake. In April 2023, the Ethereum Network completed a network upgrade called Shapella, which enabled users to unstake their previously-staked Ether and remove it from the relevant smart contract. Forthcoming planned upgrades include Dencun, which will enable “proto-danksharding.” The purpose of proto-danksharding is to increase scalability of the Ethereum Network by allowing easy synchronization with Layer 2 networks capable of processing many more transactions than the Ethereum Blockchain alone. The intended effect would be to increase the rate of transactions that can be processed by the Ethereum Network.
In 2021, the Ethereum Network implemented the EIP-1559 upgrade. EIP-1559 changed the methodology used to calculate the fees paid to miners (now validators). This new methodology splits fees into two components: a base cost and priority fee. The base cost is now removed from circulation, or “burnt,” and the priority fee is paid to validators. EIP-1559 has reduced the total net issuance of Ether fees to validators. The release of updates to the Ethereum Network's source code does not guarantee that the updates will be automatically adopted. Users and validators must accept any changes made to the Ethereum source code by downloading the proposed modification of the Ethereum Network's source code. A modification of the Ethereum Network's source code is effective only with respect to the Ethereum users and validators that download it. If a modification is accepted by only a percentage of users and validators, a division in the Ethereum Network will occur such that one network will run the pre-modification source code and the other network will run the modified source code. Such a division is known as a “fork.” Consequently, as a practical matter, a modification to the source code becomes part of the Ethereum Network only if accepted by participants collectively having most of the validation power on the Ethereum Network.
Core development of the Ethereum source code has increasingly focused on modifications of the Ethereum protocol to increase speed and scalability and also allow for financial and non-financial next generation uses. The Trust's activities will not directly relate to such projects, though such projects may utilize Ether as tokens for the facilitation of their non-financial uses, thereby potentially increasing demand for Ether and the utility of the Ethereum Network as a whole. Conversely, projects that operate and are built within the Ethereum Blockchain may increase the data flow on the Ethereum Network and could either “bloat” the size of the Ethereum Blockchain or slow confirmation times.

Custody of the Trust's Ether
Digital assets and digital asset transactions are recorded and validated on blockchains, the public transaction ledgers of a digital asset network. Each digital asset blockchain serves as a record of ownership for all of the units of such digital asset, even in the case of certain privacy-preserving digital assets, where the transactions themselves are not publicly viewable. All digital assets recorded on a blockchain are associated with a public blockchain address, also referred to as a digital wallet. Digital assets held at a particular public blockchain address may be accessed and transferred using a corresponding private key.

Key Generation
Public addresses and their corresponding private keys are generated by the Custodian in secret key generation ceremonies at secure locations inside faraday cages, which are enclosures used to block electromagnetic fields and thus mitigate against attacks. The Custodian uses quantum random number generators to generate the public and private key pairs.
Once generated, private keys are encrypted, separated into “shards,” and then further encrypted. After the key generation ceremony, all materials used to generate private keys, including computers, are destroyed. All key generation ceremonies are performed offline. No party other than the Custodian has access to the private key shards of the Trust, including the Trust itself.

Key Storage
Private key shards are distributed geographically in secure vaults around the world, including in the United States. The locations of the secure vaults may change regularly and are kept confidential by the Custodian for security purposes.
The “Digital Asset Account” is a segregated custody account controlled and secured by the Custodian to store private keys, which allows for the transfer of ownership or control of the Trust's Ether on the Trust's behalf. The Digital Asset Account uses offline storage, or “cold,” mechanisms to secure the Trust's private keys. The term cold storage refers to a safeguarding method by which the private keys corresponding to digital assets are disconnected and/or deleted entirely from the internet. Cold storage of private keys may involve keeping such keys on a non-networked (or “air-gapped”) computer or electronic device or storing the private keys on a storage device (for example, a USB thumb drive) or printed medium (for example, papyrus, paper, or a metallic object). A digital wallet may receive deposits of digital assets but may not send digital assets without use of the digital assets' corresponding private keys. In order to send digital assets from a digital wallet in which the private keys are kept in cold storage, either the private keys must be retrieved from cold storage and entered into an online, or “hot,” digital asset software program to sign the transaction, or the unsigned transaction must be transferred to the cold server in which the private keys are held for signature by the private keys and then transferred back to the online digital asset software program. At that point, the user of the digital wallet can transfer its digital assets.

Security Procedures
The Custodian is the custodian of the Trust's private keys (which, as noted above, facilitate the transfer of ownership or control of the Trust's Ether) in accordance with the terms and provisions of the custodian agreement by and between the Custodian, the Sponsor and the Trust (the “Custodian Agreement”). Transfers from the Digital Asset Account require certain security procedures, including, but not limited to, multiple encrypted private key shards, usernames, passwords and 2-step verification. Multiple private key shards held by the Custodian must be combined to reconstitute the private key to sign any transaction in order to transfer the Trust's assets. Private key shards are distributed geographically in secure vaults around the world, including in the United States.
As a result, if any one secure vault is ever compromised, this event will have no impact on the ability of the Trust to access its assets, other than a possible delay in operations, while one or more of the other secure vaults is used instead. These security procedures are intended to remove single points of failure in the protection of the Trust's assets.
Transfers of Ether to the Digital Asset Account will be available to the Trust once processed on the Blockchain.
Subject to obtaining regulatory approval to operate a redemption program and authorization of the Sponsor, the process of accessing and withdrawing Ether from the Trust to redeem a Basket by an Authorized Participant ^{19} will follow the same general procedure as transferring Ether to the Trust to create a Basket by an Authorized Participant, only in reverse.
^{19} “Authorized Participant” has the meaning set forth in “Creation and Redemption of Shares” below.
The Sponsor will maintain ownership and control of the Trust's Ether in a manner consistent with good delivery requirements for spot commodity transactions.

Ether Value

Digital Asset Trading Platform Valuation
According to the Registration Statement, the value of Ether is determined by the value that various market participants place on Ether through their transactions. The most common means of determining the value of an Ether is by surveying one or more Digital Asset Trading Platforms where Ether is traded publicly and transparently ( e.g., Coinbase, Kraken, LMAX Digital, and Crypto.com). Additionally, there are over-the-counter dealers or market makers that transact in Ether.

Digital Asset Trading Platform Public Market Data
On each online Digital Asset Trading Platform, Ether is traded with publicly disclosed valuations for each executed trade, measured by one or more fiat currencies such as the U.S. dollar or euro, or by the widely used cryptocurrency Bitcoin. Over-the-counter dealers or market makers do not typically disclose their trade data.
As of December 31, 2023, the Digital Asset Trading Platforms included in the Index were Coinbase, Kraken, LMAX Digital, and Crypto.com. As further described below, the Sponsor and the Trust reasonably believe each of these Digital Asset Trading Platforms are in material compliance with applicable U.S. federal and state licensing requirements and maintain practices and policies designed to comply with know-your-customer (“KYC”) and anti-money-laundering (“AML”) regulations.
Coinbase: A U.S.-based trading platform registered as a money services business (“MSB”) with the U.S. Department of the Treasury's Financial Crimes Enforcement Network (“FinCEN”) and licensed as a virtual currency business under the New York State Department of Financial Services (“NYDFS”) BitLicense, as well as a money transmitter in various U.S. states.
Crypto.com: A Singapore-based trading platform registered as an MSB with FinCEN and licensed as a money transmitter in various U.S. states. Crypto.com does not hold a BitLicense.
Kraken: A U.S.-based trading platform registered as an MSB with FinCEN and licensed as a money transmitter in various U.S. states. Kraken does not hold a BitLicense.
LMAX Digital: A U.K.-based trading platform registered as a broker with the Financial Conduct Authority. LMAX Digital does not hold a BitLicense.
Currently, there are several Digital Asset Trading Platforms operating worldwide, and online Digital Asset Trading Platforms represent a substantial percentage of Ether buying and selling activity and provide the most data with respect to prevailing valuations of Ether. These trading platforms include established trading platforms such as those included in the Index, which provide a number of options for buying and selling Ether. The below table reflects the trading volume in Ether and market share ^{20} of the Ether-U.S. dollar trading pairs of each of the Digital Asset Trading Platforms included in the Index as of December 31, 2023 (collectively, “Constituent Trading Platforms”), ^{21} using data reported by the Index Provider from December 14, 2017 to December 31, 2023:
^{20} Market share is calculated using trading volume (in Ether) for certain Digital Asset Trading Platforms, including Coinbase, Kraken, LMAX Digital and Crypto.com, as well as certain other large U.S.-dollar denominated Digital Asset Trading Platforms that were not included in the Index as of December 31, 2023, including Bitstamp, Binance.US (data included from April 1, 2020), Bittrex (data included from July 31, 2018), Bitfinex, Bitflyer (data included from November 13, 2022), Cboe Digital (data included from October 1, 2020), Gemini, HitBTC (data included from June 13, 2019 through March 31, 2020), itBit (data included from December 27, 2018), OKCoin (data included from December 25, 2018) and FTX.US (data included from July 1, 2021 through November 12, 2022).
^{21} On January 19, 2020, the Index Provider removed itBit due to a lack of trading volume and added LMAX Digital to the Index based on the trading platform meeting the liquidity thresholds as part of its scheduled quarterly review. On July 23, 2022, the Index Provider removed Bitstamp from the Index due to the trading platform's failure to meet the minimum liquidity requirement, and added FTX.US as a Constituent Trading Platform based on its satisfaction of the minimum liquidity requirement as part of its scheduled quarterly review. On November 10, 2022, the Index Provider removed FTX.US from the Index due to the trading platform's announcement that trading on the trading platform would be halted, which would impact FTX.US's ability to reliably publish trade prices and volume on a real-time basis through APIs, and did not add any Constituent Trading Platforms as part of its review. On January 28, 2023, the Index Provider added Binance.US to the Index due to the trading platform meeting the minimum liquidity requirement, and did not remove any Constituent Trading Platforms as part of its quarterly review. On June 17, 2023, the Index Provider removed Binance.US from the Index due to Binance.US's announcement that the trading platform was suspending U.S. dollar (“USD”) deposits and withdrawals and planned to delist its USD trading pairs, and did not add any Constituent Trading Platforms as part of its review. On October 28, 2023, the Index Provider added Crypto.com to the Index due to the trading platform meeting the minimum liquidity requirement, and did not remove any Constituent Trading Platforms as part of its scheduled quarterly review.
Digital Asset Trading Platforms included in the Index as of December 31, 2023 | Volume (Ether) | Market share (%)
Coinbase | 416,006,668 | 34.75
Kraken | 135,358,403 | 11.31
LMAX Digital | 69,287,707 | 5.79
Crypto.com | 14,750,030 | 1.23
Total Ether-U.S. Dollar trading pair | 635,402,808 | 53.08
The domicile, regulation, and legal compliance of the Digital Asset Trading Platforms included in the Index varies. Information regarding each Digital Asset Trading Platform may be found, where available, on the websites for such Digital Asset Trading Platforms, among other places.

The Index and the Index Price
The Index is a U.S. dollar-denominated composite reference rate for the price of Ether. The Index is designed to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity from impacting the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events.
The Index Price is determined by the Index Provider through a process in which trade data is cleansed and compiled in such a manner as to algorithmically reduce the impact of anomalistic or manipulative trading. This is accomplished by adjusting the weight of each data input based on price deviation relative to the observable set, as well as recent and long-term trading volume at each venue relative to the observable set.
The value of the Index is calculated and disseminated on a 24-hour basis and will be available on a continuous basis at https://www.coindesk.com/indices.

Constituent Trading Platform Selection
According to the Registration Statement, the Digital Asset Trading Platforms that are included in the Index are selected by the Index Provider utilizing a methodology that is guided by the International Organization of Securities Commissions (“IOSCO”) principles for financial benchmarks. For a trading platform to become a Constituent Trading Platform, it must satisfy the criteria listed below (the “Inclusion Criteria”):
• Sufficient USD liquidity relative to the size of the listed assets;
• No evidence in the past 12 months of trading restrictions on individuals or entities that would otherwise meet the trading platform's eligibility requirements to trade;
• No evidence in the past 12 months of undisclosed restrictions on deposits or withdrawals from user accounts;
• Real-time price discovery;
• Limited or no capital controls; ^{22}
^{22} “Capital controls” in this context means governmental sanctions that would limit the movement of capital into, or out of, the jurisdiction in which such Digital Asset Trading Platforms operate.
• Transparent ownership including a publicly-owned ownership entity;
• Publicly available language and policies addressing legal and regulatory compliance in the U.S., including KYC (Know Your Customer), AML (Anti-Money Laundering) and other policies designed to comply with relevant regulations that might apply to it;
• Be a U.S.-domiciled trading platform or a non-U.S. domiciled trading platform that is able to service U.S. investors; and
• Offer programmatic spot trading of the trading pair ^{23} and reliably publish trade prices and volumes on a real-time basis through Rest and Websocket APIs.
^{23} Trading platforms with programmatic trading offer traders an application programming interface that permits trading by sending programmed commands to the trading platform.
A Digital Asset Trading Platform is removed as a Constituent Trading Platform when it no longer satisfies the Inclusion Criteria. The Index Provider does not currently include data from over-the-counter markets or derivatives platforms among the Constituent Trading Platforms. According to the Registration Statement, over-the-counter data is not currently included because of the potential for trades to include a significant premium or discount paid for larger liquidity, which creates an uneven comparison relative to more active markets. There is also a higher potential for over-the-counter transactions to not be arms-length, and thus not be representative of a true market price. Ether derivative markets data, including Ether futures markets and perpetuals markets data, are also not currently included. While the Index Provider has no plans to include data from over-the-counter markets or derivative platforms at this time, the Index Provider will consider IOSCO principles for financial benchmarks, the management of trading venues of Ether derivatives and the aforementioned Inclusion Criteria when considering whether to include over-the-counter or derivative platform data in the future.
The Index Provider and the Sponsor have entered into the index license agreement, dated as of February 1, 2022 (as amended, the “Index License Agreement”), governing the Sponsor's use of the Index Price. ^{24} Pursuant to the terms of the Index License Agreement, the Index Provider may adjust the calculation methodology for the Index Price without notice to, or consent of, the Trust or its shareholders. The Index Provider may decide to change the calculation methodology to maintain the integrity of the Index Price calculation should it identify or become aware of previously unknown variables or issues with the existing methodology that it believes could materially impact its performance and/or reliability. The Index Provider has sole discretion over the determination of Index Price and may change the methodologies for determining the Index Price from time to time. Shareholders will be notified of any material changes to the calculation methodology or the Index Price in the Trust's current reports and will be notified of all other changes that the Sponsor considers significant in the Trust's periodic or current reports. The Sponsor will determine the materiality of any changes to the Index Price on a case-by-case basis, in consultation with external counsel.
^{24} Upon entering into the Index License Agreement, the Sponsor and the Index Provider terminated the license agreement between the parties dated as of February 28, 2019.
The Index Provider may change the trading venues that are used to calculate the Index or otherwise change the way in which the Index is calculated at any time. For example, the Index Provider has scheduled quarterly reviews in which it may add or remove Constituent Trading Platforms that satisfy or fail the Inclusion Criteria. The Index Provider does not have any obligation to consider the interests of the Sponsor, the Trust, the shareholders, or anyone else in connection with such changes. While the Index Provider is not required to publicize or explain the changes or to alert the Sponsor to such changes, it has historically notified the Trust (and other subscribers to the Index) of any material changes to the Constituent Trading Platforms, including any additions or removals, contemporaneous with its issuance of press releases in connection with the same. The Sponsor will notify investors of any such material event by filing a current report on Form 8-K. Although the Index methodology is designed to operate without any manual intervention, rare events would justify manual intervention. Intervention of this kind would be in response to non-market-related events, such as the halting of deposits or withdrawals of funds on a Digital Asset Trading Platform, the unannounced closure of operations on a Digital Asset Trading Platform, insolvency or the compromise of user funds. In the event that such an intervention is necessary, the Index Provider would issue a public announcement through its website, API and other established communication channels with its clients.

Determination of the Index Price
The Index applies an algorithm to the price of Ether on the Constituent Trading Platforms calculated on a per second basis over a 24-hour period. The Index's algorithm is expected to reflect a four-pronged methodology to calculate the Index Price from the Constituent Trading Platforms:
Volume Weighting: Constituent Trading Platforms with greater liquidity receive a higher weighting in the Index, increasing the ability to execute against ( i.e., replicate) the Index in the underlying spot markets.
Price-Variance Weighting: The Index Price reflects data points that are discretely weighted in proportion to their variance from the rest of the Constituent Trading Platforms. As the price at a particular trading platform diverges from the prices at the rest of the Constituent Trading Platforms, its weight in the Index Price consequently decreases.
Inactivity Adjustment: The Index Price algorithm penalizes stale activity from any given Constituent Trading Platform. When a Constituent Trading Platform does not have recent trading data, its weighting in the Index Price is gradually reduced until it is de-weighted entirely. Similarly, once trading activity at a Constituent Trading Platform resumes, the corresponding weighting for that Constituent Trading Platform is gradually increased until it reaches the appropriate level.
Manipulation Resistance: In order to mitigate the effects of wash trading and order book spoofing, the Index only includes executed trades in its calculation. Additionally, the Index only includes Constituent Trading Platforms that charge trading fees to its users in order to attach a real, quantifiable cost to any manipulation attempts.
The Index Provider re-evaluates the weighting algorithm on a periodic basis, but maintains discretion to change the way in which an Index Price is calculated based on its periodic review or in extreme circumstances and does not make the exact methodology to calculate the Index Price publicly available. Nonetheless, the Sponsor believes that the Index is designed to limit exposure to trading or price distortion of any individual Digital Asset Trading Platform that experiences periods of unusual activity or limited liquidity by discounting, in real-time, anomalous price movements at individual Digital Asset Trading Platforms.
The Sponsor believes the Index Provider's selection process for Constituent Trading Platforms as well as the methodology of the Index Price's algorithm provides a more accurate picture of Ether price movements than a simple average of Digital Asset Trading Platform spot prices, and that the weighting of Ether prices on the Constituent Trading Platforms limits the inclusion of data that is influenced by temporary price dislocations that may result from technical problems, limited liquidity or fraudulent activity elsewhere in the Ether spot market. By referencing multiple trading venues and weighting them based on trade activity, the Sponsor believes that the impact of any potential fraud, manipulation or anomalous trading activity occurring on any single venue is reduced.
If the Index Price becomes unavailable, or if the Sponsor determines in good faith that such Index Price does not reflect an accurate price for Ether, then the Sponsor will, on a best efforts basis, contact the Index Provider to obtain the Index Price directly from the Index Provider. If after such contact such Index Price remains unavailable or the Sponsor continues to believe in good faith that such Index Price does not reflect an accurate price for Ether, then the Sponsor will employ a cascading set of rules to determine the Index Price, as described below in “Determination of the Index Price When Index Price is Unavailable.”
The Trust values its Ether for operational purposes by reference to the Index Price. The Index Price is the value of an Ether as represented by the Index, calculated at 4:00 p.m., New York time, on each business day.

Illustrative Example
For the purposes of illustration, outlined below are examples of how the attributes that impact weighting and adjustments in the aforementioned methodology may be utilized to generate the Index Price for a digital asset. For example, Constituent Trading Platforms used to calculate the Index Price of the digital asset may include trading platforms such as Coinbase, Kraken, LMAX Digital, and Crypto.com.
The Index Price algorithm, as described above, accounts for manipulation at the outset by only including data from executed trades on Constituent Trading Platforms that charge trading fees. Then, the below-listed elements may impact the weighting of the Constituent Trading Platforms on the Index Price as follows:
• Volume Weighting: Each Constituent Trading Platform will be weighted to appropriately reflect the trading volume share of the Constituent Trading Platform relative to all the Constituent Trading Platforms during this same period. For example, an average hourly weighting of 67.06%, 14.57%, 11.88%, and 6.49% for Coinbase, Kraken, LMAX Digital, and Crypto.com , respectively, would represent each Constituent Trading Platform's share of trading volume during the same period.
• Inactivity Adjustment: Assume that a Constituent Trading Platform represented a 14% weighting on the Index Price of the digital asset, which is based on the per-second calculations of its trading volume and price-variance relative to the cohort of Constituent Trading Platforms included in such Index, and then went offline for approximately two hours. The index algorithm would automatically recognize inactivity and start de-weighting the Constituent Trading Platform at the 3-minute mark and continue to do so over a 7-minute period until its influence was effectively zero, 10 minutes after becoming inactive. As soon as trading activity resumed at the Constituent Trading Platform, the index algorithm would re-weight it to the appropriate weighting based on trading volume and price-variance relative to the cohort of Constituent Trading Platforms included in the Index. Due to the period of inactivity, it would re-weight the Constituent Trading Platform activity to a weight lower than its original weighting—for example, to 12%.
• Price-Variance Weighting: The price-variance weighting adjustment is a relative measure of each Constituent Trading Platform versus the cohort of Constituent Trading Platforms. The further the price at a Constituent Trading Platform is from the mean price of the cohort, the less influence that trading platform's price will have on the algorithm that produces the Index Price, as the trading platform data is discretely weighted in proportion to their variance from the rest of the trading platforms on a per-second basis and there is no minimum threshold the variance must meet for this adjustment to take place. For example, assume that for a one-hour period, the digital asset's execution prices on one Constituent Trading Platform were trading more than 7% higher than the average execution prices on another Constituent Trading Platform. The algorithm will automatically detect the anomaly (price variance) and reduce that specific Constituent Trading Platform's weighting during that one-hour period, ensuring a reliable spot reference price that is unaffected by the localized event and that is reflective of broader market activity.

Determination of the Index Price When Index Price Is Unavailable
The Sponsor uses the following cascading set of rules to calculate the Index Price when the Index Price is unavailable. ^{25} For the avoidance of doubt, the Sponsor will employ the below rules sequentially and in the order as presented below, should one or more specific rule(s) fail:
^{25} The Sponsor updated these rules on January 11, 2022.
1. Index Price = The price set by the Index as of 4:00 p.m., New York time, on the valuation date. ^{26} If the Index becomes unavailable, or if the Sponsor determines in good faith that the Index does not reflect an accurate price, then the Sponsor will, on a best efforts basis, contact the Index Provider to obtain the Index Price directly from the Index Provider. If after such contact the Index remains unavailable or the Sponsor continues to believe in good faith that the Index does not reflect an accurate price, then the Sponsor will employ the next rule to determine the Index Price. There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
^{26} The valuation date is any day for which the value of the Ether in the Trust may be calculated utilizing the Index Price.
2. Index Price = The price set by Coin Metrics Real-Time Rate (the “Secondary Index”) as of 4:00 p.m., New York time, on the valuation date (the “Secondary Index Price”). The Secondary Index Price is a real-time reference rate price, calculated using trade data from constituent markets selected by Coin Metrics, Inc. (the “Secondary Index Provider”). The Secondary Index Price is calculated by applying weighted-median techniques to such trade data where half the weight is derived from the trading volume on each constituent market and half is derived from inverse price variance, where a constituent market with high price variance as a result of outliers or market anomalies compared to other constituent markets is assigned a smaller weight. If the Secondary Index becomes unavailable, or if the Sponsor determines in good faith that the Secondary Index does not reflect an accurate price, then the Sponsor will, on a best efforts basis, contact the Secondary Index Provider to obtain the Secondary Index Price directly from the Secondary Index Provider. If after such contact the Secondary Index remains unavailable or the Sponsor continues to believe in good faith that the Secondary Index does not reflect an accurate price, then the Sponsor will employ the next rule to determine the Index Price. There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
3. Index Price = The price set by the Trust's principal market (as defined in the Registration Statement) (the “Tertiary Pricing Option”) as of 4:00 p.m., New York time, on the valuation date. The Tertiary Pricing Option is a spot price derived from the principal market's public data feed that is believed to be consistently publishing pricing information as of 4:00 p.m., New York time, and is provided to the Sponsor via an application programming interface. If the Tertiary Pricing Option becomes unavailable, or if the Sponsor determines in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will, on a best efforts basis, contact the Tertiary Pricing Provider to obtain the Tertiary Pricing Option directly from the Tertiary Pricing Provider. If after such contact the Tertiary Pricing Option remains unavailable after such contact or the Sponsor continues to believe in good faith that the Tertiary Pricing Option does not reflect an accurate price, then the Sponsor will employ the next rule to determine the Index Price. There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
4. Index Price = The Sponsor will use its best judgment to determine a good faith estimate of the Index Price. There are no predefined criteria to make a good faith assessment and it will be made by the Sponsor in its sole discretion.
In the event of a fork, the Index Provider may calculate the Index Price based on a digital asset that the Sponsor does not believe to be an appropriate asset of the Trust ( i.e., a digital asset other than Ether). ^{27} In this event, the Sponsor has full discretion to use a different index provider or calculate the Index Price itself using its best judgment. In such an event, the Exchange will submit a proposed rule filing to contemplate the assets that would subsequently be held by the Trust.
^{27} According to the Registration Statement, when a modification is introduced and a substantial majority of users and validators consent to the modification, the change is implemented and the network remains uninterrupted. However, if less than a substantial majority of users and validators consent to the proposed modification, and the modification is not compatible with the software prior to its modification, the consequence would be what is known as a “hard fork” of the Ethereum Network, with one group running the pre-modified software and the other running the modified software. The effect of such a fork would be the existence of two versions of Ether running in parallel, yet lacking interchangeability. For example, in July 2016, Ethereum “forked” into Ethereum and a new digital asset, Ethereum Classic, as a result of the Ethereum Network community's response to a significant security breach in which an anonymous hacker exploited a smart contract running on the Ethereum Network to syphon approximately $60 million of Ether held by the DAO, a distributed autonomous organization, into a segregated account. In response to the hack, most participants in the Ethereum community elected to adopt a “fork” that effectively reversed the hack. However, a minority of users continued to develop the original blockchain, with the digital asset on that blockchain now referred to as Ethereum Classic, or ETC. ETC now trades on several Digital Asset Trading Platforms. In the event of a hard fork of the Ethereum Network, the Sponsor will, if permitted by the terms of the Trust Agreement, use its discretion to determine, in good faith, which peer-to-peer network, among a group of incompatible forks of the Ethereum Network, is generally accepted as the Ethereum Network and should therefore be considered the appropriate network for the Trust's purposes. The Sponsor will base its determination on a variety of then relevant factors, including, but not limited to, the Sponsor's beliefs regarding expectations of the core developers of Ether, users, services, businesses, miners, and other constituencies, as well as the actual continued acceptance of, validating power on, and community engagement with, the Ethereum Network. There is no guarantee that the Sponsor will choose the digital asset that is ultimately the most valuable fork, and the Sponsor's decision may adversely affect the value of the Shares as a result. The Sponsor may also disagree with shareholders, security vendors, and the Index Provider on what is generally accepted as Ether and should therefore be considered “Ether” for the Trust's purposes, which may also adversely affect the value of the Shares as a result.
The Sponsor may, in its sole discretion, select a different index provider, select a different index price provided by the Index Provider, calculate the Index Price by using the cascading set of rules set forth above, or change the cascading set of rules set forth above at any time. ^{28}
^{28} The Sponsor will provide notice of any such changes in the Trust's periodic or current reports and, if the Sponsor makes such a change other than on an ad hoc or temporary basis,, will file a proposed rule change with the Commission.

The Impact of the Approval of Ether Futures ETFs on Spot Ether ETPs Like the Trust
On October 2, 2023, the first Ether-based exchange-traded funds (“ETFs”) were approved by the Commission for trading. ^{29} The ETFs hold Ether futures contracts that trade on the Chicago Mercantile Exchange (“CME”) and settle using the CME CF Ethereum Reference Rate (“ERR”), which is priced based on the spot Ether markets Coinbase, Kraken, LMAX Digital, Bitstamp, Gemini, and itBit, essentially the same spot markets that are included in the Index that the Trust uses to value its Ether holdings. Given that the Commission has approved ETFs that offer exposure to CME Ether futures, which themselves are priced based on the underlying spot Ether market, the Sponsor believes that the Commission must also approve exchange-traded products (“ETPs”) that offer exposure to spot Ether, like the Trust.
^{29} These ETFs included the Bitwise Ethereum Strategy ETF, Bitwise Bitcoin & Ether Equal Weight Strategy ETF, Hashdex Ether Strategy ETF, ProShares Ether Strategy ETF, ProShares Bitcoin & Ether Strategy ETF, ProShares Bitcoin & Ether Equal Weight Strategy ETF, Valkyrie Bitcoin & Ethereum Strategy ETF, VanEck Ethereum Strategy ETF, and Volatility Shares Ethereum Strategy ETF.
In the context of other digital asset-based ETF and ETP proposals for Bitcoin, the Commission has sought to justify treating futures-based ETFs differently from spot-based ETPs because of (i) distinctions between the regulations under which the two products would be registered (the Investment Company Act of 1940 (the “ '40 Act”) for digital-asset futures ETFs and '33 Act for spot digital-asset ETPs) and (ii) the existence of regulation and surveillance-sharing over the CME digital-asset futures market through the Intermarket Surveillance Group (“ISG”), as compared to the spot market for those digital assets. ^{30} The Sponsor believes that this reasoning is unsupported for the following reasons.
^{30} See, e.g., Chair Gary Gensler Public Statement, “Remarks Before the Aspen Security Forum,” (August 3, 2021), stating that the Chair looked forward to the Commission's review of Bitcoin-based ETF proposals registered under the '40 Act, “particularly if those are limited to [the] CME-traded Bitcoin futures,” noting the “significant investor protection” offered by the '40 Act, https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03; Securities Exchange Act Release No. 93559 (November 12, 2021), 86 FR 64539 (November 18, 2021) (SR-CboeBZX-2021-019) (Order Disapproving a Proposed Rule Change to List and Trade Shares of the VanEck Bitcoin Trust under BZX Rule 14.11(e)(4), Commodity-Based Trust Shares) (“VanEck Order”) (denying the first spot bitcoin ETP registered under the '33 Act following the first approval of a bitcoin futures ETF registered under the '40 Act, noting the differences in the standard of review that applies to such products); Securities Exchange Act Release No. 94620 (April 6, 2022), 87 FR 21676 (April 12, 2022) (SR-NYSEArca-2021-53) (Order Granting Approval of a Proposed Rule Change, as Modified by Amendment No. 2, to List and Trade Shares of the Teucrium Bitcoin Futures Fund under NYSE ARCA Rule 8.200-E, Commentary .02 (Trust Issued Receipts)) (“Teucrium Order”) (approving the first bitcoin futures ETP registered under the '33 Act, stating that “With respect to the proposed ETP, the underlying bitcoin assets are CME bitcoin futures contracts. The relevant analysis, therefore, is whether Arca has a comprehensive surveillance sharing agreement with a regulated market of significant size related to CME bitcoin futures contracts. As discussed below, taking into consideration the direct relationship between the regulated market with which Arca has a surveillance-sharing agreement and the assets held by the proposed ETP, as well as developments with respect to the CME bitcoin futures market—including the launch of exchange-traded funds registered under the Investment Company Act of 1940 (“1940 Act”) that hold CME bitcoin futures (“Bitcoin Futures ETFs”)—the Commission concludes that the Exchange has the requisite surveillance-sharing agreement.”).

The '40 Act Offers No More Investor Protections Than the '33 Act in the Context of Ether-Based ETF and ETP Proposals
While the '40 Act has certain added investor protections that the '33 Act does not require, these protections do not seek to allay harms arising from underlying assets or markets of assets that ETFs hold, such as the potential for fraud or manipulation in such markets. In other words, the Sponsor does not believe that the application of the '40 Act supports the purported justifications the Commission has made in denying other spot digital asset ETPs. Instead, the '40 Act seeks to remedy certain abusive practices in the management of investment companies such as ETFs, and thus places certain restrictions on ETFs and ETF sponsors. The '40 Act explicitly lists out the types of abuses it seeks to prevent, and places certain restrictions related to accounting, borrowing, custody, fees, and independent boards, among others. Notably, none of these restrictions address an ETF's underlying assets, whether Ether futures or spot Ether, or the markets from which such assets' pricing is derived, whether the Ether futures market or spot Ether markets. As a result, the Sponsor believes that the distinction between registration of Ether futures ETFs under the '40 Act and the registration of spot Ether ETPs under the '33 Act is one without a difference in the context of Ether-based ETP proposals.

Surveillance-Sharing With the CME Ether Futures Market is Sufficient To Protect Against Fraud and Manipulation in the Underlying Spot Ether Market
The Sponsor believes that, because the CME Ether futures market is priced based on the underlying spot Ether market, any fraud or manipulation in the spot market would necessarily affect the price of CME Ether futures, thereby affecting the net asset value of an ETP holding spot Ether or an ETF holding CME Ether futures, as well as the price investors pay for such product's shares. ^{31} The Sponsor also believes that a correlation analysis conducted by Coinbase, Inc. further corroborates this conclusion. Coinbase, Inc.'s analysis found that the CME Ether futures market has been consistently and highly correlated with the spot Ether market throughout the past (nearly) three years, with an even greater correlation than that cited by the Commission with respect to the CME Bitcoin futures and spot Bitcoin market in approving proposed rule changes to list and trade spot Bitcoin-based ETPs. ^{32}
^{31} See Grayscale Investments, LLC v. Securities and Exchange Commission (“ Grayscale v. SEC ”), No. 22-1142, Brief of Petitioner Grayscale Investments, LLC (October 11, 2022) (advancing the same argument regarding CME Bitcoin futures and the underlying spot Bitcoin market).
^{32} See Comment Letter from Paul Grewal, Chief Legal Officer, Coinbase, Inc. (February 21, 2024), available at: https://www.sec.gov/comments/sr-nysearca-2023-70/srnysearca202370-432799-1074283.pdf (noting that “the correlation between the CME ETH futures market and the spot ETH market for the full sample period is 99.3% using data at an hourly interval, 96.2% using data at a five-minute interval, and 84.7% using data at a one-minute interval”); Securities Exchange Act Release No. 34-99306 (January 10, 2024), 89 FR 3008 at 3010-11 (January 17, 2024) (SR-NYSEARCA-2021-90; SR-NYSEARCA-2023-44; SRNYSEARCA-2023-58; SR-NASDAQ-2023-016; SR-NASDAQ-2023-019; SR-CboeBZX-2023028; SR-CboeBZX-2023-038; SR-CboeBZX-2023-040; SR-CboeBZX-2023-042; SRCboeBZX-2023-044; SR-CboeBZX-2023-072) (Order Granting Accelerated Approval of Proposed Rule Changes, as Modified by Amendments Thereto, to List and Trade Bitcoin-Based Commodity-Based Trust Shares and Trust Units).
Given the similarity between an ETP holding spot Ether and an ETF holding CME Ether futures, the Sponsor believes that it must be the case that CME surveillance can either detect spot-market fraud that affects both futures ETFs and spot ETPs, or that such surveillance cannot do so for either type of product. Having approved CME Ether futures ETFs in part on the basis of such surveillance, the Commission has clearly determined that CME surveillance can detect spot-market fraud that would affect spot ETPs, and the Sponsor thus believes that it must also approve spot Ether ETPs on that basis.
* * * * *
In summary, the Sponsor believes that the distinctions between the '40 Act and the '33 Act, and the surveillance-sharing available for the CME Ether futures market versus the spot Ether market, are not meaningful in the context of Ether-based ETF and ETP proposals, and that such reasoning cannot be a basis for the Commission treating Ether futures ETFs differently from spot Ether ETPs like the Trust. The Sponsor believes that the Commission's approval of CME Ether futures ETFs means it must also approve spot Ether ETPs like the Trust.

The Structure and Operation of the Trust Protects Investors and Satisfies Commission Requirements for Ether-Based Exchange Traded Products
Even if the Commission had not approved CME Ether futures ETFs, the Sponsor still believes the Commission should approve the listing and trading of Shares of the Trust. In the context of prior spot digital asset ETP proposal disapproval orders for Bitcoin, the Commission expressed concerns about the underlying Digital Asset Market due to the potential for fraud and manipulation and has outlined the reasons why such ETP proposals have been unable to satisfy these concerns. ^{33}
For purposes of the Trust's Ether-based ETP proposal, the Sponsor anticipates that the Commission may have the same concerns and addresses each of these in turn below.
^{33} See Securities Exchange Act Release Nos. 83723 (July 26, 2018), 83 FR 37579 (August 1, 2018) (SR-BatsBZX-2016-30) (Order Setting Aside Action by Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments No. 1 and 2, To List and Trade Shares of the Winklevoss Bitcoin Trust) (the “Winklevoss Order”); 87267 (October 9, 2019), 84 FR 55382 (October 16, 2019) (SR-NYSEArca-2019-01) (Order Disapproving a Proposed Rule Change, as Modified by Amendment No. 1, Relating to the Listing and Trading of Shares of the Bitwise Bitcoin ETF Trust Under NYSE Arca Rule 8.201-E) (the “Bitwise Order”); 88284 (February 26, 2020), 85 FR 12595 (March 3, 2020) (SR-NYSEArca-2019-39) (Order Disapproving a Proposed Rule Change, as Modified by Amendment No. 1, to Amend NYSE Arca Rule 8.201-E (Commodity-Based Trust Shares) and to List and Trade Shares of the United States Bitcoin and Treasury Investment Trust Under NYSE Arca Rule 8.201-E) (the “Wilshire Phoenix Order”); 83904 (August 22, 2018), 83 FR 43934 (August 28, 2018) (SR-NYSEArca-2017-139) (Order Disapproving a Proposed Rule Change to List and Trade the Shares of the ProShares Bitcoin ETF and the ProShares Short Bitcoin ETF) (the “ProShares Order”); 83912 (August 22, 2018), 83 FR 43912 (August 28, 2018) (SR-NYSEArca-2018-02) (Order Disapproving a Proposed Rule Change Relating to Listing and Trading of the Direxion Daily Bitcoin Bear 1X Shares, Direxion Daily Bitcoin 1.25X Bull Shares, Direxion Daily Bitcoin 1.5X Bull Shares, Direxion Daily Bitcoin 2X Bull Shares, and Direxion Daily Bitcoin 2X Bear Shares Under NYSE Arca Rule 8.200-E) (the “Direxion Order”); 83913 (August 22, 2018), 83 FR 43923 (August 28, 2018) (SR-CboeBZX-2018-01) (Order Disapproving a Proposed Rule Change to List and Trade the Shares of the GraniteShares Bitcoin ETF and the GraniteShares Short Bitcoin ETF) (the “GraniteShares Order”) (together, the “Prior Spot Digital Asset ETP Disapproval Orders”).
In the Prior Spot Digital Asset ETP Disapproval Orders, the Commission outlined that a proposal relating to a digital asset-based ETP could satisfy its concerns regarding potential for fraud and manipulation by demonstrating:
(1) Inherent Resistance to Fraud and Manipulation: that the underlying commodity market is inherently resistant to fraud and manipulation;
(2) Other Means to Prevent Fraud and Manipulation: that there are other means to prevent fraudulent and manipulative acts and practices that are sufficient; or
(3) Surveillance Sharing: that the listing exchange has entered into a surveillance sharing agreement with a regulated market of significant size relating to the underlying or reference assets.
As described below, the Sponsor believes the structure and operation of the Trust are designed to prevent fraudulent and manipulative acts and practices, to protect investors and the public interest, and to respond to the specific concerns that the Commission may have with respect to potential fraud and manipulation in the context of an Ether-based ETP.

How the Trust Meets Standards in the Prior Spot Digital Asset ETP Disapproval Orders

1. Resistance to or Prevention of Fraud and Manipulation
In the Prior Spot Digital Asset ETP Disapproval Orders, the Commission disagreed with the proposition that a digital asset's fungibility, transportability and exchange tradability combine to provide unique protections against, and allow such digital asset to be uniquely resistant to, attempts at price manipulation. The Commission reached its conclusion based on concessions by one issuer that 95% of the reported trading in the digital asset, Bitcoin, is “fake” or non-economic, effectively admitting that the properties of Bitcoin do not make it inherently resistant to manipulation. Such issuer's concessions were further compounded by evidence of potential and actual fraud and manipulation in the historical trading of Bitcoin on certain marketplaces such as (1) “wash” trading, (2) trading based on material, non-public information, including the dissemination of false and misleading information, (3) manipulative activity involving Tether, and (4) fraud and manipulation. ^{34}
^{34} See Bitwise Order, 84 FR at 55383 (discussing analysis of the Bitcoin spot market that asserts that 95% of the spot market is dominated by fake and non-economic activity, such as wash trades), 55391 (discussing possible sources of fraud and manipulation in the bitcoin spot market). See also Winklevoss Order, 83 FR at 37585-86 (discussing pending litigation against a Bitcoin trading platform for fraudulent conduct relating to Tether); Bitwise Order, 84 FR at 55391 n.140, 55402 & n.331 (same); Winklevoss Order, 83 FR at 37584-86 (discussing potential types of manipulation in the Bitcoin spot market). The Commission has also noted that fraud and manipulation in the Bitcoin spot market could persist for a significant duration. See, e.g., Bitwise Order, 84 FR at 55405 & n.379.
The Sponsor acknowledges the possibility that fraud and manipulation may exist in commodity markets and that digital asset trading, such as Ether, on any given trading platform may be no more uniquely resistant to fraud and manipulation than other commodity markets. ^{35} However, the Sponsor believes that the fundamental features of digital assets, including fungibility, transportability and exchange tradability offer novel protections beyond those that exist in traditional commodity markets or equity markets when combined with other means, as discussed further below.
^{35} See generally Bitwise Order.

2. Other Means To Prevent Fraud and Manipulation
The Commission has recognized that a listing exchange could demonstrate that other means to prevent fraudulent and manipulative acts and practices are sufficient to justify dispensing with the requisite surveillance-sharing agreement. ^{36} In evaluating the effectiveness of this type of resistance, the Commission does not apply a “cannot be manipulated” standard. Instead, the Commission requires that such resistance to fraud and manipulation be novel and beyond those protections that exist in traditional commodity markets or equity markets for which the Commission has long required surveillance-sharing agreements in the context of listing derivative securities products. ^{37}
^{36} See Winklevoss Order, 84 FR at 37580, 37582-91; Bitwise Order, 84 FR at 55383, 55385-406; Wilshire Phoenix Order, 85 FR at 12597.
^{37} See Winklevoss Order, 84 FR at 37582; Wilshire Phoenix Order, 85 FR at 12597.
The Sponsor believes the Index represents a novel means to prevent fraud and manipulation from impacting a reference price for Ether and that it offers protections beyond those that exist in traditional commodity markets or equity markets. The Index operates materially similarly to CoinDesk Bitcoin Price Index (XBX). Specifically, digital assets, such as Ether, are novel and exist outside traditional commodity markets. It therefore stands to reason that the methods by which they trade will be novel and that the market for digital assets like Ether will have different attributes than traditional commodity markets. Digital assets like Ether were only introduced within the past decade, twenty years after the first U.S. ETFs were offered ^{38} and 150 years after the first futures were offered. ^{39} In contrast to older commodities such as gold, silver, platinum, palladium or copper, which the Commission has noted all had at least one significant, regulated market for trading futures on the underlying commodity at the time commodity trust ETPs were approved for listing and trading, the first trading in digital assets like Ether took place entirely in an open, transparent and online setting where other commodities cannot trade.
^{38} SEC, “Investor Bulletin: Exchange-Traded Funds (ETFs),” August 2012, https://www.sec.gov/investor/alerts/etfs.pdf.
^{39} Commodity Futures Trading Commission (“CFTC”), “History of the CFTC,” https://www.cftc.gov/About/HistoryoftheCFTC/history_precftc.html .
An affiliate of the Trust that is structured identically to the Trust and also seeking to list its shares as an ETP on the Exchange, Grayscale Ethereum Trust (ETH) (“ETHE”), has priced its Shares consistently for more than six years based on the Index. ^{40} The Sponsor believes the Trust's use of the Index specifically addresses the Commission's concerns in that the Index serves as an alternative means to prevent fraud and manipulation. Specifically, the Index can (i) mitigate the effects of fraud, manipulation and other anomalous trading activity on the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events.
^{40} The Trust and ETHE are identically structured investment vehicles and will have the same service providers. The Trust will have a materially lower sponsor's fee than ETHE.
As described in more detail below, the Sponsor believes that the Index accomplishes those objectives in the following ways:
1. The Index tracks the Digital Asset Trading Platform Market price through trading activity at “U.S.-Compliant Trading Platform”; ^{41}
^{41} “U.S.-Compliant Trading Platforms” are trading platforms in the Digital Asset Trading Platform Market that are compliant with applicable U.S. federal and state licensing requirements and practices regarding AML and KYC regulations. All Constituent Trading Platforms are U.S.-Compliant Trading Platforms.
“Non-U.S.-Compliant Trading Platforms” are all other trading platforms in the Digital Asset Trading Platform Market.
As of December 31, 2023, the U.S.-Compliant Trading Platforms that the Index Provider considered for inclusion in the Index were Coinbase, Kraken, LMAX Digital and Crypto.com.
From these U.S.-Compliant Trading Platforms, the Index Provider then applies additional Inclusion Criteria to determine the Constituent Trading Platforms.
2. The Index mitigates the impact of instances of fraud, manipulation and other anomalous trading activity in real-time through systematic adjustments;
3. The Index is constructed and maintained by an expert third-party index provider, allowing for prudent handling of non-market-related events; and
4. The Index mitigates the impact of instances of fraud, manipulation and other anomalous trading activity concentrated on any one specific trading platform through a cross-trading platform composite index rate.
1. The Index tracks the Digital Asset Trading Platform Market price through trading activity at “U.S.-Compliant Trading Platforms”
To reduce the risk of fraud, manipulation, and other anomalous trading activity from impacting the Index, only U.S.-Compliant Trading Platforms are eligible to be included in the Index.
The Index maintains a minimum number of three trading platforms and a maximum number of five trading platforms to track the Digital Asset Trading Platform Market while offering replicability for traders and market makers. ^{42}
^{42} According to the Sponsor, the more trading platforms included in the Index, the more ability there is for traders and market makers to trade against the Index by arbitraging price differences. For example, in the event of variances between Ether prices on Constituent Trading Platforms and non-Constituent Trading Platforms, arbitrage trading opportunities would exist. These discrepancies generally consolidate over time, as price differences across trading platforms are realized and capitalized upon by traders and market makers.
U.S.-Compliant Trading Platforms possess safeguards that protect against fraud and manipulation. For example, U.S.-Compliant Trading Platforms regulated by the NYDFS under the BitLicense program have regulatory requirements to implement measures designed to effectively detect, prevent, and respond to fraud, attempted fraud, market manipulation, and similar wrongdoing, and to monitor, control, investigate and report back to the NYDFS regarding any wrongdoing. ^{43} These trading platforms also have the following obligations: ^{44}
^{43} See, e.g., “DFS Takes Action to Deter Fraud and Manipulation in Virtual Currency Markets,” available at: https://www.dfs.ny.gov/about/press/pr1802071.htm.
^{44} See “New York's Final “BitLicense” Rule: Overview and Changes from July 2014 Proposal,” June 5, 2015, Davis Polk, available at: https://www.davispolk.com/files/new_yorks_final_bitlicense_rule_overview_changes_july_2014_proposal.pdf.
• Submission of audited financial statements including income statements, statements of assets/liabilities, insurance, and banking;
• Compliance with capitalization requirements set at NYDFS's discretion;
• Prohibitions against the sale or encumbrance to protect full reserves of custodian assets;
• Fingerprints and photographs of employees with access to customer funds;
• Retention of a qualified Chief Information Security Officer and annual penetration testing/audits;
• Documented business continuity and disaster recovery plan, independently tested annually; and
• Participation in an independent exam by NYDFS.
Other U.S.-Compliant Trading Platforms have voluntarily implemented measures to protect against common forms of market manipulation. ^{45}
^{45} As of the date of this filing, one of the four Constituent Trading Platforms, Coinbase, is regulated by NYDFS.
Furthermore, all U.S.-Compliant Trading Platforms are considered MSBs that are subject to FinCEN's federal and state reporting requirements that provide additional safeguards. For example, unscrupulous traders may be less likely to engage in fraudulent or manipulative acts and practices on trading platforms that (1) report suspicious activity to FinCEN as money services businesses, (2) report to state regulators as money transmitters, and/or (3) require customer identification through KYC procedures. U.S.-Compliant Trading Platforms are required to: ^{46}
^{46} See BSA Requirements for MSBs, FinCEN website: https://www.fincen.gov/bsarequirements-msbs.
• Identify people with ownership stakes or controlling roles in the MSB;
• Establish a formal Anti-Money Laundering (AML) policy in place with documentation, training, independent review, and a named compliance officer;
• Implement strict customer identification and verification policies and procedures;
• File Suspicious Activity Reports (SARs) for suspicious customer transactions;
• File Currency Transaction Reports (CTRs) for cash-in or cash-out transactions greater than $10,000; and
• Maintain a five-year record of currency exchanges greater than $1,000 and money transfers greater than $3,000.
Lastly, because of Ether's classification as a commodity, the CFTC has authority to police fraud and manipulation on U.S.-Compliant Trading Platforms. ^{47}
^{47} “U.S. CFTC Chief Behnam Reinforces View of Ether as Commodity,” CoinDesk (Mar. 28, 2023), https://www.coindesk.com/policy/2023/03/28/us-cftc-chief-behnam-reinforces-view-of-ether-as-commodity/; CME Group, https://www.cmegroup.com/markets/cryptocurrencies/ether/ether.html?gad=1&gclid=EAIaIQobChMI44KBmu7ygAMVavvjBx2P4g5yEAAYASAAEgJSZfD_BwE&gclsrc=aw.ds.
The Sponsor acknowledges that there are substantial differences between FinCEN and New York state regulations and the Commission's regulation of the national securities exchanges. ^{48} The Sponsor does not believe the inclusion of U.S.-Compliant Trading Platforms is in and of itself sufficient to prove that the Index is an alternative means to prevent fraud and manipulation such that surveillance sharing agreements are not required, but does believe that the inclusion of only U.S.-Compliant Trading Platforms in the Index is one significant way in which the Index is protected from the potential impacts of fraud and manipulation.
^{48} See Bitwise Order, 84 FR at 55392; Wilshire Phoenix Order, 85 FR at 12603.
2. The Index mitigates the impact of instances of fraud, manipulation, and other anomalous trading activity in real-time through systematic adjustments.
The Index is calculated once every second according to a systematic methodology that relies on observed trading activity on the Constituent Trading Platforms. While the precise methodology underlying the Index is currently proprietary, the key elements of the Index are outlined below:
• Volume Weighting: Constituent Trading Platforms with greater liquidity receive a higher weighting in the Index, increasing the ability to execute against ( i.e., replicate) the Index in the underlying spot markets.
• Price-Variance Weighting: The Index reflects data points that are discretely weighted in proportion to their variance from the rest of the Constituent Trading Platforms. As the price at a Constituent Trading Platform diverges from the prices at the rest of the Constituent Trading Platforms, its weight in the Index consequently decreases.
• Inactivity Adjustment: The Index algorithm penalizes stale activity from any given Constituent Trading Platform. When a Constituent Trading Platform does not have recent trading data, its weighting in the Index is gradually reduced, until it is de-weighted entirely. Similarly, once trading activity at the Constituent Trading Platform resumes, the corresponding weighting for that Constituent Trading Platform is gradually increased until it reaches the appropriate level.
• Manipulation Resistance: In order to mitigate the effects of wash trading and order book spoofing, the Index only includes executed trades in its calculation. Additionally, the Index only includes Constituent Trading Platforms that charge trading fees to its users in order to attach a real, quantifiable cost to any manipulation attempts.
3. The Index is constructed and maintained by an expert third-party index provider, allowing for prudent handling of non-market-related events.
The Index Provider reviews and periodically updates which trading platforms are included in the Index by utilizing a methodology that is guided by the IOSCO principles for financial benchmarks.
According to the Index methodology, for a trading platform to become a Constituent Trading Platform, it must satisfy the following Inclusion Criteria:
• Sufficient USD liquidity relative to the size of the listed assets;
• No evidence in the past 12 months of trading restrictions on individuals or entities that would otherwise meet the trading platform's eligibility requirements to trade;
• No evidence in the past 12 months of undisclosed restrictions on deposits or withdrawals from user accounts;
• Real-time price discovery;
• Limited or no capital controls;
• Transparent ownership including a publicly-owned ownership entity;
• Publicly available language and policies addressing legal and regulatory compliance in the US, including KYC (Know Your Customer), AML (Anti-Money Laundering) and other policies designed to comply with relevant regulations that might apply to it;
• Be a U.S.-domiciled trading platform or a non-U.S. domiciled trading platform that is able to service U.S. investors;
• Offer programmatic spot trading of the trading pair and reliably publish trade prices and volumes on a real-time basis through Rest and Websocket APIs.
Although the Index methodology is designed to operate without any human interference, rare events would justify manual intervention. Manual intervention would only be in response to “non-market-related events” ( e.g., halting of deposits or withdrawals of funds, unannounced closure of trading platform operations, insolvency, compromise of user funds, etc.). In the event that such an intervention is necessary, the Index Provider would issue a public announcement through its website, API and other established communication channels with its clients. ^{49}
^{49} To the extent any such intervention has a material impact on the Trust, the Sponsor will also issue a public announcement.
4. The Index mitigates the impact of instances of fraud, manipulation and other anomalous trading activity concentrated on any one specific trading platform through a cross-trading platform composite index rate.
The Index is based on the price and volume data of multiple U.S.-Compliant Trading Platforms that satisfy the Index Provider's Inclusion Criteria. By referencing multiple trading venues and weighting them based on trade activity, the impact of any potential fraud, manipulation, or anomalous trading activity occurring on any single venue is reduced. Specifically, the effects of fraud, manipulation, or anomalous trading activity occurring on any single venue are de-weighted and consequently diluted by non-anomalous trading activity from other Constituent Trading Platforms.
Although the Index is designed to accurately capture the market price of Ether, third parties may be able to purchase and sell Ether on public or private markets included or not included among the Constituent Trading Platforms, and such transactions may take place at prices materially higher or lower than the Index Price. For example, based on data provided by the Index Provider, on any given day during the twelve months ended December 31, 2023, the maximum differential between the 4:00 p.m., New York time spot price of any single Digital Asset Trading Platform included in the Index and the Index Price was 2.76% and the average of the maximum differentials of the 4:00 p.m., New York time spot price of each Digital Asset Trading Platform included in the Index and the Index Price was 0.75%. During this same period, the average differential between the 4:00 p.m., New York time spot prices of all the Digital Asset Trading Platforms included in the Index and the Index Price was 0.012%. ^{50}
^{50} All Digital Asset Trading Platforms that were included in the Index throughout the period were considered in this analysis.
As described above, the Trust's affiliate, ETHE, has consistently priced its Shares at 4:00 p.m., New York time based on the Index Price. While that pricing would be known to the market, the Sponsor believes that, even if efforts to manipulate the price of Ether at 4:00 p.m., E.T. were successful on any trading platform, such activity would have had a negligible effect on the pricing of the Trust, due to the controls embedded in the structure of the Index.
Accordingly, the Sponsor believes that the Index has proven its ability to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity on the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events. For these reasons, the Sponsor believes that the Index represents an effective alternative means to prevent fraud and manipulation and the Trust's reliance on the Index addresses the Commission's concerns with respect to potential fraud and manipulation.

3. A Significant, Regulated and Surveilled Market Exists and Is Closely Connected With Spot Market for Ether
In the Prior Spot Digital Asset ETP Disapproval Orders, the Commission described both the need for and the definition of a surveilled market of significant size for commodity-trust ETPs like the Trust to date. ^{51} Specifically, the Commission explained that:
^{51} See Winklevoss Order, 83 FR at 37593-94; Bitwise Order, 84 FR at 55383, 55410; Wilshire Phoenix Order, 85 FR at 12609.
for the commodity-trust ETPs approved to date for listing and trading, there has been in every case at least one significant, regulated market for trading futures on the underlying commodity—whether gold, silver, platinum, palladium, or copper—and the ETP listing exchange has entered into surveillance-sharing agreements with, or held Intermarket Surveillance Group membership in common with, that market. ^{52}
^{52} See Winklevoss Order, 83 FR at 37594.
Further, the Commission stated that its interpretation of the term “market of significant size” depends on the interrelationship between the market with which the listing exchange has a surveillance-sharing agreement and the proposed ETP. ^{53} Accordingly, the terms “significant market” and “market of significant size” could mean:
^{53} See Winklevoss Order, 83 FR at 37594; Bitwise Order, 84 FR at 55410; ProShares Order, 83 FR at 43936; GraniteShares Order, 83 FR at 43925; Direxion Order, 83 FR at 43914; Wilshire Phoenix Order, 85 FR at 12609.
a market (or group of markets) as to which (a) there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, so that a surveillance-sharing agreement would assist in detecting and deterring misconduct, and (b) it is unlikely that trading in the ETP would be the predominant influence on prices in that market. ^{54}
^{54} See Winklevoss Order, 83 FR at 37594. This definition is illustrative and not exclusive. There could be other types of “significant markets” and “markets of significant size,” but this definition is an example that will provide guidance to market participants.
In the context of the Prior Spot Digital Asset ETP Disapproval Orders specifically, the Commission has stated that establishing a lead-lag relationship between the futures market and the spot market is central to understanding whether it is reasonably likely that a would-be manipulator of the ETP would need to trade on the futures market to successfully manipulate prices on those spot platforms that feed into the proposed ETP's pricing mechanism such that a surveillance-sharing agreement would assist the ETP listing market in detecting and deterring misconduct. ^{55} In particular, if the spot market leads the futures market, this would indicate that it would not be necessary to trade on the futures market to manipulate the proposed ETP, even if arbitrage worked efficiently, because the futures price would move to meet the spot price.
^{55} See Bitwise Order, 84 FR at 55411; Wilshire Phoenix Order, 85 FR at 12612.
While studies have found that the CME Bitcoin futures market does lead the spot market in the context of Bitcoin, ^{56} as explained in the Sponsor's briefs and argument in its prevailing case before the D.C. Circuit Court of Appeals regarding its Bitcoin-based ETP proposal, the lead/lag question is irrelevant. If a would-be manipulator were to attempt to manipulate either a spot ETP or futures ETP by trading futures on the CME, then a surveillance-sharing agreement with the CME would provide access to information concerning that activity. ^{57} If, on the other hand, a would-be manipulator were to attempt to manipulate either a spot ETP or a futures ETP by trading on the spot market, then a surveillance-sharing agreement with the CME would also be able to provide access to information concerning that activity. If that were not true, the Commission could not have approved the Bitcoin futures ETPs. Given that the Commission has approved Bitcoin futures ETPs, the Commission must have concluded that the CME is capable of detecting manipulation attempts in the spot Bitcoin market. And given that the Commission has now approved CME Ether futures ETFs, it must have concluded that the CME is capable of detecting manipulation attempts in the spot Ether market as well. Accordingly, the Sponsor believes that disapproval of the instant proposal on such grounds would be arbitrary given that Shares of the Trust would be just as protected from fraud as shares of previously approved CME Ether futures ETFs.
^{56} See Memorandum to File from Neel Maitra, Senior Special Counsel (Fintech & Crypto Specialist), Division of Trading and Markets, U.S. Securities and Exchange Commission re: Meeting with Representatives from Fidelity Digital Assets, et al. and attachment (SR-CboeBZX-2021-039) (September 8, 2021), available at: https://www.sec.gov/comments/sr-cboebzx-2021-039/srcboebzx2021039-250110.pdf; Letter from Bitwise Asset Management, Inc. re: File Number SR-NYSEArca-2021-89 (February 25, 2022), available at: https://www.sec.gov/comments/sr-nysearca-2021-89/srnysearca202189-20117902-270822.pdf; Letter from Wilson Sonsini Goodrich and Rosati, P.C. and Chapman and Cutler LLP, on behalf of Bitwise Asset Management, Inc. re: File No. SR-NYSEArca-2021-89 (March 7, 2022), available at: https://www.sec.gov/comments/sr-nysearca-2021-89/srnysearca202189-20118794-271630.pdf.
^{57} Grayscale v. SEC, Commission Reply Br. 27.
Regardless of the irrelevance of the lead/lag relationship and the mixed findings regarding the lead/lag relationship between the CME futures and spot markets in the context of Ether, the Sponsor believes that the CME Ether futures market represents a large, surveilled and regulated market and meets the Commission's definition of a “significant market.” For example, from November 1, 2019 to December 31, 2023, the CME Ether futures market trading volume was over $461 billion, compared to $732 billion in trading volume across the Constituent Trading Platforms included in the Index. With over 60% of the Index trading volume, the CME Ether futures market represents significant coverage of U.S.-Compliant Trading Platforms in the Ether market.
Given the size of the CME Ether futures markets, the Sponsor believes such markets meet the Commission's definition of “significant market” because there is a reasonable likelihood that a person attempting to manipulate the ETP would also have to trade on that market to successfully manipulate the ETP, since arbitrage between the derivative and spot markets would tend to counter an attempt to manipulate the spot market alone. As a result, the Exchange's ability to obtain information regarding trading in the Shares and futures from markets and other entities that are members of the Intermarket Trading Group (“ISG”), including the CME, would assist the Exchange in detecting and deterring misconduct.
The Sponsor also believes it is unlikely that the ETP would become the predominant influence on prices in the market. While future inflows to the proposed Trust cannot be predicted, to provide comparable data, the Sponsor examined the change in market capitalization of Ether with net inflows into ETHE, another spot Ether fund that the Sponsor manages. ETHE currently trades on OTC Markets and is largest and most liquid Ether investment product in the world. ^{58} From November 1, 2019 to December 31, 2023, the market capitalization of Ether grew from $20 billion to $273 billion, a $250 billion increase. Over the same period, ETHE experienced $1.2 billion of inflows. The cumulative inflow into ETHE over the stated time period was only 0.5% of the aggregate growth of Ether's market capitalization.
^{58} To further illustrate the size and liquidity of ETHE, as of March 8, 2024, compared with global commodity ETPs, ETHE would rank 8th in assets under management and 10th in notional trading volume for the preceding 30 days.
Additionally, ETHE experienced approximately $71 billion of trading volume from November 1, 2019 to December 31, 2023, only 15% of the CME Ether futures market and 10% of the Index over the same period.
* * * * *
In summary, the Sponsor believes that the foregoing addresses concerns the Commission may have with respect to Ether-based ETPs, based on the Commission's articulated concerns with respect to potential fraud and manipulation in Bitcoin-based ETPs. Specifically, the Sponsor believes that, although Ether is not itself inherently resistant to fraud and manipulation, the Index represents an effective means to prevent fraudulent and manipulative acts and practices. As discussed above, the Trust has used the Index to price the Shares for more than six years, and the Index has proven its ability to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity on the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events. The Sponsor also believes that the CME Ether futures market is a significant, surveilled and regulated market that is closely connected with the spot market for Ether and fulfills the requirements for surveillance sharing given the Exchange's ability to obtain information from markets and other entities that are members of the ISG to assist in detecting and deterring misconduct.

Creation and Redemption of Shares
Authorized Participants may submit orders to create or redeem Shares under procedures for “Cash Orders.”
The Authorized Participants will deliver only cash to create Shares and will receive only cash when redeeming Shares. Further, Authorized Participants will not directly or indirectly purchase, hold, deliver, or receive Ether as part of the creation or redemption process or otherwise direct the Trust or a third party with respect to purchasing, holding, delivering, or receiving Ether as part of the creation or redemption process.
The Trust will create Shares by receiving Ether from a third party that is not the Authorized Participant and the Trust, or an affiliate of the Trust (and in any event not the Authorized Participant), is responsible for selecting the third party to deliver the Ether. Further, the third party will not be acting as an agent of the Authorized Participant with respect to the delivery of the Ether to the Trust or acting at the direction of the Authorized Participant with respect to the delivery of the Ether to the Trust. The Trust will redeem Shares by delivering Ether to a third party that is not the Authorized Participant and the Trust, or an affiliate of the Trust (and in any event not the Authorized Participant), is responsible for selecting the third party to receive the Ether. Further, the third party will not be acting as an agent of the Authorized Participant with respect to the receipt of the Ether from the Trust or acting at the direction of the Authorized Participant with respect to the receipt of the Ether from the Trust.
Cash Orders are made through the participation of a Liquidity Provider ^{59} who obtains or receives Ether in exchange for cash, and are facilitated by the Transfer Agent and Grayscale Investments, LLC, acting in its capacity as the Liquidity Engager. Liquidity Providers are not party to the Participant Agreements and are engaged separately by the Liquidity Engager.
^{59} A “Liquidity Provider” means one or more eligible companies that facilitate the purchase and sale of Ether in connection with creations or redemptions pursuant to Cash Orders. The Liquidity Providers with which Grayscale Investments, LLC, acting other than in its capacity as the Sponsor (in such other capacity, the “Liquidity Engager”) will engage in Ether transactions are third parties that are not affiliated with the Sponsor or the Trust and are not acting as agents of the Trust, the Sponsor, or any Authorized Participant, and all transactions will be done on an arms-length basis. Except for the contractual relationships between each Liquidity Provider and Grayscale Investments, LLC in its capacity as the Liquidity Engager, there is no contractual relationship between each Liquidity Provider and the Trust, the Sponsor, or any Authorized Participant. When seeking to buy Ether in connection with creations or sell Ether in connection with redemptions, the Liquidity Engager will seek to obtain commercially reasonable prices and terms from the approved Liquidity Providers. Once agreed upon, the transaction will generally occur on an “over-the-counter” basis.
According to the Registration Statement, the Trust creates Baskets (as described below) of Shares only upon receipt of Ether and redeems Shares only by distributing Ether. “Authorized Participants” are the only persons that may place orders to create and redeem Baskets. Each Authorized Participant must (i) be a registered broker-dealer and (ii) enter into an agreement with the Sponsor and Transfer Agent that provides the procedures for the creation and redemption of Baskets and for the delivery of Ether required for the creation and redemption of Baskets via a Liquidity Provider (each, a “Participant Agreement”). An Authorized Participant may act for its own account or as agent for broker-dealers, custodians and other securities market participants that wish to create or redeem Baskets. Shareholders who are not Authorized Participants will only be able to create or redeem their Shares through an Authorized Participant.
The Trust issues Shares to and redeems Shares from Authorized Participants on an ongoing basis, but only in one or more “Baskets” (with a Basket being a block of 10,000 Shares). The Trust will not issue fractions of a Basket.
The creation and redemption of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional Ether represented by each Basket being created or redeemed, which is determined by dividing (x) the number of Ether owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of Ether representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one Ether ( i.e., carried to the eighth decimal place)), and multiplying such quotient by 10,000 (the “Basket Amount”). The U.S. dollar value of a Basket is calculated by multiplying the Basket Amount by the Index Price as of the trade date (the “Basket NAV”). The Basket NAV multiplied by the number of Baskets being created or redeemed is referred to as the “Total Basket NAV.” All questions as to the calculation of the Basket Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The number of Ether represented by a Share will gradually decrease over time as the Trust's Ether are used to pay the Trust's expenses.
The creation of Baskets requires the delivery by the Authorized Participant of the Total Basket Amount and the redemption of Baskets requires the distribution to the Authorized Participant of the Total Basket Amount.
Although the Trust creates Baskets only upon the receipt of Ether, and redeems Baskets only by distributing Ether, an Authorized Participant will submit Cash Orders, pursuant to which the Authorized Participant will deposit cash with, or accept cash from, the Transfer Agent in connection with the creation and redemption of Baskets.
Cash Orders will be facilitated by the Transfer Agent and Liquidity Engager, acting other than in its capacity as Sponsor. On an order-by-order basis, the Liquidity Engager will engage one or more Liquidity Providers to obtain or receive Ether in exchange for cash in connection with such order, as described in more detail below.
Unless the Sponsor requires that a Cash Order be effected at actual execution prices (an “Actual Execution Cash Order”), ^{60} each Authorized Participant that submits a Cash Order to create or redeem Baskets (a “Variable Fee Cash Order”) ^{61} will pay a fee (the “Variable Fee”) based on the Total Basket NAV, and any price differential of Ether between the trade date and the settlement date will be borne solely by the Liquidity Provider until such Ether have been received or liquidated by the Trust. The Variable Fee is intended to cover all of a Liquidity Provider's expenses in connection with the creation or redemption order, including any Ether trading platform fees that the Liquidity Provider incurs in connection with buying or selling Ether. The amount may be changed by the Sponsor in its sole discretion at any time, and Liquidity Providers will communicate to the Sponsor in advance the Variable Fee they would be willing to accept in connection with a Variable Fee Cash Order, based on market conditions and other factors existing at the time of such Variable Fee Cash Order.
^{60} With respect to a creation or redemption pursuant to an Actual Execution Cash Order, as between the Trust and an Authorized Participant, the Authorized Participant is responsible for the dollar cost of the difference between the Ether price utilized in calculating Total Basket NAV on the trade date and the price at which the Trust acquires or disposes of the Ether on the settlement date. If the price realized in acquiring or disposing of the corresponding Total Basket Amount is higher than the Total Basket NAV, the Authorized Participant will bear the dollar cost of such difference, in the case of a creation, by delivering cash in the amount of such shortfall (the “Additional Creation Cash”) to the Cash Account or, in the case of a redemption, with the amount of cash to be delivered to the Authorized Participant being reduced by the amount of such difference (the “Redemption Cash Shortfall”). If the price realized in acquiring the corresponding Total Basket Amount is lower than the Total Basket NAV, the Authorized Participant will benefit from such difference, with the Trust promptly returning cash in the amount of such excess (the “Excess Creation Cash”) to the Authorized Participant.
^{61} Unless the Sponsor determines otherwise in its sole discretion based on market conditions and other factors existing at the time of such Cash Order, all creations and redemptions pursuant to Cash Orders are expected to be executed as Variable Fee Cash Orders, and any price differential of Ether between the trade date and the settlement date will be borne solely by the Liquidity Provider until such Ether have been received by the Trust.
Alternatively, the Sponsor may require that a Cash Order be effected as an Actual Execution Cash Order, in its sole discretion based on market conditions and other factors existing at the time of such Cash Order, and under such circumstances, any price differential of Ether between the trade date and the settlement date will be borne solely by the Authorized Participant until such Ether have been received or liquidated by the Trust.
In the case of creations, to transfer the Total Basket Amount to the Trust's Digital Asset Account, the Liquidity Provider will transfer Ether to one of the public key addresses associated with the Digital Asset Account and as provided by the Sponsor. In the case of redemptions, the same procedure is conducted, but in reverse, using the public key addresses associated with the wallet of the Liquidity Provider and as provided by such party. All such transactions will be conducted on the Blockchain and parties acknowledge and agree that such transfers may be irreversible if done incorrectly.
Authorized Participants do not pay a transaction fee to the Trust in connection with the creation or redemption of Baskets, but there may be transaction fees associated with the validation of the transfer of Ether by the Ethereum Network, which will be paid by the Custodian in the case of redemptions and the Authorized Participant or the Liquidity Provider in the case of creations. Service providers may charge Authorized Participants administrative fees for order placement and other services related to creation of Baskets. As discussed above, Authorized Participants will also pay the Variable Fee in connection with Variable Fee Cash Orders. Under certain circumstances Authorized Participants may also be required to deposit additional cash in the Cash Account, or be entitled to receive excess cash from the Cash Account, in connection with creations and redemptions pursuant to Actual Execution Cash Orders. Authorized Participants will receive no fees, commissions or other form of compensation or inducement of any kind from either the Sponsor or the Trust and no such person has any obligation or responsibility to the Sponsor or the Trust to effect any sale or resale of Shares.
The following is a summary of the procedures for the creation and redemption of Baskets.

Creation Procedures
On any business day, an Authorized Participant may place an order with the Transfer Agent to create one or more Baskets.
Cash Orders for creation must be placed with the Transfer Agent no later than 1:59:59 p.m., New York time.
The Sponsor may in its sole discretion limit the number of Shares created pursuant to Cash Orders on any specified day without notice to the Authorized Participants and may direct the Marketing Agent to reject any Cash Orders in excess of such capped amount. In exercising its discretion to limit the number of Shares created pursuant to Cash Orders, the Sponsor expects to take into consideration a number of factors, including the availability of Liquidity Providers to facilitate Cash Orders and the cost of processing Cash Orders.
Creations under Cash Orders will take place as follows, where “T” is the trade date and each day in the sequence must be a business day. Before a creation order is placed, the Sponsor determines if such creation order will be a Variable Fee Cash Order or an Actual Execution Cash Order, which determination is communicated to the Authorized Participant.
Trade date (T) | Settlement date (T+1, or T+2, as established at the time of order placement)
• The Authorized Participant places a creation order with the Transfer Agent. • The Marketing Agent accepts (or rejects) the creation order, which is communicated to the Authorized Participant by the Transfer Agent. • The Sponsor notifies the Liquidity Provider of the creation order. • The Sponsor determines the Total Basket NAV and any Variable Fee and Additional Creation Cash as soon as practicable after 4:00 p.m., New York time. | • The Authorized Participant delivers to the Cash Account: * (x) in the case of a Variable Fee Cash Order, the Total Basket NAV, plus any Variable Fee; or (y) in the case of an Actual Execution Cash Order, the Total Basket NAV, plus any Additional Creation Cash, less any Excess Creation Cash, if applicable (such amount, as applicable, the “Required Creation Cash”). • The Liquidity Provider transfers the Total Basket Amount to the Trust's Digital Asset Account.
| • Once the Trust is in simultaneous possession of (x) the Total Basket Amount and (y) the Required Creation Cash, the Trust issues the aggregate number of Shares corresponding to the Baskets ordered by the Authorized Participant, which the Transfer Agent holds for the benefit of the Authorized Participant.
| • Cash equal to the Required Creation Cash is delivered to the Liquidity Provider from the Cash Account.
| • The Transfer Agent delivers Shares to the Authorized Participant by crediting the number of Baskets created to the Authorized Participant's DTC account.
* The “Cash Account” means the account maintained by the Transfer Agent for purposes of receiving cash from, and distributing cash to, Authorized Participants in connection with creations and redemptions pursuant to Cash Orders. For the avoidance of doubt, the Trust shall have no interest (beneficial, equitable or otherwise) in the Cash Account or any cash held therein.

Redemption Procedures
The procedures by which an Authorized Participant can redeem one or more Baskets mirror the procedures for the creation of Baskets. On any business day, an Authorized Participant may place a redemption order specifying the number of Baskets to be redeemed.
The redemption of Shares pursuant to Cash Orders will only take place if approved by the Sponsor in writing, in its sole discretion and on a case-by-case basis. In exercising its discretion to approve the redemption of Shares pursuant to Cash Orders, the Sponsor expects to take into consideration a number of factors, including the availability of Liquidity Providers to facilitate Cash Orders and the cost of processing Cash Orders
Cash Orders for redemption must be placed no later than 1:59:59 p.m., New York time on each business day. The Authorized Participants may only redeem Baskets and cannot redeem any Shares in an amount less than a Basket.
Redemptions under Cash Orders will take place as follows, where “T” is the trade date and each day in the sequence must be a business day. Before a redemption order is placed, the Sponsor determines if such redemption order will be a Variable Fee Cash Order or an Actual Execution Cash Order, which determination is communicated to the Authorized Participant.
Trade date (T) | Settlement date (T+1 (or T+2 on case-by-case basis, as approved by Sponsor))
• The Authorized Participant places a redemption order with the Transfer Agent | • The Authorized Participant delivers Baskets to be redeemed from its DTC account to the Transfer Agent.
• The Marketing Agent accepts (or rejects) the redemption order, which is communicated to the Authorized Participant by the Transfer Agent. • The Sponsor notifies the Liquidity Provider of the redemption order. • The Sponsor determines the Total Basket NAV and, in the case of a Variable Fee Cash Order, any Variable Fee, as soon as practicable after 4:00 p.m., New York time. | • The Liquidity Provider delivers to the Cash Account: (x) in the case of a Variable Fee Cash Order, the Total Basket NAV less any Variable Fee; or (y) in the case of an Actual Execution Cash Order, the actual proceeds to the Trust from the liquidation of the Total Basket Amount (such amount, as applicable, the “Required Redemption Cash”). • Once the Trust is in simultaneous possession of (x) the Total Basket Amount and (y) the Required Redemption Cash, the Transfer Agent cancels the Shares comprising the number of Baskets redeemed by the Authorized Participant. • The Custodian sends the Liquidity Provider the Total Basket Amount, and cash equal to the Required Redemption Cash is delivered to the Authorized Participant from the Cash Account.

Suspension or Rejection of Orders and Total Basket Amount
The creation or redemption of Shares may be suspended generally, or refused with respect to particular requested creations or redemptions, during any period when the transfer books of the Transfer Agent are closed or if circumstances outside the control of the Sponsor or its delegates make it for all practicable purposes not feasible to process creation orders or redemption orders or for any other reason at any time or from time to time. ^{62} The Transfer Agent may reject an order or, after accepting an order, may cancel such order if: (i) such order is not presented in proper form as described in the Participant Agreement, (ii) the transfer of the Total Basket Amount comes from an account other than a Ether wallet address that is known to the Custodian as belonging to a Liquidity Provider or (iii) the fulfillment of the order, in the opinion of counsel, might be unlawful, among other reasons. None of the Sponsor or its delegates will be liable for the suspension, rejection or acceptance of any creation order or redemption order.
^{62} Extenuating circumstances outside of the control of the Sponsor and its delegates or that could cause the transfer books of the Transfer Agent to be closed are outlined in the Participant Agreement and include, for example, public service or utility problems, power outages resulting in telephone, telecopy and computer failures, acts of God such as fires, floods or extreme weather conditions, market conditions or activities causing trading halts, systems failures involving computer or other information systems, including any failures or outages of the Ethereum Network, affecting the Authorized Participant, the Sponsor, the Trust, the Transfer Agent, the Marketing Agent and the Custodian and similar extraordinary events.

Availability of Information
The Trust's website ( https://grayscale.com/crypto-products/grayscale-ethereum-mini-trust/ ) will include quantitative information on a per Share basis updated on a daily basis, including, (i) the current NAV per Share daily and the prior business day's NAV per Share and the reported closing price of the Shares; (ii) the mid-point of the bid-ask price ^{63} as of the time the NAV per Share is calculated (“Bid-Ask Price”) and a calculation of the premium or discount of such price against such NAV per Share; and (iii) data in chart format displaying the frequency distribution of discounts and premiums of the daily Bid-Ask Price against the NAV per Share, within appropriate ranges, for each of the four previous calendar quarters (or for as long as the Trust has been trading as an ETP if shorter). In addition, on each business day the Trust's website will provide pricing information for the Shares.
^{63} The bid-ask price of the Trust is determined using the highest bid and lowest offer on the Consolidated Tape as of the time of calculation of the closing day NAV.
One or more major market data vendors, will provide an intra-day indicative value (“IIV”) per Share updated every 15 seconds, as calculated by the Exchange or a third party financial data provider during the Exchange's Core Trading Session (9:30 a.m. to 4:00 p.m., E.T.). The IIV will be calculated using the same methodology as the NAV per Share of the Trust (as described above), specifically by using the prior day's closing NAV per Share as a base and updating that value during the NYSE Arca Core Trading Session to reflect changes in the value of the Index during the trading day.
The IIV disseminated during the NYSE Arca Core Trading Session should not be viewed as an actual real-time update of the NAV per Share, which will be calculated only once at the end of each trading day. The IIV will be widely disseminated on a per Share basis every 15 seconds during the NYSE Arca Core Trading Session by one or more major market data vendors. In addition, the IIV will be available through on-line information services.
The NAV for the Trust will be calculated by the Sponsor once a day and will be disseminated daily to all market participants at the same time. To the extent that the Sponsor has utilized the cascading set of rules described in “Index Price” above, the Trust's website will note the valuation methodology used and the price per Ether resulting from such calculation. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the Consolidated Tape Association (“CTA”).
Quotation and last sale information for Ether will be widely disseminated through a variety of major market data vendors, including Bloomberg and Reuters. In addition, real-time price (and volume) data for Ether is available by subscription from Reuters and Bloomberg. The spot price of Ether is available on a 24-hour basis from major market data vendors, including Bloomberg and Reuters. Information relating to trading, including price and volume information, in Ether will be available from major market data vendors and from the trading platforms on which Ether are traded. The normal trading hours for Digital Asset Trading Platforms are 24-hours per day, 365-days per year.
On each business day, the Sponsor will publish the Index Price, the Trust's NAV, and the NAV per Share on the Trust's website as soon as practicable after its determination. If the NAV and NAV per Share have been calculated using a price per Ether other than the Index Price for such Evaluation Time, the publication on the Trust's website will note the valuation methodology used and the price per Ether resulting from such calculation.
The Trust will provide website disclosure of its NAV daily. The website disclosure of the Trust's NAV will occur at the same time as the disclosure by the Sponsor of the NAV to Authorized Participants so that all market participants are provided such portfolio information at the same time. Therefore, the same portfolio information will be provided on the public website as well as in electronic files provided to Authorized Participants. Accordingly, each investor will have access to the current NAV of the Trust through the Trust's website, as well as from one or more major market data vendors.
The value of the Index, as well as additional information regarding the Index, will be available on a continuous basis at https://www.coindesk.com/indices.
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services.
Information regarding the previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers.

Trading Rules
The Exchange deems the Shares to be equity securities, thus rendering trading in the Shares subject to the Exchange's existing rules governing the trading of equity securities. Shares will trade on the NYSE Arca Marketplace from 4:00 a.m. to 8:00 p.m., E.T. in accordance with NYSE Arca Rule 7.34-E (Early, Core, and Late Trading Sessions). The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in NYSE Arca Rule 7.6-E, the minimum price variation (“MPV”) for quoting and entry of orders in equity securities traded on the NYSE Arca Marketplace is $0.01, with the exception of securities that are priced less than $1.00, for which the MPV for order entry is $0.0001.
The Shares will conform to the initial and continued listing criteria under NYSE Arca Rule 8.201-E. The trading of the Shares will be subject to NYSE Arca Rule 8.201-E(g), which sets forth certain restrictions on Equity Trading Permit Holders (“ETP Holders”) acting as registered Market Makers in Commodity-Based Trust Shares to facilitate surveillance. The Exchange represents that, for initial and continued listing, the Trust will be in compliance with Rule 10A-3 ^{64} under the Act, as provided by NYSE Arca Rule 5.3-E. A minimum of 100,000 Shares of the Trust will be outstanding at the commencement of trading on the Exchange.
^{64} 17 CFR 240.10A-3.

Trading Halts
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Trust. ^{65} Trading in Shares of the Trust will be halted if the circuit breaker parameters in NYSE Arca Rule 7.12-E have been reached. Trading also may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable.
^{65} See NYSE Arca Rule 7.12-E.
The Exchange may halt trading during the day in which an interruption to the dissemination of the IIV or the value of the Index occurs. If the interruption to the dissemination of the IIV or the value of the Index persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption. In addition, if the Exchange becomes aware that the NAV per Share is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV per Share is available to all market participants.

Surveillance
The Exchange represents that trading in the Shares of the Trust will be subject to the existing trading surveillances administered by the Exchange, as well as cross-market surveillances administered by FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws. ^{66} The Exchange represents that these procedures are adequate to properly monitor Exchange trading of the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange.
^{66} FINRA conducts cross-market surveillances on behalf of the Exchange pursuant to a regulatory services agreement. The Exchange is responsible for FINRA's performance under this regulatory services agreement.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets and other entities that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares and Ether derivatives from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and Ether derivatives from markets and other entities that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement (“CSSA”). ^{67} The Exchange is also able to obtain information regarding trading in the Shares and any underlying Ether, Ether futures contracts, options on Ether futures, or any other Ether derivatives in connection with ETP Holders' proprietary trades, or customer trades effected through ETP Holders on any relevant market. Under NYSE Arca Rule 8.201-E(g), an ETP Holder acting as a registered Market Maker in the Shares is required to provide the Exchange with information relating to its accounts for trading in any underlying commodity, related futures or options on futures, or any other related derivatives. Commentary .04 of NYSE Arca Rule 11.3-E requires an ETP Holder acting as a registered Market Maker, and its affiliates, in the Shares to establish, maintain and enforce written policies and procedures reasonably designed to prevent the misuse of any material nonpublic information with respect to such products, any components of the related products, any physical asset or commodity underlying the product, applicable currencies, underlying indexes, related futures or options on futures, and any related derivative instruments (including the Shares). As a general matter, the Exchange has regulatory jurisdiction over its ETP Holders and their associated persons, which include any person or entity controlling an ETP Holder. To the extent the Exchange may be found to lack jurisdiction over a subsidiary or affiliate of an ETP Holder that does business only in commodities or futures contracts and that subsidiary or affiliate is a member of another regulatory organization, the Exchange could obtain information regarding the activities of such subsidiary or affiliate through a surveillance sharing agreement with that regulatory organization.
^{67} For a list of the current members of ISG, see www.isgportal.org. The Exchange notes that not all components of the Trust may trade on markets that are members of ISG or with which the Exchange has in place a CSSA.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
All statements and representations made in this filing regarding (a) the description of the index, portfolio, or reference assets of the Trust, (b) limitations on index or portfolio holdings or reference assets, or (c) the applicability of Exchange listing rules specified in this rule filing shall constitute continued listing requirements for listing the Shares on the Exchange.
The Sponsor has represented to the Exchange that it will advise the Exchange of any failure by the Trust to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Trust is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under NYSE Arca Rule 5.5-E(m).

Information Bulletin
Prior to the commencement of trading, the Exchange will inform its ETP Holders in an “Information Bulletin” of the special characteristics and risks associated with trading the Shares. Specifically, the Information Bulletin will discuss the following: (1) the procedures for creations of Shares in Baskets; (2) NYSE Arca Rule 9.2-E(a), which imposes a duty of due diligence on its ETP Holders to learn the essential facts relating to every customer prior to trading the Shares; (3) information regarding how the value of the Index and NAV are disseminated; (4) the possibility that trading spreads and the resulting premium or discount on the Shares may widen during the Opening and Late Trading Sessions, when an updated IIV will not be calculated or publicly disseminated; (5) the requirement that members deliver a prospectus to investors purchasing newly issues Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. The Exchange notes that investors purchasing Shares directly from the Trust will receive a prospectus.
In addition, the Information Bulletin will reference that the Trust is subject to various fees and expenses as described in the Registration Statement. The Information Bulletin will disclose that information about the Shares of the Trust is publicly available on the Trust's website.
The Information Bulletin will also discuss any relief, if granted, by the Commission or the staff from any rules under the Act.

2. Statutory Basis
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5) ^{68} that an exchange have rules that are designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to, and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest.
^{68} 15 U.S.C. 78f(b)(5).
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Rule 8.201-E. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and applicable federal securities laws. The Exchange or FINRA, on behalf of the Exchange, or both, will communicate as needed regarding trading in the Shares with other markets that are members of the ISG, and the Exchange or FINRA, on behalf of the Exchange, or both, may obtain trading information regarding trading in the Shares from such markets. In addition, the Exchange may obtain information regarding trading in the Shares from markets that are members of ISG or with which the Exchange has in place a CSSA. Also, pursuant to NYSE Arca Rule 8.201-E(g), the Exchange is able to obtain information regarding trading in the Shares and the underlying Ether or any Ether derivative through ETP Holders acting as registered Market Makers, in connection with such ETP Holders' proprietary trades which they effect on any relevant market.
The proposed rule change is also designed to prevent fraudulent and manipulative acts and practices because, although the Digital Asset Trading Platform Market is not inherently resistant to fraud and manipulation, the Index serves as a means sufficient to mitigate the impact of instances of fraud and manipulation on a reference price for Ether. Specifically, the Index provides a better benchmark for the price of Ether than the Digital Asset Trading Platform Market price because it (1) tracks the Digital Asset Trading Platform Market price through trading activity at U.S.-Compliant Trading Platforms; (2) mitigates the impact of instances of fraud, manipulation and other anomalous trading activity in real-time through systematic adjustments; (3) is constructed and maintained by an expert third-party index provider, allowing for prudent handling of non-market-related events; and (4) mitigates the impact of instances of fraud, manipulation and other anomalous trading activity concentrated on any one specific trading platform through a cross-trading platform composite index rate. ETHE has used the Index to price the Shares for more than six years, and the Index has proven its ability to (i) mitigate the effects of fraud, manipulation and other anomalous trading activity from impacting the Ether reference rate, (ii) provide a real-time, volume-weighted fair value of Ether and (iii) appropriately handle and adjust for non-market related events, such that efforts to manipulate the price of Ether would have had a negligible effect on the pricing of the Trust, due to the controls embedded in the structure of the Index. In addition, certain of the Index's Constituent Trading Platforms also have or have begun to implement market surveillance infrastructure to further detect, prevent, and respond to fraud, attempted fraud, and similar wrongdoing, including market manipulation. The proposed rule change is also designed to prevent fraudulent and manipulative acts and practices based on the existence of the CME Ether futures market as a large, surveilled and regulated market that is closely connected with the spot market for Ether and through which the Exchange could obtain information to assist in detecting and deterring potential fraud or manipulation.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that there is a considerable amount of Ether price and market information available on public websites and through professional and subscription services. Investors may obtain, on a 24-hour basis, Ether pricing information based on the spot price for Ether from various financial information service providers. The closing price and settlement prices of Ether are readily available from the Digital Asset Trading Platforms and other publicly available websites. In addition, such prices are published in public sources, or on-line information services such as Bloomberg and Reuters. The NAV per Share will be calculated daily and made available to all market participants at the same time. The Trust will provide website disclosure of its NAV daily. One or more major market data vendors will disseminate for the Trust on a daily basis information with respect to the most recent NAV per Share and Shares outstanding. In addition, if the Exchange becomes aware that the NAV per Share is not disseminated to all market participants at the same time, it will halt trading in the Shares until such time as the NAV is available to all market participants. Quotation and last-sale information regarding the Shares will be disseminated through the facilities of the CTA. The IIV will be widely disseminated on a per Share basis every 15 seconds during the NYSE Arca Core Trading Session (normally 9:30 a.m., E.T., to 4:00 p.m., E.T.) by one or more major market data vendors. The Exchange represents that the Exchange may halt trading during the day in which an interruption to the dissemination of the IIV or the value of the Index occurs. If the interruption to the dissemination of the IIV or the value of the Index persists past the trading day in which it occurred, the Exchange will halt trading no later than the beginning of the trading day following the interruption.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace. As noted above, the Exchange has in place surveillance procedures relating to trading in the Shares and may obtain information via ISG from other exchanges that are members of ISG or with which the Exchange has entered into a CSSA. In addition, as noted above, investors will have ready access to information regarding the Trust's NAV, IIV, and quotation and last sale information for the Shares.

B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change will facilitate the listing and trading of an additional type of exchange-traded product, which will enhance competition among market participants, to the benefit of investors and the marketplace.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.

IV. Solicitation of Comments
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:

Electronic Comments
• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov. Please include file number SR-NYSEARCA-2024-44 on the subject line.

Paper Comments
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEARCA-2024-44. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-NYSEARCA-2024-44 and should be submitted on or before June 24, 2024.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ^{69}
^{69} 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100235; File No. SR-NYSEARCA-2024-39]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Fees for the NYSE Arca Aggregated Lite Data Feed
May 28, 2024.
Pursuant to Section 19(b)(1) ^1 of the Securities Exchange Act of 1934 (the “Act”) ^2 and Rule 19b-4 thereunder, ^3 notice is hereby given that, on May 13, 2024, NYSE Arca, Inc. (“NYSE Arca” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
^1 15 U.S.C. 78s(b)(1).
^2 15 U.S.C. 78a.
^3 17 CFR 240.19b-4.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to toestablish fees for the NYSE Arca Aggregated Lite data feed. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the NYSE Arca Equities Proprietary Market Data Fees Schedule (“Fee Schedule”) and establish fees for the NYSE Arca Aggregated Lite (“NYSE Arca Agg Lite”) data feed that would be effective May 13, 2024. ^4
^4 The proposed rule change establishing the NYSE Arca Agg Lite data feed was immediately effective on February 27, 2024. See Securities Exchange Act Release No. 99713 (March 12, 2024), 89 FR 19381 (March 18, 2024) (SR-NYSEARCA-2024-22) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE Arca Aggregated Lite Market Data Feed).
In summary, the NYSE Arca Agg Lite is a NYSE Arca-only frequency-based depth of book market data feed of the NYSE Arca's limit order book for up to ten (10) price levels on both the bid and offer sides of the order book for securities traded on the Exchange and for which the Exchange reports quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The NYSE Arca Agg Lite is a compilation of limit order data that the Exchange provides to vendors and subscribers. The NYSE Arca Agg Lite includes depth of book order data as well as security status messages. The security status message informs subscribers of changes in the status of a specific security, such as trading halts, short sale restriction, etc. In addition, the NYSE Arca Agg Lite includes order imbalance information prior to the opening and closing of trading.

Background
The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^5
^5 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final Rule) (“Regulation NMS”).
While Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^6 Indeed, cash equity trading is currently dispersed across 16 exchanges, ^7 numerous alternative trading systems, ^8 and broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share (whether including or excluding auction volume). ^9
^6 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^7 See Cboe U.S Equities Market Volume Summary, available at https://markets.cboe.com/us/equities/market_share. See generally https://www.sec.gov/fastanswers/divisionsmarketregmrexchangesshtml.html.
^8 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^9 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.

Proposed NYSE Arca Agg Lite Data Feed Fees
To reflect the value of NYSE Arca's market data, the Exchange proposes to establish the fees listed below for the NYSE Arca Agg Lite data feed, operative on May 13, 2024. The Exchange proposes to charge fees for the same categories of market data use as its affiliated exchanges (namely, NYSE, NYSE American and NYSE National) currently charge. The Exchange believes that adopting the same fee structure as its affiliated exchanges would reduce administrative burdens on market data subscribers that also currently subscribe to market data feeds from the Exchange's affiliates.
1. Access Fee. For the receipt of access to the NYSE Arca Agg Lite data feed, the Exchange proposes to charge $1,500 per month. This proposed Access Fee would be charged to any data recipient that receives the NYSE Arca Agg Lite data feed. Data recipients that only use display devices to view NYSE Arca Agg Lite market data and do not separately receive a data feed would not be charged an Access Fee. The proposed Access Fee would be charged only once per firm.
2. User Fees. The Exchange proposes to charge a Professional User Fee (Per User) of $30 per month and a Non-Professional User Fee (Per User) of $4 per month. These user fees would apply to each display device that has access to the NYSE Arca Agg Lite data feed.
3. Redistribution Fee. For redistribution of the NYSE Arca Agg Lite data feed, the Exchange proposes to establish a fee of $250 per month. The proposed Redistribution Fee would be charged to any Redistributor of the NYSE Arca Agg Lite data feed, which is defined to mean a vendor or any person that provides a real-time NYSE Arca market data product externally to a data recipient that is not its affiliate or wholly-owned subsidiary, or to any system that an external data recipient uses, irrespective of the means of transmission or access. The proposed Redistribution Fee would be charged only once per Redistributor account. As an incentive to potential Redistributors to subscribe to the NYSE Arca Agg Lite data feed, the Exchange proposes to waive the Access Fee and Redistribution Fee for a Redistributor if the Redistributor provides NYSE Arca Agg Lite externally to at least one data feed recipient and reports such data feed recipient or recipients to the Exchange. For example, a Redistributor that subscribes to the NYSE Arca Agg Lite data feed will have the Access Fee and Redistribution Fee waived if such Redistributor provides NYSE Arca Agg Lite externally to at least one data feed recipient and reports such data feed recipient to the Exchange.
By targeting this proposed fee waiver to Redistributors that provide external distribution of NYSE Arca Agg Lite, the Exchange believes that this would provide an incentive for Redistributors to make the NYSE Arca Agg Lite market data product available to its customers. Specifically, if a data recipient is interested in subscribing to NYSE Arca Agg Lite and relies on a Redistributor to obtain market data products from the Exchange, that data recipient would need its Redistributor to subscribe to and redistribute NYSE Arca Agg Lite. The Exchange believes that this proposed fee waiver for Redistributors of NYSE Arca Agg Lite would provide an incentive for Redistributors to make NYSE Arca Agg Lite available to their customers, which will increase the availability of the Exchange's market data products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be applicable to Redistributors that provide external distribution of NYSE Arca Agg Lite to Professional and Non-Professional Users. As proposed, such Redistributors would receive a credit equal to the amount of the monthly Professional User and Non-Professional User Fees for such external distribution, up to a maximum of the combination of the Access Fee and Redistribution Fee for NYSE Arca Agg Lite that the Redistributor would otherwise be required to pay to the Exchange. For example, a Redistributor that reports external Professional Users and Non-Professional Users in a month totaling $1,750 or more would receive a maximum credit of $1,750 for that month, which could effectively reduce its monthly fee for access and redistribution to zero. If that same Redistributor were to report external User quantities in a month totaling $600 of monthly usage, that Redistributor would receive a credit of $600. The Exchange believes the proposed credit would provide Redistributors with an incentive to increase their redistribution of NYSE Arca Agg Lite because the credit they would be eligible to receive would increase if they report additional external User quantities.

4. Enterprise Fees
The Exchange proposes to establish an enterprise license that will reduce Exchange fees and administrative costs for subscribers that disseminate NYSE Arca Agg Lite. Subscribers that are broker-dealers will be able to distribute the NYSE Arca Agg Lite data feed for display usage to an unlimited number of non-professional users for a monthly fee of $35,000, with an opportunity to lower that fee to $31,500 per month if they contract for twelve months of service in advance. Alternatively, subscribers that are broker-dealers will be able to distribute the NYSE Arca Agg Lite data feed for display usage to an unlimited number of recipients (professional users and non-professional users) for a monthly fee of $110,000, with an opportunity to lower that fee to $99,000 per month if they contract for twelve months of service in advance.
As proposed, the NYSE Arca Agg Lite data feed may be distributed pursuant to the proposed market data enterprise license only for display usage and in the context of a brokerage relationship with a broker-dealer through such broker-dealer's own devices. Purchase of an enterprise license would eliminate per User subscriber fees for NYSE Arca Agg Lite. Further, the Exchange proposes to waive the Access Fee and the Redistribution Fee for NYSE Arca Agg lite for Redistributors that pay either the Non-Professional Enterprise Fee or the Professional and Non-Professional Enterprise Fee. The Exchange believes the proposed fee waiver would provide an incentive for Redistributors to subscribe to the NYSE Arca Agg Lite market data product at the enterprise level to reduce the fees it would pay to the Exchange and without having to report the number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise license for at least twelve months may elect to purchase this product in advance for a monthly fee of $31,500 for distribution of NYSE Arca Agg Lite to an unlimited number of non-professional users, or $99,000 per month for distribution to an unlimited number of professional users and non-professional users. This feature is intended to simplify cost projections and budgeting for both subscribers and the Exchange. Subscribers that elect not to purchase this particular feature will nevertheless be able to obtain all of the market data information offered by NYSE Arca Agg Lite by paying the standard fee of $35,000 per month for distribution of NYSE Arca Agg Lite to an unlimited number of non-professional users, or $110,000 per month for distribution to an unlimited number of professional users and non-professional users. Subscribers that elect to pay the monthly fee will be able to switch to the annual fee at any time, and those that elect to purchase the annual contract would be able to change to the monthly contract, with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise license will reduce exchange fees, lower administrative costs for subscribers, and help expand the availability of market information to investors, and thereby increase participation in financial markets.

5. Non-Display Use Fees
The Exchange proposes to establish non-display fees for the NYSE Arca Agg Lite data feed that are based on the non-display use categories charged by NYSE, NYSE American, NYSE National, the CTA, and the UTP Plan for non-display use. ^{10} Non-display use would mean accessing, processing, or consuming the NYSE Arca Agg Lite data feed delivered directly or through a Redistributor, for a purpose other than in support of a data recipient's display or further internal or external redistribution (“Non-Display Use”). Non-Display Use would include trading uses such as high frequency or algorithmic trading as well as any trading in any asset class, automated order or quote generation and/or order pegging, price referencing for algorithmic trading or smart order routing, operations control programs, investment analysis, order verification, surveillance programs, risk management, compliance, and portfolio management.
^{10} See Endnote 1 to the NYSE Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE American LLC Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE National Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_National_Market_Data_Fee_Schedule.pdf; Endnote 8 to the Schedule of Market Data Charges for the CTA, available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf; and Non-Display Usage Fees as set forth in the UTP Plan Fee Schedule and Non-Display Policy, available here: http://utpplan.com/DOC/Datapolicies.pdf. See, e.g., Securities Exchange Act Release Nos. 69315 (April 5, 2013), 78 FR 21668 (April 11, 2013) (SR-NYSEArca-2013-37) and 73011 (September 5, 2014), 79 FR 54315 (September 11, 2014) (SR-NYSEARCA-2014-93).
Under the proposal, for Non-Display Use of NYSE Arca Agg Lite, there would be three categories of, and fees applicable, to, data recipients. One, two, or three categories of Non-Display Use may apply to a data recipient.
• As proposed, the Category 1 Fee would be $4,500 per month and would apply when a data recipient's Non-Display Use of the NYSE Arca Agg Lite data feed is on its own behalf, not on behalf of its clients.
• As proposed, Category 2 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Arca Agg Lite data feed on behalf of its clients.
• As proposed, Category 3 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Arca Agg Lite data feed for the purpose of internally matching buy and sell orders within an organization, including matching customer orders for a data recipient's own behalf and/or on behalf of its clients. This category would apply to Non-Display Use in trading platforms, such as, but not restricted to, alternative trading systems (“ATSs”), broker crossing networks, broker crossing systems not filed as ATSs, dark pools, multilateral trading facilities, exchanges and systematic internalization systems. A data recipient will be charged $4,500 per month for each platform on which it uses the Non-Display data internally to match buy and sell orders, up to a cap of $13,500 per month; even if the data recipient uses the NYSE Arca Agg Lite data feed for more than three platforms, it will not pay more than $13,500 for such Category 3 use per month.
The description of the three non-display use categories is set forth in the Fee Schedule in endnote 1 and that endnote would be referenced in the NYSE Arca Agg Lite data feed fees on the Fee Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE Arca Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. A firm subject to Category 3 Fees would be required to identify each platform that uses the NYSE Arca Agg Lite data feed for a Category 3 Non-Display Use basis, such as ATSs and broker crossing systems not registered as ATSs, as part of the Non-Display Use Declaration.
6. Non-Display Use Declaration Late Fee. Data recipients that receive the NYSE Arca Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. Beginning in 2025, NYSE Arca Agg Lite data feed recipients would be required to submit, by January 31 of each year, the Non-Display Use Declaration. The requirement to submit a Non-Display Use Declaration applies to all real-time NYSE Arca data feed product recipients. The Exchange proposes to charge a Non-Display Use Declaration Late Fee of $1,000 per month to any data recipient that pays an Access Fee for the NYSE Arca Agg Lite data feed that has failed to timely complete and submit a Non-Display Use Declaration. Specifically, with respect to the Non-Display Use Declaration due by January 31 of each year, the Non-Display Use Declaration Late Fee would apply to data recipients that fail to complete and submit the Non-Display Use Declaration by the January 31 due date, and would apply beginning February 1 and for each month thereafter until the data recipient has completed and submitted the annual Non-Display Use Declaration.
The proposed Non-Display Use Declaration Late Fee applicable to NYSE Arca Agg Lite data feed would be set forth in endnote 2 on the Fee Schedule. As proposed, endnote 2 would be amended with the proposed addition of the following new text: “The Non-Display Declaration Late Fee will apply, beginning in 2025, to NYSE Arca Aggregated Lite data recipients that fail to complete and submit the annual Non-Display Use Declaration by the January 31st due date, and applies beginning February 1st and for each month thereafter until the data recipient has completed and submitted the annual Non-Display Use Declaration.”
In addition, if a data recipient's use of the NYSE Arca Agg Lite data feed changes at any time after the data recipient submits a Non-Display Use Declaration, the data recipient must inform the Exchange of the change by completing and submitting at the time of the change an updated declaration reflecting the change of use.
7. Multiple Data Feed Fee. The Exchange proposes to establish a monthly fee, the “Multiple Data Feed Fee,” that would apply to data recipients that take a data feed for a market data product in more than two locations. Data recipients taking the NYSE Arca Agg Lite data feed in more than two locations would be charged $200 per additional location per month. No new reporting would be required. ^{11}
^{11} Data vendors currently report a unique Vendor Account Number for each location at which they provide a data feed to a data recipient. The Exchange considers each Vendor Account Number a location. For example, if a data recipient has five Vendor Account Numbers, representing five locations, for the receipt of the NYSE Arca Agg Lite data feed, that data recipient will pay the Multiple Data Feed fee with respect to three of the five locations.
8. Three-Month Fee Waiver. The Exchange currently provides a one-month free trial to any firm that subscribes to a particular NYSE Arca market data product for the first time. Under the current one-month trial, a first-time subscriber is not charged the Access Fee, Non-Display Fee, any applicable Professional and Non-Professional User Fee and Redistribution Fee for one calendar month. ^{12} The Exchange now proposes an additional three-month fee waiver for any Redistributor that subscribes to a particular NYSE Arca market data product for the first time for external redistribution. As proposed, a first-time Redistributor would be any firm that has not previously subscribed to and externally redistributed a particular NYSE Arca market data product listed on the Fee Schedule. As proposed, a first-time Redistributor that subscribes to a particular NYSE Arca market data product would not be charged the Access Fee and the Redistribution Fee for that product for three calendar months. Any other fees, including but not limited to, Non-Display Fee, any applicable Professional and Non-Professional User Fee, and Enterprise Fee would be billable after the first calendar month after a first-time Redistributor subscribes to a particular NYSE Arca market data product. For example, a first-time Redistributor that chooses to subscribe to NYSE Arca Agg Lite on June 24, 2024 would not be charged the Access Fee and the Redistribution Fee for the months of July, August, and September 2024. The proposed fee waiver would be for the three calendar months following the date a Redistributor is approved to receive access to the particular NYSE Arca market data product. The Exchange would provide the three-month fee waiver for each particular product to each Redistributor once.
^{12} See Fee Schedule.
The Exchange believes that providing a three-month fee waiver to NYSE Arca market data products listed on the Fee Schedule would enable potential Redistributors to determine whether a particular NYSE Arca market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed three-month fee waiver would also provide Redistributors with time to begin onboarding new clients prior to being liable to the Access Fee and the Redistribution Fee, allowing time to choose how to allocate costs and increase revenues to defray costs associated with providing a new feed to its customers.

Application of Proposed Fees
The Exchange is not required to make the NYSE Arca Agg Lite data feed available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase the NYSE Arca Agg Lite data feed. Firms that choose to purchase the NYSE Arca Agg Lite data feed do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange (including for order flow). Those firms are able to determine for themselves whether or not the NYSE Arca Agg Lite data feed or any other similar products are attractively priced.
The Exchange believes that subscribers would use the price level detail information available in the NYSE Arca Agg Lite data feed to make trading decisions that directly benefit the transaction services that the Exchange offers. The Exchange determined the level of the fees to charge for the NYSE Arca Agg Lite data feed based on the value of the Exchange's transaction services.
The Exchange believes the proposed rule change would provide an incentive both for data subscribers to subscribe to NYSE Arca Agg Lite and for Redistributors to subscribe to the product for purposes of providing external distribution of NYSE Arca Agg Lite. The Exchange believes that this proposed rule change also has the potential to attract new Redistributors for NYSE Arca Agg Lite.
The proposed fee structure is not novel as it is based on the fee structure currently in place for the NYSE ArcaBook feed. The Exchange is proposing fees for the NYSE Arca Agg Lite data feed that are based on the existing fee structure and rates that data recipients already pay for the NYSE ArcaBook feed. Specifically, the fees for the NYSE ArcaBook feed—which like the NYSE Arca Agg Lite data feed, includes depth of book, auction imbalances, and security status messages—consist of an Access Fee of $2,000 per month, a Professional User Fee (Per User) of $60 per month, a Non-Professional User Fee (Per User) that ranges between $3 per month to $10 per month, Non-Display Fees of $6,000 per month for each of Categories 1, 2 and 3, and a Redistribution Fee of $2,000 per month. The Exchange also charges a Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple Data Feed Fee of $200 per month for NYSE ArcaBook. ^{13}
^{13} See NYSE Arca Equities Proprietary Market Data Fees at https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf.

2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, ^{14} in general, and Sections 6(b)(4) and 6(b)(5) of the Act, ^{15} in particular, in that it provides an equitable allocation of reasonable fees among users and recipients of the data and is not designed to permit unfair discrimination among customers, issuers, and brokers.
^{14} 15 U.S.C. 78f(b).
^{15} 15 U.S.C. 78f(b)(4), (5).

The Proposed Rule Change Is Reasonable
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^{16}
^{16} See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC upheld the Commission's reliance on the existence of competitive market mechanisms to evaluate the reasonableness and fairness of fees for proprietary market data:
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.” ^{17}
^{17} NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) (“ NetCoalition I ”) (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ” ^{18}
^{18} Id. at 535.
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
the Commission considers whether the exchange was subject to significant competitive forces in setting the terms of its proposal for [market data], including the level of any fees. If an exchange meets this burden, the Commission will find that its fee rule is consistent with the Act unless there is a substantial countervailing basis to find that the terms of the rule violate the Act or the rules thereunder. ^{19}
^{19} See Securities Exchange Act Release No. 34-90217 (October 16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) (“National IF Approval Order”) (internal quotation marks omitted), quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December 9, 2008).
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in Ohio v. American Express, platforms are firms that act as intermediaries between two or more sets of agents, and typically the choices made on one side of the platform affect the results on the other side of the platform via externalities, or “indirect network effects.” ^{20} Externalities are linkages between the different sides of a platform such that one cannot understand pricing and competition for goods or services on one side of the platform in isolation; one must also account for the influence of the other sides. As the Supreme Court explained:
^{20} Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side. ^{21}
^{21} Id. at 2281.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41-E, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in NetCoalition I, “[n]o one disputes that competition for order flow is fierce.” ^{22} The court further noted that “no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers,” and that an exchange “must compete vigorously for order flow to maintain its share of trading volume.” ^{23}
^{22} NetCoalition I, 615 F.3d at 544 (internal quotation omitted).
^{23} Id.
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^{24} The Commission's Division of Trading and Markets has also recognized that with so many “operating equities exchanges and dozens of ATSs, there is vigorous price competition among the U.S. equity markets and, as a result, [transaction] fees are tailored and frequently modified to attract particular types of order flow, some of which is highly fluid and price sensitive.” ^{25} Indeed, today, equity trading is currently dispersed across 16 exchanges, ^{26} numerous alternative trading systems, ^{27} broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share. ^{28}
^{24} See Securities Exchange Act Release No. 61358, 75 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^{25} Commission Division of Trading and Markets, Memorandum to EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
^{26} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
^{27} See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^{28} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020; ^{29} Members Exchange (MEMX), which began operations as an exchange on September 29, 2020; ^{30} and Miami International Holdings (MIAX), which began operations of its first equities exchange on September 29, 2020. ^{31}
^{29} See LTSE Market Announcement: MA-2020-020, dated August 14, 2020, announcing LTSE production securities phase-in planned for August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf and LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
^{30} As of October 29, 2020, MEMX is trading all NMS symbols. See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
^{31} See MIAX Pearl Press release, dated September 29, 2020, available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others). ^{32}
^{32} MEMX Home Page (“Founded by members and investors, MEMX aims to drive simplicity, efficiency, and competition in equity markets.”), available at https://memx.com/.
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.” ^{33} Nor is this a new phenomenon: exchange customers formed BATS to compete with incumbent exchanges and once registered as an exchange in 2008, BATS did not initially charge for market data. The BATS venture was a financial success for its founders, first through recouping their investment in its initial public offering and then in the subsequent sale of BATS to Cboe, which now charges for market data from those exchanges. Notably, MEMX has some of the same founding broker-dealer customers, leading some to dub MEMX “BATS 2.0.” ^{34}
^{33} MEMX home page, available at https://memx.com/.
^{34} See “MEMX turns up the heat on US stock exchanges,” Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also “US equities exchanges: If you can't beat them, join them,” Euromoney, February 13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable. ^{35} And low barriers to entry act as a market check on high prices. ^{36}
^{35} United States v. SunGard Data Sys., 172 F. Supp. 2d 172, 186 (D.D.C. 2001) (recognizing that “[a]s a matter of law, courts have generally recognized that when a customer can replace the services of an external product with an internally-created system, this captive output ( i.e., the self-production of all or part of the relevant product) should be included in the same market.”). In SunGard, the court rejected the Antitrust Division's attempt to block SunGuard's acquisition of the disaster recovery assets of Comdisco on the basis that the acquisition would “substantially lessen competition in the market for shared hotsite disaster recovery services,” when the evidence showed that “internal hotsites” created by customers competed with the “external shared hotsite business” engaged in by the merging parties. Id. at 173-74, 187.
^{36} United States v. Baker Hughes, 908 F.2d 981, 987 (1990) (“In the absence of significant barriers [to entry], a company probably cannot maintain supracompetitive pricing for any length of time.”); see also David S. Evans and Richard Schmalensee, Markets with Two-Sided Platforms, in 1 Issues In Competition Law And Policy 667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange mergers in 2005 and 2006 were approved by competition authorities in part in reliance on planned and likely entry of other firms).
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
More specifically, in setting fees for the NYSE Arca Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
Subscribing to the NYSE Arca Agg Lite is entirely optional. The Exchange is not required to make the NYSE Arca Agg Lite available to any customers, nor is any customer required to purchase the NYSE Arca Agg Lite market data feed. Unlike some other data products ( e.g., the consolidated quotation and last-sale information feeds) that firms are required to purchase in order to fulfil regulatory obligations, ^{37} a customer's decision whether to purchase the NYSE Arca Agg Lite is entirely discretionary. Most firms that choose to subscribe to the NYSE Arca Agg Lite would do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange for order flow. Such firms are able to determine for themselves whether the NYSE Arca Agg Lite data feed is necessary for their business needs, and if so, whether or not it is attractively priced. If the NYSE Arca Agg Lite data feed does not provide sufficient value to firms based on the uses those firms may have for it, such firms may simply choose to conduct their business operations in ways that do not use the NYSE Arca Agg Lite data feed.
^{37} The Exchange notes that broker-dealers are not required to purchase proprietary market data to comply with their best execution obligations. See In the Matter of the Application of Securities Industry and Financial Markets Association for Review of Actions Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement in Regulation NMS or any other rule that proprietary data be utilized for order routing decisions, and some broker-dealers and ATSs have chosen not to do so.
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make NYSE Arca Agg Lite available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE Arca Agg Lite can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for the NYSE Arca Agg Lite data feed, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition.
Even putting aside the facts that exchanges are platforms and that pricing decisions on the two sides of the platform are intertwined, the Exchange is constrained in setting the proposed market data fees by the availability of numerous substitute market data products. The Commission has been clear that substitute products need not be identical, but only substantially similar to the product at hand. ^{38}
^{38} For example, in the National IF Approval Order, the Commission recognized that for some customers, the best bid and offer information from consolidated data feeds may function as a substitute for the NYSE National Integrated Feed product, which contains order by order information. See National IF Approval Order, supra note 19, at 67397 [release p. 21] (“[I]nformation provided by NYSE National demonstrates that a number of executing broker-dealers do not subscribe to the NYSE National Integrated Feed and executing broker-dealers can otherwise obtain NYSE National best bid and offer information from the consolidated data feeds.” (internal quotations omitted)).
The NYSE Arca Aggregated Lite market data feed is subject to significant competitive forces that constrain its pricing. Specifically, the NYSE Arca Agg Lite data feed competes head-to-head with similar market data products currently offered by the four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), each of which offers a market data product called BZX Summary Depth, BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth, respectively (collectively, the “Cboe Summary Depth”). ^{39} Similar to Cboe Summary Depth, NYSE Arca Agg Lite can be utilized by vendors and subscribers to quickly access and distribute aggregated order book data. As noted above, NYSE Arca Agg Lite, similar to Cboe Summary Depth, would provide aggregated depth per security, including the bid, ask and share quantity for orders received by NYSE Arca, except unlike Cboe Summary Depth, which provides aggregated depth per security for up to five price levels, NYSE Arca Agg Lite would provide aggregated depth per security for up to ten price levels on both the bid and offer sides of the NYSE Arca limit order book as well as auction imbalance data.
^{39} See BZX Rule 11.22(m) BZX Summary Depth; BYX Rule 11.22(k) BYX Summary Depth; EDGA Rule 13.8(f) EDGA Summary Depth; and EDGX Rule 13.8(f) EDGX Summary Depth. The Cboe Summary Depth offered by BZX, BYX, EDGA and EDGX are each a data feed that offers aggregated two-sided quotations for all displayed orders for up to five (5) price levels and contains the individual last sale information, market status, trading status and trade break messages.
The specific fees that the Exchange proposes for the NYSE Arca Agg Lite data feed are reasonable for the following additional reasons.
Overall. The Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are reasonable because they represent the value of the data available but also the value of receiving the data on an aggregated basis. The Exchange believes that providing vendors and subscribers with the option to subscribe to a market data product that integrates a subset of data from existing products and where such aggregated data is published at a pre-defined interval, thus lowering bandwidth, infrastructure and operational requirements, would allow vendors and subscribers to choose the best solution for their specific business needs.
The Exchange believes the proposed fees for the NYSE Arca Agg Lite data feed are also reasonable when compared to fees for comparable products, such as the Cboe Summary Depth. ^{40} Additionally, the Exchange is proposing fees for the NYSE Arca Agg Lite data feed that are based on the existing fee structure that data recipients already pay for the NYSE Arca's other market data products. The Exchange believes that adopting the same fee structure would reduce administrative burdens on NYSE Arca data subscribers that also currently subscribe to market data feeds from NYSE Arca.
^{40} See https://cdn.cboe.com/resources/membership/US_Market_Data_Product_Price_List.pdf.
Access Fee. The Exchange believes that is reasonable to charge access fees because of the value of the data to data recipients in their profit-generating activities. The Exchange believes that the proposed monthly Access Fee of $1,500 for the NYSE Arca Aggregated Lite data feed is reasonable because it is lower than the fees charged by BZX, BYX, EDGA, and EDGX, each of which charges between $2,500 per month to $5,000 per month for both Internal Distribution and External Distribution of the Cboe Summary Depth market data product. ^{41}
^{41} Id.
User Fees. The Exchange believes that having separate Professional and Non-Professional User fees for the NYSE Arca Agg Lite data feed is reasonable because it will make the product more affordable and result in greater availability to Professional and Non-Professional Users. Setting a modest Non-Professional User fee is reasonable because it provides an additional method for Non-Professional Users to access the NYSE Arca Agg Lite data feed by providing the same data that is available to Professional Users. The proposed monthly Professional User Fee (Per User) of $30 and monthly Non-Professional User Fee (Per User) of $4 are reasonable because they are comparable to user fees generally charged by exchanges. For example, NYSE Arca charges a monthly Professional User Fee (Per User) of $60 and a monthly Non-Professional User Fee (Per User) of up to $10 for the NYSE ArcaBook feed. ^{42} Although the proposed User Fees for Professional and Non-Professional Users are higher than those charged by BZX, BYX, EDGA and EDGX, the Exchange notes that User fees are only a subset of the total fees that vendors and subscribers pay and the lower fees proposed to access and redistribute NYSE Arca Agg Lite would provide such market data recipients with a more affordable alternative to existing substitutes offered by the Exchange and its competitors.
^{42} See Fee Schedule.
Redistribution Fees. The Exchange believes that it is reasonable to charge redistribution fees because vendors receive value from redistributing the data in their business products for their customers. The Exchange believes that charging a Redistribution Fee is reasonable because the vendors that would be charged such a fee profit by re-transmitting the Exchange's market data to their customers. This fee would be charged only once per month to each vendor account that redistributes the NYSE Arca Agg Lite data feed, regardless of the number of customers to which that vendor redistributes the data. The Exchange believes the proposed monthly Redistribution Fee of $250 for the NYSE Arca Agg Lite data feed is reasonable because it is nominal and lower than the fees charged by BZX, BYX, EDGA and EDGX, each of which charges considerably more for both Internal Distribution and External Distribution of the Cboe Summary Depth market data feed. ^{43}
^{43} See supra, note 40.
Enterprise Fees. The Exchange believes the proposed enterprise license is reasonable because it would reduce exchange fees, lower administrative costs for subscribers that are broker-dealers and help expand the availability of market information to investors, and thereby increase participation in financial markets. Subscribers that are broker-dealers would be able to disseminate the NYSE Arca Agg Lite data feed for display usage to an unlimited number of non-professional users for a monthly fee of $35,000, or $31,500 if they contract for twelve months of service in advance. Alternatively, subscribers that are broker-dealers would be able to disseminate the NYSE Arca Agg Lite data feed for display usage to an unlimited number of professional users and non-professional users for a monthly fee of $110,000, or $99,000 if they contract for twelve months of service in advance. The proposed enterprise license would result in lower fees for subscribers able to reach the largest audience of investors, including retail investors. Discounts for broader dissemination of market data information have routinely been adopted by exchanges and permitted by the Commission as equitable allocations of reasonable dues, fees and charges. ^{44}
^{44} For example, the Commission has permitted pricing discounts for market data under Nasdaq Rules 7023(c) and 7047(b). See also Securities Exchange Act Release No. 82182 (November 30, 2017), 82 FR 57627 (December 6, 2017) (SR-NYSE-2017-60) (changing an enterprise fee for NYSE BBO and NYSE Trades).
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are reasonable, because they reflect the value of the data to the data recipients in their profit-generating activities and do not impose the burden of counting non-display devices.
The Exchange believes that the proposed Non-Display Use fees reflect the significant value of the non-display data use to data recipients, which purchase such data on an entirely voluntary basis. Non-display data can be used by data recipients for a wide variety of profit-generating purposes, including proprietary and agency trading and smart order routing, as well as by data recipients that operate order matching and execution platforms that compete directly with the Exchange for order flow. The data also can be used for a variety of non-trading purposes that indirectly support trading, such as risk management and compliance. Although some of these non-trading uses do not directly generate revenues, they can nonetheless substantially reduce a recipient's costs by automating such functions so that they can be carried out in a more efficient and accurate manner and reduce errors and labor costs, thereby benefiting recipients. The Exchange believes that charging for non-trading uses is reasonable because data recipients can derive substantial value from such uses, for example, by automating tasks so that can be performed more quickly and accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many exchanges required customers to count, and the exchanges to audit the count of, the number of non-display devices used by a customer. As non-display use grew more prevalent and varied, however, exchanges received an increasing number of complaints about the impracticality and administrative burden associated with that approach. In response, the Exchange and its affiliated exchanges developed a non-display use pricing structure that does not require non-display devices to be counted or those counts to be audited, and instead looks merely at the three following categories of potential use of non-display data: use of the data on the customer's own behalf (Category 1), use on behalf of clients (Category 2), and use to internally match buy and sell orders within an organization (Category 3).
The Exchange believes that it is reasonable to segment the fee for non-display use into these three categories. As noted above, the uses to which customers can put the NYSE Arca Agg Lite data feed are numerous and varied, and the Exchange believes that charging separate fees for these separate categories of use is reasonable because it reflects the actual value the customer derives from the data, based upon how many categories of use the customer makes of the data. Segmenting the fees for non-display data in this way avoids the unreasonable result of customers that make only limited non-display use of the data paying the same fees as customers that use the data for numerous different revenue-generating and cost-saving purposes.
The Exchange believes that the proposed fees of $4,500 per month for each of Categories 1, 2, and 3 is reasonable. These fees are comparable to non-display use fees generally charged by exchanges. For example, the fees for Non-Display Use of NYSE ArcaBook for Categories 1, 2 and 3 is $6,000 per month. ^{45} The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using non-display data in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments.
^{45} See Fee Schedule.
The Exchange also believes that, regarding Category 3 fees, it is reasonable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is reasonable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Arca Agg Lite data feed for use by their trading platforms.
The proposed Non-Display Use fees for the NYSE Arca Agg Lite data feed are also reasonable because they take into account the extra value of receiving the data for Non-Display Use on an integrated basis. The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using the NYSE Arca Agg Lite data feed on a non-display basis in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments. ^{46}
^{46} See also Exchange Act Release No. 69157, March 18, 2013, 78 FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (“[D]ata feeds have become more valuable, as recipients now use them to perform a far larger array of non-display functions. Some firms even base their business models on the incorporation of data feeds into black boxes and application programming interfaces that apply trading algorithms to the data, but that do not require widespread data access by the firm's employees. As a result, these firms pay little for data usage beyond access fees, yet their data access and usage is critical to their businesses.”).
Non-Display Use Declaration Late Fee. The Exchange believes that it is reasonable to require annual submissions of the Non-Display Use Declaration so that the Exchange will have current and accurate information about the use of the NYSE Arca Agg Lite data feed and can correctly assess fees for the uses of the NYSE Arca Agg Lite data feed. Requiring annual submissions of such declarations is reasonable because it also allows users to re-assess their own usage each year.
The Exchange believes that it is reasonable to impose a late fee in connection with the submission of the Non-Display Use Declaration. In order to correctly assess fees for the non-display use of the NYSE Arca Agg Lite data feed, the Exchange needs to have current and accurate information about the use of the NYSE Arca Agg Lite data feed. The failure of data recipients to submit the Non-Display Use Declaration on time leads to potentially incorrect billing and administrative burdens, including tracking and obtaining late Non-Display Use Declarations and correcting and following up on payments owed in connection with late Non-Display Use Declarations. The purpose of the late fee is to incent data recipients to submit the Non-Display Use Declaration promptly to avoid the administrative burdens associated with the late submission of Non-Display Use Declarations.
Multiple Data Feed Fee. The Exchange believes that it is reasonable to require data recipients to pay a modest additional fee for taking a data feed for a market data product in more than two locations, because such data recipients can derive substantial value from being able to consume the product in as many locations as they want. In addition, there are administrative burdens associated with tracking each location at which a data recipient receives the product. The Multiple Data Feed Fee is designed to encourage data recipients to better manage their requests for additional data feeds and to monitor their usage of data feeds. The proposed fee is designed to apply to data feeds received in more than two locations so that each data recipient can have one primary and one backup data location before having to pay a multiple data feed fee.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE Arca Agg Lite data feed to new Redistributors for three calendar months is reasonable because it would enable potential Redistributors to determine whether a particular NYSE Arca market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed fee waiver would also allow Redistributors to become familiar with the feed and determine whether it suits their needs without incurring fees. Making a new market data product available without charging a fee for three months is consistent with offerings of other exchanges. For example, BZX offers subscribers of BZX Summary Depth a three-month credit for external distribution, which is akin to the three-month fee waiver proposed by the Exchange. ^{47}
^{47} See e.g., Securities Exchange Act Release No. 94432 (March 16, 2022), 87 FR 16277 (March 22, 2022) (SR-CboeBZX-2022-015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Applicable to Various Market Data Products).
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are reasonable.

The Proposed Fees Are Equitably Allocated
The Exchange believes the proposed fees for the NYSE Arca Agg Lite data feed are allocated fairly and equitably among the various categories of users of the feed, and any differences among categories of users are justified.
Overall. The Exchange believes that the proposed fees are equitably allocated because they will apply to all data recipients that choose to subscribe to the NYSE Arca Agg Lite data feed. Any subscriber or vendor that chooses to subscribe to the NYSE Arca Agg Lite data feed is subject to the same Fee Schedule, regardless of what type of business they operate or the use they plan to make of the data feed. Subscribers and vendors are not required to purchase the NYSE Arca Agg Lite data feed and may choose to receive the data on the NYSE Arca Agg Lite data feed regardless of what type of business they operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee of $1,500 for the NYSE Arca Agg Lite data feed is equitably allocated because it would be charged on an equal basis to all data recipients that receive a data feed of the NYSE Arca Agg Lite data feed, regardless of what type of business they operate or the use they plan to make of the data feed.
User Fees. The Exchange believes that the fee structure differentiating Professional User fees ($30 per month per user) from Non-Professional User fees ($4 per month per user) for display device access to the NYSE Arca Agg Lite data feed is equitable. This structure has long been used by the Exchange to reduce the price of data to Non-Professional Users and make it more broadly available. ^{48} Offering the NYSE Arca Agg Lite data feed to Non-Professional Users with the same data as is available to Professional Users results in greater equity among data recipients. These user fees would be charged uniformly to all display devices that have access to the NYSE Arca Agg Lite data feed.
^{48} See, e.g., Securities Exchange Act Release No. 72560 (July 8, 2014), 79 FR 40801 (July 14, 2014) (SR-NYSEARCA-2014-72) (establishing tiered Non-Professional User Fees (Per User) for NYSE ArcaBook); Securities Exchange Act Release No. 20002, File No. S7-433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-Professional fees for CTA data); NASDAQ BX Equity 7 Pricing Schedule, Section 123.
Redistribution Fees. The Exchange believes the proposed monthly fee of $250 for redistributing the NYSE Arca Agg Lite data feed is equitably allocated because it would be charged on an equal basis to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise license is equitably allocated because it would be available on an equal basis to all subscribers that are broker-dealers, each of whom would benefit from reduced exchange fees and from lower administrative costs. Moreover, the specific feature of the proposed enterprise license that will allow subscribers to lower fees by subscribing to a twelve-month contract is also an equitable allocation because all subscribers will have the same option of choosing between the stability of a fixed, lower rate, and the more flexible option of maintaining the ability to change market data products after a month of service. Subscribers will be free to move from the monthly to the annual rate at any time, or from annual to a monthly fee, with notice, at the expiration of the twelve-month period.
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are equitably allocated because they would require subscribers to pay fees only for the uses they actually make of the data. As noted above, non-display data can be used by data recipients for a wide variety of profit-generating purposes (including trading, risk management, and compliance) as well as purposes that do not directly generate revenues but nonetheless substantially reduce the recipient's costs by automating certain functions. The Exchange believes that it is equitable to charge non-display data subscribers a $4,500 fee for each category of use they make of such data—namely, using the data on their own behalf (Category 1), on behalf of their clients (Category 2), and to internally match buy and sell orders within an organization (Category 3)—because this fee structure results in subscribers with greater uses of the data paying higher fees, and subscribers with fewer uses of the data paying lower fees. This segmented fee structure is also equitable because no subscriber of non-display data would be charged a fee for a category of use in which it did not actually engage.
The Exchange also believes that, regarding Category 3 fees, it is equitable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is equitable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Arca Agg Lite data feed for use by their trading platforms.
Non-Display Use Declaration Late Fee. The Exchange believes that the proposed fee of $1,000 per month for a late Non-Display Use Declaration is equitably allocated because it applies to any data recipient that pays an Access Fee for the NYSE Arca Agg Lite data feed but has failed to complete and submit a Non-Display Use Declaration. In addition, the Exchange believes that it is equitable to charge a late fee to subscribers who fail to timely submit their Non-Display Use Declarations because their failure to do so leads to potentially incorrect billing and administrative burdens on the part of the Exchange. The Exchange believes it is equitable to defray these administrative costs by imposing a late fee only on subscribers' whose declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per month per location fee to data recipients taking the NYSE Arca Agg Lite data feed in more than two locations is equitable because it would apply to all such customers, regardless of what type of business they operate or the use they make of the data feed. In addition, the Exchange believes that it is equitable to charge a fee to subscribers for taking a data feed in more than two locations because there are administrative burdens on the part of the Exchange associated with tracking each location at which a data recipient receives the product. The Exchange believes that it is equitable for it to defray these administrative costs by imposing a modest fee only on subscribers who seek to take the feed in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE Arca Agg Lite data feed to new Redistributors for three calendar months is equitable because it would apply to any first-time Redistributor, regardless of the use they plan to make of the feed. As proposed, any first-time Redistributor of the NYSE Arca Agg Lite data feed would not be charged the Access Fee and the Redistribution Fee for three calendar months. The Exchange believes it is equitable to restrict the availability of this three-month fee waiver to Redistributors that have not previously subscribed to and redistributed the NYSE Arca Agg Lite data feed, since customers who are current or previous subscribers of the feed are already familiar with it and are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are equitably allocated.

The Proposed Fees Are Not Unfairly Discriminatory
The Exchange believes the proposed fees for the NYSE Arca Agg Lite data feed are not unfairly discriminatory because any differences in the application of the fees are based on meaningful distinctions between customers, and those meaningful distinctions are not unfairly discriminatory between customers.
Overall. The Exchange believes that the proposed fees are not unfairly discriminatory because they would apply to all data recipients that choose to subscribe to the NYSE Arca Agg Lite data feed. Any subscriber, including Redistributor, that chooses to subscribe to the NYSE Arca Agg Lite data feed is subject to the same Fee Schedule, regardless of what type of business they operate or the use they plan to make of the data feed. Subscribers, including Redistributors, may choose to receive the data on the NYSE Arca Agg Lite data feed regardless of what type of business they operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee of $1,500 for the NYSE Arca Agg Lite data feed is not unfairly discriminatory because it would be charged on an equal basis to all data recipients that receive a data feed of the NYSE Arca Agg Lite, regardless of what type of business they operate or the use they plan to make of the data feed.
User Fees. The Exchange believes that the fee structure differentiating Professional User fees ($30 per month per user) from Non-Professional User fees ($4 per month per user) for display device access to the NYSE Arca Agg Lite data feed is not unfairly discriminatory. This structure has long been used by the Exchange to reduce the price of data to Non-Professional Users and make it more broadly available. ^{49} Offering the NYSE Arca Agg Lite data feed to Non-Professional Users with the same data as is available to Professional Users results in greater equity among data recipients. These user fees would be charged uniformly to all display devices that have access to the NYSE Arca Agg Lite data feed.
^{49} Id.
Redistribution Fees. The Exchange believes the proposed monthly fee of $250 for redistributing the NYSE Arca Agg Lite data feed is not unfairly discriminatory because it would be charged on an equal basis to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise license will not unfairly discriminate between customers, issuers, brokers or dealers. The Act does not prohibit all distinctions among customers, but only discrimination that is unfair, and it is not unfair discrimination to charge those subscribers that are able to reach the largest audiences of investors, including retail investors, a lower fee for incremental investors in order to encourage the widespread distribution of market data. This principle has been repeatedly endorsed by the Commission, as evidenced by the approval of enterprise licenses for other market data products. ^{50} Moreover, the proposed enterprise license will be subject to significant competition, and that competition will ensure that there is no unfair discrimination. Each subscriber will be able to accept or reject the license depending on whether it will or will not lower costs for that particular subscriber, and, if the license is not sufficiently competitive, the Exchange may lose market share. The proposed enterprise license will compete with other enterprise licenses of the Exchange, underlying fee schedules promulgated by the Exchange, and enterprise licenses and fee structures implemented by other exchanges. As such, it is a voluntary product for which market participants can readily find substitutes. Accordingly, the Exchange is constrained from introducing a fee that would be inequitable or unfairly discriminatory.
^{50} See e.g., Securities Exchange Act Release No. 83751 (July 31, 2018), 83 FR 38428 (August 6, 2018) (SR-NASDAQ-2018-058) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Lower Fees and Administrative Costs for Distributors of Nasdaq Basic, Nasdaq Last Sale, NLS Plus and the Nasdaq Depth-of-Book Products Through a Consolidated Enterprise License).
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are not unfairly discriminatory because they would require subscribers for non-display use to pay fees only for the categories of use they actually make of the data. As noted above, non-display data can be used by data recipients for a wide variety of profit-generating purposes (including trading, risk management, and compliance) as well as purposes that do not directly generate revenues but nonetheless substantially reduce the recipient's costs by automating certain functions. The Exchange believes that it is not unfairly discriminatory to charge non-display data subscribers a $4,500 per month fee for each category of use they make of such data—namely, using the data on their own behalf (Category 1), on behalf of their clients (Category 2), and to internally match buy and sell orders within an organization (Category 3)—because this fee structure results in subscribers with greater uses for the data paying higher fees, while subscribers with fewer uses of the data pay lower fees. This segmented fee structure is not unfairly discriminatory because no subscriber of non-display data would be charged a fee for a category of use in which it did not actually engage.
The Exchange also believes that, regarding Category 3 fees, it is not unreasonably discriminatory to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is not unreasonably discriminatory to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Arca Agg Lite data feed for use by their trading platforms.
Non-Display Use Declaration Late Fee. The Exchange believes that the proposed fee of $1,000 per month for a late Non-Display Use Declaration is not unfairly discriminatory because it applies to any data recipient that pays an Access Fee for the NYSE Arca Agg Lite data feed but has failed to complete and submit a Non-Display Use Declaration. In addition, the Exchange believes that it is not unfairly discriminatory to charge a late fee to subscribers who fail to timely submit their Non-Display Use Declarations because their failure to do so leads to potentially incorrect billing and administrative burdens on the part of the Exchange. Nor is it unfairly discriminatory for the Exchange to defray these administrative costs by imposing a late fee only on subscribers' whose declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per month per location fee to data recipients taking the NYSE Arca Agg Lite data feed in more than two locations is not unfairly discriminatory because it would apply to all such customers, regardless of what type of business they operate or the use they make of the data feed. In addition, the Exchange believes that it is not unfairly discriminatory to charge a fee to subscribers for taking a data feed in more than two locations because there are administrative burdens on the part of the Exchange associated with tracking each location at which a data recipient receives the product. The Exchange believes that it is not unfairly discriminatory for it to defray these administrative costs by imposing a modest fee only on subscribers who seek to take the feed in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE Arca Agg Lite data feed to new Redistributors for three months is not unfairly discriminatory because it would apply to any first-time Redistributor, regardless of the use they plan to make of the feed. As proposed, any first-time Redistributor of the NYSE Arca Agg Lite data feed would not be charged the Access Fee and the Redistribution Fee for three calendar months. The Exchange believes it is not unfairly discriminatory to restrict the availability of this three-month fee waiver to Redistributors that have not previously subscribed to the NYSE Arca Agg Lite data feed, since Redistributors who are current or previous subscribers of the feed are already familiar with it and are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Arca Agg Lite data feed are not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fees will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Intramarket Competition. The Exchange believes that the proposed fees do not put any market participants at a relative disadvantage compared to other market participants. As noted above, the proposed fee schedule would apply to all subscribers, including Redistributors, of the NYSE Arca Agg Lite data feed, and customers may not only choose whether to subscribe to the feed at all, but may tailor their subscriptions by choosing particular uses of the feed but not others ( e.g., Category 1 only versus all three categories; display device access only versus non-display use).
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition. As shown above, to the extent that particular proposed fees apply to only a subset of subscribers ( e.g., Category 2 fees apply only to those making non-display use on behalf of clients; late fees apply only to customers who fail to timely submit their declarations), those distinctions are not unfairly discriminatory and do not unfairly burden one set of customers over another. To the contrary, by tailoring the proposed fees in this manner, the Exchange believes that it has eliminated the potential burden on competition that might result from unfairly asking subscribers to pay fees for services they did not use, or late fees they did not actually incur.
Intermarket Competition. The Exchange believes that the proposed fees do not impose a burden on competition or on other SROs that is not necessary or appropriate. As noted above, exchanges are platforms for market data and trading. In setting the proposed fees, the Exchange was constrained by the availability of numerous substitute platforms also offering market data products and trading, and low barriers to entry mean new exchange platforms are frequently introduced. The fact that exchanges are platforms ensures that no exchange can make pricing decisions for one side of its platform without considering, and being constrained by, the effects that price will have on the other side of the platform. In setting fees for the NYSE Arca Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers will have its pick of an increasing number of alternative platforms to use instead of the Exchange. Given this intense competition between platforms, no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Many other exchanges offer proprietary data feeds like the NYSE Arca Agg Lite data feed, supplying depth of book order data, security status updates, stock summary messages, and the exchange's best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another platform, in which case the platform would stand to lose both market data and trading fees. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) ^{51} of the Act and subparagraph (f)(2) of Rule 19b-4 ^{52} thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
^{51} 15 U.S.C. 78s(b)(3)(A).
^{52} 17 CFR 240.19b-4(f)(2).
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) ^{53} of the Act to determine whether the proposed rule change should be approved or disapproved.
^{53} 15 U.S.C. 78s(b)(2)(B).

IV. Solicitation of Comments
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:

Electronic Comments
• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov. Please include file number SR-NYSEARCA-2024-39 on the subject line.

Paper Comments
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEARCA-2024-39. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-NYSEARCA-2024-39 and should be submitted on or before June 24, 2024.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ^{54}
^{54} 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100225; File No. SR-NYSE-2024-29]
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Fees for the NYSE Aggregated Lite Data Feed
May 28, 2024.
Pursuant to Section 19(b)(1) ^1 of the Securities Exchange Act of 1934 (the “Act”) ^2 and Rule 19b-4 thereunder, ^3 notice is hereby given that, on May 13, 2024, New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
^1 15 U.S.C. 78s(b)(1).
^2 15 U.S.C. 78a.
^3 17 CFR 240.19b-4.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to establish fees for the NYSE Aggregated Lite data feed. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the NYSE Proprietary Market Data Fees Schedule (“Fee Schedule”) and establish fees for the NYSE Aggregated Lite (“NYSE Agg Lite”) data feed that would be effective May 13, 2024. ^4
^4 The proposed rule change establishing the NYSE Agg Lite data feed was immediately effective on February 27, 2024. See Securities Exchange Act Release No. 99689 (March 7, 2024), 89 FR 18466 (March 13, 2024) (SR-NYSE-2024-12) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE Aggregated Lite Market Data Feed).
In summary, the NYSE Agg Lite is a NYSE-only frequency-based depth of book market data feed of the NYSE's limit order book for up to ten (10) price levels on both the bid and offer sides of the order book for securities traded on the Exchange and for which the Exchange reports quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The NYSE Agg Lite is a compilation of limit order data that the Exchange provides to vendors and subscribers. The NYSE Agg Lite includes depth of book order data as well as security status messages. The security status message informs subscribers of changes in the status of a specific security, such as trading halts, short sale restriction, etc. In addition, the NYSE Agg Lite includes order imbalance information prior to the opening and closing of trading.

Background
The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^5
^5 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final Rule) (“Regulation NMS”).
While Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^6 Indeed, cash equity trading is currently dispersed across 16 exchanges, ^7 numerous alternative trading systems, ^8 and broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share (whether including or excluding auction volume). ^9
^6 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^7 See Cboe U.S Equities Market Volume Summary, available at https://markets.cboe.com/us/equities/market_share. See generally https://www.sec.gov/fastanswers/divisionsmarketregmrexchangesshtml.html.
^8 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^9 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.

Proposed NYSE Agg Lite Data Feed Fees
To reflect the value of NYSE's market data, the Exchange proposes to establish the fees listed below for the NYSE Agg Lite data feed, operative on May 13, 2024. The Exchange proposes to charge fees for the same categories of market data use as its affiliated exchanges (namely, NYSE Arca, NYSE American and NYSE National) currently charge. The Exchange believes that adopting the same fee structure as its affiliated exchanges would reduce administrative burdens on market data subscribers that also currently subscribe to market data feeds from the Exchange's affiliates.
1. Access Fee. For the receipt of access to the NYSE Agg Lite data feed, the Exchange proposes to charge $3,000 per month. This proposed Access Fee would be charged to any data recipient that receives the NYSE Agg Lite data feed. Data recipients that only use display devices to view NYSE Agg Lite market data and do not separately receive a data feed would not be charged an Access Fee. The proposed Access Fee would be charged only once per firm.
2. User Fees. The Exchange proposes to charge a Professional User Fee (Per User) of $35 per month and a Non-Professional User Fee (Per User) of $6 per month. These user fees would apply to each display device that has access to the NYSE Agg Lite data feed.
3. Redistribution Fee. For redistribution of the NYSE Agg Lite data feed, the Exchange proposes to establish a fee of $250 per month. The proposed Redistribution Fee would be charged to any Redistributor of the NYSE Agg Lite data feed, which is defined to mean a vendor or any person that provides a real-time NYSE market data product externally to a data recipient that is not its affiliate or wholly-owned subsidiary, or to any system that an external data recipient uses, irrespective of the means of transmission or access. The proposed Redistribution Fee would be charged only once per Redistributor account. As an incentive to potential Redistributors to subscribe to the NYSE Agg Lite data feed, the Exchange proposes to waive the Access Fee and Redistribution Fee for a Redistributor if the Redistributor provides NYSE Agg Lite externally to at least one data feed recipient and reports such data feed recipient or recipients to the Exchange. For example, a Redistributor that subscribes to the NYSE Agg Lite data feed will have the Access Fee and Redistribution Fee waived if such Redistributor provides NYSE Agg Lite externally to at least one data feed recipient and reports such data feed recipient to the Exchange.
By targeting this proposed fee waiver to Redistributors that provide external distribution of NYSE Agg Lite, the Exchange believes that this would provide an incentive for Redistributors to make the NYSE Agg Lite market data product available to its customers. Specifically, if a data recipient is interested in subscribing to NYSE Agg Lite and relies on a Redistributor to obtain market data products from the Exchange, that data recipient would need its Redistributor to subscribe to and redistribute NYSE Agg Lite. The Exchange believes that this proposed fee waiver for Redistributors of NYSE Agg Lite would provide an incentive for Redistributors to make NYSE Agg Lite available to their customers, which will increase the availability of the Exchange's market data products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be applicable to Redistributors that provide external distribution of NYSE Agg Lite to Professional and Non-Professional Users. As proposed, such Redistributors would receive a credit equal to the amount of the monthly Professional User and Non-Professional User Fees for such external distribution, up to a maximum of the combination of the Access Fee and Redistribution Fee for NYSE Agg Lite that the Redistributor would otherwise be required to pay to the Exchange. For example, a Redistributor that reports external Professional Users and Non-Professional Users in a month totaling $3,250 or more would receive a maximum credit of $3,250 for that month, which could effectively reduce its monthly fee for access and redistribution to zero. If that same Redistributor were to report external User quantities in a month totaling $600 of monthly usage, that Redistributor would receive a credit of $600. The Exchange believes the proposed credit would provide Redistributors with an incentive to increase their redistribution of NYSE Agg Lite because the credit they would be eligible to receive would increase if they report additional external User quantities.

4. Enterprise Fees
The Exchange proposes to establish an enterprise license that will reduce Exchange fees and administrative costs for subscribers that disseminate NYSE Agg Lite. Subscribers that are broker-dealers will be able to distribute the NYSE Agg Lite data feed for display usage to an unlimited number of non-professional users for a monthly fee of $20,000, with an opportunity to lower that fee to $18,000 per month if they contract for twelve months of service in advance. Alternatively, subscribers that are broker-dealers will be able to distribute the NYSE Agg Lite data feed for display usage to an unlimited number of recipients (professional users and non-professional users) for a monthly fee of $25,000, with an opportunity to lower that fee to $22,500 per month if they contract for twelve months of service in advance.
As proposed, the NYSE Agg Lite data feed may be distributed pursuant to the proposed market data enterprise license only for display usage and in the context of a brokerage relationship with a broker-dealer through such broker-dealer's own devices. Purchase of an enterprise license would eliminate per User subscriber fees for NYSE Agg Lite. Further, the Exchange proposes to waive the Access Fee and the Redistribution Fee for NYSE Agg lite for Redistributors that pay either the Non-Professional Enterprise Fee or the Professional and Non-Professional Enterprise Fee. The Exchange believes the proposed fee waiver would provide an incentive for Redistributors to subscribe to the NYSE Agg Lite market data product at the enterprise level to reduce the fees it would pay to the Exchange and without having to report the number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise license for at least twelve months may elect to purchase this product in advance for a monthly fee of $18,000 for distribution of NYSE Agg Lite to an unlimited number of non-professional users, or $22,500 per month for distribution to an unlimited number of professional users and non-professional users. This feature is intended to simplify cost projections and budgeting for both subscribers and the Exchange. Subscribers that elect not to purchase this particular feature will nevertheless be able to obtain all of the market data information offered by NYSE Agg Lite by paying the standard fee of $20,000 per month for distribution of NYSE Agg Lite to an unlimited number of non-professional users, or $25,000 per month for distribution to an unlimited number of professional users and non-professional users. Subscribers that elect to pay the monthly fee will be able to switch to the annual fee at any time, and those that elect to purchase the annual contract would be able to change to the monthly contract, with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise license will reduce exchange fees, lower administrative costs for subscribers, and help expand the availability of market information to investors, and thereby increase participation in financial markets.

5. Non-Display Use Fees
The Exchange proposes to establish non-display fees for the NYSE Agg Lite data feed that are based on the non-display use categories charged by NYSE Arca, NYSE American, NYSE National, the CTA, and the UTP Plan for non-display use. ^{10} Non-display use would mean accessing, processing, or consuming the NYSE Agg Lite data feed delivered directly or through a Redistributor, for a purpose other than in support of a data recipient's display or further internal or external redistribution (“Non-Display Use”). Non-Display Use would include trading uses such as high frequency or algorithmic trading as well as any trading in any asset class, automated order or quote generation and/or order pegging, price referencing for algorithmic trading or smart order routing, operations control programs, investment analysis, order verification, surveillance programs, risk management, compliance, and portfolio management.
^{10} See Endnote 1 to the NYSE Arca Equites Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE American LLC Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE National Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_National_Market_Data_Fee_Schedule.pdf; Endnote 8 to the Schedule of Market Data Charges for the CTA, available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf; and Non-Display Usage Fees as set forth in the UTP Plan Fee Schedule and Non-Display Policy, available here: http://utpplan.com/DOC/Datapolicies.pdf. See, e.g., Securities Exchange Act Release Nos. 69278 (April 2, 2013), 78 FR 20973 (April 8, 2013) (SR-NYSE-2013-25) and 72923 (Aug. 26, 2014), 79 FR 52079 (Sept. 2, 2014) (SR-NYSE-2014-43).
Under the proposal, for Non-Display Use of NYSE Agg Lite, there would be three categories of, and fees applicable, to, data recipients. One, two, or three categories of Non-Display Use may apply to a data recipient.
• As proposed, the Category 1 Fee would be $4,500 per month and would apply when a data recipient's Non-Display Use of the NYSE Agg Lite data feed is on its own behalf, not on behalf of its clients.
• As proposed, Category 2 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Agg Lite data feed on behalf of its clients.
• As proposed, Category 3 Fees would be $4,500 per month and would apply to a data recipient's Non-Display Use of the NYSE Agg Lite data feed for the purpose of internally matching buy and sell orders within an organization, including matching customer orders for a data recipient's own behalf and/or on behalf of its clients. This category would apply to Non-Display Use in trading platforms, such as, but not restricted to, alternative trading systems (“ATSs”), broker crossing networks, broker crossing systems not filed as ATSs, dark pools, multilateral trading facilities, exchanges and systematic internalization systems. A data recipient will be charged $4,500 per month for each platform on which it uses the Non-Display data internally to match buy and sell orders, up to a cap of $13,500 per month; even if the data recipient uses the NYSE Agg Lite data feed for more than three platforms, it will not pay more than $13,500 for such Category 3 use per month.
The description of the three non-display use categories is set forth in the Fee Schedule in endnote 1 and that endnote would be referenced in the NYSE Agg Lite data feed fees on the Fee Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. A firm subject to Category 3 Fees would be required to identify each platform that uses the NYSE Agg Lite data feed for a Category 3 Non-Display Use basis, such as ATSs and broker crossing systems not registered as ATSs, as part of the Non-Display Use Declaration.
6. Non-Display Use Declaration Late Fee. Data recipients that receive the NYSE Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. Beginning in 2025, NYSE Agg Lite data feed recipients would be required to submit, by January 31 of each year, the Non-Display Use Declaration. The requirement to submit a Non-Display Use Declaration applies to all real-time NYSE data feed product recipients. The Exchange proposes to charge a Non-Display Use Declaration Late Fee of $1,000 per month to any data recipient that pays an Access Fee for the NYSE Agg Lite data feed that has failed to timely complete and submit a Non-Display Use Declaration. Specifically, with respect to the Non-Display Use Declaration due by January 31 of each year, the Non-Display Use Declaration Late Fee would apply to data recipients that fail to complete and submit the Non-Display Use Declaration by the January 31 due date, and would apply beginning February 1 and for each month thereafter until the data recipient has completed and submitted the annual Non-Display Use Declaration.
The proposed Non-Display Use Declaration Late Fee applicable to NYSE Agg Lite data feed would be set forth in endnote 2 on the Fee Schedule. As proposed, endnote 2 would be amended with the proposed addition of the following new text: “The Non-Display Declaration Late Fee will apply, beginning in 2025, to NYSE Aggregated Lite data recipients that fail to complete and submit the annual Non-Display Use Declaration by the January 31st due date, and applies beginning February 1st and for each month thereafter until the data recipient has completed and submitted the annual Non-Display use Declaration.”
In addition, if a data recipient's use of the NYSE Agg Lite data feed changes at any time after the data recipient submits a Non-Display Use Declaration, the data recipient must inform the Exchange of the change by completing and submitting at the time of the change an updated declaration reflecting the change of use.
7. Multiple Data Feed Fee. The Exchange proposes to establish a monthly fee, the “Multiple Data Feed Fee,” that would apply to data recipients that take a data feed for a market data product in more than two locations. Data recipients taking the NYSE Agg Lite data feed in more than two locations would be charged $200 per additional location per month. No new reporting would be required. ^{11}
^{11} Data vendors currently report a unique Vendor Account Number for each location at which they provide a data feed to a data recipient. The Exchange considers each Vendor Account Number a location. For example, if a data recipient has five Vendor Account Numbers, representing five locations, for the receipt of the NYSE Agg Lite data feed, that data recipient will pay the Multiple Data Feed fee with respect to three of the five locations..
8. Three-Month Fee Waiver. The Exchange currently provides a one-month free trial to any firm that subscribes to a particular NYSE market data product for the first time. Under the current one-month trial, a first-time subscriber is not charged the Access Fee, Non-Display Fee, any applicable Professional and Non-Professional User Fee and Redistribution Fee for one calendar month. ^{12} The Exchange now proposes an additional three-month fee waiver for any Redistributor that subscribes to a particular NYSE market data product for the first time for external redistribution. As proposed, a first-time Redistributor would be any firm that has not previously subscribed to and externally redistributed a particular NYSE market data product listed on the Fee Schedule. As proposed, a first-time Redistributor that subscribes to a particular NYSE market data product would not be charged the Access Fee and the Redistribution Fee for that product for three calendar months. Any other fees, including but not limited to, Non-Display Fee, any applicable Professional and Non-Professional User Fee, and Enterprise Fee would be billable after the first calendar month after a first-time Redistributor subscribes to a particular NYSE market data product. For example, a first-time Redistributor that chooses to subscribe to NYSE Agg Lite on June 24, 2024 would not be charged the Access Fee and the Redistribution Fee for the months of July, August, and September 2024. The proposed fee waiver would be for the three calendar months following the date a Redistributor is approved to receive access to the particular NYSE market data product. The Exchange would provide the three-month fee waiver for each particular product to each Redistributor once.
^{12} See Fee Schedule.
The Exchange believes that providing a three-month fee waiver to NYSE market data products listed on the Fee Schedule would enable potential Redistributors to determine whether a particular NYSE market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed three-month fee waiver would also provide Redistributors with time to begin onboarding new clients prior to being liable to the Access Fee and the Redistribution Fee, allowing time to choose how to allocate costs and increase revenues to defray costs associated with providing a new feed to its customers.

Application of Proposed Fees
The Exchange is not required to make the NYSE Agg Lite data feed available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase the NYSE Agg Lite data feed. Firms that choose to purchase the NYSE Agg Lite data feed do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange (including for order flow). Those firms are able to determine for themselves whether or not the NYSE Agg Lite data feed or any other similar products are attractively priced.
The Exchange believes that subscribers would use the price level detail information available in the NYSE Agg Lite data feed to make trading decisions that directly benefit the transaction services that the Exchange offers. The Exchange determined the level of the fees to charge for the NYSE Agg Lite data feed based on the value of the Exchange's transaction services.
The Exchange believes the proposed rule change would provide an incentive both for data subscribers to subscribe to NYSE Agg Lite and for Redistributors to subscribe to the product for purposes of providing external distribution of NYSE Agg Lite. The Exchange believes that this proposed rule change also has the potential to attract new Redistributors for NYSE Agg Lite.
The proposed fee structure is not novel as it is based on the fee structure currently in place for the NYSE OpenBook feed. The Exchange is proposing fees for the NYSE Agg Lite data feed that are based on the existing fee structure and rates that data recipients already pay for the NYSE OpenBook feed. Specifically, the fees for the NYSE OpenBook feed—which like the NYSE Agg Lite data feed, includes depth of book and security status messages—consist of an Access Fee of $5,000 per month, a Professional User Fee (Per User) of $60 per month, a Non-Professional User Fee (Per User) of $15 per month, Non-Display Fees of $6,000 per month for each of Categories 1, 2 and 3, and a Redistribution Fee of $3,000 per month. The Exchange also charges a Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple Data Feed Fee of $200 per month for NYSE OpenBoook. ^{13}
^{13} See NYSE Proprietary Market Data Fees at https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf.

2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, ^{14} in general, and Sections 6(b)(4) and 6(b)(5) of the Act, ^{15} in particular, in that it provides an equitable allocation of reasonable fees among users and recipients of the data and is not designed to permit unfair discrimination among customers, issuers, and brokers.
^{14} 15 U.S.C. 78f(b).
^{15} 15 U.S.C. 78f(b)(4), (5).

The Proposed Rule Change Is Reasonable
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^{16}
^{16} See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC upheld the Commission's reliance on the existence of competitive market mechanisms to evaluate the reasonableness and fairness of fees for proprietary market data:
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.” ^{17}
^{17} NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) (“ NetCoalition I ”) (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ” ^{18}
^{18} Id. at 535.
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
the Commission considers whether the exchange was subject to significant competitive forces in setting the terms of its proposal for [market data], including the level of any fees. If an exchange meets this burden, the Commission will find that its fee rule is consistent with the Act unless there is a substantial countervailing basis to find that the terms of the rule violate the Act or the rules thereunder. ^{19}
^{19} See Securities Exchange Act Release No. 34-90217 (October 16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) (“National IF Approval Order”) (internal quotation marks omitted), quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December 9, 2008).
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in Ohio v. American Express, platforms are firms that act as intermediaries between two or more sets of agents, and typically the choices made on one side of the platform affect the results on the other side of the platform via externalities, or “indirect network effects.” ^{20} Externalities are linkages between the different sides of a platform such that one cannot understand pricing and competition for goods or services on one side of the platform in isolation; one must also account for the influence of the other sides. As the Supreme Court explained:
^{20} Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side. ^{21}
^{21} Id. at 2281.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in NetCoalition I, “[n]o one disputes that competition for order flow is fierce.” ^{22} The court further noted that “no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers,” and that an exchange “must compete vigorously for order flow to maintain its share of trading volume.” ^{23}
^{22} NetCoalition I, 615 F.3d at 544 (internal quotation omitted).
^{23} Id.
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^{24} The Commission's Division of Trading and Markets has also recognized that with so many “operating equities exchanges and dozens of ATSs, there is vigorous price competition among the U.S. equity markets and, as a result, [transaction] fees are tailored and frequently modified to attract particular types of order flow, some of which is highly fluid and price sensitive.” ^{25} Indeed, today, equity trading is currently dispersed across 16 exchanges, ^{26} numerous alternative trading systems, ^{27} broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share. ^{28}
^{24} See Securities Exchange Act Release No. 61358, 75 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^{25} Commission Division of Trading and Markets, Memorandum to EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
^{26} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
^{27} See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^{28} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020; ^{29} Members Exchange (MEMX), which began operations as an exchange on September 29, 2020; ^{30} and Miami International Holdings (MIAX), which began operations of its first equities exchange on September 29, 2020. ^{31}
^{29} See LTSE Market Announcement: MA-2020-020, dated August 14, 2020, announcing LTSE production securities phase-in planned for August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf and LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
^{30} As of October 29, 2020, MEMX is trading all NMS symbols. See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
^{31} See MIAX Pearl Press release, dated September 29, 2020, available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others). ^{32}
^{32} MEMX Home Page (“Founded by members and investors, MEMX aims to drive simplicity, efficiency, and competition in equity markets.”), available at https://memx.com/.
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.” ^{33} Nor is this a new phenomenon: exchange customers formed BATS to compete with incumbent exchanges and once registered as an exchange in 2008, BATS did not initially charge for market data. The BATS venture was a financial success for its founders, first through recouping their investment in its initial public offering and then in the subsequent sale of BATS to Cboe, which now charges for market data from those exchanges. Notably, MEMX has some of the same founding broker-dealer customers, leading some to dub MEMX “BATS 2.0.” ^{34}
^{33} MEMX home page, available at https://memx.com/.
^{34} See “MEMX turns up the heat on US stock exchanges,” Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also “US equities exchanges: If you can't beat them, join them,” Euromoney, February 13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable. ^{35} And low barriers to entry act as a market check on high prices. ^{36}
^{35} United States v. SunGard Data Sys., 172 F. Supp. 2d 172, 186 (D.D.C. 2001) (recognizing that “[a]s a matter of law, courts have generally recognized that when a customer can replace the services of an external product with an internally-created system, this captive output ( i.e. the self-production of all or part of the relevant product) should be included in the same market.”). In SunGard, the court rejected the Antitrust Division's attempt to block SunGuard's acquisition of the disaster recovery assets of Comdisco on the basis that the acquisition would “substantially lessen competition in the market for shared hotsite disaster recovery services,” when the evidence showed that “internal hotsites” created by customers competed with the “external shared hotsite business” engaged in by the merging parties. Id. at 173-74, 187.
^{36} United States v. Baker Hughes, 908 F.2d 981, 987 (1990) (“In the absence of significant barriers [to entry], a company probably cannot maintain supracompetitive pricing for any length of time.”); see also David S. Evans and Richard Schmalensee, Markets with Two-Sided Platforms, in 1 Issues In Competition Law And Policy 667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange mergers in 2005 and 2006 were approved by competition authorities in part in reliance on planned and likely entry of other firms).
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
More specifically, in setting fees for the NYSE Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
Subscribing to the NYSE Agg Lite is entirely optional. The Exchange is not required to make the NYSE Agg Lite available to any customers, nor is any customer required to purchase the NYSE Agg Lite market data feed. Unlike some other data products ( e.g., the consolidated quotation and last-sale information feeds) that firms are required to purchase in order to fulfil regulatory obligations, ^{37} a customer's decision whether to purchase the NYSE Agg Lite is entirely discretionary. Most firms that choose to subscribe to the NYSE Agg Lite would do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange for order flow. Such firms are able to determine for themselves whether the NYSE Agg Lite data feed is necessary for their business needs, and if so, whether or not it is attractively priced. If the NYSE Agg Lite data feed does not provide sufficient value to firms based on the uses those firms may have for it, such firms may simply choose to conduct their business operations in ways that do not use the NYSE Agg Lite data feed.
^{37} The Exchange notes that broker-dealers are not required to purchase proprietary market data to comply with their best execution obligations. See In the Matter of the Application of Securities Industry and Financial Markets Association for Review of Actions Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement in Regulation NMS or any other rule that proprietary data be utilized for order routing decisions, and some broker-dealers and ATSs have chosen not to do so.
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make NYSE Agg Lite available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE Agg Lite can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for the NYSE Agg Lite data feed, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition.
Even putting aside the facts that exchanges are platforms and that pricing decisions on the two sides of the platform are intertwined, the Exchange is constrained in setting the proposed market data fees by the availability of numerous substitute market data products. The Commission has been clear that substitute products need not be identical, but only substantially similar to the product at hand. ^{38}
^{38} For example, in the National IF Approval Order, the Commission recognized that for some customers, the best bid and offer information from consolidated data feeds may function as a substitute for the NYSE National Integrated Feed product, which contains order by order information. See National IF Approval Order, supra note 19, at 67397 [release p. 21] (“[I]nformation provided by NYSE National demonstrates that a number of executing broker-dealers do not subscribe to the NYSE National Integrated Feed and executing broker-dealers can otherwise obtain NYSE National best bid and offer information from the consolidated data feeds.” (internal quotations omitted)).
The NYSE Aggregated Lite market data feed is subject to significant competitive forces that constrain its pricing. Specifically, the NYSE Agg Lite data feed competes head-to-head with similar market data products currently offered by the four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), each of which offers a market data product called BZX Summary Depth, BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth, respectively (collectively, the “Cboe Summary Depth”). ^{39} Similar to Cboe Summary Depth, NYSE Agg Lite can be utilized by vendors and subscribers to quickly access and distribute aggregated order book data. As noted above, NYSE Agg Lite, similar to Cboe Summary Depth, would provide aggregated depth per security, including the bid, ask and share quantity for orders received by NYSE, except unlike Cboe Summary Depth, which provides aggregated depth per security for up to five price levels, NYSE Agg Lite would provide aggregated depth per security for up to ten price levels on both the bid and offer sides of the NYSE limit order book as well as auction imbalance data.
^{39} See BZX Rule 11.22(m) BZX Summary Depth; BYX Rule 11.22(k) BYX Summary Depth; EDGA Rule 13.8(f) EDGA Summary Depth; and EDGX Rule 13.8(f) EDGX Summary Depth. The Cboe Summary Depth offered by BZX, BYX, EDGA and EDGX are each a data feed that offers aggregated two-sided quotations for all displayed orders for up to five (5) price levels and contains the individual last sale information, market status, trading status and trade break messages.
The specific fees that the Exchange proposes for the NYSE Agg Lite data feed are reasonable for the following additional reasons.
Overall. The Exchange believes that the proposed fees for the NYSE Agg Lite data feed are reasonable because they represent the value of the data available but also the value of receiving the data on an aggregated basis. The Exchange believes that providing vendors and subscribers with the option to subscribe to a market data product that integrates a subset of data from existing products and where such aggregated data is published at a pre-defined interval, thus lowering bandwidth, infrastructure and operational requirements, would allow vendors and subscribers to choose the best solution for their specific business needs.
The Exchange believes the proposed fees for the NYSE Agg Lite data feed are also reasonable when compared to fees for comparable products, such as the Cboe Summary Depth. ^{40} Additionally, the Exchange is proposing fees for the NYSE Agg Lite data feed that are based on the existing fee structure that data recipients already pay for the NYSE's other market data products. The Exchange believes that adopting the same fee structure would reduce administrative burdens on NYSE data subscribers that also currently subscribe to market data feeds from NYSE.
^{40} See https://cdn.cboe.com/resources/membership/US_Market_Data_Product_Price_List.pdf.
Access Fee. The Exchange believes that is reasonable to charge access fees because of the value of the data to data recipients in their profit-generating activities. The Exchange believes that the proposed monthly Access Fee of $3,000 for the NYSE Aggregated Lite data feed is reasonable because it is comparable to the fees charged by BZX, BYX, EDGA, and EDGX, each of which charges between $2,500 per month to $5,000 per month for both Internal Distribution and External Distribution of the Cboe Summary Depth market data product. ^{41}
^{41} Id.
User Fees. The Exchange believes that having separate Professional and Non-Professional User fees for the NYSE Agg Lite data feed is reasonable because it will make the product more affordable and result in greater availability to Professional and Non-Professional Users. Setting a modest Non-Professional User fee is reasonable because it provides an additional method for Non-Professional Users to access the NYSE Agg Lite data feed by providing the same data that is available to Professional Users. The proposed monthly Professional User Fee (Per User) of $35 and monthly Non-Professional User Fee (Per User) of $6 are reasonable because they are comparable to user fees generally charged by exchanges. For example, NYSE charges a monthly Professional User Fee (Per User) of $60 and a monthly Non-Professional User Fee (Per User) of $15 for the NYSE OpenBook feed. ^{42} Although the proposed User Fees for Professional and Non-Professional Users are higher than those charged by BZX, BYX, EDGA and EDGX, the Exchange notes that User fees are only a subset of the total fees that vendors and subscribers pay and the lower fees proposed to access and redistribute NYSE Agg Lite would provide such market data recipients with a more affordable alternative to existing substitutes offered by the Exchange and its competitors.
^{42} See Fee Schedule.
Redistribution Fees. The Exchange believes that it is reasonable to charge redistribution fees because vendors receive value from redistributing the data in their business products for their customers. The Exchange believes that charging a Redistribution Fee is reasonable because the vendors that would be charged such a fee profit by re-transmitting the Exchange's market data to their customers. This fee would be charged only once per month to each vendor account that redistributes the NYSE Agg Lite data feed, regardless of the number of customers to which that vendor redistributes the data. The Exchange believes the proposed monthly Redistribution Fee of $250 for the NYSE Agg Lite data feed is reasonable because it is nominal and lower than the fees charged by BZX, BYX, EDGA and EDGX, each of which charges considerably more for both Internal Distribution and External Distribution of the Cboe Summary Depth market data feed. ^{43}
^{43} See supra, note 40.
Enterprise Fees. The Exchange believes the proposed enterprise license is reasonable because it would reduce exchange fees, lower administrative costs for subscribers that are broker-dealers and help expand the availability of market information to investors, and thereby increase participation in financial markets. Subscribers that are broker-dealers would be able to disseminate the NYSE Agg Lite data feed for display usage to an unlimited number of non-professional users for a monthly fee of $20,000, or $18,000 if they contract for twelve months of service in advance. Alternatively, subscribers that are broker-dealers would be able to disseminate the NYSE Agg Lite data feed for display usage to an unlimited number of professional users and non-professional users for a monthly fee of $25,000, or $22,500 if they contract for twelve months of service in advance. The proposed enterprise license would result in lower fees for subscribers able to reach the largest audience of investors, including retail investors. Discounts for broader dissemination of market data information have routinely been adopted by exchanges and permitted by the Commission as equitable allocations of reasonable dues, fees and charges. ^{44}
^{44} For example, the Commission has permitted pricing discounts for market data under Nasdaq Rules 7023(c) and 7047(b). See also Securities Exchange Act Release No. 82182 (November 30, 2017), 82 FR 57627 (December 6, 2017) (SR-NYSE-2017-60) (changing an enterprise fee for NYSE BBO and NYSE Trades).
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are reasonable, because they reflect the value of the data to the data recipients in their profit-generating activities and do not impose the burden of counting non-display devices.
The Exchange believes that the proposed Non-Display Use fees reflect the significant value of the non-display data use to data recipients, which purchase such data on an entirely voluntary basis. Non-display data can be used by data recipients for a wide variety of profit-generating purposes, including proprietary and agency trading and smart order routing, as well as by data recipients that operate order matching and execution platforms that compete directly with the Exchange for order flow. The data also can be used for a variety of non-trading purposes that indirectly support trading, such as risk management and compliance. Although some of these non-trading uses do not directly generate revenues, they can nonetheless substantially reduce a recipient's costs by automating such functions so that they can be carried out in a more efficient and accurate manner and reduce errors and labor costs, thereby benefiting recipients. The Exchange believes that charging for non-trading uses is reasonable because data recipients can derive substantial value from such uses, for example, by automating tasks so that can be performed more quickly and accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many exchanges required customers to count, and the exchanges to audit the count of, the number of non-display devices used by a customer. As non-display use grew more prevalent and varied, however, exchanges received an increasing number of complaints about the impracticality and administrative burden associated with that approach. In response, the Exchange and its affiliated exchanges developed a non-display use pricing structure that does not require non-display devices to be counted or those counts to be audited, and instead looks merely at the three following categories of potential use of non-display data: use of the data on the customer's own behalf (Category 1), use on behalf of clients (Category 2), and use to internally match buy and sell orders within an organization (Category 3).
The Exchange believes that it is reasonable to segment the fee for non-display use into these three categories. As noted above, the uses to which customers can put the NYSE Agg Lite data feed are numerous and varied, and the Exchange believes that charging separate fees for these separate categories of use is reasonable because it reflects the actual value the customer derives from the data, based upon how many categories of use the customer makes of the data. Segmenting the fees for non-display data in this way avoids the unreasonable result of customers that make only limited non-display use of the data paying the same fees as customers that use the data for numerous different revenue-generating and cost-saving purposes.
The Exchange believes that the proposed fees of $4,500 per month for each of Categories 1, 2, and 3 is reasonable. These fees are comparable to non-display use fees generally charged by exchanges. For example, the fees for Non-Display Use of NYSE OpenBook for Categories 1, 2 and 3 is $6,000 per month. ^{45} The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using non-display data in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments.
^{45} See Fee Schedule.
The Exchange also believes that, regarding Category 3 fees, it is reasonable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is reasonable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Agg Lite data feed for use by their trading platforms.
The proposed Non-Display Use fees for the NYSE Agg Lite data feed are also reasonable because they take into account the extra value of receiving the data for Non-Display Use on an integrated basis. The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using the NYSE Agg Lite data feed on a non-display basis in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments. ^{46}
^{46} See also Exchange Act Release No. 69157, March 18, 2013, 78 FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (“[D]ata feeds have become more valuable, as recipients now use them to perform a far larger array of non-display functions. Some firms even base their business models on the incorporation of data feeds into black boxes and application programming interfaces that apply trading algorithms to the data, but that do not require widespread data access by the firm's employees. As a result, these firms pay little for data usage beyond access fees, yet their data access and usage is critical to their businesses.”).
Non-Display Use Declaration Late Fee. The Exchange believes that it is reasonable to require annual submissions of the Non-Display Use Declaration so that the Exchange will have current and accurate information about the use of the NYSE Agg Lite data feed and can correctly assess fees for the uses of the NYSE Agg Lite data feed. Requiring annual submissions of such declarations is reasonable because it also allows users to re-assess their own usage each year.
The Exchange believes that it is reasonable to impose a late fee in connection with the submission of the Non-Display Use Declaration. In order to correctly assess fees for the non-display use of the NYSE Agg Lite data feed, the Exchange needs to have current and accurate information about the use of the NYSE Agg Lite data feed. The failure of data recipients to submit the Non-Display Use Declaration on time leads to potentially incorrect billing and administrative burdens, including tracking and obtaining late Non-Display Use Declarations and correcting and following up on payments owed in connection with late Non-Display Use Declarations. The purpose of the late fee is to incent data recipients to submit the Non-Display Use Declaration promptly to avoid the administrative burdens associated with the late submission of Non-Display Use Declarations.
Multiple Data Feed Fee. The Exchange believes that it is reasonable to require data recipients to pay a modest additional fee for taking a data feed for a market data product in more than two locations, because such data recipients can derive substantial value from being able to consume the product in as many locations as they want. In addition, there are administrative burdens associated with tracking each location at which a data recipient receives the product. The Multiple Data Feed Fee is designed to encourage data recipients to better manage their requests for additional data feeds and to monitor their usage of data feeds. The proposed fee is designed to apply to data feeds received in more than two locations so that each data recipient can have one primary and one backup data location before having to pay a multiple data feed fee.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE Agg Lite data feed to new Redistributors for three calendar months is reasonable because it would enable potential Redistributors to determine whether a particular NYSE market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed fee waiver would also allow Redistributors to become familiar with the feed and determine whether it suits their needs without incurring fees. Making a new market data product available without charging a fee for three months is consistent with offerings of other exchanges. For example, BZX offers subscribers of BZX Summary Depth a three-month credit for external distribution, which is akin to the three-month fee waiver proposed by the Exchange. ^{47}
^{47} See e.g., Securities Exchange Act Release No. 94432 (March 16, 2022), 87 FR 16277 (March 22, 2022) (SR-CboeBZX-2022-015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Applicable to Various Market Data Products).
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Agg Lite data feed are reasonable.

The Proposed Fees Are Equitably Allocated
The Exchange believes the proposed fees for the NYSE Agg Lite data feed are allocated fairly and equitably among the various categories of users of the feed, and any differences among categories of users are justified.
Overall. The Exchange believes that the proposed fees are equitably allocated because they will apply to all data recipients that choose to subscribe to the NYSE Agg Lite data feed. Any subscriber or vendor that chooses to subscribe to the NYSE Agg Lite data feed is subject to the same Fee Schedule, regardless of what type of business they operate or the use they plan to make of the data feed. Subscribers and vendors are not required to purchase the NYSE Agg Lite data feed and may choose to receive the data on the NYSE Agg Lite data feed regardless of what type of business they operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee of $3,000 for the NYSE Agg Lite data feed is equitably allocated because it would be charged on an equal basis to all data recipients that receive a data feed of the NYSE Agg Lite data feed, regardless of what type of business they operate or the use they plan to make of the data feed.
User Fees. The Exchange believes that the fee structure differentiating Professional User fees ($35 per month per user) from Non-Professional User fees ($6 per month per user) for display device access to the NYSE Agg Lite data feed is equitable. This structure has long been used by the Exchange to reduce the price of data to Non-Professional Users and make it more broadly available. ^{48} Offering the NYSE Agg Lite data feed to Non-Professional Users with the same data as is available to Professional Users results in greater equity among data recipients. These user fees would be charged uniformly to all display devices that have access to the NYSE Agg Lite data feed.
^{48} See, e.g., Securities Exchange Act Release No. 59544 (March 9, 2009), 74 FR 11162 (March 16, 2009) (SR-NYSE-2008-131) (establishing the $15 Non-Professional User Fee (Per User) for NYSE OpenBook); Securities Exchange Act Release No. 20002, File No. S7-433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-Professional fees for CTA data); NASDAQ BX Equity 7 Pricing Schedule, Section 123.
Redistribution Fees. The Exchange believes the proposed monthly fee of $250 for redistributing the NYSE Agg Lite data feed is equitably allocated because it would be charged on an equal basis to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise license is equitably allocated because it would be available on an equal basis to all subscribers that are broker-dealers, each of whom would benefit from reduced exchange fees and from lower administrative costs. Moreover, the specific feature of the proposed enterprise license that will allow subscribers to lower fees by subscribing to a twelve-month contract is also an equitable allocation because all subscribers will have the same option of choosing between the stability of a fixed, lower rate, and the more flexible option of maintaining the ability to change market data products after a month of service. Subscribers will be free to move from the monthly to the annual rate at any time, or from annual to a monthly fee, with notice, at the expiration of the twelve-month period.
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are equitably allocated because they would require subscribers to pay fees only for the uses they actually make of the data. As noted above, non-display data can be used by data recipients for a wide variety of profit-generating purposes (including trading, risk management, and compliance) as well as purposes that do not directly generate revenues but nonetheless substantially reduce the recipient's costs by automating certain functions. The Exchange believes that it is equitable to charge non-display data subscribers a $4,500 fee for each category of use they make of such data—namely, using the data on their own behalf (Category 1), on behalf of their clients (Category 2), and to internally match buy and sell orders within an organization (Category 3)—because this fee structure results in subscribers with greater uses of the data paying higher fees, and subscribers with fewer uses of the data paying lower fees. This segmented fee structure is also equitable because no subscriber of non-display data would be charged a fee for a category of use in which it did not actually engage.
The Exchange also believes that, regarding Category 3 fees, it is equitable to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is equitable to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Agg Lite data feed for use by their trading platforms.
Non-Display Use Declaration Late Fee. The Exchange believes that the proposed fee of $1,000 per month for a late Non-Display Use Declaration is equitably allocated because it applies to any data recipient that pays an Access Fee for the NYSE Agg Lite data feed but has failed to complete and submit a Non-Display Use Declaration. In addition, the Exchange believes that it is equitable to charge a late fee to subscribers who fail to timely submit their Non-Display Use Declarations because their failure to do so leads to potentially incorrect billing and administrative burdens on the part of the Exchange. The Exchange believes it is equitable to defray these administrative costs by imposing a late fee only on subscribers' whose declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per month per location fee to data recipients taking the NYSE Agg Lite data feed in more than two locations is equitable because it would apply to all such customers, regardless of what type of business they operate or the use they make of the data feed. In addition, the Exchange believes that it is equitable to charge a fee to subscribers for taking a data feed in more than two locations because there are administrative burdens on the part of the Exchange associated with tracking each location at which a data recipient receives the product. The Exchange believes that it is equitable for it to defray these administrative costs by imposing a modest fee only on subscribers who seek to take the feed in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE Agg Lite data feed to new Redistributors for three calendar months is equitable because it would apply to any first-time Redistributor, regardless of the use they plan to make of the feed. As proposed, any first-time Redistributor of the NYSE Agg Lite data feed would not be charged the Access Fee and the Redistribution Fee for three calendar months. The Exchange believes it is equitable to restrict the availability of this three-month fee waiver to Redistributors that have not previously subscribed to and redistributed the NYSE Agg Lite data feed, since customers who are current or previous subscribers of the feed are already familiar with it and are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Agg Lite data feed are equitably allocated.

The Proposed Fees Are Not Unfairly Discriminatory
The Exchange believes the proposed fees for the NYSE Agg Lite data feed are not unfairly discriminatory because any differences in the application of the fees are based on meaningful distinctions between customers, and those meaningful distinctions are not unfairly discriminatory between customers.
Overall. The Exchange believes that the proposed fees are not unfairly discriminatory because they would apply to all data recipients that choose to subscribe to the NYSE Agg Lite data feed. Any subscriber, including Redistributor, that chooses to subscribe to the NYSE Agg Lite data feed is subject to the same Fee Schedule, regardless of what type of business they operate or the use they plan to make of the data feed. Subscribers, including Redistributors, may choose to receive the data on the NYSE Agg Lite data feed regardless of what type of business they operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee of $3,000 for the NYSE Agg Lite data feed is not unfairly discriminatory because it would be charged on an equal basis to all data recipients that receive a data feed of the NYSE Agg Lite, regardless of what type of business they operate or the use they plan to make of the data feed.
User Fees. The Exchange believes that the fee structure differentiating Professional User fees ($35 per month per user) from Non-Professional User fees ($6 per month per user) for display device access to the NYSE Agg Lite data feed is not unfairly discriminatory. This structure has long been used by the Exchange to reduce the price of data to Non-Professional Users and make it more broadly available. ^{49} Offering the NYSE Agg Lite data feed to Non-Professional Users with the same data as is available to Professional Users results in greater equity among data recipients. These user fees would be charged uniformly to all display devices that have access to the NYSE Agg Lite data feed.
^{49} Id.
Redistribution Fees. The Exchange believes the proposed monthly fee of $250 for redistributing the NYSE Agg Lite data feed is not unfairly discriminatory because it would be charged on an equal basis to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise license will not unfairly discriminate between customers, issuers, brokers or dealers. The Act does not prohibit all distinctions among customers, but only discrimination that is unfair, and it is not unfair discrimination to charge those subscribers that are able to reach the largest audiences of investors, including retail investors, a lower fee for incremental investors in order to encourage the widespread distribution of market data. This principle has been repeatedly endorsed by the Commission, as evidenced by the approval of enterprise licenses for other market data products. ^{50} Moreover, the proposed enterprise license will be subject to significant competition, and that competition will ensure that there is no unfair discrimination. Each subscriber will be able to accept or reject the license depending on whether it will or will not lower costs for that particular subscriber, and, if the license is not sufficiently competitive, the Exchange may lose market share. The proposed enterprise license will compete with other enterprise licenses of the Exchange, underlying fee schedules promulgated by the Exchange, and enterprise licenses and fee structures implemented by other exchanges. As such, it is a voluntary product for which market participants can readily find substitutes. Accordingly, the Exchange is constrained from introducing a fee that would be inequitable or unfairly discriminatory.
^{50} See e.g., Securities Exchange Act Release No. 83751 (July 31, 2018), 83 FR 38428 (August 6, 2018) (SR-NASDAQ-2018-058) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Lower Fees and Administrative Costs for Distributors of Nasdaq Basic, Nasdaq Last Sale, NLS Plus and the Nasdaq Depth-of-Book Products Through a Consolidated Enterprise License).
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are not unfairly discriminatory because they would require subscribers for non-display use to pay fees only for the categories of use they actually make of the data. As noted above, non-display data can be used by data recipients for a wide variety of profit-generating purposes (including trading, risk management, and compliance) as well as purposes that do not directly generate revenues but nonetheless substantially reduce the recipient's costs by automating certain functions. The Exchange believes that it is not unfairly discriminatory to charge non-display data subscribers a $4,500 per month fee for each category of use they make of such data—namely, using the data on their own behalf (Category 1), on behalf of their clients (Category 2), and to internally match buy and sell orders within an organization (Category 3)—because this fee structure results in subscribers with greater uses for the data paying higher fees, while subscribers with fewer uses of the data pay lower fees. This segmented fee structure is not unfairly discriminatory because no subscriber of non-display data would be charged a fee for a category of use in which it did not actually engage.
The Exchange also believes that, regarding Category 3 fees, it is not unreasonably discriminatory to charge $4,500 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is not unreasonably discriminatory to cap such fees for Category 3 use at $13,500 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE Agg Lite data feed for use by their trading platforms.
Non-Display Use Declaration Late Fee. The Exchange believes that the proposed fee of $1,000 per month for a late Non-Display Use Declaration is not unfairly discriminatory because it applies to any data recipient that pays an Access Fee for the NYSE Agg Lite data feed but has failed to complete and submit a Non-Display Use Declaration. In addition, the Exchange believes that it is not unfairly discriminatory to charge a late fee to subscribers who fail to timely submit their Non-Display Use Declarations because their failure to do so leads to potentially incorrect billing and administrative burdens on the part of the Exchange. Nor is it unfairly discriminatory for the Exchange to defray these administrative costs by imposing a late fee only on subscribers' whose declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per month per location fee to data recipients taking the NYSE Agg Lite data feed in more than two locations is not unfairly discriminatory because it would apply to all such customers, regardless of what type of business they operate or the use they make of the data feed. In addition, the Exchange believes that it is not unfairly discriminatory to charge a fee to subscribers for taking a data feed in more than two locations because there are administrative burdens on the part of the Exchange associated with tracking each location at which a data recipient receives the product. The Exchange believes that it is not unfairly discriminatory for it to defray these administrative costs by imposing a modest fee only on subscribers who seek to take the feed in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE Agg Lite data feed to new Redistributors for three months is not unfairly discriminatory because it would apply to any first-time Redistributor, regardless of the use they plan to make of the feed. As proposed, any first-time Redistributor of the NYSE Agg Lite data feed would not be charged the Access Fee and the Redistribution Fee for three calendar months. The Exchange believes it is not unfairly discriminatory to restrict the availability of this three-month fee waiver to Redistributors that have not previously subscribed to the NYSE Agg Lite data feed, since Redistributors who are current or previous subscribers of the feed are already familiar with it and are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE Agg Lite data feed are not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fees will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Intramarket Competition. The Exchange believes that the proposed fees do not put any market participants at a relative disadvantage compared to other market participants. As noted above, the proposed fee schedule would apply to all subscribers, including Redistributors, of the NYSE Agg Lite data feed, and customers may not only choose whether to subscribe to the feed at all, but may tailor their subscriptions by choosing particular uses of the feed but not others ( e.g., Category 1 only versus all three categories; display device access only versus non-display use).
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition. As shown above, to the extent that particular proposed fees apply to only a subset of subscribers ( e.g., Category 2 fees apply only to those making non-display use on behalf of clients; late fees apply only to customers who fail to timely submit their declarations), those distinctions are not unfairly discriminatory and do not unfairly burden one set of customers over another. To the contrary, by tailoring the proposed fees in this manner, the Exchange believes that it has eliminated the potential burden on competition that might result from unfairly asking subscribers to pay fees for services they did not use, or late fees they did not actually incur.
Intermarket Competition. The Exchange believes that the proposed fees do not impose a burden on competition or on other SROs that is not necessary or appropriate. As noted above, exchanges are platforms for market data and trading. In setting the proposed fees, the Exchange was constrained by the availability of numerous substitute platforms also offering market data products and trading, and low barriers to entry mean new exchange platforms are frequently introduced. The fact that exchanges are platforms ensures that no exchange can make pricing decisions for one side of its platform without considering, and being constrained by, the effects that price will have on the other side of the platform. In setting fees for the NYSE Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers will have its pick of an increasing number of alternative platforms to use instead of the Exchange. Given this intense competition between platforms, no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Many other exchanges offer proprietary data feeds like the NYSE Agg Lite data feed, supplying depth of book order data, security status updates, stock summary messages, and the exchange's best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another platform, in which case the platform would stand to lose both market data and trading fees. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) ^{51} of the Act and subparagraph (f)(2) of Rule 19b-4 ^{52} thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
^{51} 15 U.S.C. 78s(b)(3)(A).
^{52} 17 CFR 240.19b-4(f)(2).
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) ^{53} of the Act to determine whether the proposed rule change should be approved or disapproved.
^{53} 15 U.S.C. 78s(b)(2)(B).

IV. Solicitation of Comments
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:

Electronic Comments
• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov. Please include file number SR-NYSE-2024-29 on the subject line.

Paper Comments
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSE-2024-29. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-NYSE-2024-29 and should be submitted on or before June 24, 2024.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ^{54}
^{54} 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-347, OMB Control No. 3235-0393]
Proposed Collection; Comment Request; Extension: Rule 15g-4
Upon Written Request, Copies Available From: Securities and Exchange Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 20549-2736
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (“PRA”) (44 U.S.C. 3501 et seq. ), the Securities and Exchange Commission (“Commission”) is soliciting comments on the existing collection of information provided for in Rule 15g-4—Disclosure of compensation to brokers or dealers (17 CRF 240.15g-4) under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq. ). The Commission plans to submit this existing collection of information to the Office of Management and Budget (“OMB”) for extension and approval.
Rule 15g-4 requires brokers and dealers effecting transactions in penny stocks for or with customers to disclose the amount of compensation received by the broker-dealer in connection with the transaction. The purpose of the rule is to increase the level of disclosure to investors concerning penny stocks generally and specific penny stock transactions.
The Commission estimates that approximately 170 broker-dealers will each spend an average of approximately 87.0833333 hours annually to comply with this rule. Thus, the total time burden is approximately 14,804 hours per year.
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 collected; 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 August 2, 2024.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information under the PRA unless it displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Director/Chief Information Officer, Securities and Exchange Commission, c/o John Pezzullo, 100 F Street NE, Washington, DC 20549, or send an email to: PRA_Mailbox@sec.gov.
Dated: May 29, 2024.
Sherry R. Haywood.

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100229; File No. SR-NYSEAMER-2024-31]
Self-Regulatory Organizations; NYSE American LLC; Notice of Filing and Immediate Effectiveness of Proposed Change To Establish Fees for the NYSE American Aggregated Lite Data Feed
May 28, 2024.
Pursuant to Section 19(b)(1) ^1 of the Securities Exchange Act of 1934 (the “Act”) ^2 and Rule 19b-4 thereunder, ^3 notice is hereby given that, on May 13, 2024, NYSE American LLC (“NYSE American” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
^1 15 U.S.C. 78s(b)(1).
^2 15 U.S.C. 78a.
^3 17 CFR 240.19b-4.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to establish fees for the NYSE American Aggregated Lite data feed. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the NYSE American LLC Equities Proprietary Market Data Fees Schedule (“Fee Schedule”) and establish fees for the NYSE American Aggregated Lite (“NYSE American Agg Lite”) data feed that would be effective May 13, 2024. ^4
^4 The proposed rule change establishing the NYSE American Agg Lite data feed was immediately effective on February 27, 2024. See Securities Exchange Act Release No. 99690 (March 7, 2024), 89 FR 18445 (March 13, 2024) (SR-NYSEAMER-2024-14) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE American Aggregated Lite Market Data Feed).
In summary, the NYSE American Agg Lite is a NYSE American-only frequency-based depth of book market data feed of the NYSE American's limit order book for up to ten (10) price levels on both the bid and offer sides of the order book for securities traded on the Exchange and for which the Exchange reports quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The NYSE American Agg Lite is a compilation of limit order data that the Exchange provides to vendors and subscribers. The NYSE American Agg Lite includes depth of book order data as well as security status messages. The security status message informs subscribers of changes in the status of a specific security, such as trading halts, short sale restriction, etc. In addition, the NYSE American Agg Lite includes order imbalance information prior to the opening and closing of trading.

Background
The Exchange operates in a highly competitive market. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^5
^5 See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37499 (June 29, 2005) (File No. S7-10-04) (Final Rule) (“Regulation NMS”).
While Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^6 Indeed, cash equity trading is currently dispersed across 16 exchanges, ^7 numerous alternative trading systems, ^8 and broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share (whether including or excluding auction volume). ^9
^6 See Securities Exchange Act Release No. 61358, 75 FR 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^7 See Cboe U.S Equities Market Volume Summary, available at https://markets.cboe.com/us/equities/market_share. See generally https://www.sec.gov/fastanswers/divisionsmarketregmrexchangesshtml.html.
^8 See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^9 See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.

Proposed NYSE American Agg Lite Data Feed Fees
To reflect the value of NYSE American's market data, the Exchange proposes to establish the fees listed below for the NYSE American Agg Lite data feed, operative on May 13, 2024. The Exchange proposes to charge fees for the same categories of market data use as its affiliated exchanges (namely, NYSE, NYSE Arca and NYSE National) currently charge. The Exchange believes that adopting the same fee structure as its affiliated exchanges would reduce administrative burdens on market data subscribers that also currently subscribe to market data feeds from the Exchange's affiliates.
1. Access Fee. For the receipt of access to the NYSE American Agg Lite data feed, the Exchange proposes to charge $500 per month. This proposed Access Fee would be charged to any data recipient that receives the NYSE American Agg Lite data feed. Data recipients that only use display devices to view NYSE American Agg Lite market data and do not separately receive a data feed would not be charged an Access Fee. The proposed Access Fee would be charged only once per firm.
2. User Fees. The Exchange proposes to charge a Professional User Fee (Per User) of $1 per month. The Exchange does not propose a fee for Non-Professional Users. The Professional User Fee would apply to each display device that has access to the NYSE American Agg Lite data feed.
3. Redistribution Fee. For redistribution of the NYSE American Agg Lite data feed, the Exchange proposes to establish a fee of $250 per month. The proposed Redistribution Fee would be charged to any Redistributor of the NYSE American Agg Lite data feed, which is defined to mean a vendor or any person that provides a real-time NYSE American market data product externally to a data recipient that is not its affiliate or wholly-owned subsidiary, or to any system that an external data recipient uses, irrespective of the means of transmission or access. The proposed Redistribution Fee would be charged only once per Redistributor account. As an incentive to potential Redistributors to subscribe to the NYSE American Agg Lite data feed, the Exchange proposes to waive the Access Fee and Redistribution Fee for a Redistributor if the Redistributor provides NYSE American Agg Lite externally to at least one data feed recipient and reports such data feed recipient or recipients to the Exchange. For example, a Redistributor that subscribes to the NYSE American Agg Lite data feed will have the Access Fee and Redistribution Fee waived if such Redistributor provides NYSE American Agg Lite externally to at least one data feed recipient and reports such data feed recipient to the Exchange.
By targeting this proposed fee waiver to Redistributors that provide external distribution of NYSE American Agg Lite, the Exchange believes that this would provide an incentive for Redistributors to make the NYSE American Agg Lite market data product available to its customers. Specifically, if a data recipient is interested in subscribing to NYSE American Agg Lite and relies on a Redistributor to obtain market data products from the Exchange, that data recipient would need its Redistributor to subscribe to and redistribute NYSE American Agg Lite. The Exchange believes that this proposed fee waiver for Redistributors of NYSE American Agg Lite would provide an incentive for Redistributors to make NYSE American Agg Lite available to their customers, which will increase the availability of the Exchange's market data products to a larger potential population of data recipients.
Further, the Exchange proposes to adopt a credit that would be applicable to Redistributors that provide external distribution of NYSE American Agg Lite to Professional and Non-Professional Users. As proposed, such Redistributors would receive a credit equal to the amount of the monthly Professional User and Non-Professional User Fees for such external distribution, up to a maximum of the combination of the Access Fee and Redistribution Fee for NYSE American Agg Lite that the Redistributor would otherwise be required to pay to the Exchange. For example, a Redistributor that reports external Professional Users in a month totaling $750 or more would receive a maximum credit of $750 for that month, which could effectively reduce its monthly fee for access and redistribution to zero. If that same Redistributor were to report external User quantities in a month totaling $600 of monthly usage, that Redistributor would receive a credit of $600. The Exchange believes the proposed credit would provide Redistributors with an incentive to increase their redistribution of NYSE American Agg Lite because the credit they would be eligible to receive would increase if they report additional external User quantities.
4. Enterprise Fees.
The Exchange proposes to establish an enterprise license that will reduce Exchange fees and administrative costs for subscribers that disseminate NYSE American Agg Lite. Subscribers that are broker-dealers will be able to distribute the NYSE American Agg Lite data feed for display usage to an unlimited number of recipients (professional users and non-professional users) for a monthly fee of $550, with an opportunity to lower that fee to $500 per month if they contract for twelve months of service in advance.
As proposed, the NYSE American Agg Lite data feed may be distributed pursuant to the proposed market data enterprise license only for display usage and in the context of a brokerage relationship with a broker-dealer through such broker-dealer's own devices. Purchase of an enterprise license would eliminate per User subscriber fees for NYSE American Agg Lite. Further, the Exchange proposes to waive the Access Fee and the Redistribution Fee for NYSE American Agg lite for Redistributors that pay the Professional and Non-Professional Enterprise Fee. The Exchange believes the proposed fee waiver would provide an incentive for Redistributors to subscribe to the NYSE American Agg Lite market data product at the enterprise level to reduce the fees it would pay to the Exchange and without having to report the number of users that receive the data feed from the Redistributor.
Subscribers that intend to purchase a market data enterprise license for at least twelve months may elect to purchase this product in advance for a monthly fee of $500 per month for distribution to an unlimited number of professional users and non-professional users. This feature is intended to simplify cost projections and budgeting for both subscribers and the Exchange. Subscribers that elect not to purchase this particular feature will nevertheless be able to obtain all of the market data information offered by NYSE American Agg Lite by paying the standard fee of $550 per month for distribution to an unlimited number of professional users and non-professional users. Subscribers that elect to pay the monthly fee will be able to switch to the annual fee at any time, and those that elect to purchase the annual contract would be able to change to the monthly contract, with notice, at the end of the twelve-month period.
The Exchange believes that the proposed market data enterprise license will reduce exchange fees, lower administrative costs for subscribers, and help expand the availability of market information to investors, and thereby increase participation in financial markets.
5. Non-Display Use Fees.
The Exchange proposes to establish non-display fees for the NYSE American Agg Lite data feed that are based on the non-display use categories charged by NYSE, NYSE Arca, NYSE National, the CTA, and the UTP Plan for non-display use. ^{10} Non-display use would mean accessing, processing, or consuming the NYSE American Agg Lite data feed delivered directly or through a Redistributor, for a purpose other than in support of a data recipient's display or further internal or external redistribution (“Non-Display Use”). Non-Display Use would include trading uses such as high frequency or algorithmic trading as well as any trading in any asset class, automated order or quote generation and/or order pegging, price referencing for algorithmic trading or smart order routing, operations control programs, investment analysis, order verification, surveillance programs, risk management, compliance, and portfolio management.
^{10} See Endnote 1 to the NYSE Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Market_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE Arca Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_Arca_Equities_Proprietary_Data_Fee_Schedule.pdf; Endnote 1 to the NYSE National Equities Proprietary Market Data Fees, available here: https://www.nyse.com/publicdocs/nyse/data/NYSE_National_Market_Data_Fee_Schedule.pdf; Endnote 8 to the Schedule of Market Data Charges for the CTA, available here: https://www.ctaplan.com/publicdocs/ctaplan/notifications/trader-update/Schedule%20Of%20Market%20Data%20Charges%20-%20January%201,%202015.pdf; and Non-Display Usage Fees as set forth in the UTP Plan Fee Schedule and Non-Display Policy, available here: http://utpplan.com/DOC/Datapolicies.pdf. See, e.g., Securities Exchange Act Release Nos. 69285 (April 3, 2013), 78 FR 21172 (April 9, 2013) (SR-NYSEMKT-2013-32) and 72020 (September 9, 2014), 79 FR 55040 (September 15, 2014) (SR-NYSEMKT-2014-72).
Under the proposal, for Non-Display Use of NYSE American Agg Lite, there would be three categories of, and fees applicable, to, data recipients. One, two, or three categories of Non-Display Use may apply to a data recipient.
• As proposed, the Category 1 Fee would be $1,000 per month and would apply when a data recipient's Non-Display Use of the NYSE American Agg Lite data feed is on its own behalf, not on behalf of its clients.
• As proposed, Category 2 Fees would be $1,000 per month and would apply to a data recipient's Non-Display Use of the NYSE American Agg Lite data feed on behalf of its clients.
• As proposed, Category 3 Fees would be $1,000 per month and would apply to a data recipient's Non-Display Use of the NYSE American Agg Lite data feed for the purpose of internally matching buy and sell orders within an organization, including matching customer orders for a data recipient's own behalf and/or on behalf of its clients. This category would apply to Non-Display Use in trading platforms, such as, but not restricted to, alternative trading systems (“ATSs”), broker crossing networks, broker crossing systems not filed as ATSs, dark pools, multilateral trading facilities, exchanges and systematic internalization systems. A data recipient will be charged $1,000 per month for each platform on which it uses the Non-Display data internally to match buy and sell orders, up to a cap of $3,000 per month; even if the data recipient uses the NYSE American Agg Lite data feed for more than three platforms, it will not pay more than $3,000 for such Category 3 use per month.
The description of the three non-display use categories is set forth in the Fee Schedule in endnote 1 and that endnote would be referenced in the NYSE American Agg Lite data feed fees on the Fee Schedule. The text in the endnote would remain unchanged.
Data recipients that receive the NYSE American Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. A firm subject to Category 3 Fees would be required to identify each platform that uses the NYSE American Agg Lite data feed for a Category 3 Non-Display Use basis, such as ATSs and broker crossing systems not registered as ATSs, as part of the Non-Display Use Declaration.
6. Non-Display Use Declaration Late Fee. Data recipients that receive the NYSE American Agg Lite data feed for Non-Display Use would be required to complete and submit a Non-Display Use Declaration before they would be authorized to receive the feed. Beginning in 2025, NYSE American Agg Lite data feed recipients would be required to submit, by January 31 of each year, the Non-Display Use Declaration. The requirement to submit a Non-Display Use Declaration applies to all real-time NYSE American data feed product recipients. The Exchange proposes to charge a Non-Display Use Declaration Late Fee of $1,000 per month to any data recipient that pays an Access Fee for the NYSE American Agg Lite data feed that has failed to timely complete and submit a Non-Display Use Declaration. Specifically, with respect to the Non-Display Use Declaration due by January 31 of each year, the Non-Display Use Declaration Late Fee would apply to data recipients that fail to complete and submit the Non-Display Use Declaration by the January 31 due date, and would apply beginning February 1 and for each month thereafter until the data recipient has completed and submitted the annual Non-Display Use Declaration.
The proposed Non-Display Use Declaration Late Fee applicable to NYSE American Agg Lite data feed would be set forth in endnote 2 on the Fee Schedule. As proposed, endnote 2 would be amended with the proposed addition of the following new text: “The Non-Display Declaration Late Fee will apply, beginning in 2025, to NYSE American Aggregated Lite data recipients that fail to complete and submit the annual Non-Display Use Declaration by the January 31st due date, and applies beginning February 1st and for each month thereafter until the data recipient has completed and submitted the annual Non-Display use Declaration.”
In addition, if a data recipient's use of the NYSE American Agg Lite data feed changes at any time after the data recipient submits a Non-Display Use Declaration, the data recipient must inform the Exchange of the change by completing and submitting at the time of the change an updated declaration reflecting the change of use.
7. Multiple Data Feed Fee. The Exchange proposes to establish a monthly fee, the “Multiple Data Feed Fee,” that would apply to data recipients that take a data feed for a market data product in more than two locations. Data recipients taking the NYSE American Agg Lite data feed in more than two locations would be charged $200 per additional location per month. No new reporting would be required. ^{11}
^{11} Data vendors currently report a unique Vendor Account Number for each location at which they provide a data feed to a data recipient. The Exchange considers each Vendor Account Number a location. For example, if a data recipient has five Vendor Account Numbers, representing five locations, for the receipt of the NYSE American Agg Lite data feed, that data recipient will pay the Multiple Data Feed fee with respect to three of the five locations.
8. Three-Month Fee Waiver. The Exchange currently provides a one-month free trial to any firm that subscribes to a particular NYSE American market data product for the first time. Under the current one-month trial, a first-time subscriber is not charged the Access Fee, Non-Display Fee, any applicable Professional and Non-Professional User Fee and Redistribution Fee for one calendar month. ^{12} The Exchange now proposes an additional three-month fee waiver for any Redistributor that subscribes to a particular NYSE American market data product for the first time for external redistribution. As proposed, a first-time Redistributor would be any firm that has not previously subscribed to and externally redistributed a particular NYSE American market data product listed on the Fee Schedule. As proposed, a first-time Redistributor that subscribes to a particular NYSE American market data product would not be charged the Access Fee and the Redistribution Fee for that product for three calendar months. Any other fees, including but not limited to, Non-Display Fee, any applicable Professional and Non-Professional User Fee, and Enterprise Fee would be billable after the first calendar month after a first-time Redistributor subscribes to a particular NYSE American market data product. For example, a first-time Redistributor that chooses to subscribe to NYSE American Agg Lite on June 24, 2024 would not be charged the Access Fee and the Redistribution Fee for the months of July, August, and September 2024. The proposed fee waiver would be for the three calendar months following the date a Redistributor is approved to receive access to the particular NYSE American market data product. The Exchange would provide the three-month fee waiver for each particular product to each Redistributor once.
^{12} See Fee Schedule.
The Exchange believes that providing a three-month fee waiver to NYSE American market data products listed on the Fee Schedule would enable potential Redistributors to determine whether a particular NYSE American market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed three-month fee waiver would also provide Redistributors with time to begin onboarding new clients prior to being liable to the Access Fee and the Redistribution Fee, allowing time to choose how to allocate costs and increase revenues to defray costs associated with providing a new feed to its customers.

Application of Proposed Fees
The Exchange is not required to make the NYSE American Agg Lite data feed available or to offer any specific pricing alternatives to any customers, nor is any firm required to purchase the NYSE American Agg Lite data feed. Firms that choose to purchase the NYSE American Agg Lite data feed do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange (including for order flow). Those firms are able to determine for themselves whether or not the NYSE American Agg Lite data feed or any other similar products are attractively priced.
The Exchange believes that subscribers would use the price level detail information available in the NYSE American Agg Lite data feed to make trading decisions that directly benefit the transaction services that the Exchange offers. The Exchange determined the level of the fees to charge for the NYSE American Agg Lite data feed based on the value of the Exchange's transaction services.
The Exchange believes the proposed rule change would provide an incentive both for data subscribers to subscribe to NYSE American Agg Lite and for Redistributors to subscribe to the product for purposes of providing external distribution of NYSE American Agg Lite. The Exchange believes that this proposed rule change also has the potential to attract new Redistributors for NYSE American Agg Lite.
The proposed fee structure is not novel as it is based on the fee structure currently in place for the NYSE American OpenBook feed. The Exchange is proposing fees for the NYSE American Agg Lite data feed that are based on the existing fee structure and rates that data recipients already pay for the NYSE American OpenBook feed. Specifically, the fees for the NYSE American OpenBook feed—which like the NYSE American Agg Lite data feed, includes depth of book and security status messages—consist of an Access Fee of $1,000 per month, a Professional User Fee (Per User) of $5 per month, a Non-Professional User Fee (Per User) of $1 per month, Non-Display Fees of $2,000 per month for each of Categories 1, 2 and 3. The Exchange does not currently charge a Redistribution Fee for NYSE American OpenBook. The Exchange also charges a Non-Display Use Declaration Late Fee of $1,000 per month and a Multiple Data Feed Fee of $200 per month for NYSE American OpenBook. ^{13}
^{13} See NYSE American LLC Equities Proprietary Market Data Fees at https://www.nyse.com/publicdocs/nyse/data/NYSE_American_Equities_Market_Data_Fee_Schedule.pdf.

2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, ^{14} in general, and Sections 6(b)(4) and 6(b)(5) of the Act, ^{15} in particular, in that it provides an equitable allocation of reasonable fees among users and recipients of the data and is not designed to permit unfair discrimination among customers, issuers, and brokers.
^{14} 15 U.S.C. 78f(b).
^{15} 15 U.S.C. 78f(b)(4), (5).

The Proposed Rule Change Is Reasonable
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^{16}
^{16} See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC upheld the Commission's reliance on the existence of competitive market mechanisms to evaluate the reasonableness and fairness of fees for proprietary market data:
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.” ^{17}
^{17} NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) (“ NetCoalition I ”) (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ” ^{18}
^{18} Id. at 535.
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
the Commission considers whether the exchange was subject to significant competitive forces in setting the terms of its proposal for [market data], including the level of any fees. If an exchange meets this burden, the Commission will find that its fee rule is consistent with the Act unless there is a substantial countervailing basis to find that the terms of the rule violate the Act or the rules thereunder. ^{19}
^{19} See Securities Exchange Act Release No. 34-90217 (October 16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) (“National IF Approval Order”) (internal quotation marks omitted), quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December 9, 2008).
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in Ohio v. American Express, platforms are firms that act as intermediaries between two or more sets of agents, and typically the choices made on one side of the platform affect the results on the other side of the platform via externalities, or “indirect network effects.” ^{20} Externalities are linkages between the different sides of a platform such that one cannot understand pricing and competition for goods or services on one side of the platform in isolation; one must also account for the influence of the other sides. As the Supreme Court explained:
^{20} Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side. ^{21}
^{21} Id. at 2281.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41E, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in NetCoalition I, “[n]o one disputes that competition for order flow is fierce.” ^{22} The court further noted that “no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers,” and that an exchange “must compete vigorously for order flow to maintain its share of trading volume.” ^{23}
^{22} NetCoalition I, 615 F.3d at 544 (internal quotation omitted).
^{23} Id.
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^{24} The Commission's Division of Trading and Markets has also recognized that with so many “operating equities exchanges and dozens of ATSs, there is vigorous price competition among the U.S. equity markets and, as a result, [transaction] fees are tailored and frequently modified to attract particular types of order flow, some of which is highly fluid and price sensitive.” ^{25} Indeed, today, equity trading is currently dispersed across 16 exchanges, ^{26} numerous alternative trading systems, ^{27} broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share. ^{28}
^{24} See Securities Exchange Act Release No. 61358, 75 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^{25} Commission Division of Trading and Markets, Memorandum to EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
^{26} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
^{27} See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^{28} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020; ^{29} Members Exchange (MEMX), which began operations as an exchange on September 29, 2020; ^{30} and Miami International Holdings (MIAX), which began operations of its first equities exchange on September 29, 2020. ^{31}
^{29} See LTSE Market Announcement: MA-2020-020, dated August 14, 2020, announcing LTSE production securities phase-in planned for August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf and LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
^{30} As of October 29, 2020, MEMX is trading all NMS symbols. See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
^{31} See MIAX Pearl Press release, dated September 29, 2020, available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others). ^{32}
^{32} MEMX Home Page (“Founded by members and investors, MEMX aims to drive simplicity, efficiency, and competition in equity markets.”), available at https://memx.com/.
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.” ^{33} Nor is this a new phenomenon: exchange customers formed BATS to compete with incumbent exchanges and once registered as an exchange in 2008, BATS did not initially charge for market data. The BATS venture was a financial success for its founders, first through recouping their investment in its initial public offering and then in the subsequent sale of BATS to Cboe, which now charges for market data from those exchanges. Notably, MEMX has some of the same founding broker-dealer customers, leading some to dub MEMX “BATS 2.0.” ^{34}
^{33} MEMX home page, available at https://memx.com/.
^{34} See “MEMX turns up the heat on US stock exchanges,” Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also “US equities exchanges: If you can't beat them, join them,” Euromoney, February 13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable. ^{35} And low barriers to entry act as a market check on high prices. ^{36}
^{35} United States v. SunGard Data Sys., 172 F. Supp. 2d 172, 186 (D.D.C. 2001) (recognizing that “[a]s a matter of law, courts have generally recognized that when a customer can replace the services of an external product with an internally-created system, this captive output ( i.e. the self-production of all or part of the relevant product) should be included in the same market.”). In SunGard, the court rejected the Antitrust Division's attempt to block SunGuard's acquisition of the disaster recovery assets of Comdisco on the basis that the acquisition would “substantially lessen competition in the market for shared hotsite disaster recovery services,” when the evidence showed that “internal hotsites” created by customers competed with the “external shared hotsite business” engaged in by the merging parties. Id. at 173-74, 187.
^{36} United States v. Baker Hughes, 908 F.2d 981, 987 (1990) (“In the absence of significant barriers [to entry], a company probably cannot maintain supracompetitive pricing for any length of time.”); see also David S. Evans and Richard Schmalensee, Markets with Two-Sided Platforms, in 1 Issues In Competition Law And Policy 667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange mergers in 2005 and 2006 were approved by competition authorities in part in reliance on planned and likely entry of other firms).
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand.
More specifically, in setting fees for the NYSE American Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
Subscribing to the NYSE American Agg Lite is entirely optional. The Exchange is not required to make the NYSE American Agg Lite available to any customers, nor is any customer required to purchase the NYSE American Agg Lite market data feed. Unlike some other data products ( e.g., the consolidated quotation and last-sale information feeds) that firms are required to purchase in order to fulfil regulatory obligations, ^{37} a customer's decision whether to purchase the NYSE American Agg Lite is entirely discretionary. Most firms that choose to subscribe to the NYSE American Agg Lite would do so for the primary goals of using it to increase their revenues, reduce their expenses, and in some instances to compete directly with the Exchange for order flow. Such firms are able to determine for themselves whether the NYSE American Agg Lite data feed is necessary for their business needs, and if so, whether or not it is attractively priced. If the NYSE American Agg Lite data feed does not provide sufficient value to firms based on the uses those firms may have for it, such firms may simply choose to conduct their business operations in ways that do not use the NYSE American Agg Lite data feed.
^{37} The Exchange notes that broker-dealers are not required to purchase proprietary market data to comply with their best execution obligations. See In the Matter of the Application of Securities Industry and Financial Markets Association for Review of Actions Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement in Regulation NMS or any other rule that proprietary data be utilized for order routing decisions, and some broker-dealers and ATSs have chosen not to do so.
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make NYSE American Agg Lite available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless NYSE American Agg Lite can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for the NYSE American Agg Lite data feed, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition.
Even putting aside the facts that exchanges are platforms and that pricing decisions on the two sides of the platform are intertwined, the Exchange is constrained in setting the proposed market data fees by the availability of numerous substitute market data products. The Commission has been clear that substitute products need not be identical, but only substantially similar to the product at hand. ^{38}
^{38} For example, in the National IF Approval Order, the Commission recognized that for some customers, the best bid and offer information from consolidated data feeds may function as a substitute for the NYSE National Integrated Feed product, which contains order by order information. See National IF Approval Order, supra note 19, at 67397 [release p. 21] (“[I]nformation provided by NYSE National demonstrates that a number of executing broker-dealers do not subscribe to the NYSE National Integrated Feed and executing broker-dealers can otherwise obtain NYSE National best bid and offer information from the consolidated data feeds.” (internal quotations omitted)).
The NYSE American Aggregated Lite market data feed is subject to significant competitive forces that constrain its pricing. Specifically, the NYSE American Agg Lite data feed competes head-to-head with similar market data products currently offered by the four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), each of which offers a market data product called BZX Summary Depth, BYX Summary Depth, EDGA Summary Depth and EDGX Summary Depth, respectively (collectively, the “Cboe Summary Depth”). ^{39} Similar to Cboe Summary Depth, NYSE American Agg Lite can be utilized by vendors and subscribers to quickly access and distribute aggregated order book data. As noted above, NYSE American Agg Lite, similar to Cboe Summary Depth, would provide aggregated depth per security, including the bid, ask and share quantity for orders received by NYSE American, except unlike Cboe Summary Depth, which provides aggregated depth per security for up to five price levels, NYSE American Agg Lite would provide aggregated depth per security for up to ten price levels on both the bid and offer sides of the NYSE American limit order book as well as auction imbalance data.
^{39} See BZX Rule 11.22(m) BZX Summary Depth; BYX Rule 11.22(k) BYX Summary Depth; EDGA Rule 13.8(f) EDGA Summary Depth; and EDGX Rule 13.8(f) EDGX Summary Depth. The Cboe Summary Depth offered by BZX, BYX, EDGA and EDGX are each a data feed that offers aggregated two-sided quotations for all displayed orders for up to five (5) price levels and contains the individual last sale information, market status, trading status and trade break messages.
The specific fees that the Exchange proposes for the NYSE American Agg Lite data feed are reasonable for the following additional reasons.
Overall. The Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are reasonable because they represent the value of the data available but also the value of receiving the data on an aggregated basis. The Exchange believes that providing vendors and subscribers with the option to subscribe to a market data product that integrates a subset of data from existing products and where such aggregated data is published at a pre-defined interval, thus lowering bandwidth, infrastructure and operational requirements, would allow vendors and subscribers to choose the best solution for their specific business needs.
The Exchange believes the proposed fees for the NYSE American Agg Lite data feed are also reasonable when compared to fees for comparable products, such as the Cboe Summary Depth. ^{40} Additionally, the Exchange is proposing fees for the NYSE American Agg Lite data feed that are based on the existing fee structure that data recipients already pay for the NYSE American's other market data products. The Exchange believes that adopting the same fee structure would reduce administrative burdens on NYSE American data subscribers that also currently subscribe to market data feeds from NYSE American.
^{40} See https://cdn.cboe.com/resources/membership/US_Market_Data_Product_Price_List.pdf.
Access Fee. The Exchange believes that is reasonable to charge access fees because of the value of the data to data recipients in their profit-generating activities. The Exchange believes that the proposed monthly Access Fee of $500 for the NYSE American Aggregated Lite data feed is reasonable because it is lower than the fees charged by BZX, BYX, EDGA, and EDGX, each of which charges between $2,500 per month to $5,000 per month for both Internal Distribution and External Distribution of the Cboe Summary Depth market data product. ^{41}
^{41} Id.
User Fees. The Exchange believes that having separate Professional and Non-Professional User fees for the NYSE American Agg Lite data feed is reasonable because it will make the product more affordable and result in greater availability to Professional and Non-Professional Users. Not charging a Non-Professional User fee is reasonable because it provides a cost-effective method for Non-Professional Users to access the NYSE American Agg Lite data feed by providing the same data that is available to Professional Users. The proposed monthly Professional User Fee (Per User) of $1 and monthly Non-Professional User Fee (Per User) of $0 are reasonable because they are comparable to user fees generally charged by exchanges. For example, NYSE American charges a monthly Professional User Fee (Per User) of $5 and a monthly Non-Professional User Fee (Per User) of $1 for the NYSE American OpenBook feed. ^{42} Although the proposed User Fees for Professional and Non-Professional Users are higher than those charged by BZX, BYX, EDGA and EDGX, the Exchange notes that User fees are only a subset of the total fees that vendors and subscribers pay and the lower fees proposed to access and redistribute NYSE American Agg Lite would provide such market data recipients with a more affordable alternative to existing substitutes offered by the Exchange and its competitors.
^{42} See Fee Schedule.
Redistribution Fees. The Exchange believes that it is reasonable to charge redistribution fees because vendors receive value from redistributing the data in their business products for their customers. The Exchange believes that charging a Redistribution Fee is reasonable because the vendors that would be charged such a fee profit by re-transmitting the Exchange's market data to their customers. This fee would be charged only once per month to each vendor account that redistributes the NYSE American Agg Lite data feed, regardless of the number of customers to which that vendor redistributes the data. The Exchange believes the proposed monthly Redistribution Fee of $250 for the NYSE American Agg Lite data feed is reasonable because it is nominal and lower than the fees charged by BZX, BYX, EDGA and EDGX, each of which charges considerably more for both Internal Distribution and External Distribution of the Cboe Summary Depth market data feed. ^{43}
^{43} See supra, note 40.
Enterprise Fees. The Exchange believes the proposed enterprise license is reasonable because it would reduce exchange fees, lower administrative costs for subscribers that are broker-dealers and help expand the availability of market information to investors, and thereby increase participation in financial markets. Subscribers that are broker-dealers would be able to disseminate the NYSE American Agg Lite data feed for display usage to an unlimited number of professional users and non-professional users for a monthly fee of $550, or $500 if they contract for twelve months of service in advance. The proposed enterprise license would result in lower fees for subscribers able to reach the largest audience of investors, including retail investors. Discounts for broader dissemination of market data information have routinely been adopted by exchanges and permitted by the Commission as equitable allocations of reasonable dues, fees and charges. ^{44}
^{44} For example, the Commission has permitted pricing discounts for market data under Nasdaq Rules 7023(c) and 7047(b). See also Securities Exchange Act Release No. 82182 (November 30, 2017), 82 FR 57627 (December 6, 2017) (SR-NYSE-2017-60) (changing an enterprise fee for NYSE BBO and NYSE Trades).
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are reasonable, because they reflect the value of the data to the data recipients in their profit-generating activities and do not impose the burden of counting non-display devices.
The Exchange believes that the proposed Non-Display Use fees reflect the significant value of the non-display data use to data recipients, which purchase such data on an entirely voluntary basis. Non-display data can be used by data recipients for a wide variety of profit-generating purposes, including proprietary and agency trading and smart order routing, as well as by data recipients that operate order matching and execution platforms that compete directly with the Exchange for order flow. The data also can be used for a variety of non-trading purposes that indirectly support trading, such as risk management and compliance. Although some of these non-trading uses do not directly generate revenues, they can nonetheless substantially reduce a recipient's costs by automating such functions so that they can be carried out in a more efficient and accurate manner and reduce errors and labor costs, thereby benefiting recipients. The Exchange believes that charging for non-trading uses is reasonable because data recipients can derive substantial value from such uses, for example, by automating tasks so that can be performed more quickly and accurately and less expensively than if they were performed manually.
Previously, the non-display use data pricing policies of many exchanges required customers to count, and the exchanges to audit the count of, the number of non-display devices used by a customer. As non-display use grew more prevalent and varied, however, exchanges received an increasing number of complaints about the impracticality and administrative burden associated with that approach. In response, the Exchange and its affiliated exchanges developed a non-display use pricing structure that does not require non-display devices to be counted or those counts to be audited, and instead looks merely at the three following categories of potential use of non-display data: use of the data on the customer's own behalf (Category 1), use on behalf of clients (Category 2), and use to internally match buy and sell orders within an organization (Category 3).
The Exchange believes that it is reasonable to segment the fee for non-display use into these three categories. As noted above, the uses to which customers can put the NYSE American Agg Lite data feed are numerous and varied, and the Exchange believes that charging separate fees for these separate categories of use is reasonable because it reflects the actual value the customer derives from the data, based upon how many categories of use the customer makes of the data. Segmenting the fees for non-display data in this way avoids the unreasonable result of customers that make only limited non-display use of the data paying the same fees as customers that use the data for numerous different revenue-generating and cost-saving purposes.
The Exchange believes that the proposed fees of $1,000 per month for each of Categories 1, 2, and 3 is reasonable. These fees are comparable to non-display use fees generally charged by exchanges. For example, the fees for Non-Display Use of NYSE American OpenBook for Categories 1, 2 and 3 is $2,000 per month. ^{45} The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using non-display data in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments.
^{45} See Fee Schedule.
The Exchange also believes that, regarding Category 3 fees, it is reasonable to charge $1,000 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is reasonable to cap such fees for Category 3 use at $3,000 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE American Agg Lite data feed for use by their trading platforms.
The proposed Non-Display Use fees for the NYSE American Agg Lite data feed are also reasonable because they take into account the extra value of receiving the data for Non-Display Use on an integrated basis. The Exchange believes that the proposed fees directly and appropriately reflect the significant value of using the NYSE American Agg Lite data feed on a non-display basis in a wide range of computer-automated functions relating to both trading and non-trading activities and that the number and range of these functions continue to grow through innovation and technology developments. ^{46}
^{46} See also Exchange Act Release No. 69157, March 18, 2013, 78 FR 17946, 17949 (March 25, 2013) (SR-CTA/CQ-2013-01) (“[D]ata feeds have become more valuable, as recipients now use them to perform a far larger array of non-display functions. Some firms even base their business models on the incorporation of data feeds into black boxes and application programming interfaces that apply trading algorithms to the data, but that do not require widespread data access by the firm's employees. As a result, these firms pay little for data usage beyond access fees, yet their data access and usage is critical to their businesses.”).
Non-Display Use Declaration Late Fee. The Exchange believes that it is reasonable to require annual submissions of the Non-Display Use Declaration so that the Exchange will have current and accurate information about the use of the NYSE American Agg Lite data feed and can correctly assess fees for the uses of the NYSE American Agg Lite data feed. Requiring annual submissions of such declarations is reasonable because it also allows users to re-assess their own usage each year.
The Exchange believes that it is reasonable to impose a late fee in connection with the submission of the Non-Display Use Declaration. In order to correctly assess fees for the non-display use of the NYSE American Agg Lite data feed, the Exchange needs to have current and accurate information about the use of the NYSE American Agg Lite data feed. The failure of data recipients to submit the Non-Display Use Declaration on time leads to potentially incorrect billing and administrative burdens, including tracking and obtaining late Non-Display Use Declarations and correcting and following up on payments owed in connection with late Non-Display Use Declarations. The purpose of the late fee is to incent data recipients to submit the Non-Display Use Declaration promptly to avoid the administrative burdens associated with the late submission of Non-Display Use Declarations.
Multiple Data Feed Fee. The Exchange believes that it is reasonable to require data recipients to pay a modest additional fee for taking a data feed for a market data product in more than two locations, because such data recipients can derive substantial value from being able to consume the product in as many locations as they want. In addition, there are administrative burdens associated with tracking each location at which a data recipient receives the product. The Multiple Data Feed Fee is designed to encourage data recipients to better manage their requests for additional data feeds and to monitor their usage of data feeds. The proposed fee is designed to apply to data feeds received in more than two locations so that each data recipient can have one primary and one backup data location before having to pay a multiple data feed fee.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE American Agg Lite data feed to new Redistributors for three calendar months is reasonable because it would enable potential Redistributors to determine whether a particular NYSE American market data product provides value to their business models before fully committing to expend development and implementation costs related to the receipt of that product, and is intended to encourage increased use of the Exchange's market data products by defraying some of the development and implementation costs Redistributors would ordinarily have to expend before using a product. The proposed fee waiver would also allow Redistributors to become familiar with the feed and determine whether it suits their needs without incurring fees. Making a new market data product available without charging a fee for three months is consistent with offerings of other exchanges. For example, BZX offers subscribers of BZX Summary Depth a three-month credit for external distribution, which is akin to the three-month fee waiver proposed by the Exchange. ^{47}
^{47} See e.g., Securities Exchange Act Release No. 94432 (March 16, 2022), 87 FR 16277 (March 22, 2022) (SR-CboeBZX-2022-015) (Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees Applicable to Various Market Data Products).
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are reasonable.

The Proposed Fees Are Equitably Allocated
The Exchange believes the proposed fees for the NYSE American Agg Lite data feed are allocated fairly and equitably among the various categories of users of the feed, and any differences among categories of users are justified.
Overall. The Exchange believes that the proposed fees are equitably allocated because they will apply to all data recipients that choose to subscribe to the NYSE American Agg Lite data feed. Any subscriber or vendor that chooses to subscribe to the NYSE American Agg Lite data feed is subject to the same Fee Schedule, regardless of what type of business they operate or the use they plan to make of the data feed. Subscribers and vendors are not required to purchase the NYSE American Agg Lite data feed and may choose to receive the data on the NYSE American Agg Lite data feed regardless of what type of business they operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee of $500 for the NYSE American Agg Lite data feed is equitably allocated because it would be charged on an equal basis to all data recipients that receive a data feed of the NYSE American Agg Lite data feed, regardless of what type of business they operate or the use they plan to make of the data feed.
User Fees. The Exchange believes that the fee structure differentiating Professional User fees ($1 per month per user) from Non-Professional User fees ($0 per month per user) for display device access to the NYSE American Agg Lite data feed is equitable. This structure has long been used by the Exchange to reduce the price of data to Non-Professional Users and make it more broadly available. ^{48} Offering the NYSE American Agg Lite data feed to Non-Professional Users with the same data as is available to Professional Users results in greater equity among data recipients. These user fees would be charged uniformly to all display devices that have access to the NYSE American Agg Lite data feed.
^{48} See, e.g., Securities Exchange Act Release No. 70212 (August 15, 2013), 78 FR 51775 (August 21, 2013) (SR-NYSEMKT-2013-69) (lowering the Non-Professional User Fee (Per User) for NYSE MKT BBO and Trades); Securities Exchange Act Release No. 20002, File No. S7-433 (July 22, 1983), 48 FR 34552 (July 29, 1983) (establishing Non-Professional fees for CTA data); NASDAQ BX Equity 7 Pricing Schedule, Section 123.
Redistribution Fees. The Exchange believes the proposed monthly fee of $250 for redistributing the NYSE American Agg Lite data feed is equitably allocated because it would be charged on an equal basis to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise license is equitably allocated because it would be available on an equal basis to all subscribers that are broker-dealers, each of whom would benefit from reduced exchange fees and from lower administrative costs. Moreover, the specific feature of the proposed enterprise license that will allow subscribers to lower fees by subscribing to a twelve-month contract is also an equitable allocation because all subscribers will have the same option of choosing between the stability of a fixed, lower rate, and the more flexible option of maintaining the ability to change market data products after a month of service. Subscribers will be free to move from the monthly to the annual rate at any time, or from annual to a monthly fee, with notice, at the expiration of the twelve-month period.
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are equitably allocated because they would require subscribers to pay fees only for the uses they actually make of the data. As noted above, non-display data can be used by data recipients for a wide variety of profit-generating purposes (including trading, risk management, and compliance) as well as purposes that do not directly generate revenues but nonetheless substantially reduce the recipient's costs by automating certain functions. The Exchange believes that it is equitable to charge non-display data subscribers a $1,000 fee for each category of use they make of such data—namely, using the data on their own behalf (Category 1), on behalf of their clients (Category 2), and to internally match buy and sell orders within an organization (Category 3)—because this fee structure results in subscribers with greater uses of the data paying higher fees, and subscribers with fewer uses of the data paying lower fees. This segmented fee structure is also equitable because no subscriber of non-display data would be charged a fee for a category of use in which it did not actually engage.
The Exchange also believes that, regarding Category 3 fees, it is equitable to charge $1,000 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is equitable to cap such fees for Category 3 use at $3,000 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE American Agg Lite data feed for use by their trading platforms.
Non-Display Use Declaration Late Fee. The Exchange believes that the proposed fee of $1,000 per month for a late Non-Display Use Declaration is equitably allocated because it applies to any data recipient that pays an Access Fee for the NYSE American Agg Lite data feed but has failed to complete and submit a Non-Display Use Declaration. In addition, the Exchange believes that it is equitable to charge a late fee to subscribers who fail to timely submit their Non-Display Use Declarations because their failure to do so leads to potentially incorrect billing and administrative burdens on the part of the Exchange. The Exchange believes it is equitable to defray these administrative costs by imposing a late fee only on subscribers' whose declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per month per location fee to data recipients taking the NYSE American Agg Lite data feed in more than two locations is equitable because it would apply to all such customers, regardless of what type of business they operate or the use they make of the data feed. In addition, the Exchange believes that it is equitable to charge a fee to subscribers for taking a data feed in more than two locations because there are administrative burdens on the part of the Exchange associated with tracking each location at which a data recipient receives the product. The Exchange believes that it is equitable for it to defray these administrative costs by imposing a modest fee only on subscribers who seek to take the feed in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE American Agg Lite data feed to new Redistributors for three calendar months is equitable because it would apply to any first-time Redistributor, regardless of the use they plan to make of the feed. As proposed, any first-time Redistributor of the NYSE American Agg Lite data feed would not be charged the Access Fee and the Redistribution Fee for three calendar months. The Exchange believes it is equitable to restrict the availability of this three-month fee waiver to Redistributors that have not previously subscribed to and redistributed the NYSE American Agg Lite data feed, since customers who are current or previous subscribers of the feed are already familiar with it and are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are equitably allocated.

The Proposed Fees Are Not Unfairly Discriminatory
The Exchange believes the proposed fees for the NYSE American Agg Lite data feed are not unfairly discriminatory because any differences in the application of the fees are based on meaningful distinctions between customers, and those meaningful distinctions are not unfairly discriminatory between customers.
Overall. The Exchange believes that the proposed fees are not unfairly discriminatory because they would apply to all data recipients that choose to subscribe to the NYSE American Agg Lite data feed. Any subscriber, including Redistributor, that chooses to subscribe to the NYSE American Agg Lite data feed is subject to the same Fee Schedule, regardless of what type of business they operate or the use they plan to make of the data feed. Subscribers, including Redistributors, may choose to receive the data on the NYSE American Agg Lite data feed regardless of what type of business they operate or the use they plan to make of the data feed.
Access Fee. The Exchange believes the proposed monthly Access Fee of $500 for the NYSE American Agg Lite data feed is not unfairly discriminatory because it would be charged on an equal basis to all data recipients that receive a data feed of the NYSE American Agg Lite, regardless of what type of business they operate or the use they plan to make of the data feed.
User Fees. The Exchange believes that the fee structure differentiating Professional User fees ($1 per month per user) from Non-Professional User fees ($0 per month per user) for display device access to the NYSE American Agg Lite data feed is not unfairly discriminatory. This structure has long been used by the Exchange to reduce the price of data to Non-Professional Users and make it more broadly available. ^{49} Offering the NYSE American Agg Lite data feed to Non-Professional Users with the same data as is available to Professional Users results in greater equity among data recipients. These user fees would be charged uniformly to all display devices that have access to the NYSE American Agg Lite data feed.
^{49} Id.
Redistribution Fees. The Exchange believes the proposed monthly fee of $250 for redistributing the NYSE American Agg Lite data feed is not unfairly discriminatory because it would be charged on an equal basis to those Redistributors that choose to redistribute the feed.
Enterprise Fees. The Exchange believes the proposed enterprise license will not unfairly discriminate between customers, issuers, brokers or dealers. The Act does not prohibit all distinctions among customers, but only discrimination that is unfair, and it is not unfair discrimination to charge those subscribers that are able to reach the largest audiences of investors, including retail investors, a lower fee for incremental investors in order to encourage the widespread distribution of market data. This principle has been repeatedly endorsed by the Commission, as evidenced by the approval of enterprise licenses for other market data products. ^{50} Moreover, the proposed enterprise license will be subject to significant competition, and that competition will ensure that there is no unfair discrimination. Each subscriber will be able to accept or reject the license depending on whether it will or will not lower costs for that particular subscriber, and, if the license is not sufficiently competitive, the Exchange may lose market share. The proposed enterprise license will compete with other enterprise licenses of the Exchange, underlying fee schedules promulgated by the Exchange, and enterprise licenses and fee structures implemented by other exchanges. As such, it is a voluntary product for which market participants can readily find substitutes. Accordingly, the Exchange is constrained from introducing a fee that would be inequitable or unfairly discriminatory.
^{50} See e.g., Securities Exchange Act Release No. 83751 (July 31, 2018), 83 FR 38428 (August 6, 2018) (SR-NASDAQ-2018-058) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Lower Fees and Administrative Costs for Distributors of Nasdaq Basic, Nasdaq Last Sale, NLS Plus and the Nasdaq Depth-of-Book Products Through a Consolidated Enterprise License).
Non-Display Use Fees. The Exchange believes the proposed Non-Display Use fees are not unfairly discriminatory because they would require subscribers for non-display use to pay fees only for the categories of use they actually make of the data. As noted above, non-display data can be used by data recipients for a wide variety of profit-generating purposes (including trading, risk management, and compliance) as well as purposes that do not directly generate revenues but nonetheless substantially reduce the recipient's costs by automating certain functions. The Exchange believes that it is not unfairly discriminatory to charge non-display data subscribers a $1,000 per month fee for each category of use they make of such data—namely, using the data on their own behalf (Category 1), on behalf of their clients (Category 2), and to internally match buy and sell orders within an organization (Category 3)—because this fee structure results in subscribers with greater uses for the data paying higher fees, while subscribers with fewer uses of the data pay lower fees. This segmented fee structure is not unfairly discriminatory because no subscriber of non-display data would be charged a fee for a category of use in which it did not actually engage.
The Exchange also believes that, regarding Category 3 fees, it is not unreasonably discriminatory to charge $1,000 per month for each trading platform on which the data recipient uses the Non-Display data, because such use of the data is directly in competition with the Exchange and the Exchange should be permitted to recoup some of its lost trading revenue by charging for the data that makes such competition possible. The Exchange believes that it is not unreasonably discriminatory to cap such fees for Category 3 use at $3,000 per month per data recipient, because a higher monthly fee may potentially dissuade competitors from buying the NYSE American Agg Lite data feed for use by their trading platforms.
Non-Display Use Declaration Late Fee. The Exchange believes that the proposed fee of $1,000 per month for a late Non-Display Use Declaration is not unfairly discriminatory because it applies to any data recipient that pays an Access Fee for the NYSE American Agg Lite data feed but has failed to complete and submit a Non-Display Use Declaration. In addition, the Exchange believes that it is not unfairly discriminatory to charge a late fee to subscribers who fail to timely submit their Non-Display Use Declarations because their failure to do so leads to potentially incorrect billing and administrative burdens on the part of the Exchange. Nor is it unfairly discriminatory for the Exchange to defray these administrative costs by imposing a late fee only on subscribers' whose declarations were late, as opposed to all subscribers.
Multiple Data Feed Fee. The Exchange believes that the $200 per month per location fee to data recipients taking the NYSE American Agg Lite data feed in more than two locations is not unfairly discriminatory because it would apply to all such customers, regardless of what type of business they operate or the use they make of the data feed. In addition, the Exchange believes that it is not unfairly discriminatory to charge a fee to subscribers for taking a data feed in more than two locations because there are administrative burdens on the part of the Exchange associated with tracking each location at which a data recipient receives the product. The Exchange believes that it is not unfairly discriminatory for it to defray these administrative costs by imposing a modest fee only on subscribers who seek to take the feed in more than two locations, as opposed to all subscribers.
Three-Month Fee Waiver. The Exchange believes the proposal to waive the Access Fee and the Redistribution Fee for the NYSE American Agg Lite data feed to new Redistributors for three months is not unfairly discriminatory because it would apply to any first-time Redistributor, regardless of the use they plan to make of the feed. As proposed, any first-time Redistributor of the NYSE American Agg Lite data feed would not be charged the Access Fee and the Redistribution Fee for three calendar months. The Exchange believes it is not unfairly discriminatory to restrict the availability of this three-month fee waiver to Redistributors that have not previously subscribed to the NYSE American Agg Lite data feed, since Redistributors who are current or previous subscribers of the feed are already familiar with it and are able to determine whether it suits their needs.
For all of the foregoing reasons, the Exchange believes that the proposed fees for the NYSE American Agg Lite data feed are not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed fees will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.
Intramarket Competition. The Exchange believes that the proposed fees do not put any market participants at a relative disadvantage compared to other market participants. As noted above, the proposed fee schedule would apply to all subscribers, including Redistributors, of the NYSE American Agg Lite data feed, and customers may not only choose whether to subscribe to the feed at all, but may tailor their subscriptions by choosing particular uses of the feed but not others ( e.g., Category 1 only versus all three categories; display device access only versus non-display use).
The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition. As shown above, to the extent that particular proposed fees apply to only a subset of subscribers ( e.g., Category 2 fees apply only to those making non-display use on behalf of clients; late fees apply only to customers who fail to timely submit their declarations), those distinctions are not unfairly discriminatory and do not unfairly burden one set of customers over another. To the contrary, by tailoring the proposed fees in this manner, the Exchange believes that it has eliminated the potential burden on competition that might result from unfairly asking subscribers to pay fees for services they did not use, or late fees they did not actually incur.
Intermarket Competition. The Exchange believes that the proposed fees do not impose a burden on competition or on other SROs that is not necessary or appropriate. As noted above, exchanges are platforms for market data and trading. In setting the proposed fees, the Exchange was constrained by the availability of numerous substitute platforms also offering market data products and trading, and low barriers to entry mean new exchange platforms are frequently introduced. The fact that exchanges are platforms ensures that no exchange can make pricing decisions for one side of its platform without considering, and being constrained by, the effects that price will have on the other side of the platform. In setting fees for the NYSE American Agg Lite data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers will have its pick of an increasing number of alternative platforms to use instead of the Exchange. Given this intense competition between platforms, no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Many other exchanges offer proprietary data feeds like the NYSE American Agg Lite data feed, supplying depth of book order data, security status updates, stock summary messages, and the exchange's best bid and offer at any given time, on a real-time basis. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another platform, in which case the platform would stand to lose both market data and trading fees. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) ^{51} of the Act and subparagraph (f)(2) of Rule 19b-4 ^{52} thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
^{51} 15 U.S.C. 78s(b)(3)(A).
^{52} 17 CFR 240.19b-4(f)(2).
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) ^{53} of the Act to determine whether the proposed rule change should be approved or disapproved.
^{53} 15 U.S.C. 78s(b)(2)(B).

IV. Solicitation of Comments
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:

Electronic Comments
• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov. Please include file number SR-NYSEAMER-2024-31 on the subject line.

Paper Comments
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSEAMER-2024-31. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-NYSEAMER-2024-31 and should be submitted on or before June 24, 2024.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ^{54}
^{54} 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100232; File No. SR-NYSE-2024-30]
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the NYSE Proprietary Market Data Fee Schedule
May 28, 2024.
Pursuant to Section 19(b)(1) ^1 of the Securities Exchange Act of 1934 (the “Act”) ^2 and Rule 19b-4 thereunder, ^3 notice is hereby given that, on May 13, 2024, New York Stock Exchange LLC (“NYSE” or the “Exchange”) filed with the Securities and Exchange Commission (the “Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.
^1 15 U.S.C. 78s(b)(1).
^2 15 U.S.C. 78a.
^3 17 CFR 240.19b-4.

I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The Exchange proposes to amend the NYSE Proprietary Market Data Fee Schedule to establish an Access Fee for the NYSE Pillar Depth data feed. The Exchange proposes to implement the proposed fee change on May 13, 2024. The proposed rule change is available on the Exchange's website at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
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.

A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the NYSE Proprietary Market Data Fee Schedule (“Fee Schedule”). Specifically, the Exchange proposes to establish an Access Fee for the NYSE Pillar Depth (“Pillar Depth”) data feed, effective May 13, 2024. The proposed fee for Pillar Depth would be $250 per month, provided that the market data recipient separately pays the applicable fees for the five existing market data products underlying the Pillar Depth data feed, consistent with the existing fee structures for those market data products.
The Pillar Depth data feed is a frequency-based depth of book market data feed that provides a consolidated view of the ten (10) best price levels on both the bid and offer sides across the NYSE Group's combined limit order books for securities traded on the NYSE Group equities markets, i.e., NYSE, NYSE American LLC (“NYSE American”), NYSE Arca, Inc. (“NYSE Arca”), NYSE Chicago, Inc. (“NYSE Chicago”) and NYSE National, Inc. (“NYSE National”), for which the NYSE Group equities markets report quotes and trades under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. ^4 In other words, Pillar Depth would be a compilation of limit order data that the Exchange provides to vendors and subscribers, updated no less frequently than once per second. Specifically, the Pillar Depth data feed consists of certain data elements from five market data feeds ^5 —NYSE Aggregated Lite, ^6 NYSE American Aggregated Lite, ^7 NYSE Arca Aggregated Lite, ^8 NYSE Chicago Aggregated Lite ^9 and NYSE National Aggregated Lite. ^{10}
^4 See Securities Exchange Act Release No. 100030 (April 25, 2024), 89 FR 35260 (May 1, 2024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE Pillar Depth Data Feed) (SR-NYSE-2024-24) (“Pillar Depth Product Filing”).
^5 Each of these data feeds are offered pursuant to preexisting and effective rules and fees filed with the Commission. This filing does not affect those rules, or the fees associated with these underlying data feeds or the ability for the Exchange, NYSE American, NYSE Arca, NYSE Chicago or NYSE National to amend the data feeds or fees associated with those data feeds pursuant to a separate rule filing.
^6 See Securities Exchange Act Release No. 99689 (March 7, 2024) 89 FR 18466 (March 13, 2024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE Aggregated Lite Market Data Feed) (SR-NYSE-2024-12).
^7 See Securities Exchange Act Release No. 99690 (March 7, 2024) 89 FR 18445 (March 13, 2024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE American Aggregated Lite Market Data Feed) (SR-NYSEAMER-2024-14).
^8 See Securities Exchange Act Release No. 99713 (March 12, 2024) 89 FR 19381 (March 18, 2024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE Arca Aggregated Lite Market Data Feed) (SR-NYSEARCA-2024-22).
^9 See Securities Exchange Act Release No. 99691 (March 7, 2024) 89 FR 18468 (March 13, 2024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE Chicago Aggregated Lite Market Data Feed) (SR-NYSECHX-2024-08).
^{10} See Securities Exchange Act Release No. 99715 (March 12, 2024) 89 FR 19383 (March 18, 2024) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish the NYSE National Aggregated Lite Market Data Feed) (SR-NYSENAT-2024-06).
The Exchange, NYSE American, NYSE Arca, NYSE Chicago and NYSE National are the exclusive distributors of the five Aggregated Lite feeds from which certain data elements are taken to create the Pillar Depth data feed. By contrast, the Exchange would not be the exclusive distributor of the aggregated and consolidated information that comprises the Pillar Depth data feed. Any entity that receives, or elects to receive, the five underlying Aggregated Lite data feeds would be able, if it so chooses, to create a data feed with the same information included in Pillar Depth and sell and distribute it to its clients so that it could be received by those clients as quickly as the Pillar Depth data feed would be received by those same clients. ^{11}
^{11} See Pillar Depth Product Filing, supra note 4.
As proposed, the Exchange would charge a $250 per month Access Fee for Pillar Depth, which reflects the value of the aggregation and consolidation function that the Exchange performs in creating Pillar Depth. To obtain Pillar Depth, a market data recipient would need to pay any applicable fees for the five data feeds underlying Pillar Depth, consistent with the existing fee schedules for those market data products as previously filed with the Commission and which may be amended from time to time, including any applicable Access, Redistribution, Professional User, Non-Professional User, Non-Display or Enterprise fees. The Exchange proposes to denote the requirement for market data recipients to pay the applicable fees for the five data feeds underlying Pillar Depth in proposed footnote 3 on the Fee Schedule.
When subscribing to Pillar Depth, the underlying data feeds would be delivered in the Pillar Depth consolidated format, as described above, but charged for as if the recipient were receiving the underlying feeds directly. The Exchange notes that if a subscriber chooses to receive the five underlying feeds both separately and in the Pillar Depth format, such subscriber may be subject to additional Professional User or Non-Professional User fees to reflect the distribution of both Pillar Depth (which incorporates the five underlying data feeds) and any separate dissemination of the underlying data feeds. The Exchange believes that the proposed fees for Pillar Depth would not be lower than the cost to a vendor of creating a comparable product, including the cost of receiving the underlying data feeds.
The Exchange notes that another market participant seeking to distribute a competing product to Pillar Depth might engage in a different analysis of assessing the cost of a competing product, which may incorporate passing through fees associated with co-location at the Mahwah, New Jersey data center. However, the incremental co-location cost to a particular vendor might be inconsequential if such vendor is already co-located and is able to allocate its co-location costs over numerous product and customer relationships. The Exchange therefore believes that a vendor could create and offer a product similar to Pillar Depth on a cost-competitive basis.
The proposed rule change is intended to encourage market participants to subscribe to Pillar Depth by making it more affordable for prospective customers. The proposed fee change would allow the Exchange to compete more effectively with the Cboe One Premium Feed, which as described below, is a comparable market data offering to Pillar Depth.
The Exchange notes that the proposed change is not otherwise intended to address any other issues, and the Exchange is not aware of any problems that member organizations or others would have in complying with the proposed rule change.

2. Statutory Basis
The Exchange believes that the proposed rule change is consistent with the provisions of Section 6 of the Act, ^{12} in general, and Sections 6(b)(4) and 6(b)(5) of the Act, ^{13} in particular, in that it provides an equitable allocation of reasonable fees among users and recipients of the data and is not designed to permit unfair discrimination among customers, issuers, and brokers. The Exchange also believes that the proposed rule change is consistent with Section 11(A) of the Act ^{14} in that it is consistent with (i) fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets; and (ii) the availability to brokers, dealers, and investors of information with respect to quotations for and transactions in securities. Furthermore, the proposed rule change is consistent with Rule 603 of Regulation NMS, ^{15} which provides that any national securities exchange that distributes information with respect to quotations for or transactions in an NMS stock do so on terms that are not unreasonably discriminatory.
^{12} 15 U.S.C. 78f(b).
^{13} 15 U.S.C. 78f(b)(4), (5).
^{14} 15 U.S.C. 78k-1.
^{15} 17 CFR 242.603.

The Proposed Rule Change Is Reasonable
In adopting Regulation NMS, the Commission granted SROs and broker-dealers increased authority and flexibility to offer new and unique market data to the public. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. Specifically, in Regulation NMS, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.” ^{16}
^{16} See Regulation NMS Adopting Release, 70 FR 37495, at 37499.
With respect to market data, the decision of the United States Court of Appeals for the District of Columbia Circuit in NetCoalition v. SEC upheld the Commission's reliance on the existence of competitive market mechanisms to evaluate the reasonableness and fairness of fees for proprietary market data:
In fact, the legislative history indicates that the Congress intended that the market system “evolve through the interplay of competitive forces as unnecessary regulatory restrictions are removed” and that the SEC wield its regulatory power “in those situations where competition may not be sufficient,” such as in the creation of a “consolidated transactional reporting system.” ^{17}
^{17} NetCoalition v. SEC, 615 F.3d 525, 535 (D.C. Cir. 2010) (“ NetCoalition I ”) (quoting H.R. Rep. No. 94-229 at 92 (1975), as reprinted in 1975 U.S.C.C.A.N. 323).
The court agreed with the Commission's conclusion that “Congress intended that `competitive forces should dictate the services and practices that constitute the U.S. national market system for trading equity securities.' ” ^{18}
^{18} Id. at 535.
More recently, the Commission confirmed that it applies a “market-based” test in its assessment of market data fees, and that under that test:
the Commission considers whether the exchange was subject to significant competitive forces in setting the terms of its proposal for [market data], including the level of any fees. If an exchange meets this burden, the Commission will find that its fee rule is consistent with the Act unless there is a substantial countervailing basis to find that the terms of the rule violate the Act or the rules thereunder. ^{19}
^{19} See Securities Exchange Act Release No. 34-90217 (October 16, 2020), 85 FR 67392 (October 22, 2020) (SR-NYSENAT-2020-05) (“National IF Approval Order”) (internal quotation marks omitted), quoting Securities Exchange Act Release No. 59039 (December 2, 2008), 73 FR 74770, 74781 (December 9, 2008) (“2008 ArcaBook Approval Order”).
An exchange may demonstrate that its fees are constrained by competitive forces by showing that platform competition applies.
As the United States Supreme Court recognized in Ohio v. American Express, platforms are firms that act as intermediaries between two or more sets of agents, and typically the choices made on one side of the platform affect the results on the other side of the platform via externalities, or “indirect network effects.” ^{20} Externalities are linkages between the different sides of a platform such that one cannot understand pricing and competition for goods or services on one side of the platform in isolation; one must also account for the influence of the other sides. As the Supreme Court explained:
^{20} Ohio v. American Express, 138 S. Ct. 2274, 2280-81 (2018).
To ensure sufficient participation, two-sided platforms must be sensitive to the prices that they charge each side. . . . Raising the price on side A risks losing participation on that side, which decreases the value of the platform to side B. If the participants on side B leave due to this loss in value, then the platform has even less value to side A—risking a feedback loop of declining demand. . . . Two-sided platforms therefore must take these indirect network effects into account before making a change in price on either side. ^{21}
^{21} Id. at 2281.
The Exchange and its affiliated exchanges have long maintained that they function as platforms between consumers of market data and consumers of trading services. Proving the existence of linkages between the two sides of this platform requires an in-depth economic analysis of both public data and confidential exchange data about particular customers' trading activities and market data purchases. Exchanges, however, are prohibited from publicly sharing details about these specific customer activities and purchases. For example, pursuant to Exchange Rule 7.41, transactions executed on the Exchange are processed anonymously.
Exchanges function as platforms for market data and transaction services mean that exchanges do not set fees for market data products without considering, and being constrained by, the effect the fees will have on the order-flow side of the platform. As the D.C. Circuit recognized in NetCoalition I, “[n]o one disputes that competition for order flow is fierce.” ^{22} The court further noted that “no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers,” and that an exchange “must compete vigorously for order flow to maintain its share of trading volume.” ^{23}
^{22} NetCoalition I, 615 F.3d at 544 (internal quotation omitted).
^{23} Id.
As noted above, while Regulation NMS has enhanced competition, it has also fostered a “fragmented” market structure where trading in a single stock can occur across multiple trading centers. When multiple trading centers compete for order flow in the same stock, the Commission has recognized that “such competition can lead to the fragmentation of order flow in that stock.” ^{24} The Commission's Division of Trading and Markets has also recognized that with so many “operating equities exchanges and dozens of ATSs, there is vigorous price competition among the U.S. equity markets and, as a result, [transaction] fees are tailored and frequently modified to attract particular types of order flow, some of which is highly fluid and price sensitive.” ^{25} Indeed, today, equity trading is currently dispersed across 16 exchanges, ^{26} numerous alternative trading systems, ^{27} broker-dealer internalizers and wholesalers, all competing for order flow. Based on publicly-available information, no single exchange currently has more than 20% market share. ^{28}
^{24} See Securities Exchange Act Release No. 61358, 75 3594, 3597 (January 21, 2010) (File No. S7-02-10) (Concept Release on Equity Market Structure).
^{25} Commission Division of Trading and Markets, Memorandum to EMSAC, dated October 20, 2015, available here: https://www.sec.gov/spotlight/emsac/memo-maker-taker-fees-on-equities-exchanges.pdf.
^{26} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
^{27} See FINRA ATS Transparency Data, available at https://otctransparency.finra.org/otctransparency/AtsIssueData. A list of alternative trading systems registered with the Commission is available at https://www.sec.gov/foia/docs/atslist.htm.
^{28} See Cboe Global Markets, U.S. Equities Market Volume Summary, available at http://markets.cboe.com/us/equities/market_share/.
Further, low barriers to entry mean that new exchanges may rapidly and inexpensively enter the market and offer additional substitute platforms to compete with the Exchange. For example, since 2020, three new ones have entered the market: Long Term Stock Exchange (LTSE), which began operations as an exchange on August 28, 2020; ^{29} Members Exchange (MEMX), which began operations as an exchange on September 29, 2020; ^{30} and Miami International Holdings (MIAX), which began operations of its first equities exchange on September 29, 2020. ^{31}
^{29} See LTSE Market Announcement: MA-2020-020, dated August 14, 2020, announcing LTSE production securities phase-in planned for August 28, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa0698e7_MA-2020-020__Production_Securities_Launching_August_28_-_Google_Docs.pdf and LTSE Market Announcement: MA-2020-025, available here: https://assets-global.website-files.com/6462417e8db99f8baa06952c/6462417e8db99f8baa069873_MA-2020-025.pdf.
^{30} As of October 29, 2020, MEMX is trading all NMS symbols. See https://info.memxtrading.com/trader-alert-20-10-memx-trading-symbols-update/.
^{31} See MIAX Pearl Press release, dated September 29, 2020, available here: https://www.miaxoptions.com/sites/default/files/alert-files/MIAX_Press_Release_09292020.pdf.
These low barriers enable existing exchange customers to disintermediate and start their own exchanges if they think the prices charged for exchange proprietary market data products are too high. This is precisely the rationale behind the creation of MEMX, which was formed by some of the largest and most well capitalized financial firms that are also Exchange customers (including Bank of America, BlackRock, Charles Schwab, Citadel, Citi, E*Trade, Fidelity, Goldman Sachs, J.P. Morgan, Jane Street, Morgan Stanley, TD Ameritrade, and others). ^{32}
^{32} MEMX Home Page (“Founded by members and investors, MEMX aims to drive simplicity, efficiency, and competition in equity markets.”), available at https://memx.com/.
For example, one of MEMX's founding principles is that exchange proprietary market data prices are too high, and that MEMX will benefit its members by offering “[l]ower pricing on market data.” ^{33} Nor is this a new phenomenon: exchange customers formed BATS to compete with incumbent exchanges and once registered as an exchange in 2008, BATS did not initially charge for market data. The BATS venture was a financial success for its founders, first through recouping their investment in its initial public offering and then in the subsequent sale of BATS to Cboe, which now charges for market data from those exchanges. Notably, MEMX has some of the same founding broker-dealer customers, leading some to dub MEMX “BATS 2.0.” ^{34}
^{33} MEMX home page, available at https://memx.com/.
^{34} See “MEMX turns up the heat on US stock exchanges,” Financial Times, January 9, 2019, available at https://www.ft.com/content/4908c8b0-1418-11e9-a581-4ff78404524e; see also “US equities exchanges: If you can't beat them, join them,” Euromoney, February 13, 2019, available at https://www.euromoney.com/article/b1d3tfby4p3y4v/us-equities-exchanges-if-you-cant-beat-them-join-them.
The fact that this cycle is viable and repeatable by entities that both trade on and compete with existing exchanges confirms that barriers to entry are low and that these markets are competitive and contestable. ^{35} And low barriers to entry act as a market check on high prices. ^{36}
^{35} United States v. SunGard Data Sys., 172 F. Supp. 2d 172, 186 (D.D.C. 2001) (recognizing that “[a]s a matter of law, courts have generally recognized that when a customer can replace the services of an external product with an internally-created system, this captive output ( i.e. the self-production of all or part of the relevant product) should be included in the same market.”). In SunGard, the court rejected the Antitrust Division's attempt to block SunGuard's acquisition of the disaster recovery assets of Comdisco on the basis that the acquisition would “substantially lessen competition in the market for shared hotsite disaster recovery services,” when the evidence showed that “internal hotsites” created by customers competed with the “external shared hotsite business” engaged in by the merging parties. Id. at 173-74, 187.
^{36} United States v. Baker Hughes, 908 F.2d 981, 987 (1990) (“In the absence of significant barriers [to entry], a company probably cannot maintain supracompetitive pricing for any length of time.”); see also David S. Evans and Richard Schmalensee, Markets with Two-Sided Platforms, in 1 Issues in Competition Law and Policy 667, 685 (ABA Section of Antitrust Law 2008) (noting that exchange mergers in 2005 and 2006 were approved by competition authorities in part in reliance on planned and likely entry of other firms).
In sum, the fierce competition for order flow thus constrains any exchange from pricing its market data at a supracompetitive price and constrains the Exchange in setting its fees at issue here.
More specifically, in setting fees for the Pillar Depth data feed, the Exchange is constrained by the fact that, if its pricing across the platform is unattractive to customers, customers have their pick of an increasing number of alternative platforms to use instead of the Exchange. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of numerous alternative platforms to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
More specifically, the Exchange believes that the proposed $250 per month Access Fee for Pillar Depth is reasonable because it represents the value for the data aggregation and consolidation function that the Exchange performs. The Exchange further believes that requiring market data recipients to separately pay for the five underlying data feeds to Pillar Depth is reasonable because by design, Pillar Depth represents an aggregated and consolidated version of those existing five data feeds. The Exchange notes that it is not seeking with this filing to establish fees relating to the underlying five Aggregated Lite data feeds, as those fees have been established consistent with Section 19(b)(3)(A) of the Act ^{37} and Rule 19b-4(f)(2) ^{38} thereunder, and which may be amended from time to time. However, the Exchange believes it would be unfair if it did not require Pillar Depth data feed recipients to separately pay for those five feeds because otherwise, Pillar Depth data feed recipients would be receiving a data product that includes such underlying data at a lower cost than separately subscribing to the underlying data feeds. Similarly, the Exchange believes that it would be reasonable to charge separate Professional User or Non-Professional User fees if a market data recipient chooses to receive both Pillar Depth and a separate dissemination of the five underlying data feeds in a non-consolidated form. The Exchange believes that such delivery would constitute two separate uses of the underlying data feeds and thus should be charged accordingly, consistent with the existing fee schedule for those market data products. The Exchange therefore believes that the proposed fee structure for Pillar Depth would not be lower than the cost to another party to create a comparable product, including the cost of receiving the underlying data feeds.
^{37} 15 U.S.C. 78s(b)(3)(A).
^{38} 17 CFR 240.19b-4(f)(2).
The Exchange notes that its proposed fee structure is similar to the fee structure for the NYSE BQT data feed. ^{39} The NYSE BQT data feed provides best bid and offer (“BBO”) and last sale information (“Trades”) for the Exchange and its affiliates, NYSE Arca, NYSE American, NYSE Chicago and NYSE National. NYSE BQT consists of certain data elements from ten market data feeds—NYSE Trades, NYSE BBO, NYSE Arca Trades, NYSE Arca BBO, NYSE American Trades, NYSE American BBO, NYSE Chicago Trades, NYSE Chicago BBO, NYSE National Trades and NYSE National BBO. ^{40} To receive NYSE BQT, market data recipient must pay the applicable fee for the ten data feeds underlying NYSE BQT, and an Access Fee of $250 per month. ^{41}
^{39} See Securities Exchange Act Release No. 73816 (December 11, 2014), 79 FR 75200 (December 17, 2014) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish an Access Fee for the NYSE Best Quote & Trades Data Feed) (SR-NYSE-2014-64).
^{40} See Securities Exchange Act Release Nos. 72750 (August 4, 2014), 79 FR 46494 (August 8, 2014) (notice—NYSE BQT); and 73553 (November 6, 2014), 79 FR 67491 (November 13, 2014) (approval order—NYSE BQT) (SR-NYSE-2014-40) (“NYSE BQT Filing”). In 2018, NYSE BQT was amended to include NYSE National BBO and NYSE National Trades. See Securities Exchange Act Release No. 83359 (June 1, 2018), 83 FR 26507 (June 7, 2018) (SR-NYSE-2018-22). In 2019, NYSE BQT was amended to include NYSE Chicago BBO and NYSE Chicago Trades. See Securities Exchange Act Release No. 87511 (November 12, 2019), 84 FR 63689 (November 18, 2019) (SR-NYSE-2019-60).
^{41} See Securities Exchange Act Release No. 82121 (November 30, 2017), 82 FR 57627 (December 6, 22017) (Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Fees for NYSE BBO and NYSE Trades To Lower the Enterprise Fee, and for NYSE BQT To Lower the Access Fee) (SR-NYSE-2017-60).
The Exchange notes that Pillar Depth is entirely optional. The Exchange is not required to make the proprietary data products that are the subject of this proposed rule change available or to offer any specific pricing alternatives to any customers, nor is any firm or investor required to purchase the Exchange's data products. Unlike some other data products ( e.g., the consolidated quotation and last-sale information feeds) that firms are required to purchase in order to fulfil regulatory obligations, ^{42} a customer's decision whether to purchase any of the Exchange's proprietary market data feeds is entirely discretionary. Most firms that choose to subscribe to proprietary market data feeds from the Exchange and its affiliates do so for the primary goals of using them to increase their revenues, reduce their expenses, and in some instances compete directly with the Exchange's trading services. Such firms are able to determine for themselves whether or not the products in question or any other similar products are attractively priced. If market data feeds from the Exchange and its affiliates do not provide sufficient value to firms based on the uses those firms may have for it, such firms may simply choose to conduct their business operations in ways that do not use the products.
^{42} The Exchange notes that broker-dealers are not required to purchase proprietary market data to comply with their best execution obligations. See In the Matter of the Application of Securities Industry and Financial Markets Association for Review of Actions Taken by Self-Regulatory Organizations, Release Nos. 34-72182; AP-3-15350; AP-3-15351 (May 16, 2014). Similarly, there is no requirement in Regulation NMS or any other rule that proprietary data be utilized for order routing decisions, and some broker-dealers and ATSs have chosen not to do so.
Further, in the case of products that are also redistributed through market data vendors such as Bloomberg and Refinitiv, the vendors themselves provide additional price discipline for proprietary data products because they control the primary means of access to certain end users. These vendors impose price discipline based upon their business models. For example, vendors that assess a surcharge on data they sell are able to refuse to offer proprietary products that their end users do not or will not purchase in sufficient numbers. Vendors may elect not to make Pillar Depth available to its customers unless their customers request it, and customers will not elect to pay the proposed fees unless Pillar Depth can provide value by sufficiently increasing revenues or reducing costs in the customer's business in a manner that will offset the fees. All of these factors operate as constraints on pricing proprietary data products.
In setting the proposed fees for Pillar Depth, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish reasonable fees. The existence of alternatives to the Exchange's platform ensures that the Exchange cannot set unreasonable market data fees without suffering the negative effects of that decision in the fiercely competitive market for trading order flow.
The proposed fees are therefore reasonable because in setting them, the Exchange is constrained by the availability of numerous substitute platforms offering market data products and trading. Such substitutes need not be identical, but only substantially similar to the product at hand. ^{43}
^{43} For example, in the National IF Approval Order, the Commission recognized that for some customers, the best bid and offer information from consolidated data feeds may function as a substitute for the NYSE National Integrated Feed product, which contains order by order information. See National IF Approval Order, supra note 19, at 67397 [release p. 21] (“[I]nformation provided by NYSE National demonstrates that a number of executing broker-dealers do not subscribe to the NYSE National Integrated Feed and executing broker-dealers can otherwise obtain NYSE National best bid and offer information from the consolidated data feeds.” (internal quotations omitted)).
The four U.S. equities exchanges operated by Cboe Exchange, Inc.—Cboe BZX Exchange, Inc. (“BZX”), Cboe BYX Exchange, Inc. (“BYX”), Cboe EDGA Exchange, Inc. (“EDGA”), and Cboe EDGX Exchange, Inc. (“EDGX”), currently offer a market data product called the Cboe One Premium Feed, ^{44} which competes with the Pillar Depth data feed. Similar to the Cboe One Premium Feed, Pillar Depth can be utilized by vendors and subscribers to quickly access and distribute aggregated order book data. As noted above, Pillar Depth, similar to Cboe One Premium Feed, would provide aggregated depth per security, including the bid, ask and share quantity for orders received by the NYSE Group markets. The Exchange believes that Pillar Depth will offer a competitive alternative to the Cboe One Premium Feed. ^{45}
^{44} See BZX Rule 11.22(j); BYX Rule 11.22(i); EDGA Rule 13.8(b); and EDGX Rule 13.8(b). The Cboe One Feed offered by BZX, BYX, EDGA and EDGX is a data feed that contains the aggregate best bid and offer of all displayed orders for securities traded on the Cboe exchanges. The Cboe One Feed also contains the individual last sale information, consolidated volume, the primary listing market's official opening and closing price, and the current day consolidated high and low price for all listed equity securities. Cboe One Feed recipients may also elect to receive aggregated two-sided quotations from the Cboe exchanges for five (5) price levels (“Cboe One Premium Feed”).
^{45} Fees for the Cboe One Premium Feed are available at https://www.cboe.com/market_data_services/us/equities/cboe_one/.
In addition, the fees that are the subject of this rule filing are constrained by competition. As explained below in the Exchange's Statement on Burden on Competition, the existence of alternatives to these data products further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives. That is, the Exchange competes with other exchanges (and their affiliates) that provide similar market data products. If another exchange (or its affiliate) were to charge less to consolidate and distribute its similar product than the Exchange charges to consolidate and distribute Pillar Depth, prospective users likely would not subscribe to, or would cease subscribing to, Pillar Depth. In addition, the Exchange would compete with unaffiliated market data vendors who would be in a position to consolidate and distribute the same data that comprises the Pillar Depth data feed into the vendor's own comparable market data product. If the third-party vendor is able to provide the exact same data for a lower cost, prospective users would avail themselves of that lower cost and elect not to take Pillar Depth.

The Proposed Fees Are Equitably Allocated and Are Not Unfairly Discriminatory
The Exchange believes that the proposed fee is equitable and non-discriminatory in that it would apply uniformly to all recipients of Exchange data. The Exchange also believes the proposed fee is competitive with those charged by other venues and, therefore, reasonable and equitably allocated to recipients. The Exchange also notes that the proposed fee is not designed to permit unfair discrimination because all market data recipients that subscribe to Pillar Depth would be charged the same fee. The Exchange further believes that the proposed Pillar Depth fee structure is equitable and not unfairly discriminatory because all vendors and subscribers that elect to purchase Pillar Depth would be charged the same fees. In addition, vendors and subscribers that do not wish to purchase Pillar Depth may separately purchase the five individual underlying products, and if they so choose, perform a similar aggregation and consolidation function that the Exchange performs in creating Pillar Depth. To enable such competition, the Exchange is offering Pillar Depth on terms that a subscriber of those five feeds could offer a competing product if it so chooses.
For these reasons, the Exchange believes that the proposed fees are reasonable, equitable, and not unfairly discriminatory.

B. Self-Regulatory Organization's Statement on Burden on Competition
In accordance with Section 6(b)(8) ^{46} of the Act, the Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. As noted above, the Pillar Depth data feed represents aggregated and consolidated information from five existing market data feeds. Although the Exchange, NYSE American, NYSE Arca, NYSE Chicago and NYSE National are the exclusive distributors of the five Aggregated Lite data feeds from which certain data elements are taken to create Pillar Depth, the Exchange may not be the exclusive distributor of the aggregated and consolidated information that comprises the Pillar Depth data feed. Any other market participant recipient of the five Aggregated Lite feeds would be able, if they chose, to create a data feed with the same information as Pillar Depth and distribute it to their clients on a level-playing field with respect to latency and cost as compared to the Exchange's product. ^{47}
^{46} 78 U.S.C. 78f(b)(8).
^{47} See Pillar Depth Product Filing, supra note 4.
Intramarket Competition. The Exchange believes that the proposed fees do not put any market participant at a relative disadvantage compared to other market participant. As noted above, the proposed fees would apply equally to all subscribers of Pillar Depth, and subscribers may not only choose whether to subscribe to Pillar Depth at all, but also may tailor their subscription to include only the products offered by the Exchange that they deem suitable for their business needs. The Exchange also believes that the proposed fees neither favor nor penalize one or more categories of market participants in a manner that would impose an undue market on competition.
Intermarket Competition. The Exchange believes that the proposed monthly Access Fee the Exchange proposes to charge subscribers for Pillar Depth would be pro-competitive because another market data recipient could perform a similar aggregating and consolidating function and similarly charge for such service. The Exchange notes that a competing vendor might engage in a different analysis of assessing the cost of a competing product, which may incorporate passing through fees associated with co-location at the Mahwah, New Jersey data center. However, the incremental co-location costs to a particular vendor may be inconsequential of such vendor is already co-located and is able to allocate its co-location costs over numerous product and customer relationships. The Exchange therefore believes that a competing vendor could create and offer a product similar to the Pillar Depth data feed at a similar cost. For these reasons, the Exchange believes that vendors could readily offer a product similar to Pillar Depth on a competitive basis.
In addition, the Exchange believes that the proposed fees do not impose a burden on competition or on other exchanges that is not necessary or appropriate because of the availability of numerous substitute market data products. Specifically, as described above, Pillar Depth would compete with the Cboe One Premium Feed. ^{48} These products each serve as reasonable substitutes for one another as they are each designed to provide investors with a unified view of quotes in all Tape A, B, and C securities. Each product provides subscribers with aggregated and consolidated quotes from multiple U.S. equities markets. Pillar Depth provides depth of book data from five NYSE-affiliated U.S. equities exchanges, while Cboe One Premium Feed similarly provides depth of book data from Cboe's four U.S. equities exchanges. Pillar Depth and Cboe One Premium Feed are intended to provide indicative pricing and therefore, are reasonable substitutes for one another. Additionally, market data vendors are also able to offer close substitutes to Pillar Depth. Because market data users can find suitable substitute feeds, an exchange that overprices its market data products stands a high risk that users may substitute another source of market data information for its own. These competitive pressures ensure that no one exchange's market data fees can impose an unnecessary burden on competition, and the Exchange's proposed fees do not do so here.
^{48} See supra, note 45.
As such, in establishing the proposed fees, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all users. The existence of alternatives to Pillar Depth, including the five underlying feeds, consolidated data, and proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives or choose not to purchase a specific proprietary data product if its cost to purchase is not justified by the returns any particular vendor or subscriber would achieve through the purchase.

C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) ^{49} of the Act and subparagraph (f)(2) of Rule 19b-4 ^{50} thereunder, because it establishes a due, fee, or other charge imposed by the Exchange.
^{49} 15 U.S.C. 78s(b)(3)(A).
^{50} 17 CFR 240.19b-4(f)(2).
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) ^{51} of the Act to determine whether the proposed rule change should be approved or disapproved.
^{51} 15 U.S.C. 78s(b)(2)(B).

IV. Solicitation of Comments
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:

Electronic Comments
• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or
• Send an email to rule-comments@sec.gov. Please include file number SR-NYSE-2024-30 on the subject line.

Paper Comments
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSE-2024-30. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR-NYSE-2024-30 and should be submitted on or before June 24, 2024.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ^{52}
^{52} 17 CFR 200.30-3(a)(12).
Sherry R. Haywood,

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Investment Company Act Release No. 35205; 812-15553]
Eagle Point Enhanced Income Trust, Eagle Point Institutional Income Fund, Eagle Point Credit Management LLC, and Eagle Point Enhanced Income Management LLC
May 28, 2024.

AGENCY:
Securities and Exchange Commission (“Commission” or “SEC”).

ACTION:
Notice.
Notice of an application for an order pursuant to section 6(c) of the Investment Company Act of 1940 (the “Act”) for an exemption from sections 18(a)(2), 18(c), and 18(i) of the Act, pursuant to sections 6(c) and 23(c) of the Act for an exemption from rule 23c-3 under the Act, and pursuant to section 17(d) of the Act and rule 17d-1 thereunder.

Summary of Application :
Applicants request an order to permit certain registered closed-end investment companies to issue multiple classes of shares and to impose early withdrawal charges and asset-based distribution and/or service fees.

Applicants :
Eagle Point Enhanced Income Trust, Eagle Point Institutional Income Fund, Eagle Point Credit Management LLC, and Eagle Point Enhanced Income Management LLC

Filing Dates :
The application was filed on March 4, 2024, and amended on April 9, 2024.

Hearing or Notification of Hearing :
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 Secretarys-Office@sec.gov and serving the Applicants with a copy of the request by email, if an email address is listed for the relevant Applicant below, or personally or by mail, if a physical address is listed for the relevant Applicant below. Hearing requests should be received by the Commission by 5:30 p.m. on June 24, 2024, and should be accompanied by proof of service on the Applicants, in the form of an affidavit, or, for lawyers, a certificate of service. Pursuant to rule 0-5 under the Act, hearing requests should state the nature of the writer's interest, any facts bearing upon the desirability of a hearing on the matter, the reason for the request, and the issues contested. Persons who wish to be notified of a hearing may request notification by emailing the Commission's Secretary.

ADDRESSES:
The Commission: Secretarys-Office@sec.gov. Applicants: Nauman S. Malik, Esq., Eagle Point Credit Management LLC, nmalik@eaglepointcredit.com, with copies to Thomas J. Friedmann, Esq., Dechert LLP, thomas.friedmann@dechert.com, Philip Hinkle, Esq., Dechert LLP, philip.hinkle@dechert.com, and Alexander Karampatsos, Esq., Dechert LLP, alexander.karampatsos@dechert.com.

FOR FURTHER INFORMATION CONTACT:
Trace W. Rakestraw, Senior Special Counsel, at (202) 551-6825 (Division of Investment Management, Chief Counsel's Office).

SUPPLEMENTARY INFORMATION:
For Applicants' representations, legal analysis, and conditions, please refer to Applicants' application, dated April 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 https://www.sec.gov/edgar/searchedgar/legacy/companysearch.html. You may also call the SEC's Public Reference Room at (202) 551-8090.
For the Commission, by the Division of Investment Management, under delegated authority.
Sherry R. Haywood,

Assistant Secretary.
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100234; File No. SR-NASDAQ-2023-035]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Withdrawal of a Proposed Rule Change To List and Trade Shares of the Hashdex Nasdaq Ethereum ETF Under Nasdaq Rule 5711(i) (Trust Units)
May 28, 2024.
On September 20, 2023, The Nasdaq Stock Market LLC (“Nasdaq” or “Exchange”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) ^1 and Rule 19b-4 thereunder, ^2 a proposed rule change to list and trade shares of the Hashdex Nasdaq Ethereum ETF under Nasdaq Rule 5711(i) (Trust Units). The proposed rule change was published for comment in the Federal Register on October 3, 2023. ^3
^1 15 U.S.C. 78s(b)(1).
^2 17 CFR 240.19b-4.
^3 See Securities Exchange Act Release No. 98563 (Sept. 27, 2023), 88 FR 68214. Comments on the proposed rule change are available at: https://www.sec.gov/comments/sr-nasdaq-2023-035/srnasdaq2023035.htm.
On November 15, 2023, pursuant to Section 19(b)(2) of the Act, ^4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change. ^5 On December 18, 2023, the Commission instituted proceedings under Section 19(b)(2)(B) of the Act ^6 to determine whether to approve or disapprove the proposed rule change. ^7 On March 19, 2024, the Commission designated a longer period for Commission action on the proposed rule change. ^8
^4 15 U.S.C. 78s(b)(2).
^5 See Securities Exchange Act Release No. 98948, 88 FR 81156 (Nov. 21, 2023).
^6 15 U.S.C. 78s(b)(2)(B).
^7 See Securities Exchange Act Release No. 99200, 88 FR 88687 (Dec. 22, 2023).
^8 See Securities Exchange Act Release No. 99771, 89 FR 20734 (Mar. 25, 2024).
On May 24, 2024, the Exchange withdrew the proposed rule change (File No. SR-NASDAQ-2023-035).
^9 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority. ^9
Sherry R. Haywood,

Assistant Secretary.
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20320 and #20321; Texas Disaster Number TX-20010]
Presidential Declaration Amendment of a Major Disaster for the State of Texas

AGENCY:
Small Business Administration.

ACTION:
Amendment 3.

SUMMARY:
This is an amendment of the Presidential declaration of a major disaster for the State of Texas (FEMA-4781-DR), dated 05/17/2024.
Incident: Severe Storms, Straight-line Winds, Tornadoes, and Flooding.
Incident Period: 04/26/2024 and continuing.

DATES:
Issued on 05/27/2024.
Physical Loan Application Deadline Date: 07/16/2024.
Economic Injury (EIDL) Loan Application Deadline Date: 02/18/2025.

ADDRESSES:
Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan.

FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.

SUPPLEMENTARY INFORMATION:
The notice of the President's major disaster declaration for the State of TEXAS, dated 05/17/2024, is hereby amended to include the following areas as adversely affected by the disaster:
Primary Counties (Physical Damage and Economic Injury Loans): Collin, Cooke, Denton, Montague.
Contiguous Counties (Economic Injury Loans Only):
Texas: Clay, Dallas, Grayson, Hunt, Jack, Rockwall, Tarrant, Wise
Oklahoma: Jefferson, Love
All other information in the original declaration remains unchanged.
(Catalog of Federal Domestic Assistance Number 59008)
Francisco Sánchez, Jr.,

Associate Administrator, Office of Disaster Recovery & Resilience.
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20366 and #20367; Maine Disaster Number ME-20006]
Presidential Declaration of a Major Disaster for Public Assistance Only for the State of Maine

AGENCY:
U.S. Small Business Administration.

ACTION:
Notice.

SUMMARY:
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of Maine (FEMA-4785-DR), dated 05/24/2024.
Incident: Severe Winter Storm.
Incident Period: 04/03/2024 through 04/05/2024.

DATES:
Issued on 05/24/2024.
Physical Loan Application Deadline Date: 07/23/2024.
Economic Injury (EIDL) Loan Application Deadline Date: 02/24/2025.

ADDRESSES:
Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan.

FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.

SUPPLEMENTARY INFORMATION:
Notice is hereby given that as a result of the President's major disaster declaration on 05/24/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal https://lending.sba.gov or other locally announced locations. Please contact the SBA disaster assistance customer service center by email at disastercustomerservice@sba.gov or by phone at 1-800-659-2955 for further assistance.
The following areas have been determined to be adversely affected by the disaster:
Primary Counties: Cumberland, York.
The Interest Rates are:
| Percent
For Physical Damage:
Non-Profit Organizations with Credit Available Elsewhere | 3.250
Non-Profit Organizations without Credit Available Elsewhere | 3.250
For Economic Injury:
Non-Profit Organizations without Credit Available Elsewhere | 3.250
The number assigned to this disaster for physical damage is 20366B and for economic injury is 203670.
(Catalog of Federal Domestic Assistance Number 59008)
Francisco Sánchez, Jr.,

Associate Administrator, Office of Disaster Recovery & Resilience.
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20370 and #20371; West Virginia Disaster Number WV-20006]
Presidential Declaration of a Major Disaster for Public Assistance Only for the State of West Virginia

AGENCY:
Small Business Administration.

ACTION:
Notice.

SUMMARY:
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of WEST VIRGINIA (FEMA-4787-DR), dated 05/24/2024.
Incident: Severe Storms, Flooding, Landslides, and Mudslides.
Incident Period: 04/11/2024 through 04/12/2024.

DATES:
Issued on 05/24/2024.
Physical Loan Application Deadline Date: 07/23/2024.
Economic Injury (EIDL) Loan Application Deadline Date: 02/24/2025.

ADDRESSES:
Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan.

FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.

SUPPLEMENTARY INFORMATION:
Notice is hereby given that as a result of the President's major disaster declaration on 05/24/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal https://lending.sba.gov or other locally announced locations. Please contact the SBA disaster assistance customer service center by email at disastercustomerservice@sba.gov or by phone at 1-800-659-2955 for further assistance.
The following areas have been determined to be adversely affected by the disaster:
Primary Counties: Boone, Brooke, Doddridge, Gilmer, Hancock, Lincoln, Marshall, Ohio, Tyler, Wetzel.
The Interest Rates are:
| Percent
For Physical Damage:
Non-Profit Organizations with Credit Available Elsewhere | 3.250
Non-Profit Organizations without Credit Available Elsewhere | 3.250
For Economic Injury:
Non-Profit Organizations without Credit Available Elsewhere | 3.250
The number assigned to this disaster for physical damage is 203706 and for economic injury is 203710.
(Catalog of Federal Domestic Assistance Number 59008)
Francisco Sánchez, Jr.,

Associate Administrator, Office of Disaster Recovery & Resilience.
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20368 and #20369; Nebraska Disaster Number NE-20001]
Presidential Declaration of a Major Disaster for Public Assistance Only for the State of Nebraska

AGENCY:
Small Business Administration.

ACTION:
Notice.

SUMMARY:
This is a Notice of the Presidential declaration of a major disaster for Public Assistance Only for the State of NEBRASKA (FEMA-4786-DR), dated 05/24/2024.
Incident: Severe Winter Storm and Straight-line Winds.
Incident Period: 04/06/2024 through 04/07/2024.

DATES:
Issued on 05/24/2024.
Physical Loan Application Deadline Date: 07/23/2024.
Economic Injury (EIDL) Loan Application Deadline Date: 02/24/2025.

ADDRESSES:
Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan.

FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.

SUPPLEMENTARY INFORMATION:
Notice is hereby given that as a result of the President's major disaster declaration on 05/24/2024, Private Non-Profit organizations that provide essential services of a governmental nature may file disaster loan applications online using the MySBA Loan Portal https://lending.sba.gov or other locally announced locations. Please contact the SBA disaster assistance customer service center by email at disastercustomerservice@sba.gov or by phone at 1-800-659-2955 for further assistance.
The following areas have been determined to be adversely affected by the disaster:
Primary Counties: Banner, Cheyenne, Dawes, Garden, Kimball, Morrill, Scotts Bluff, Sioux.
The Interest Rates are:
| Percent
For Physical Damage:
Non-Profit Organizations with Credit Available Elsewhere | 3.250
Non-Profit Organizations without Credit Available Elsewhere | 3.250
For Economic Injury:
Non-Profit Organizations without Credit Available Elsewhere | 3.250
The number assigned to this disaster for physical damage is 20368B and for economic injury is 203690.
(Catalog of Federal Domestic Assistance Number 59008)
Francisco Sánchez, Jr.,

Associate Administrator, Office of Disaster Recovery & Resilience.
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20305 and #20306; SOUTH CAROLINA Disaster Number SC-20005]
Administrative Declaration of a Disaster for the State of South Carolina

AGENCY:
Small Business Administration.

ACTION:
Notice.

SUMMARY:
This is a notice of an Administrative declaration of a disaster for the State of South Carolina dated 05/28/2024.
Incident: Severe Storms, High Winds and Hail.
Incident Period: 04/20/2024.

DATES:
Issued on 05/28/2024.
Physical Loan Application Deadline Date: 07/29/2024.
Economic Injury (EIDL) Loan Application Deadline Date: 02/28/2025.

ADDRESSES:
Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan.

FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.

SUPPLEMENTARY INFORMATION:
Notice is hereby given that as a result of the Administrator's disaster declaration, applications for disaster loans may be submitted online using the MySBA Loan Portal https://lending.sba.gov or other locally announced locations. Please contact the SBA disaster assistance customer service center by email at disastercustomerservice@sba.gov or by phone at 1-800-659-2955 for further assistance.
The following areas have been determined to be adversely affected by the disaster:
Primary Counties: York
Contiguous Counties:
South Carolina: Cherokee, Chester, Lancaster, Union
North Carolina: Cleveland, Mecklenburg, Gaston
The Interest Rates are:
| Percent
For Physical Damage:
Homeowners with Credit Available Elsewhere | 5.375
Homeowners without Credit Available Elsewhere | 2.688
Businesses with Credit Available Elsewhere | 8.000
Businesses without Credit Available Elsewhere | 4.000
Non-Profit Organizations with Credit Available Elsewhere | 3.250
Non-Profit Organizations without Credit Available Elsewhere | 3.250
For Economic Injury:
Business and Small Agricultural Cooperatives without Credit Available Elsewhere | 4.000
Non-Profit Organizations without Credit Available Elsewhere | 3.250
The number assigned to this disaster for physical damage is 20305B and for economic injury is 203060.
The States which received an EIDL Declaration are South Carolina, North Carolina.
(Catalog of Federal Domestic Assistance Number 59008)
Isabella Guzman,

Administrator.
SMALL BUSINESS ADMINISTRATION
[Disaster Declaration #20339 and #20340; Oklahoma Disaster Number OK-20003]
Presidential Declaration Amendment of a Major Disaster for Public Assistance Only for the State of Oklahoma

AGENCY:
Small Business Administration.

ACTION:
Amendment 1.

SUMMARY:
This is an amendment of the Presidential declaration of a major disaster for Public Assistance Only for the State of OKLAHOMA (FEMA-4776-DR), dated 05/16/2024.
Incident: Severe Storms, Straight-line Winds, Tornadoes, and Flooding.
Incident Period: 04/25/2024 through 05/09/2024.

DATES:
Issued on 05/17/2024.
Physical Loan Application Deadline Date: 07/15/2024.
Economic Injury (EIDL) Loan Application Deadline Date: 02/18/2025.

ADDRESSES:
Visit the MySBA Loan Portal at https://lending.sba.gov to apply for a disaster assistance loan.

FOR FURTHER INFORMATION CONTACT:
Alan Escobar, Office of Disaster Recovery & Resilience, U.S. Small Business Administration, 409 3rd Street SW, Suite 6050, Washington, DC 20416, (202) 205-6734.

SUPPLEMENTARY INFORMATION:
The notice of the President's major disaster declaration for Private Non-Profit organizations in the State of OKLAHOMA, dated 05/16/2024, is hereby amended to include the following areas as adversely affected by the disaster.
Primary Counties:
Johnston, Pittsburg, Pontotoc, Tillman, Washita.
All other information in the original declaration remains unchanged.
(Catalog of Federal Domestic Assistance Number 59008)
Francisco Sánchez, Jr.,

Associate Administrator, Office of Disaster Recovery & Resilience.
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
Noise Compatibility Program for Chicago Executive Airport, Cook County, Illinois

AGENCY:
Federal Aviation Administration, DOT.

ACTION:
Acceptance of Chicago Executive Airport noise exposure map.

SUMMARY:
The Federal Aviation Administration (FAA) announces its determination that the noise exposure map submitted by Chicago Executive Airport is in compliance with applicable statutory and regulatory requirements.

DATES:
The effective date of the FAA's determination on the noise exposure map is May 28, 2024.

FOR FURTHER INFORMATION CONTACT:
Craig Pullins, 2300 Devon Avenue, Suite 312, Des Plaines, Illinois 60018. 847-294-7354.

SUPPLEMENTARY INFORMATION:
The FAA determined the noise exposure map submitted by Chicago Executive Airport, is in compliance with applicable statutory and regulatory requirements, effective May 28, 2024. Under title 49, United States Code (U.S.C.) section 47503, an airport operator may submit to the FAA, noise exposure maps depicting non-compatible uses as of the date such map is submitted, a description of estimated aircraft operations during a forecast period that is at least five years in the future and how those operations will affect the map. A noise exposure map must be prepared in accordance with title 14, Code of Federal Regulations (CFR) part 150, the regulations promulgated pursuant to 49 U.S.C. 47502 and developed in consultation with public agencies and planning authorities in the area surrounding the airport, state and Federal agencies, interested and affected parties in the local community, and aeronautical users of the airport. In addition, an airport operator that submitted a noise exposure map, which the FAA determined is compliant with statutory and regulatory requirements, may submit a noise compatibility program for FAA approval that sets forth measures the operator has taken or proposes to take to reduce existing non-compatible uses and prevent the introduction of additional non-compatible uses.
The FAA completed its review of the noise exposure map and supporting documentation submitted by the Cities of Wheeling & Prospect Heights and determined the noise exposure map and accompanying documentation are in compliance with applicable requirements.
The documentation that constitutes the Noise Exposure Map includes: Figure 2-1 Airport Location Map; Figure 2-2 Airport Diagram; Table 2-1 Airport Facilities; Table 2-3 Published Arrival Procedures; Table 2-4 Published Departure Procedures; Figure 4-1 Land Use; Table 5-1 2022 and 2027 Annual Aircraft Operations; Table 5-2 2022 and 2027 AEDT Operations and Fleet; Table 5-3 2022 and 2027 AEDT Aircraft Percent Time of Day; Table 5-4 2022 Overall Runway Use; Table 5-5 2022 Modeled Runway Use by Aircraft Category; Table 5-6 2027 Modeled Runway Use by Aircraft Category; Table 5-7 Modeled Flight Track Use by Aircraft Category—Departures; Table 5-8 Modeled Flight Track Use by Aircraft Category—Arrivals; Figure 5-1 AEDT Modeled Aircraft Flight Tracks—Runway 16; Figure 5-2 AEDT Modeled Aircraft Flight Tracks—Runway 34; Figure 5-3 AEDT Modeled Aircraft Flight Tracks—Runway 12; Figure 5-4 AEDT Modeled Aircraft Flight Tracks—Runway 30; Figure 5-5 AEDT Modeled Aircraft Flight Tracks—Runway 6; Figure 5-6 AEDT Modeled Aircraft Flight Tracks—Runway 24; Figure 5-7 AEDT Modeled Aircraft Flight Tracks—All Runways; Table 6-1 Land Use Within the 2022 DNL Contours; Table 6-2 Population and Housing Units Within the 2022 DNL Contours; Figure 6-1 2022 DNL Contours; Table 6-3 Land Use Within the 2027 DNL Contours; Table 6-4 Population and Housing Units Within the 2027 DNL Contours; Table 6-5 Change in Land Use from 2022 to 2027; Table 6-6 Change in Population and Housing Units From 2022 to 2027; Figure 6-2 2027 DNL Contours; Figure 6-3 2022 and 2027 DNL Contours—North of PWK; Figure 6-4 2022 and 2027 DNL Contours—South of PWK; Appendix G 2022 Noise Exposure Map; Appendix G 2022 Aircraft Flight Tracks—Arrivals; Appendix G 2022 Aircraft Flight Tracks—Departures; Appendix G 2027 Noise Exposure Map; Appendix G 2027 Aircraft Flight Tracks—Arrivals; Appendix G 2027 Aircraft Flight Tracks—Departures required by 14 CFR 150.101 and 49 U.S.C. 47503 and 47506. This determination is effective on May 28, 2024. FAA's determination on an airport's noise exposure map is limited to a finding that the noise exposure map was developed in accordance with the 49 U.S.C. 47503 and 47506 and procedures contained in 14 CFR part 150, appendix A. FAA's acceptance of an NEM does not constitute approval of the applicant's data, information or plans, or a commitment to approve a noise compatibility program or to fund the implementation of that program. If questions arise concerning the precise relationship of specific properties within noise exposure contours depicted on a noise exposure map, it should be noted that the FAA is not involved in any way in determining the relative locations of specific properties with regard to the depicted noise contours or in interpreting the noise exposure maps to resolve questions concerning, for example, which properties should be covered by the provisions of 49 U.S.C. 47506.
These functions are inseparable from the ultimate land use control and planning responsibilities of local government. These local responsibilities are not changed in any way under 14 CFR part 150 or through FAA review and acceptance of a noise exposure map. Therefore, the responsibility for the detailed overlaying of noise exposure contours onto the map depicting properties on the surface rests exclusively with the airport operator that submitted a noise exposure map or with those public and planning agencies with which consultation is required under 49 U.S.C. 47503. The FAA relied on the certification by the airport operator, under of 14 CFR 150.21 that the required consultations and opportunity for public review has been accomplished during the development of the noise exposure maps. Copies of the noise exposure map and supporting documentation and the FAA's evaluation of the noise exposure maps are available for examination at the following locations:
Federal Aviation Administration Chicago Airports District Office, 2300 Devon Avenue, Suite 312, Des Plaines, IL 60018, and Chicago Executive Airport at 1020 S. Plant Road, Wheeling, IL 60090. Questions may be directed to the individual listed in the FOR FURTHER INFORMATION CONTACT section of this notice.
Issued in Des Plaines, Illinois on May 28, 2024.
Debra L. Bartell,

Manager, Chicago Airports District Office, FAA Great Lakes Region.
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
[Docket No. FHWA-2024-0044]
Agency Information Collection Activities: Notice of Request for Reinstatement of a Previously Approved Information Collection

AGENCY:
Federal Highway Administration (FHWA), DOT.

ACTION:
Notice of request for reinstatement of a previously approved information collection.

SUMMARY:
The FHWA has forwarded the information collection request described in this notice to the Office of Management and Budget (OMB) to reinstate an information collection. We are required to publish this notice in the Federal Register by the Paperwork Reduction Act of 1995.

DATES:
Please submit comments by July 3, 2024.

ADDRESSES:
You may submit comments identified by DOT Docket ID Number 0044 by any of the following methods:
Website: For access to the docket to read background documents or comments received go to the Federal eRulemaking Portal: Go to http://www.regulations.gov . Follow the online instructions for submitting comments.
Fax: 1-202-493-2251.
Mail: Docket Management Facility, U.S. Department of Transportation, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590-0001.
Hand Delivery or Courier: U.S. Department of Transportation, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m. ET, Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:
Jazmyne Lewis, (202) 366-2826, Office of Administration, Federal Highway Administration, Department of Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590. Office hours are from 7 a.m. to 3 p.m., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:
We published a Federal Register Notice with a 60-day public comment period on this information collection on March 27, 2024 [89 FR 21405]. There were no comments received.
Title: Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery.
OMB Control: 2125-0628.
Background: The information collection activity will garner qualitative customer and stakeholder feedback in an efficient, timely manner, in accordance with the Administration's commitment to improving service delivery. By qualitative feedback we mean information that provides useful insights on perceptions and opinions but are not statistical surveys that yield quantitative results that can be generalized to the population of study. This feedback will provide insights into customer or stakeholder perceptions, experiences, and expectations, provide an early warning of issues with service, or focus attention on areas where communication, training or changes in operations might improve delivery of products or services. These collections will allow for ongoing, collaborative, and actionable communications between the Agency and its customers and stakeholders. It will also allow feedback to contribute directly to the improvement of program management.
Feedback collected under this generic clearance will provide useful information, but it will not yield data that can be generalized to the overall population. This type of generic clearance for qualitative information will not be used for quantitative information collections that are designed to yield reliably actionable results, such as monitoring trends over time or documenting program performance. Such data uses require more rigorous designs that address: The target population to which generalizations will be made, the sampling frame, the sample design (including stratification and clustering), the precision requirements or power calculations that justify the proposed sample size, the expected response rate, methods for assessing potential non-response bias, the protocols for data collection, and any testing procedures that were or will be undertaken prior to fielding the study. Depending on the degree of influence the results are likely to have, such collections may still be eligible for submission for other generic mechanisms that are designed to yield quantitative results. Below we provide FHWA's projected average estimates for the next three years:
Respondents: State and local governments, highway industry organizations, and the general public.
Frequency: Annually.
Estimated Average Burden per Response: The burden hours per response will vary with each survey; however, we estimate an average burden of 15 minutes for each survey.
Estimated Total Annual Burden Hours: We estimate that FHWA will survey approximately 15,000 respondents annually during the next 3 years. Therefore, the estimated total annual burden is 3,750 hours.
Public Comments Invited: You are asked to comment on any aspect of this information collection, including: (1) Whether the proposed collection is necessary for the FHWA's performance; (2) the accuracy of the estimated burdens; (3) ways for the FHWA to enhance the quality, usefulness, and clarity of the collected information; and (4) ways that the burden could be minimized, including the use of electronic technology, without reducing the quality of the collected information. The agency will summarize and/or include your comments in the request for OMB's clearance of this information collection.
Authority: The Paperwork Reduction Act of 1995; 44 U.S.C. chapter 35, as amended; and 49 CFR 1.48.
Issued on: May 29, 2024.
Jazmyne Lewis,

Information Collection Officer.
DEPARTMENT OF TRANSPORTATION
Federal Highway Administration
Notice of Final Federal Agency Actions on Proposed Highway in California

AGENCY:
Federal Highway Administration (FHWA), Department of Transportation (DOT).

ACTION:
Notice of limitation on claims for judicial review of actions by the California Department of Transportation (Caltrans).

SUMMARY:
The FHWA, on behalf of Caltrans, is issuing this notice to announce actions taken by Caltrans, that are final. The actions relate to a proposed highway project, on Interstate 80 (I-80) and United States Route 50 (US-50) in the Counties of Solano, Yolo, and Sacramento, State of California. Those actions grant licenses, permits, and approvals for the project.

DATES:
By this notice, the FHWA, on behalf of Caltrans, is advising the public of final agency actions subject to 23 U.S.C. 139(l)(1). A claim seeking judicial review of the Federal agency actions on the highway project will be barred unless the claim is filed on or before October 31, 2024. If the Federal law that authorizes judicial review of a claim provides a time period of less than 150 days for filing such claim, then that shorter time period still applies.

FOR FURTHER INFORMATION CONTACT:
For Caltrans: Robert Wall, Branch Chief, Caltrans North Region Office of Environmental Management, California Department of Transportation, District 3, 703 B Street, Marysville, CA 95901 Office Hours 8 a.m.-5 p.m., Pacific time, Telephone (707) 834-2471 or email Robert.Wall@dot.ca.gov.

SUPPLEMENTARY INFORMATION:
Effective July 1, 2007, the Federal Highway Administration (FHWA) assigned, and the California Department of Transportation (Caltrans) assumed, environmental responsibilities for this project pursuant to 23 U.S.C. 327. Notice is hereby given that Caltrans, has taken final agency actions subject to 23 U.S.C. 139(l)(1) by issuing licenses, permits, and approvals for the following highway project in the State of California: Caltrans, in collaboration with stakeholders, proposes to construct improvements consisting of a High Occupancy Toll (HOT) 3+ lane in each direction with direct connectors, pedestrian/bicycle facilities, park-n-ride, and Intelligent Transportation System (ITS) elements along I-80 and US-50 from Kidwell Road near the eastern Solano County boundary (near Dixon), through Yolo County to West El Camino Avenue near the I-80/Interstate 5 (I-5) interchange, and to the US-50/I-5 interchange in Sacramento County. The purpose of the project, EA 03-3H900, is to ease congestion and improve freeway operation to support reliable transport of goods and services throughout the region. The total length of the project is 20.8 miles. The actions by the Federal agencies, and the laws under which such actions were taken, are described in the Final Environmental Assessment (FEA) and the Finding of No Significant Impact (FONSI) for the project, approved on April 30, 2024, and in other documents in the project records. The FEA, FONSI, and other project records are available by contacting Caltrans at the address provided above. The FEA and FONSI can be viewed and downloaded from the project website at: https:// dot.ca.gov/caltrans-near-me/district-3/d3-projects/d3-i80-corridor-improvements.
This notice applies to all Federal agency decisions as of the issuance date of this notice and all laws under which such actions were taken, including but not limited to:
1. Council on Environmental Quality Regulations
2. National Environmental Policy Act of 1969
3. Clean Air Act, 42 U.S.C. 7401-7671
4. Endangered Species Act of 1973 (ESA), 16 U.S.C. 1531-1544
5. National Historic Preservation Act of 1966 (NHPA)
6. Clean Water Act, 33 U.S.C. 1251-1387 (sections 319, 401, and 404)
7. Federal Land Policy and Management Act of 1976 (Paleontological Resources)
8. Noise Control Act of 1972
9. Safe Drinking Water Act of 1944, as amended
10. Endangered Species Act of 1973
11. Executive Order 11990, Protection of Wetlands
12. Executive Order 13112, Invasive Species
13. Executive Order 13186, Migratory Birds
14. Fish and Wildlife Coordination Act of 1934, as amended
15. Migratory Bird Treaty Act
16. Water Bank Act Wetlands Mitigation Banks, ISTEA 1991, sections 1006-1007
17. Wildflowers, Surface Transportation and Uniform Relocation Act of 1987 section 130
18. Executive Order 11988, Floodplain Management
19. Department of Transportation (DOT) Executive Order 5650.2—Floodplain Management and Protection (April 23, 1979)
20. Rivers and Harbors Appropriation Act of 1899, sections 9 and 10
21. Title VI of the Civil Rights Act of 1964, as amended
22. Executive Order 12898, Federal Actions to Address Environmental Justice and Low-Income Populations
(Catalog of Federal Domestic Assistance Program Number 20.205, Highway Planning and Construction. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.)
Authority: 23 U.S.C. 139(l)(1)
Antonio Johnson,

Director, Planning, Environment and Right of Way, Federal Highway Administration, California Division.
DEPARTMENT OF THE TREASURY
Office of Foreign Assets Control
Notice of OFAC Sanctions Actions

AGENCY:
Office of Foreign Assets Control, Treasury.

ACTION:
Notice.

SUMMARY:
The U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) is publishing the updated identifying information on its Specially Designated Nationals and Blocked Persons List (SDN List) for one individual whose property and interest in property subject to U.S. jurisdiction are blocked pursuant to Executive Order (E.O.) 13694, as amended by E.O. 13757.

FOR FURTHER INFORMATION CONTACT:
OFAC: Bradley T. Smith, Director, tel.: 202-622-2490; Associate Director for Global Targeting, tel.: 202-622-2420; Assistant Director for Licensing, tel.: 202-622-2480; Assistant Director for Regulatory Affairs, tel.: 202-622-4855; or the Assistant Director for Sanctions Compliance & Evaluation, tel.: 202-622-2490.

SUPPLEMENTARY INFORMATION:

Electronic Availability
The SDN List and additional information concerning OFAC sanctions programs are available on OFAC's website ( https://www.treasury.gov/ofac ).

Notice of OFAC Action
On May 28, 2024, OFAC amended the SDN List entry of the following individual to update identifying information. The listing below reflects the individual's amended entry on the SDN List.

Individual

From
1. KOVALEVSKIJ, Nikita Gennadievitch (a.k.a. KOVALEVSKY, Nikita), Finland; DOB 21 Nov 1978; nationality Finland; Gender Male; Passport 2111702697 (individual) [CYBER2] (Linked To: OPTIMA FREIGHT OY).

To
1. KOVALEVSKIJ, Nikita Gennadievitch (a.k.a. KOVALEVSKY, Nikita; a.k.a. MURAVJOV, Nikita), Leineläntie 1 B 49, Vantaa 01340, Finland; DOB 21 Nov 1978; POB Moscow; nationality Finland; alt. nationality Russia; citizen Finland; alt. citizen Russia; Gender Male; Passport FP4892455 (Finland) issued 08 Dec 2021 expires 08 Dec 2026; alt. Passport 53 1216997 (Russia); alt. Passport FP3994119 (Finland); National ID No. 211178-2697 (Finland) issued 08 Dec 2021 expires 08 Dec 2026 (individual) [CYBER2] (Linked To: OPTIMA FREIGHT OY).
Dated: May 28, 2024.
Bradley T. Smith,

Director, Office of Foreign Assets Control, U.S. Department of the Treasury.
DEPARTMENT OF VETERANS AFFAIRS
[OMB Control No. 2900-0091]
Agency Information Collection Activity Under OMB Review: VA Health Benefits: Application, Update, Hardship Determination

AGENCY:
Veterans Health Administration, Department of Veterans Affairs.

ACTION:
Notice.

SUMMARY:
In compliance with the Paperwork Reduction Act (PRA) of 1995, this notice announces that the Veterans Health Administration (VHA), Department of Veterans Affairs (VA), 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.

DATES:
Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by clicking on the following link www.reginfo.gov/public/do/PRAMain, select “Currently under Review—Open for Public Comments,” then search the list for the information collection by Title or “OMB Control No. 2900-0091.”

FOR FURTHER INFORMATION CONTACT:
VA PRA information: Maribel Aponte, 202-461-8900, vacopaperworkreduact@va.gov.

SUPPLEMENTARY INFORMATION:
Title: VA Health Benefits: Application, Update, Hardship Determination (VA Forms 10-10EZ, 10-10EZR and 10-10HS).
OMB Control Number: 2900-0091 https://www.reginfo.gov/public/do/PRASearch .
Type of Review: Extension of a currently approved collection.
Abstract: Title 38 U.S.C. chapter 17 authorizes VA to provide hospital care, medical services, domiciliary care, and nursing home care to eligible Veterans. Title 38 U.S.C. 1705 requires VA to design, establish, and operate a system of annual patient enrollment in accordance with a series of stipulated priorities. Title 38 U.S.C. 1722 establishes eligibility assessment procedures for cost-free VA medical care, based on income levels, which determines whether nonservice-connected and 0% service-connected non-compensable Veterans are able to defray the necessary expenses of care for nonservice-connected conditions. Further, when the Veteran projects that their attributable income for the current calendar year would be substantially below the applicable income thresholds, the Veteran would be considered unable to defray the expenses of care and VA may exempt the Veteran from the requirement to pay copayments for hospital or outpatient care. In addition, section 103 of Public Law 117-168, titled the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act of 2022, amended title 38 U.S.C. 1710(e) (3) by expanding the health care eligibility benefit for Veterans who participated in a toxic exposure risk activity (TERA) while serving on active duty, active duty for training, or inactive duty training.
This collection of information is required to properly administer health benefits to eligible Veterans.
a. VA Form 10-10EZ, Application for Health Benefits, is used to collect Veteran information during the initial application process for VA medical care, nursing home, domiciliary, dental benefits, etc.
b. VA Form 10-10EZR, Health Benefits Update Form, is used to update a Veteran's personal information, such as marital status, address, health insurance and financial information, for renewal of health benefits.
c. VA Form 10-10HS, Request for Hardship Determination, is used to collect information from Veterans who are in a copay required status for hospital care and medical services, but due to a loss of income project that their income for the current year will be substantially below the VA means test limits.
These forms collect information to enroll a Veteran for health benefits, establish basic eligibility, determine TERA benefit eligibility, identify 3rd party health insurance coverage, identify prescription copayment, provide for income verification, and serve as a mechanism to make changes upon admission for benefits or yearly financial updates.
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 Federal Register Notice with a 60-day comment period soliciting comments on this collection of information was published at 89 FR 20537, March 22, 2024.
Total Annual Burden: 703,300 hours.
Total Annual Responses: 1,406,000.

VA Form 10-10EZ
Affected Public: Individuals and Households.
Estimated Annual Burden: 315,000 hours.
Estimated Average Burden per Respondent: 35 minutes.
Frequency of Response: Annually.
Estimated Number of Respondents: 540,000.

VA Form 10-10EZR
Affected Public: Individuals and Households.
Estimated Annual Burden: 386,550 hours.
Estimated Average Burden Per Respondent: 27 minutes.
Frequency of Response: Annually.
Estimated Number of Respondents: 859,000.

VA Form 10-10HS
Affected Public: Individuals and Households.
Estimated Annual Burden: 1,750 hours.
Estimated Average Burden per Respondent: 15 minutes.
Frequency of Response: Annually.
Estimated Number of Respondents: 7,000.
Authority: 44 U.S.C. 3501 et seq.
Maribel Aponte,

VA PRA Clearance Officer, Office of Enterprise and Integration, Data Governance Analytics, Department of Veterans Affairs.
DEPARTMENT OF VETERANS AFFAIRS
[OMB Control No. 2900-0530]
Agency Information Collection Activity: Loan Guaranty Servicing Procedures for Holders and Servicers of VA Guaranteed Loans

AGENCY:
Veterans Benefits Administration, Department of Veterans Affairs.

ACTION:
Notice.

SUMMARY:
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.

DATES:
Comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice by clicking on the following link www.reginfo.gov/public/do/PRAMain , select “Currently under 30-day Review—Open for Public Comments”, then search the list for the information collection by Title or “OMB Control. 2900-0530.”

FOR FURTHER INFORMATION CONTACT:
VA PRA information: Maribel Aponte, 202-461-8900, vacopaperworkreduact@va.gov.

SUPPLEMENTARY INFORMATION:
Title: Loan Guaranty Servicing Procedures for Holders and Servicers of VA Guaranteed Loans.
OMB Control Number: OMB 2900-0530 https://www.reginfo.gov/public/do/PRASearch .
Type of Review: Extension of currently approved collection.
Abstract: The Department of Veterans Affairs (VA) Loan Guaranty program guarantees loans made by private lenders to veterans for the purchase, construction, and refinancing of homes owned and occupied by veterans. Under 38 CFR 36.4350, a holder of a loan guaranteed or insured by the VA is required to develop and maintain a loan servicing program.
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 Federal Register Notice with a 60-day comment period soliciting comments on this collection of information was published at 89 FR 21176 on March 26, 2024.
Affected Public: Individuals (employees of servicers making applications).
Estimated Annual Burden: 63 hours.
Estimated Average Burden per Respondent: 1 minute.
Frequency of Response: One-time.
Estimated Number of Respondents: 427.
Authority: 44 U.S.C.3501 et seq.
Maribel Aponte,

VA PRA Clearance Officer, Office of Enterprise and Integration, Data Governance Analytics, Department of Veterans Affairs.
89
107
Monday, June 3, 2024
Rules and Regulations
Part II
Securities and Exchange Commission
17 CFR Parts 240, 248, 270, et al.

Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information; Final Rule
SECURITIES AND EXCHANGE COMMISSION
17 CFR Parts 240, 248, 270, and 275
[Release Nos. 34-100155; IA-6604; IC-35193; File No. S7-05-23]
RIN 3235-AN26
Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information

AGENCY:
Securities and Exchange Commission.

ACTION:
Final rule.

SUMMARY:
The Securities and Exchange Commission (“Commission” or “SEC”) is adopting rule amendments that will require brokers and dealers (or “broker-dealers”), investment companies, investment advisers registered with the Commission (“registered investment advisers”), funding portals, and transfer agents registered with the Commission or another appropriate regulatory agency (“ARA”) as defined in the Securities Exchange Act of 1934 (“transfer agents”) to adopt written policies and procedures for incident response programs to address unauthorized access to or use of customer information, including procedures for providing timely notification to individuals affected by an incident involving sensitive customer information with details about the incident and information designed to help affected individuals respond appropriately. In addition, the amendments extend the application of requirements to safeguard customer records and information to transfer agents; broaden the scope of information covered by the requirements for safeguarding customer records and information and for properly disposing of consumer report information; impose requirements to maintain written records documenting compliance with the amended rules; and conform annual privacy notice delivery provisions to the terms of an exception provided by a statutory amendment to the Gramm-Leach-Bliley Act (“GLBA”).

DATES:
Effective date: This rule is effective August 2, 2024.
Compliance date: The applicable compliance dates are discussed in section II.F of this rule.

FOR FURTHER INFORMATION CONTACT:
Emily Hellman, James Wintering, Special Counsels; Edward Schellhorn, Branch Chief; Devin Ryan, Assistant Director; John Fahey, Deputy Chief Counsel; Emily Westerberg Russell, Chief Counsel; Office of Chief Counsel, Division of Trading and Markets, (202) 551-5550; Kevin Schopp, Senior Special Counsel; Moshe Rothman, Assistant Director; Office of Clearance and Settlement, Division of Trading and Markets, (202) 551-5550, Susan Ali and Andrew Deglin, Counsels; Michael Khalil and Y. Rachel Kuo, Senior Counsels; Blair Burnett and Bradley Gude, Branch Chiefs; or Brian McLaughlin Johnson, Assistant Director, Investment Company Regulation Office, Division of Investment Management, (202) 551-6792, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION:
The Commission is adopting amendments to 17 CFR 248.1 through 248.100 (“Regulation S-P”) under Title V of the GLBA [15 U.S.C. 6801 through 6827], the Fair Credit Reporting Act (“FCRA”) [15 U.S.C. 1681 through 1681x], the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 78a et seq. ], the Investment Company Act of 1940 (“Investment Company Act”) [15 U.S.C. 80a-1 et seq. ], and the Investment Advisers Act of 1940 (“Investment Advisers Act”) [15 U.S.C. 80b-1 et seq. ].

Table of Contents
I. Introduction and Background
II. Discussion
A. Incident Response Program Including Customer Notification
1. Assessment
2. Containment and Control
3. Notice to Affected Individuals
4. Service Providers
B. Scope of Safeguards Rule and Disposal Rule
1. Scope of Information Protected
2. Extending the Scope of the Safeguards Rule and the Disposal Rule To Cover All Transfer Agents
3. Maintaining the Current Regulatory Framework for Notice-Registered Broker-Dealers
C. Recordkeeping
D. Exception From Requirement To Deliver Annual Privacy Notice
E. Existing Staff No-Action Letters and Other Staff Statements
F. Compliance Period
III. Other Matters
IV. Economic Analysis
A. Introduction
B. Broad Economic Considerations
C. Baseline
1. Safeguarding Customer Information: Risks and Practices
2. Regulations and Guidelines
3. Market Structure
D. Benefits and Costs of the Final Rule Amendments
1. Written Policies and Procedures
2. Extending the Scope of the Safeguards Rule and the Disposal Rule
3. Recordkeeping
4. Exception From Annual Notice Delivery Requirement
E. Effects on Efficiency, Competition, and Capital Formation
F. Reasonable Alternatives Considered
1. Reasonable Assurances From Service Providers
2. Lower Threshold for Customer Notice
3. Encryption Safe Harbor
4. Longer Customer Notification Deadlines
5. Broader National Security and Public Safety Delay in Customer Notification
V. Paperwork Reduction Act
A. Introduction
B. Amendments to the Safeguards Rule and Disposal Rule
VI. Final Regulatory Flexibility Act Analysis
A. Need for, and Objectives of, the Final Amendments
B. Significant Issues Raised by Public Comments
C. Small Entities Subject to Final Amendments
D. Projected Reporting, Recordkeeping, and Other Compliance Requirements
E. Agency Action To Minimize Effect on Small Entities
Statutory Authority

I. Introduction and Background
Regulation S-P is a set of privacy rules adopted pursuant to the GLBA and the Fair and Accurate Credit Transactions Act of 2003 (“FACT Act”) that govern the treatment of nonpublic personal information about consumers by certain financial institutions. ^1 The Commission is adopting rule amendments that are designed to modernize and enhance the protections that Regulation S-P provides by addressing the expanded use of technology and corresponding risks that have emerged since the Commission originally adopted Regulation S-P in 2000. The amendments in particular update the requirements of the “safeguards” and “disposal” rules. The safeguards rule requires brokers, dealers, investment companies, ^2 and registered investment advisers to adopt written policies and procedures that address administrative, technical, and physical safeguards to protect customer records and information. ^3 The disposal rule, which applies to transfer agents registered with the Commission in addition to the institutions covered by the safeguards rule, requires proper disposal of consumer report information. ^4 In addition, under Regulation Crowdfunding, funding portals must comply with the requirements of Regulation S-P as they apply to brokers. ^5 Thus, funding portals will also be required to comply with the applicable amendments to Regulation S-P adopted in this release.
^1 See 17 CFR 248.1.
^2 Regulation S-P applies to investment companies as the term is defined in section 3 of the Investment Company Act (15 U.S.C. 80a-3), whether or not the investment company is registered with the Commission. See 17 CFR 248.3(r). Thus, a business development company, which is an investment company but is not required to register as such with the Commission, is subject to Regulation S-P. Similarly, employees' securities companies—including those that are not required to register under the Investment Company Act—are investment companies and are, therefore, subject to Regulation S-P. By contrast, issuers that are excluded from the definition of investment company—such as private funds that are able to rely on section 3(c)(1) or 3(c)(7) of the Investment Company Act—are not subject to Regulation S-P.
^3 17 CFR 248.30(a). References in this release to “rule 248.30” are to 17 CFR 248.30.
^4 Rule 248.30(b).
^5 See 17 CFR 227.403(b). Accordingly, unless otherwise stated (for example, see infra sections IV and V), references in this release to “brokers” or “broker-dealers” include funding portals.
The final Regulation S-P amendments are needed to provide enhanced protection of customer or consumer information and help ensure that customers of covered institutions receive timely and consistent notifications in the event of unauthorized access to or use of their information. ^6 In evaluating amendments to Regulation S-P, we have considered developments in how firms obtain, share, and maintain individuals' personal information since the Commission originally adopted Regulation S-P, which correspond with an increasing risk of harm to individuals. ^7 This environment of expanded risks and the importance of reducing or mitigating the potential for harm also supports our amendments to Regulation S-P.
^6 See Proposing Release at section II.A.4.
^7 See, e.g., Federal Bureau of Investigation, 2022 internet Crime Report (Mar. 27, 2023), at 7-8, available at: https://www.ic3.gov/Media/PDF/AnnualReport/2022_IC3Report.pdf (stating that the FBI's internet Crime Complaint Center received 800,944 complaints in 2022 (an increase from 351,937 complaints in 2018). The complaints included 58,859 related to personal data breaches (an increase from 50,642 breaches in 2018)); the Financial Industry Regulatory Authority (“FINRA”), 2022 Report on FINRA's Examination and Risk Monitoring Program: Cybersecurity and Technology Governance (Feb. 2022), available at: https://www.finra.org/rules-guidance/guidance/reports/2022-finras-examination-and-risk-monitoring-program (noting increased number and sophistication of cybersecurity attacks and reminding firms of their obligations to oversee, monitor, and supervise cybersecurity programs and controls of third-party vendors); Office of Compliance Inspections and Examinations (now the Division of Examinations) (“EXAMS”), Risk Alert, Cybersecurity: Safeguarding Client Accounts against Credential Compromise (Sept. 15, 2020), available at https://www.sec.gov/files/Risk%20Alert%20-%20Credential%20Compromise.pdf (describing increasingly sophisticated methods used by attackers to gain access to customer accounts and firm systems). This Risk Alert, and any other Commission staff statements represent the views of the staff. They are not a rule, regulation, or statement of the Commission. Furthermore, the Commission has neither approved nor disapproved their content. These staff statements, like all staff statements, have no legal force or effect. They do not alter or amend applicable law; and they create no new or additional obligations for any person.
In March 2023, the Commission proposed amendments to Regulation S-P. ^8 In particular, the proposed amendments would amend the safeguards rule to require any broker or dealer, investment company, registered investment adviser, or transfer agent (collectively, “covered institutions”) to develop, implement, and maintain written policies and procedures for an incident response program reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information. The proposal included a further requirement that, as part of this incident response program, covered institutions would provide notices to individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization as soon as practicable, but not later than 30 days, after becoming aware that the incident occurred or is reasonably likely to have occurred. The proposed notice requirement included provisions that addressed the use of service providers by covered institutions and included a provision that would permit covered institutions to delay providing notice after receiving a written request from the United States Attorney General (“Attorney General”) that this notice poses a substantial risk to national security.
^8 See Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Customer Information, Securities Exchange Act Release No. 97141 (Mar. 15, 2023) [88 FR 20616 (Apr. 6, 2023)] (“Proposing Release” or “proposal”). The Commission voted to issue the Proposing Release on Mar. 15, 2023. The release was posted on the Commission website that day, and comment letters were received beginning the same day. The comment period closed on June 5, 2023. We have considered all comments received since Mar. 15, 2023.
The Commission also proposed other amendments to Regulation S-P to enhance the protection of customers' nonpublic personal information. The proposed amendments included provisions to expand the scope of the protections of the safeguards and disposal rules, including extending the safeguards rule to transfer agents. The proposed amendments also included requirements for covered institutions to maintain written records documenting compliance with the proposed amended rules. Finally, the Commission proposed amendments to conform annual privacy notice delivery provisions to the terms of an exception provided by a statutory amendment to the GLBA.
The Commission received comment letters on the proposal from a variety of commenters, including financial services firms and their service providers, law firms, investor advocacy groups, professional and trade associations, public policy research institutes, academics, and interested individuals. ^9 Most individual and public interest group commenters and some industry groups generally supported the proposed amendments. ^{10} A few commenters urged the Commission to consider taking additional steps to strengthen the proposed requirements, for example, by shortening the period for customer notification. ^{11} Many industry commenters expressed concern with specific elements of the proposed amendments, however, suggesting that these amendments would pose operational difficulties. ^{12}
^9 The comment letters on the proposal are available at https://www.sec.gov/comments/s7-05-23/s70523.htm .
^{10} See, e.g., Comment Letter of the Investment Adviser Association (June 5, 2023) (“IAA Comment Letter 1”); Comment Letter of the Investment Company Institute (May 23, 2023) (“ICI Comment Letter 1”); Comment Letter of Better Markets (June 5, 2023) (“Better Markets Comment Letter”); Comment Letter of North American Securities Administrators Association (May 22, 2023) (“NASAA Comment Letter”). Some commenters suggested more tailored requirements for smaller covered institutions. See, e.g., IAA Comment Letter 1; Comment Letter of the Securities Transfer Association (June 2, 2023) (“STA Comment Letter 2”); Comment Letter of the Committee of Annuity Insurers (June 5, 2023) (“CAI Comment Letter”). As discussed in more detail below, the final amendments apply to all covered institutions because entities of all sizes are vulnerable to the types of data security breach incidents we are trying to address. See infra section VI.
^{11} See, e.g., Better Markets Comment Letter.
^{12} See, e.g., Comment Letter of the Securities Industry and Financial Markets Association, et al. (June 5, 2023) (“SIFMA Comment Letter 2”); Comment Letter of the Financial Services Institute (May 22, 2023) (“FSI Comment Letter”); Comment Letter of Federated Hermes, Inc. (June 6, 2023) (“Federated Comment Letter”).
Comments on specific aspects of the proposed amendments focused on a few key themes. First, commenters urged the Commission to take a more holistic regulatory approach to harmonize the proposed amendments with other Commission rules and proposals to avoid creating redundant, overlapping, or conflicting obligations for covered institutions. ^{13} We have modified the rule from the proposal to address comments. ^{14}
^{13} See, e.g., IAA Comment Letter 1; ICI Comment Letter 1; Comment Letter of Nasdaq Stock Market LLC (June 2, 2023) (“Nasdaq Comment Letter”). Commenters also raised these concerns about other proposed rulemakings that the Commission has not adopted. See, e.g., Comment Letter of the Investment Adviser Association (June 17, 2023) (“IAA Comment Letter 2”); ICI Comment Letter 1. Other commenters requested more specific guidance regarding how the various policies and procedure requirements in other Commission proposals would interact with each other. See, e.g., CAI Comment Letter; SIFMA Comment Letter 2; IAA Comment Letter 2. To the extent that those proposals are adopted, the baseline in those subsequent rulemakings will reflect the existing regulatory requirements at that time.
^{14} Since the publication of the proposing release, the Commission adopted new rules to enhance and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incidents by public companies that are subject to the reporting requirements of the Securities Exchange Act of 1934 (“Public Company Cybersecurity Rules”). See Cybersecurity Risk Management, Strategy, Governance, and Incident Disclosure, Securities Act Release No. 11216 (July 26, 2023) [88 FR 51896 (Aug. 4, 2023)].
For example, covered institutions may be required to adopt written policies and procedures on similar issues under other provisions of the Federal securities laws. ^{15} A covered institution can, however, adopt a single set of policies and procedures covering Regulation S-P and other rules, provided that the policies and procedures meet the requirements of each rule. ^{16} Additionally, we have changed the proposed requirement to delay providing customer notices when that notice poses a substantial risk to national security or public safety in order to align with a similar provision contained in the Public Company Cybersecurity Rules. ^{17}
^{15} See, e.g., 15 U.S.C. 80b-4a (requiring each adviser registered with the Commission to have written policies and procedures reasonably designed to prevent misuse of material non-public information by the adviser or persons associated with the adviser); 17 CFR 270.38a-1(a)(1) (requiring investment companies to adopt compliance policies and procedures); 275.206(4)-7(a) (requiring investment advisers to adopt compliance policies and procedures); and Regulation S-ID, 17 CFR part 248, subpart C (requiring financial institutions subject to the Commission's jurisdiction with covered accounts to develop and implement a written identity theft prevention program that is designed to detect, prevent, and mitigate identity theft in connection with covered accounts, which must include, among other things, policies and procedures to respond appropriately to any red flags that are detected pursuant to the program).
^{16} Two commenters addressed the proposal's application to dually-registered investment advisers and broker-dealers or firms operating both business models (collectively, “dual registrants”). One of these commenters stated that the proposed amendments to Regulation S-P allow for streamlining of process because they would apply uniformly to broker-dealers and investment advisers. FSI Comment Letter. The other commenter addressed collectively other Commission cyber proposals and the proposed amendments to Regulation S-P. The commenter stated that these proposals collectively would involve significant burden for a dual registrant to bring both broker-dealer and investment adviser entities into compliance, urging the Commission to provide an extended compliance period for all of the proposed rules to provide time for dual registrants to come into compliance and “identify some synergies that might make compliance more effective and economical.” Cambridge Comment Letter. As one of these commenters stated, Regulation S-P's requirements apply uniformly to broker-dealers and advisers, although each covered institution—including a dual registrant—will have to tailor its policies and procedures to its business.
^{17} See infra section II.A.3.d(2).
Commenters also questioned the need for the proposed amendments in light of existing State laws that also address data breaches and raised concerns about differences between the proposed amendments and State regulatory requirements. One commenter stated that the proposed amendments were not needed because existing State laws already require firms to provide notice to individuals in the event of a data breach. ^{18} Some commenters stated that parts of the proposed amendments would conflict with certain provisions of State laws, ^{19} while other commenters stated that parts of the proposed amendments would duplicate existing State laws. ^{20}
^{18} See CAI Comment Letter.
^{19} See, e.g., IAA Comment Letter 1; Letter from Computershare (June 5, 2023) (“Computershare Comment Letter”); SIFMA Comment Letter 2.
^{20} See, e.g., CAI Comment Letter.
As discussed more fully later in this section, while we recognize that existing State laws require covered institutions to notify State residents of data breaches in some cases, State laws are not consistent on this point and exclude some entities from certain requirements. ^{21} The final amendments will require notification to all customers of a covered institution affected by a data breach (regardless of State residency), in order to provide timely and consistent disclosure of important information to help affected customers respond to a data breach. ^{22} To that end, the final amendments will enhance investor protection in a number of ways, including by covering a broader scope of customer information than many States; ^{23} providing for a 30-day notification deadline that is shorter than the timing currently mandated by many States (including States that have no deadline or those allowing for various notification delays); ^{24} and providing for a more robust notification trigger than in many States. ^{25}
^{21} See infra section IV.C.2.
^{22} With respect to the interaction of the final rule with State law, Section 15(i)(1) of the Exchange Act (15 U.S.C. 78o(i)(1)) provides that no law, rule, regulation, or order, or other administrative action of any State or political subdivision thereof shall establish capital, custody, margin, financial responsibility, making and keeping records, bonding, or financial or operational reporting requirements for brokers, dealers, municipal securities dealers, government securities brokers, or government securities dealers that differ from, or are in addition to, the requirements in those areas established under the Exchange Act.
^{23} See infra section IV.D.1.b(3).
^{24} See infra section IV.D.1.b(2).
^{25} See infra section IV.D.1.b(4).
Commenters also raised concerns with differences between the proposed amendments and other Federal regulators' safeguarding standards that also include a requirement for a data breach response plan or program. ^{26} The GLBA and FACT Act oblige us to adopt regulations, to the extent possible, that are consistent and comparable with those adopted by the Banking Agencies, the Consumer Financial Protection Bureau (“CFPB”), and the FTC. ^{27} Accordingly, the Commission has also been mindful of the need to set standards for safeguarding customer records and information that are consistent and comparable with the corresponding standards set by these agencies in developing the amendments. ^{28} To this end, we have modified the final amendments from the proposal to promote greater consistency with other applicable Federal safeguard standards to the extent they do not affect the investor protection purposes of this rulemaking, as discussed in more detail below. For example, the final amendments require covered institutions to ensure that their service providers provide notification as soon as possible, but no later than 72 hours after becoming aware that an applicable breach has occurred, which is informed by the 72-hour deadline that is required under the Cyber Incident Reporting for Critical Infrastructure Act of 2022 (“CIRCIA”). ^{29}
^{26} The Federal Trade Commission (“FTC”) in 2021 amended its Safeguards Rule (16 CFR part 314 (“FTC Safeguards Rule”)) by, among other things, adding a requirement for financial institutions under the FTC's GLBA jurisdiction to establish a written incident response plan designed to respond to information security events. See FTC, Standards for Safeguarding Customer Information, 86 FR 70272 (Dec. 9, 2021). As amended, the FTC's rule requires that a response plan address security events materially affecting the confidentiality, integrity, or availability of customer information in the financial institution's control, and that the plan include specified elements that would include procedures for satisfying an institution's independent obligation to perform notification as required by State law. See id. at n.295. The “Banking Agencies” include the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), and the former Office of Thrift Supervision. In 2005, the Banking Agencies and the National Credit Union Administration (“NCUA”) jointly issued guidance on responding to incidents of unauthorized access to or use of customer information. See Interagency Guidance on Response Programs for Unauthorized Access to Customer Information and Customer Notice, 70 FR 15736 (Mar. 29, 2005) (“Banking Agencies' Incident Response Guidance”). The Banking Agencies' Incident Response Guidance provides, among other things, that when an institution becomes aware of an incident of unauthorized access to sensitive customer information, the institution should conduct a reasonable investigation to determine promptly the likelihood that the information has been or will be misused. If the institution determines that misuse of the information has occurred or is reasonably possible, it should notify affected customers as soon as possible.
^{27} See generally 15 U.S.C. 6804(a) (directing the agencies authorized to prescribe regulations under title V of the GLBA to assure to the extent possible that their regulations are consistent and comparable); 15 U.S.C. 1681w(a)(2)(A) (directing the agencies with enforcement authority set forth in 15 U.S.C. 1681s to consult and coordinate so that, to the extent possible, their regulations are consistent and comparable).
^{28} See Proposing Release at the text following n.37.
^{29} See final rule 248.30(a)(5)(i); see also infra footnote 245 and accompanying text (discussing how a 72-hour reporting deadline would align with other regulatory standards). Under CIRCIA, the 72-hour reporting deadline is for entities to report cyber incidents to the Cybersecurity and Infrastructure Security Agency (“CISA”).
We recognize, however, that there are some areas of divergence between the final amendments and other Federal regulators' GLBA safeguarding standards, and we discuss the basis for each provision of the final rules below, including cases where the amendments differ from analogous requirements under State law or other Federal regulations. ^{30}
^{30} Among the changes being adopted, we are revising as proposed the requirements of 17 CFR 248.17 (“rule 248.17”) to refer to determinations made by the CFPB rather than the FTC, consistent with changes made to section 507 of the GLBA by the Dodd-Frank Wall Street Reform and Consumer Protection Act. See Public Law 111-203, sec. 1041, 124 Stat. 1376 (2010). Upon its adoption, rule 248.17 essentially restated the then-current text of section 507 of the GLBA, and as such, referenced determinations made by the FTC. See Privacy of Consumer Financial Information (Regulation S-P), Exchange Act Release No. 42974 (June 22, 2000) [65 FR 40334 (June 29, 2000)].
Many commenters also urged the Commission to coordinate with other Federal agencies, particularly on reporting deadlines. ^{31} For example, a number of commenters suggested that the Commission coordinate with CISA as it develops regulations pursuant to CIRCIA. ^{32} We have consulted and coordinated with CISA and, consistent with the requirements of the GLBA and other statutory requirements, ^{33} other relevant agencies and their representatives for the purpose of ensuring, to the extent possible, that the amendments are consistent and comparable with the regulations prescribed by other relevant agencies. ^{34}
^{31} See, e.g., Comment Letter of Amazon Web Services (June 5, 2023) (“AWS Comment Letter”); Comment Letter of Google Cloud (June 5, 2023) (“Google Comment Letter”); and Nasdaq Comment Letter.
^{32} See, e.g., SIFMA Comment Letter 2; Cambridge Comment Letter; Google Comment Letter. CISA has provided a notice of proposed rulemaking that would implement the CIRCIA requirements but they have not yet been adopted. See also Cyber Incident Reporting for Critical Infrastructure Act (CIRCIA) Reporting Requirements, 89 FR 23644 (Apr. 4, 2024).
^{33} See Exchange Act Section 17A(d)(3)(A), 15 U.S.C. 78q-1(d)(3)(A) (providing that “[w]ith respect to any clearing agency or transfer agent for which the Commission is not the appropriate regulatory agency, the Commission and the appropriate regulatory agency for such clearing agency or transfer agent shall consult and cooperate with each other . . .”).
^{34} See 15 U.S.C. 6804(a)(2). The relevant agencies include the OCC, FRB, FDIC, CFPB, FTC, CISA, Commodity Futures Trading Commission (“CFTC”), Department of Justice (“DOJ”), and the National Association of Insurance Commissioners.
We are adopting amendments to Regulation S-P substantially as proposed, with some changes in response to comments. The principal elements of the final amendments, as discussed in more detail below, are as follows:
• Incident Response Program. The final safeguards rule requires covered institutions to develop, implement, and maintain written policies and procedures for an incident response program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information. The final amendments will require that a response program include procedures to assess the nature and scope of any incident and to take appropriate steps to contain and control the incident to prevent further unauthorized access or use.
• Notification Requirement. The response program procedures in the final amendments also includes a requirement that covered institutions provide a notification to individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. Notice will not be required if a covered institution determines, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, that the sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. Under the final amendments, a customer notice must be clear and conspicuous and provided by a means designed to ensure that each affected individual can reasonably be expected to receive it. This notice must be provided as soon as reasonably practicable, but not later than 30 days, after the covered institution becomes aware that unauthorized access to or use of customer information has, or is reasonably likely to have, occurred. As discussed in more detail below, the final amendments will permit covered institutions to delay providing notice after the Commission receives a written request from the Attorney General that this notice poses a substantial risk to national security or public safety. ^{35}
^{35} See infra section II.A.3.d(2).
• Service Providers. The final amendments to the safeguards rule include new provisions that address the use of service providers by covered institutions. Under these provisions, covered institutions will be required to establish, maintain, and enforce written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring of service providers, including to ensure that affected individuals receive any required notices. The final amendments make clear that while covered institutions may use service providers to provide any required notice, covered institutions will retain the obligation to ensure that affected individuals are notified in accordance with the notice requirements.
• Scope. The final amendments will more closely align the information protected under the safeguards rule and the disposal rule by applying the protections of both rules to “customer information,” a newly defined term. The final amendments will also broaden the group of customers whose information is protected under both rules. Also, transfer agents will be required to comply with the safeguards rule.
• Recordkeeping and Annual Notice Amendments. The final amendments will add requirements for covered institutions, other than funding portals, ^{36} to make and maintain written records documenting compliance with the requirements of the safeguards rule and the disposal rule. Further, the final amendments amend the existing requirement to provide annual privacy notices to codify a statutory exception.
^{36} As discussed below, funding portals are already subject to recordkeeping requirements with regard to documenting their compliance with Regulation S-P, which are not being amended by these final amendments. See infra footnote 385 and accompanying discussion.

II. Discussion
Since Regulation S-P was first adopted in 2000, evolving digital communications and information storage tools and other technologies have made it easier for firms to obtain, share, and maintain individuals' personal information. This increases the risk of customers' information being accessed or used without authorization, for example in a cyberattack or if customer information is improperly disposed of or stolen. In particular, as a frequently-targeted industry, the financial sector has observed increased exposure to cyberattacks that threaten not only the financial firms themselves, but also their customers, especially considering that customer records and other information that covered institutions possess can be particularly sensitive. ^{37} The final amendments will modernize and enhance the protections that Regulation S-P already provides to address this changed landscape.
^{37} See infra section IV.C.1.

A. Incident Response Program Including Customer Notification
As set forth in the proposal, security incidents may result in, among other things, misuse, exposure or theft of a customer's nonpublic personal information, and potentially leave affected individuals vulnerable to having their information further compromised. Threat actors can use customer information to cause harm in a number of ways, such as by stealing customer identities to sell to other threat actors on the dark web, publishing customer information on the dark web, using customer identities to carry out fraud themselves, or taking over a customer's account for malevolent purposes.
To help protect against harms that may result from a security incident involving customer information, the Commission proposed and is adopting amendments to the safeguards rule largely as proposed, with certain modifications to the notification requirement as discussed further below. ^{38} The amendments will require that covered institutions' safeguards policies and procedures include an incident response program for unauthorized access to or use of customer information, including customer notification procedures. ^{39} The amendments will require the incident response program to be reasonably designed to detect, respond to, and recover from both unauthorized access to and unauthorized use of customer information (for the purposes of this release, an “incident”). ^{40} Any instance of unauthorized access to or use of customer information will trigger a covered institution's incident response program. The amendments will also require that the response program include procedures for notifying affected individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. ^{41}
^{38} See
infra section II.A.3.
^{39} See final rule 248.30(a)(3). For clarity, when the amendments to the safeguards rule refer to “unauthorized access to or use”, the word “unauthorized” modifies both “access” and “use.”
^{40} See final rule 248.30(a)(3). See also infra section II.B.1 for a discussion of “customer information.”
^{41} See final rule 248.30(d)(9) for the definition of “sensitive customer information.” See also infra section II.A.3.b, which includes a discussion of “sensitive customer information.” Notice must be provided unless a covered institution determines, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information that occurred at the covered institution or one of its service providers that is not itself a covered institution, that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
In this regard, requiring covered institutions to have incident response programs will help mitigate the risk of harm to affected individuals stemming from incidents where a customer's information has been accessed or used without authorization. For example, incident response programs will help covered institutions to be better prepared to respond to such incidents, and providing notice to affected individuals will aid those individuals in taking protective measures that could mitigate harm that might otherwise result from unauthorized access to or use of their information. Further, a reasonably designed incident response program will help facilitate more consistent and systematic responses to customer information security incidents and help avoid inadequate responses based on a covered institution's initial impressions of the scope of the information involved in the compromise. Requiring the incident response program to address any incident involving customer information can help a covered institution better contain and control these incidents and facilitate a prompt recovery.
As proposed, the amendments will require that a covered institution's incident response program include policies and procedures containing certain general elements but will not prescribe specific steps a covered institution must undertake when carrying out incident response activities, thereby enabling covered institutions to create policies and procedures best suited to their particular circumstances. Specifically, a covered institution's incident response program will be required to have written policies and procedures to:
(i) Assess the nature and scope of any incident involving unauthorized access to or use of customer information and identify the customer information systems and types of customer information that may have been accessed or used without authorization; ^{42}
^{42} See final rule 248.30(a)(3)(i). The term “customer information systems” would mean the information resources owned or used by a covered institution, including physical or virtual infrastructure controlled by such information resources, or components thereof, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of customer information to maintain or support the covered institution's operations. See final rule 248.30(d)(6).
(ii) Take appropriate steps to contain and control the incident to prevent further unauthorized access to or use of customer information; ^{43} and
^{43} See final rule 248.30(a)(3)(ii).
(iii) Notify each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization in accordance with the notification obligations discussed below, ^{44} unless the covered institution determines, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, that the sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. ^{45}
^{44} See
infra section II.A.3.
^{45} See final rule 248.30(a)(3)(iii).
The Commission received multiple comments regarding the proposed requirement for an incident response program generally. ^{46} One commenter supported requiring the incident response program and appreciated its similarity to the Banking Agencies' Incident Response Guidance. ^{47} Another commenter stated that there should not be a one-size-fits-all approach to incident response programs, stating that an adviser should have discretion to determine how the incident response program should be implemented, and requested that any final rule make clear that specific steps for incident response are not required. ^{48} Moreover, this commenter requested that the final rule expressly indicate that in developing their programs, advisers should employ a principles- and risk-based approach. ^{49} This commenter also opposed the addition of any requirement in the policies and procedures for an adviser to designate an employee with specific qualifications and experience (or hire a similarly qualified third party) to coordinate its incident response program. ^{50}
^{46} Comments for specific components of the incident response program are discussed in more depth separately. See infra sections II.A.1-4.
^{47} See ICI Comment Letter 1; see also supra footnote 26 (discussing the Banking Agencies' Incident Response Guidance).
^{48} See IAA Comment Letter 1.
^{49} See id.; see also CAI Comment Letter stating that policies and procedures should be based on the specific risks of the particular covered institution and commensurate with the size and complexity of the covered institution's activities.
^{50} See id.
Covered institutions need the flexibility to develop policies and procedures suited to their size and complexity and the nature and scope of their activities. Therefore, we did not propose, and are not adopting, specific steps a covered institution must take when carrying out its incident response program, and we are not specifically designating who must undertake oversight responsibilities, thus providing covered institutions flexibility to determine whether and how to appropriately assign or divide such responsibilities. As proposed and adopted, the amendments will require that a covered institution's incident response program include policies and procedures containing certain general elements, so covered institutions may tailor their policies and procedures to their individual facts and circumstances. Additionally, advisers, like other covered institutions, can continue to use a risk-based approach to tailor their assessment and containment policies and procedures if they choose to do so, as long as the required elements of the incident response program are met.
Two commenters opposed the scope of the proposed incident response program. ^{51} Specifically, these commenters stated that, consistent with the notification requirements, the assessment and containment and control components of the incident response program should be limited to sensitive customer information (and not encompass all nonpublic customer information). ^{52} According to one commenter, because sensitive customer information is the information likely to cause substantial harm or inconvenience to a customer and that requires notification to customers, it follows that incident response programs should be tailored to sensitive customer information. ^{53} The other commenter stated that clients would view the protection of their sensitive customer information as a critically important aspect of their relationship with their adviser and that an adviser's efforts and resources should appropriately be focused on this information. ^{54}
^{51} See Comment Letter of Schulte Roth & Zabel LLP (June 5, 2023) (“Schulte Comment Letter”) and IAA Comment Letter 1.
^{52} See Schulte Comment Letter; IAA Comment Letter 1.
^{53} See Schulte Comment Letter.
^{54} See IAA Comment Letter 1.
We are adopting as proposed final rules which require the incident response program's assessment and containment and control components to cover a broader scope of information than the notification requirements. The scope of information covered by the assessment and containment and control requirements is designed to help ensure all information covered by the requirements of the GLBA ^{55} are appropriately safeguarded and that sufficient information is assessed to fulfill the more narrowly tailored obligation to notify affected individuals. For example, assessment of any incident involving unauthorized access to or use of customer information will help facilitate the evaluation of whether sensitive customer information has been accessed or used without authorization, which informs whether notice has to be provided. Additionally, a covered institution's assessment may also be useful for collecting other information that is required to populate the notice, such as identifying the date or estimated date of the incident, among other details. Therefore, the scope of the incident response program is appropriate, and we are adopting as proposed.
^{55} The GLBA directs the Commission to establish standards to insure the security and confidentiality of customer records and information; to protect against any anticipated threats or hazards to the security or integrity of such records; and to protect against unauthorized access to or use of records or information which could result in substantial harm or inconvenience to any customer. 15 U.S.C. 6801(b).

1. Assessment
The final amendments will require that the incident response program include procedures for: (1) assessing the nature and scope of any incident involving unauthorized access to or use of customer information, and (2) identifying the customer information systems and types of customer information that may have been accessed or used without authorization. ^{56} We did not receive comments addressing the assessment portion of the incident response program and are adopting it as proposed. ^{57}
^{56} See final rule 248.30(a)(3)(i). The proposed requirements related to assessing the nature and scope of a security incident are consistent with the components of a response program as set forth in the Banking Agencies' Incident Response Guidance. See Banking Agencies' Incident Response Guidance.
^{57} Although no comments discussed only the assessment requirement, multiple comments discussed the incident response program generally, which includes the assessment requirement. These comments are discussed in section II.A.
The assessment requirement is designed to require a covered institution to identify both the customer information systems and types of customer information that may have been accessed or used without authorization during the incident, as well as the specific customers affected, which would be necessary to fulfill the obligation to notify affected individuals. ^{58} Information developed during the assessment process may also help covered institutions develop a contextual understanding of the circumstances surrounding an incident, as well as enhance their technical understanding of the incident, which should be helpful in guiding incident response activities such as containment and control measures. The assessment process may also be helpful for identifying and evaluating existing vulnerabilities that could benefit from remediation in order to prevent such vulnerabilities from being exploited in the future. Further, covered institutions generally should consider reviewing and updating the assessment procedures periodically to ensure that the procedures remain reasonably designed. ^{59}
^{58} For example, a covered institution's assessment may include gathering information about the type of access, the extent to which systems or other assets have been affected, the level of privilege attained by any unauthorized persons, the operational or informational impact of the breach, and whether any data has been lost or exfiltrated.
^{59} See also 17 CFR 270.38a-1, 275.206(4)-7.

2. Containment and Control
The final amendments will require that the response program have procedures for taking appropriate steps to contain and control a security incident, in order to prevent further unauthorized access to or use of customer information. ^{60} We did not receive comments discussing the containment and control portion of the incident response program and are adopting as proposed. ^{61}
^{60} See final rule 248.30(a)(3)(ii). These proposed requirements are consistent with the components of a response program as set forth in the Banking Agencies' Incident Response Guidance. See Banking Agencies' Incident Response Guidance at 15752.
^{61} Although no comments discussed only the containment and control requirements, multiple comments discussed the incident response program generally, which includes the containment and control requirement. These comments are discussed in section II.A.
As set forth in the proposal, the objective of containment and control is to prevent additional damage from unauthorized activity and to reduce the immediate impact of an incident by removing the source of the unauthorized activity. ^{62} Strategies for containing and controlling an incident vary depending upon the type of incident and may include, for example, isolating compromised systems or enhancing the monitoring of intruder activities, searching for additional compromised systems, changing system administrator passwords, rotating private keys, and changing or disabling default user accounts and passwords, among other interventions. Because incident response may involve making complex judgment calls, such as deciding when to shut down or disconnect a system, developing and implementing written containment and control policies and procedures will provide a framework to help facilitate improved decision making at covered institutions during potentially high-pressure incident response situations. Further, covered institutions generally should consider reviewing and updating the containment and control procedures periodically to ensure that the procedures remain reasonably designed. ^{63}
^{62} See Proposing Release at Section II.A.2. For a further discussion of the purposes and practices of such containment measures, see generally CISA Incident Response Playbook, at 14; see also Federal Financial Institutions Examination Council (“FFIEC”), Information Technology Examination Handbook—Information Security (Sept. 2016), at 52, available at https://ithandbook.ffiec.gov/media/274793/ffiec_itbooklet_informationsecurity.pdf .
^{63} See also 17 CFR 270.38a-1, 275.206(4)-7.

3. Notice to Affected Individuals
As part of their incident response programs, covered institutions will be required under the final amendments to provide a clear and conspicuous notice to affected individuals under certain circumstances. ^{64} We are adopting this requirement substantially as proposed, with some changes in response to comments.
^{64} See final rule 248.30(a)(4).
We are adopting as proposed, a requirement for a covered institution to notify each affected individual whose sensitive customer information was, or was reasonably likely to have been, accessed or used without authorization, unless the covered institution has determined, after a reasonable investigation of the incident, that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. The covered institution will be required to provide a clear and conspicuous notice to each affected individual by a means designed to ensure that the individual can reasonably be expected to receive actual notice in writing. Also as proposed, the final amendments require the notice to be provided as soon as practicable, but not later than 30 days, after the covered institution becomes aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. Lastly, in a modification from the proposal, the final amendments provide for an incrementally longer period of time than the proposal for a covered institution to delay providing notice to affected individuals in cases where the Attorney General has determined that providing the notice would pose a substantial risk to national security or public safety. These requirements are discussed in detail below.

a. Standard for Providing Notice and Identification of Affected Individuals
We are adopting as proposed a requirement for a covered institution to provide notice to individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization, unless, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, it determines that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. ^{65} The final amendments reflect a presumption of notification: a covered institution must provide a notice unless it determines notification is not required following a reasonable investigation. Also as proposed, if an incident of unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred, but a covered institution is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization, the final amendments require the covered institution to provide notice to all individuals whose sensitive customer information resides in the customer information system that was, or was reasonably likely to have been, accessed without authorization (“affected individuals”). ^{66}
^{65} Final rule 248.30(a)(4)(i).
^{66} Final rule 248.30(a)(4)(ii). This proposed provision was not intended to require notification of customers whose sensitive customer information resided in the affected customer information system if the covered institution has reasonably determined that such customers' sensitive customer information was not accessed or used without authorization. Accordingly, we have modified the final rule to reflect this intended result. See infra footnote 102 and accompanying text.
While the incident response program is generally required to address information security incidents involving any form of customer information, ^{67} notification is only required when there has been unauthorized access to or use of sensitive customer information, a subset of customer information, because it presents increased risks to affected individuals. ^{68} This notice standard is designed to give affected individuals an opportunity to mitigate the risk of substantial harm or inconvenience arising from an information security incident that potentially implicates their sensitive customer information by affording them an opportunity to take timely responsive actions, such as monitoring credit reports for unauthorized activity, placing fraud alerts on relevant accounts, or changing passwords used to access accounts. At the same time, the final amendments provide a mechanism for covered institutions to avoid making unnecessary notifications in cases where, following a reasonable investigation, the institution determines that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience to the affected individual. ^{69}
^{67} See infra section II.B.1.
^{68} See infra section II.A.3.b. Additionally, customer information that is not disposed of properly could trigger the requirement to notify affected individuals under final rule 248.30(a)(4)(i). For example, a covered institution whose employee leaves un-shredded customer files containing sensitive customer information in a dumpster accessible to the public would be required to notify affected customers, unless the institution has determined that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
^{69} See infra section II.A.3.c.
Whether an investigation is reasonable will depend on the particular facts and circumstances of the unauthorized access or use. For example, unauthorized access or use that is the result of intentional intrusion by a threat actor may warrant more extensive investigation than inadvertent unauthorized access or use by an employee. The investigation may occur in parallel with an initial assessment and scoping of the incident and may build upon information generated from those activities. The scope of the investigation generally should be refined by using available data and the results of ongoing incident response activities. Information related to the nature and scope of the incident may be relevant to determining the extent of the investigation, such as whether the incident is the result of internal unauthorized access or use of sensitive customer information or an external intrusion, the duration of the incident, what accounts have been compromised and at what privilege level, and whether and what type of customer information may have been copied, transferred, or retrieved without authorization. ^{70}
^{70} For example, depending on the nature of the incident, it may be necessary to consider how a malicious intruder might use the underlying information based on current trends in identity theft.
A covered institution cannot avoid its notification obligations in cases where an investigation's results are inconclusive. Instead, the notification requirement is excused only where a reasonable investigation supports a determination that sensitive customer information has not been and is not reasonably likely to be used in a manner that would result in substantial harm or inconvenience. Thus, in a case where a threat actor has gained access to a customer information system that stores sensitive customer information, and the covered institution lacks information indicating that any particular individual's sensitive customer information stored in that customer information system was or was not used in a manner that would result in substantial harm or inconvenience, a covered institution will be required to provide notice to affected individuals even though it may not have a sufficient basis to determine whether the breach would result in substantial harm or inconvenience. ^{71} Pursuant to the amendments, as proposed and adopted, for any determination that a covered institution makes that notice is not required, covered institutions other than funding portals will be required to maintain a record of the investigation and basis for its determination. ^{72}
^{71} See final rule 248.30(a)(4)(ii).
^{72} See infra section II.C; see also infra footnote 385.
As further described below, ^{73} a number of commenters supported the proposal's requirement for covered institutions to provide notices promptly, emphasizing the importance of ensuring that customers receive timely notification when their sensitive customer information is reasonably likely to have been subject to unauthorized access or use so they have an opportunity to effectively respond to the incident. ^{74} One commenter stated that timeliness is key because any delay will impact consumers' ability to take steps to protect themselves from identify theft, account compromise, and other downstream impacts resulting from the initial harm of the unauthorized access or use. ^{75} According to this commenter, a breach notification regime is fundamentally deficient if it does not empower consumers with the information and tools necessary to take action to protect themselves or understand what risks they may face as a result of a breach. ^{76}
^{73} See infra section II.A.3.d.
^{74} See, e.g., Better Markets Comment Letter; EPIC Comment Letter; NASAA Comment Letter; ICI Comment Letter 1; Nasdaq Comment Letter.
^{75} See EPIC Comment Letter; see also Better Markets Comment Letter (customers whose information has been exposed need appropriate and timely notifications to decide for themselves whether and how to address the breach to avoid being “victimized twice”: first when the breach occurs, and then again when “bad actors use the information to steal their identity, drain their bank accounts, or run up their credit cards”).
^{76} See EPIC Comment Letter.
Several commenters proposed alternative notification standards, some expanding the circumstances requiring customer notification, and others suggesting a narrower notification regime. ^{77} One commenter suggested we require notification for any incident of unauthorized access to or use of sensitive information, regardless of the risk of harm or inconvenience. ^{78} According to this commenter, customers should always be notified when their sensitive information is accessed or used without authorization, which would allow customers to determine for themselves whether they believe there is a risk of substantial harm or inconvenience that should prompt action on their part. Similarly, another commenter suggested that the notification standard should be expanded from a “reasonably likelihood” standard to a “reasonably possible” standard with regard to whether an individual's sensitive customer information was accessed or used without authorization. ^{79} This commenter stated that this change was necessary to protect against the possibility that a covered institution might conclude it lacked sufficient information to find the reasonably likely standard satisfied if, for example, it knows it has been hacked but is unable to determine the scope of the hack. According to these commenters, the seemingly higher threshold proposed by the Commission, coupled with their belief that businesses want to avoid making disclosures that could incur liability or lose customers, leaves open the potential that customers will not be notified of some information security compromises that could threaten their investments. ^{80} One commenter suggested that, in addition to requiring notifications to affected individuals, the rules should be modified to also require that covered institutions provide notice to the Commission whenever they are providing notice to affected individuals. ^{81}
^{77} See, e.g., Better Markets Comment Letter, NASAA Comment Letter (proposing more expansive standards); SIFMA Comment Letter 2, CAI Comment Letter, IAA Comment Letter 1 (proposing narrower standards).
^{78} See Better Markets Comment Letter.
^{79} See NASAA Comment Letter.
^{80} See Better Markets Comment Letter; NASAA Comment Letter; see also EPIC Comment Letter (“EPIC agrees that businesses have a natural tendency to want to avoid making disclosures that could incur liability or lose customers”).
^{81} See Better Markets Comment Letter.
By contrast, with regard to narrowing the standard, some commenters suggested eliminating the presumption of notification altogether, such that covered institutions would have a notification obligation only after having affirmatively determined, following an investigation, a likelihood of a breach or resulting harm to customers. ^{82} These commenters suggested that eliminating the notification presumption, and allowing for the completion of an investigation, would provide covered institutions with additional time to respond to and mitigate an incident as opposed to spending time deliberating over notification obligations, and would allow for more informed notifications. These commenters also suggested that this approach would be more consistent with certain State law regimes that only require notification where an investigation shows a risk of harm and the Banking Agencies' Incident Response Guidance. ^{83} To address the concern that lengthy investigations might unduly delay customer notifications, one commenter suggested revising the rule to separately require covered institutions “to conduct a prompt investigation of potential incidents,” which the commenter stated would better align with certain existing State law standards while still providing a mechanism for timely notifications. ^{84}
^{82} See, e.g., SIFMA Comment Letter 2 (notification should only be required if the covered institution makes an affirmative finding of substantial harm or inconvenience); CAI Comment Letter (proposing revised notification trigger to no later than 30 days from a determination that actual or reasonably likely unauthorized access to sensitive customer information has occurred); ACLI Comment Letter (suggesting trigger should instead be only after the completion of a reasonable investigation and conclusion of the incident response process).
^{83} The Banking Agencies' Incident Response Guidance advises that a covered institution should provide notice to affected customers if, following the conclusion of a reasonable investigation, it has determined that misuse of sensitive customer information has occurred or is reasonably possible. See Banking Agencies' Incident Response Guidance. See also section II.A.3.d(1) (responding to commenters' concerns that the proposed notification timing requirements provide an insufficient amount of time for covered institutions to conduct a reasonable investigation of a data breach incident and prepare and send notices to affected individuals).
^{84} See CAI Comment Letter.
We considered the alternative approaches suggested by commenters but determined that adopting the standard as proposed strikes an appropriate balance in accommodating the relevant competing concerns. The suggestions to expand the circumstances requiring notification (either by requiring notification regardless of the risk of harm, or by expanding notification to include cases where it is “reasonably possible” that an individual's sensitive customer information was accessed or used without authorization) raise over-notification concerns, particularly given that the adopted standard already has a presumption towards notification. ^{85} We also disagree that the “reasonably likely” standard would allow a covered institution that knows it suffered a breach to avoid providing notice simply by pointing to a lack of information about the scope of the breach as the commenter recommending this approach suggested. ^{86} To the contrary, under the proposed and final amendments, if it is reasonably likely that a malicious actor gained access to a covered institution's information system containing sensitive customer information but the scope of the breach is unclear ( i.e., the covered institution is unable to determine which specific individuals' sensitive customer information has been accessed or used without authorization and cannot make the determinations required under the rule to avoid sending notices), the covered institution would be required to provide notice to each individual whose sensitive customer information resides in the customer information system. ^{87} In addition, providing notice of every incident, regardless of the risk of harm to affected individuals or the need to take protective measures, could diminish the impact and effectiveness of the notice in a situation where enhanced vigilance is necessary. Utilizing a “reasonably possible” standard raises similar concerns, as it could require covered institutions to provide notice in situations where it is possible, but not reasonably likely, that sensitive customer information was compromised. This could result in over-notification where, for example, a customer's sensitive information ultimately was not accessed or used without authorization, but it was not possible to rule out that possibility at the time of the incident or in the course of a reasonable investigation during the 30-day period for notices.
^{85} See supra footnotes 78-80 and accompanying text.
^{86} See NASAA Comment Letter.
^{87} See final rule 248.30(a)(4)(i) and (ii).
Additionally, we are not adopting a commenter's recommendation that the Commission require covered institutions to provide notices to the Commission when they are required to send notices to affected individuals, as one commenter suggested. ^{88} A primary reason for these amendments was to require a reasonably designed incident response program, including policies and procedures for assessment, control and containment, and customer notification, in order to mitigate the potential harm to individuals whose sensitive information is exposed or compromised in a data breach. ^{89} Providing timely notices to affected individuals accomplishes this goal without the need for covered institutions also to provide copies of the notice to the Commission.
^{88} See Better Markets Comment Letter.
^{89} Proposing Release at section I.
Conversely, the narrower alternative standards suggested by commenters ( i.e., that covered institutions have a notification obligation only after an investigation, and only if they affirmatively determine a likelihood of a breach or resulting harm to customers) could result in an unreasonable risk of significant delays in providing notice and in notification not being provided to affected individuals. A principal purpose of these amendments is to provide a notification regime that allows affected individuals to take actions to avoid or mitigate the risk of substantial harm or inconvenience. ^{90} If customer notification of a potential breach was delayed to allow a covered institution to complete an investigation that comes to a definitive conclusion about the precise details of the breach, even if done promptly, it would frustrate this goal by postponing (or potentially limiting or foreclosing) the ability of affected individuals to take mitigating actions pending the conclusion of that investigation. For these same reasons, we were not persuaded by those commenters who suggested that we should allow for the completion of an investigation in order to align with the Banking Agencies' Incident Response Guidance. After considering the comments, we continue to believe the notification standard we proposed (and are adopting in the final amendments) is necessary to enable affected individuals to make their own determinations on needed self-protections regarding the incident. ^{91}
^{90} See Proposing Release at nn.97-98 and accompanying text.
^{91} See Proposing Release at n.100 (discussing reasons for divergence from Banking Agencies' Incident Response Guidance); see also infra sections II.A.3.b, II.A.3.e, II.A.4, II.B.2, and IV.C (also discussing the Banking Agencies' Incident Response Guidance).
Regarding commenters' concerns about harmonizing Regulation S-P with State law requirements, State law notification standards vary widely such that broad harmonization would be impracticable, and a benefit of the final amendments is that they provide a consistent minimum Federal notification standard to protect affected individuals in an environment of enhanced risk. This will, for example, provide additional protections for customers in States whose laws do not mandate notification without an affirmative determination of harm or provide an outside time by which notification must be provided. ^{92} This standard will protect all customers, regardless of their State of residence and reduce the potential confusion that could result from customers in one State receiving notice of an incident while customers in another State do not. Moreover, to the extent a covered institution will have a notification obligation under both the final amendments and a similar State law, a covered institution may be able to provide one notice to satisfy notification obligations under both the final amendments and the State law, provided that the notice includes all information required under both the final amendments and the State law, which may reduce the number of notices an individual receives. ^{93}
^{92} See Proposing Release at nn.107-108 and accompanying text (discussing variation in State laws); see also infra section IV.C.2 for a fuller discussion of State law variations, and infra section IV.D.1.b(2) discussing timing of State law notification regimes.
^{93} See also infra section IV.C.2.a(2) (discussing States that excuse covered entities from individual notification under State law if the entities comply with the notification requirements of another regulator).
Relatedly, some commenters suggested eliminating or narrowing the concept of “affected individuals” entitled to notification in situations where a covered institution is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization. Instead of the proposed requirement that the covered institution must provide notice to all individuals whose sensitive customer information resides in the customer information system that was, or was reasonably likely to have been, accessed or used without authorization, commenters urged narrowing notification to individuals whose sensitive customer information was, or was reasonably likely to have been, accessed or used without authorization based on the covered institution's reasonable investigation. ^{94}
These commenters stated that, by requiring a covered institution to provide all affected individuals notice prior to the conclusion of an investigation and particularized determination, the proposed notification standard could result in the over-notification of individuals whose sensitive customer information may not have been accessed but was residing on a system that was compromised. ^{95} For example, one commenter posited a situation where a threat actor was able to compromise an employee's email account through a phishing email, and access documents accessible through that account's shared file server. According to this commenter, if the covered institution were unable to determine which files containing personal information actually were accessed, the institution would be required to provide notice in connection with millions of records, even though the “vast majority of files and data on that file server would not have been accessible to the employee or to the threat actor.” ^{96} These commenters stated that the resulting over-notification could, in turn, desensitize or unnecessarily disturb individuals whose information was not actually compromised, and might increase costs and litigation and reputational risks for the covered institution, its service providers, or other financial institutions whose contracts reside on the system. ^{97}
^{94} See, e.g., IAA Comment Letter 1 (suggesting the rule's affected individuals' provision be modified to remove the reference to situations where an institution is unable to identify which specific individual's sensitive customer information has been accessed or used without authorization, as well as the presumption that affected individuals include individuals whose sensitive customer information resides in the breached customer information system); CAI Comment Letter (suggesting the provision be revised to remove the requirement to notify all individuals whose information is on an affected system, and instead require the institution to notify individuals whose information it reasonably believes was, or reasonably could have been, subject to unauthorized access based on the finding of its investigation).
^{95} See, e.g., CAI Comment Letter; Computershare Comment Letter; IAA Comment Letter 1.
^{96} CAI Comment Letter.
^{97} See also infra section IV.D.1.b.(4) (discussing reputational costs).
For similar reasons to those discussed above, ^{98} we were not persuaded by commenter suggestions to narrow the scope of affected individuals entitled to notification in cases where a breach has or is reasonably likely to have occurred, but the covered institution is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization. ^{99} Because of the potential that customers might be adversely affected by the breach, covered institutions should be required to provide notice to affected individuals in these circumstances so they may make their own determination as to whether to take remedial actions.
^{98} See supra footnotes 90-93 and accompanying text.
^{99} See supra footnotes 94-97 and accompanying text.
Contrary to the concerns expressed by some commenters, under the proposed and final amendments, a covered institution would not need to provide notice in connection with files or data residing on a system where it knows that information was not used or accessed. ^{100} Rather, a covered institution is only required to provide notification to an affected individual where her sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. ^{101} Additionally, a covered institution need not provide notice where, after a reasonable investigation of the facts and circumstances of the incident, it has determined that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. To address these commenters' concerns, in a change from the proposal, the final amendments explicitly provide that, in cases where a covered institution reasonably determines that a specific individual's sensitive customer information that resides in the customer information system was not accessed or used without authorization, the covered institution need not provide notice to that individual. ^{102} Thus, a covered institution would not have an obligation to provide notice to an affected individual whose files happened to reside on a breached information system if it was able to reasonably conclude that those files were not subject to unauthorized use or access.
^{100} See supra footnote 96 and accompanying text.
^{101} See final rule 248.30(a)(4)(i).
^{102} See final rule 248.30(a)(4)(ii).
The notification standard should help to improve security outcomes by incentivizing covered institutions to conduct more thorough investigations after an incident occurs because the rule does not permit a covered institution to rebut the presumption of notification without conducting a reasonable investigation. Further, the rule's requirement that a covered institution provide notice to all affected individuals where it is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization should incentivize covered institutions to establish procedures (for themselves and their service providers) that provide robust protections for sensitive customer information. For example, it may encourage covered institutions to employ a principle of least privilege, so that users' access rights to sensitive customer information on a particular information system are limited to the information strictly required to do their jobs. ^{103} Protections that limit the scope of any breaches reduce the investigation and notification costs (and as a consequence, the potential harm) resulting from a breach.
^{103} See, e.g., Defend Privileges and Accounts, National Security Agency Cybersecurity Information (“Least privilege is the restriction of privileges to only those accounts that require them to perform their duties, while limiting accounts to only those privileges that are truly necessary. Doing this reduces the exposure of those privileges to a smaller, more easily manageable set of accounts. Local administrative accounts and accounts for software program management and installation are particularly powerful, but have small scopes of control and should be restricted as much as possible”) (available at https://media.defense.gov/2019/Sep/09/2002180330/-1/-1/0/Defend%20Privileges%20and%20Accounts%20-%20Copy.pdf ).
For a covered institution's customer notification procedures to remain reasonably designed to notify each affected individual whose sensitive customer information was reasonably likely to have been compromised, as required by the final amendments, the covered institution's policies and procedures generally should be designed to include revisiting notification determinations whenever the covered institution becomes aware of new facts that are potentially relevant to the determination. ^{104} For example, if at the time of the incident, a covered institution determines that risk of use in a manner that would result in substantial harm or inconvenience is not reasonably likely based on the use of encryption in accordance with industry standards, but subsequently the encryption is compromised or it is discovered that the decryption key was also obtained by the threat actor, the covered institution generally should revisit its determination.
^{104} See final rule 248.30(a)(3).
As discussed in more detail below, the scope of the final amendments will apply to customer information in a covered institution's possession or that is handled or maintained on the covered institution's behalf, regardless of whether such information pertains to (a) individuals with whom the covered institution has a customer relationship or (b) to the customers of other financial institutions where such information has been provided to the covered institution. ^{105} Some commenters expressed concern that, as a result of this scope, covered institutions would be required to provide notification to customers of other institutions with whom they do not have a preexisting relationship. ^{106} One of these commenters suggested that it was unclear how a third-party service provider's notice to a covered institution of a breach would affect that covered institution's obligations. ^{107} Additionally, some commenters addressed circumstances where multiple covered institutions would all be required to notify affected individuals concerning the same incident, asserting that requiring all covered institutions involved to provide notices to customers would be burdensome, duplicative, and confusing to customers. ^{108}
^{105} See infra section II.B.1.
^{106} See ACLI Comment Letter; Federated Hermes Comment Letter; ICI Comment Letter; SIFMA Comment Letter 2.
^{107} See ACLI Comment Letter.
^{108} See CAI Comment Letter; Computershare Comment Letter.
Where a covered institution experiences an incident involving sensitive customer information related to the customers of another covered institution, commenters generally suggested that the covered institution that has the customer relationship with the customer whose information was affected should be responsible for providing the required notice. ^{109} These commenters asserted that this would be more efficient because, if the covered institution that experienced the incident did not have a customer relationship with an affected individual, that covered institution might not have contact information for the individual necessary to send a notice.
^{109} See SIFMA Comment Letter 2; ACLI Comment Letter; Federated Hermes Comment Letter; CAI Comment Letter. Two of these commenters suggested that the covered institution with the customer relationship may make arrangements with other institutions to provide the notice on its behalf. SIFMA Comment Letter 2; ACLI Comment Letter.
After considering comments, we are modifying the proposal to avoid requiring multiple covered institutions to notify the same affected individuals about a given incident. In an effort to minimize duplicative notices, rather than requiring the covered institution with the customer relationship to send the notice as some commenters suggested, the final amendments only require a covered institution to provide notice where unauthorized access to or use of sensitive customer information has occurred at the covered institution or one of its service providers that is not itself a covered institution. ^{110} That covered institution will have information about the incident itself that is necessary to properly inform affected individuals. Thus, in response to the commenter question about the relationship between a covered institution's receipt of a breach notification from a third party service provider and the covered institution's own obligations, ^{111} where a service provider (that is not itself a covered institution) provides notice to a covered institution that a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider, ^{112} that covered institution will be required to initiate its incident response program under the final amendments ^{113} and thereafter, if applicable, provide notice to affected individuals. ^{114} While we appreciate, as offered by commenters, ^{115} that a covered institution may not have access to the contact information for some customers, it can coordinate with the covered institution that has a customer relationship to receive contact information as needed for the notices. ^{116}
^{110} Final rule 248.30(a)(4). If a covered institution is acting as a service provider, in addition to its own obligations under rule 248.30, it must provide notification to the other covered institution as required by the policies and procedures required in rule 248.30(a)(5)(i).
^{111} See ACLI Comment Letter.
^{112} See final rule 248.30(a)(5)(i)(B).
^{113} See id.; see also infra Section II.A.4.a.
^{114} See final rule 248.30(a)(4)(iii). As described above, a covered institution need not provide notice where, after a reasonable investigation of the facts and circumstances of the incident, it has determined that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. See final rule 248.30(a)(4)(i).
^{115} See ACLI Comment Letter, SIFMA Comment Letter 2.
^{116} Further, as discussed below, a covered instituition will be permitted to enter into a written agreement with its service provider to notify affected individuals on its behalf in accordance with the notice requirements. See final rule 248.30(a)(5)(ii); see also supra section II.A.4.
Moreover, in another modification from the proposal, the final amendments also provide that a covered institution that is required to notify affected individuals may satisfy that obligation by ensuring that the notice is provided. ^{117} Accordingly, if a covered institution experiences an incident affecting another covered institution's customers, although the covered institution that experienced the incident is responsible for notification under the final amendments, the two covered institutions can coordinate with each other as to which institution will send the notice.
^{117} Final rule 248.30(a)(4) (requiring covered institutions to either provide notice or ensure that such notice is provided).

b. Definition of “Sensitive Customer Information”
As discussed above, covered institutions will be required to notify customers when “sensitive customer information” was, or is reasonably likely to have been, accessed or used without authorization, subject to a reasonable investigation. As proposed and as adopted, the final amendments define the term “sensitive customer information” to mean “any component of customer information alone or in conjunction with any other information, the compromise of which could create a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.” ^{118} This definition is calibrated to include types of information that, if exposed, could put affected individuals at a higher risk of suffering substantial harm or inconvenience through, for example, fraud or identity theft enabled by the unauthorized access to or use of the information. ^{119} As with the proposal, the final amendments provide examples of the types of information that will be considered sensitive customer information. ^{120} These examples include certain customer information identified with an individual that, without any other identifying information, could create a substantial risk of harm or inconvenience to an individual identified with the information, ^{121} along with examples of combinations of identifying information and authenticating information that could create such a risk to an individual identified with the information. ^{122}
^{118} See final rule 248.30(d)(9)(i). The definition is limited to information identified with customers of financial institutions. See final rule 248.30(d)(5)(i); infra section II.B.1. As proposed, information pertaining to a covered institution's customers and to customers of other financial institutions that the other institutions have provided to the covered institution are subject to the safeguards rule under the final amendments, including the incident response program and customer notice requirements. See final rule 248.30(a); infra section II.B.1.
^{119} See supra section II.A.3.a.
^{120} See final rule 248.30(d)(9)(ii).
^{121} These examples include Social Security numbers and other types of identifying information that can be used alone to authenticate an individual's identity such as a driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number, biometric records, a unique electronic identification number, address, or routing code, or telecommunication identifying information or access device.
^{122} These examples include information identifying a customer, such as a name or online user name, in combination with authenticating information such as a partial Social Security number, access code, or mother's maiden name.
One commenter supported our proposed definition of sensitive customer information and emphasized the benefits of a broad definition. ^{123} According to this commenter, this breadth helps protect customers by ensuring that they can take the necessary steps to minimize their exposure risks and will assist covered institutions in formulating and improving their security standards. Another commenter suggested the proposed definition might be too narrow because it includes the separate concept of substantial harm or inconvenience in the definition, resulting in under-notification. ^{124} This commenter stated that harms can take many forms, and customers should receive notice of breaches involving customer information even where that information's compromise might not have obvious financial implications to the customer.
^{123} See Better Markets Comment Letter.
^{124} See EPIC Comment Letter.
Conversely, a number of commenters asserted that the proposed definition was too broad and could lead to over-notification, suggesting that the definition be narrowed to focus on information whose exposure would be more likely to lead to tangible economic harms. ^{125} For example, some commenters suggested that, rather than providing examples, the definition should list specific data elements that, when combined with an individual's name, are sufficiently sensitive to require notification. ^{126} These commenters focused on those data elements that could be used to commit identity theft or access the customer's financial account, such as a Social Security number, driver's license or State ID number, or financial account number combined with information necessary to access the account. According to one of these commenters, by using illustrative examples rather than a circumscribed list, covered institutions would face uncertainty over the definition's meaning and would likely err on the side of over-inclusion, which could lead to over-notification. ^{127} A number of commenters stated that narrowing the definition would be more consistent with the Banking Agencies' Incident Response Guidance and with various State laws. ^{128} One commenter also suggested the proposed use of the term “compromise” in the definition was unclear, and should be replaced with “unauthorized access or use,” consistent with other authorities and language used elsewhere in the proposal. ^{129}
^{125} See, e.g., CAI Comment Letter; IAA Comment Letter 1; SIFMA Comment Letter 2; ICI Comment Letter 1.
^{126} See CAI Comment Letter; SIFMA Comment Letter 2.
^{127} See CAI Comment Letter.
^{128} See, e.g., SIFMA Comment Letter 2; Computershare Comment Letter; CAI Comment Letter.
^{129} See CAI Comment Letter.
After considering these comments, we are adopting the definition of “sensitive customer information” as proposed. We recognize that this definition is broader than that used by some States and the Banking Agencies' Incident Response Guidance. ^{130} However, in contrast to the narrower definition used in some States, the definition of sensitive customer information we are adopting includes identifying information that, in combination with authenticating information (such as a partial Social Security number, access code, or mother's maiden name), could create a substantial risk of harm or inconvenience to the customer because they may be widely used for authentication purposes. ^{131} Similarly, in contrast to the definition provided in the Banking Agencies' Incident Response Guidance (which includes a customer's name, address, or telephone number, only in conjunction with other pieces of information that would permit access to a customer account), the definition in the Commission's final amendments includes customer information identified with an individual (such as Social Security numbers, driver's license numbers, biometric records) that, without any other identifying information, could create a substantial risk of harm or inconvenience to an individual identified with the information. ^{132} Accordingly, our adopted definition could help affected individuals take measures to protect themselves.
^{130} See Proposing Release at nn.113 and 115 (describing the differences). But see id. at n.115, stating that a number of States define the scope of personal information subject to a notification obligation in a manner that generally aligns with the definition of sensitive customer information under these final rules.
^{131} See infra footnote 810 and surrounding text (discussing that 14 States more narrowly define the kind of information that trigger notice requirements than our adopted definition of sensitive customer information in that only the compromise of a customer's name together with one or more enumerated pieces of information triggers the notice requirement).
^{132} See Proposing Release at n.114 and accompanying text, stating that Social Security numbers alone, without any other information linked to the individual, are sensitive because they have been used by malicious actors in “Social Security number-only” or “synthetic” identity theft, to open new financial accounts, and that a similar sensitivity exists with other types of identifying information that can be used alone to authenticate an individual's identity such as a biometric record of a fingerprint or iris image.
Given the varied and evolving nature of security practices across covered institutions, it would be impractical to provide an exhaustive list of data elements whose exposure could put affected individuals at risk of substantial harm or inconvenience. Further, while we are mindful of concerns about overbreadth and potential over-notification, those concerns are tempered by the definition's harm component and the ability of covered entities to rebut the notification presumption following a reasonable investigation and determination. Given these considerations, we are not broadening the definition of sensitive customer information to encompass information whose exposure does not pose a reasonably likely risk of substantial harm or inconvenience. Nor do we agree that the definition's use of the verb “compromise,” which is commonly used to mean “to expose or make liable to danger,” is ambiguous in this context or inconsistent with other Federal authorities. ^{133} Individuals are less likely to need to take protective measures in cases where the exposure of their information is not likely to involve a substantial harm or inconvenience. ^{134}
^{133} See, e.g., Harmonization of Cyber Incident Reporting to the Federal Government, Homeland Security Office of Strategy, Policy, and Plans, Appendix B: Federal Cyber Incident Reporting Requirements Inventory (Sept. 10, 2023) (summarizing cyber incident reporting regulations of multiple agencies that use the term “compromise,” including Departments of Defense, Justice, and Energy, the Federal Communications Commission, the Nuclear Regulatory Commission, and the Federal Energy Regulatory Commission).
^{134} See infra section II.A.3.c.
Finally, several commenters suggested we include an exception or safe harbor in the definition of sensitive customer information for encrypted information. ^{135} These commenters stated that excepting encrypted information would protect customers by incentivizing covered institutions to adopt encryption practices, limit the potential for voluminous over-reporting of less severe incidents, and align with existing State data breach notification rules. Some of these commenters acknowledged that an exception should not apply in cases where there is reason to believe that the encryption key has been compromised or that the encryption method is outdated. ^{136} One commenter suggested that if we did not include an exception in the rule text, we should acknowledge that encryption is a factor that covered institutions may take into account in determining whether an incident will result in substantial harm or inconvenience. ^{137}
^{135} See AWS Comment Letter; Google Comment Letter; IAA Comment Letter 1; SIFMA Comment Letter 2.
^{136} See Google Comment Letter, IAA Comment Letter 1; SIFMA Comment Letter 2.
^{137} See IAA Comment Letter 1.
After considering these comments, we are not excepting encrypted information from the rule's definition of sensitive customer information because the rule text effectively addresses encrypted information without the need for a provision specifically tailored to that information. Specifically, in applying the final rule, a covered institution may consider encryption as a factor in determining whether the compromise of customer information could create a reasonably likely harm risk to an individual identified with the information. ^{138} Specifically, we acknowledge that encryption of information using current industry standard best practices is a reasonable factor for a covered institution to consider in making this determination. To the extent such encryption minimizes the likelihood that the cipher text could be decrypted, it would also reduce the likelihood that the cipher text's compromise could create a risk of harm, as long as the associated decryption key is secure. ^{139} Covered institutions may also reference commonly used cryptographic standards to determine whether encryption, in fact, does substantially impede the likelihood that the cipher text's compromise could create a risk of harm. ^{140} As industry standards continue to develop in the future, covered institutions generally should review and update, as appropriate, their encryption practices. While we agree with commenters that it is important to incentivize the use of encryption consistent with State law regimes, the final amendments' approach accomplishes this goal while also addressing concerns that any particular approach to encryption may become outdated as technologies and security practices evolve. Relatedly, and for the same reasons, when information that would otherwise constitute sensitive customer information is encrypted, the covered institution may consider the security provided by that encryption in determining whether the cipher text ( i.e., the data rendered in a format not understood by people or machines without an encryption key) is sensitive customer information. Accordingly, while the final amendments provide illustrative examples of information (such as a customer's Social Security number) that can constitute sensitive customer information when unencrypted, ^{141} a covered institution could nevertheless determine that the encrypted representation of that information is not sensitive customer information if the encryption renders the cipher text sufficiently secure, such that the compromise of that encrypted information does not create a reasonably likely risk of substantial harm or inconvenience to an individual. ^{142}
^{138} See Proposing Release at n.116 and accompanying text.
^{139} As discussed in the Proposing Release, most States except encrypted information in certain circumstances, including, for example, where the covered institution can determine that the encryption offers certain levels of protection or the decryption key has not also been compromised. See Proposing Release at n.117 and accompanying text.
^{140} We understand that standards included in Federal Information Processing Standard Publication 140-3 (FIPS 140-3) are widely referenced by industry participants. See Proposing Release at n.118.
^{141} See final rule 248.30(d)(9)(ii)(A)( 1 ) through ( 4 ) and 248.30(d)(9)(ii)(B).
^{142} To the extent a covered institutioon's determination about the security of cipher text affects its determination about whether notice of a breach is required under the final rules, the covered institution would be required to make and maintain written documentation of that documentation. See final rule 248.30(c)(1)(iii).

c. Substantial Harm or Inconvenience
The GLBA directs the Commission and other Federal financial regulators to, among other things, establish appropriate standards requiring financial institutions subject to their jurisdiction to protect against unauthorized access to or use of customer records or information which could result in “substantial harm or inconvenience” to any customer, without defining what constitutes a substantial harm or inconvenience under the statute. ^{143} The Commission proposed to define “substantial harm or inconvenience” to mean all personal injuries, as well as instances of financial loss, expenditure of effort, or loss of time when they are “more than trivial,” with the proposal also providing a non-exhaustive list of examples of included harms or inconveniences. ^{144} This proposed definition included a broad range of financial and non-financial harms and inconveniences that may result from the failure to safeguard sensitive customer information. ^{145} After considering comments, and as discussed further below, we have determined not to define the term “substantial harm or inconvenience” in the final amendments.
^{143} See 15 U.S.C. 6801(b). The Banking Agencies' Incident Response Guidance likewise does not define the term “substantial harm or inconvenience.”
^{144} See proposed rule 248.30(e)(11).
^{145} See Proposing Release at n.124.
Commenters raised various concerns with the proposed definition. Some commenters proposed expanding the definition to include a broader array of harms requiring notification. ^{146} For example, one commenter suggested revising it to enumerate a list of specific personal injuries requiring notification to help clarify to covered institutions that there are a range of personal injuries that can result from an exposure of customer data. ^{147} Commenters also suggested we remove the requirement that personal or financial harms be nontrivial because, according to these commenters, there might always be some set of individuals to whom a particular personal or financial harm is material, and securities firms are not well positioned to determine what potential personal or financial harms to their customers are significant enough to require customer notice. ^{148} One of these commenters observed that, while it made sense to apply the concept of nontriviality to potential harms or inconveniences that would infringe upon a customer's time and personal labors, risks to the customer's person and pocketbook are materially different from risks to the customer's time and energies. ^{149} This commenter also suggested broadening the definition to include the term “cyberattack” as one of the enumerated events that could give rise to the customer notice obligation.
^{146} See EPIC Comment Letter; NASAA Comment Letter; Better Markets Comment Letter.
^{147} See EPIC Comment Letter (suggesting the definition specifically list as examples of personal injuries: theft, fraud, harassment, physical harm, psychological harm, impersonation, intimidation, damaged reputation, impaired eligibility for credit or government benefits, or the misuse of information identified with an individual to obtain a financial product or service, or to access, log onto, effect a transaction in, or otherwise misuse the individual's account).
^{148} See NASAA Comment Letter; EPIC Comment Letter (agreeing with NASAA's comment).
^{149} See NASAA Comment Letter.
Alternatively, a number of commenters suggested that the proposed standard was ambiguous and urged narrowing the definition to reduce the types of injuries that would require notification. ^{150} For example, one commenter suggested that we not attempt to define “substantial harm or inconvenience” at all, and further expressed concern that the proposed definition would require notice for harms or inconveniences that are unrelated to identify theft, the means to access an account without authority, or other “tangible harms.” ^{151} Another commenter proposed narrowing the kinds of financial loss or time and effort cognizable under the rules from “more than trivial” to only “material” financial loss or “significant” expenditure of effort or loss of time, suggesting that the proposed definition would be inconsistent with the usual meaning of the term “substantial” and could include any financial loss that is slightly above trivial as substantial. ^{152} Another commenter stated that the use of “more than trivial” set a very low bar that could result in second-guessing and over notification by covered intuitions that could lead to notification in practically all instances, not just instances of what the commenter viewed as a substantial harm or inconvenience. ^{153} This commenter also stated that, as drafted, it was unclear whether the proposed “more than trivial” standard was meant to apply to instances of personal injury or financial loss and suggested replacing “more than trivial” with substantial, while making clear that the word substantial modified all elements of the definition. Other commenters suggested narrowing the proposed definition by removing the term “inconvenience” from the definition, with notification only required in cases of substantial harm that were more than trivial. ^{154}
^{150} See, e.g., Comment Letter of Cambridge (“Cambridge Comment Letter”); CAI Comment Letter; IAA Comment Letter 1; SIFMA Comment Letter 2.
^{151} See SIFMA Comment Letter 2.
^{152} See IAA Comment Letter 1.
^{153} See CAI Comment Letter (“it is hard to imagine any instance of unauthorized access or use of customer information that could not create a reasonably likely risk of more than trivial inconvenience, and therefore not require notification”).
^{154} See Cambridge Comment Letter; Financial Services Institute Comment Letter.
After considering comments, we have determined, consistent with the approach of the Banking Agencies, not to define the term “substantial harm or inconvenience.” As the range of commenter concerns discussed above reflects, commenters found the proposed definition simultaneously too broad and too narrow, suggesting it could consequently lead to both under-notification and over-notification. Eliminating the proposed definition avoids this result without diminishing investor protection.
Determining whether a given harm or inconvenience rises to the level of a substantial harm or a substantial inconvenience would depend on the particular facts and circumstances surrounding an incident. As stated in the Proposing Release, we do not intend for covered institutions to design programs and incur costs to protect customers from harms of such trivial significance that the customer would be unconcerned with remediating them. ^{155} At the same time, consistent with the GLBA, the rules are intended to protect against unauthorized access to or use of customer records or information which could result in substantial harm or inconvenience to any customer. Given the wide variety of ways that a data breach can injure a customer, ^{156} and the potentially varied nature of those harms and inconveniences, ^{157} the range of harms outlined in the proposed definition may be a useful starting point for this determination. A personal injury, financial loss, expenditure of effort, or loss of time, each could constitute a substantial harm or inconvenience depending on the particular facts and circumstances. Some examples of these harms could include theft, fraud, harassment, physical harm, impersonation, intimidation, damaged reputation, impaired eligibility for credit, or the misuse of information identified with an individual to obtain a financial product or service, or to access, log into, effect a transaction in, or otherwise misuse the individual's account.
^{155} See Proposing Release at Section II.A.4.c.
^{156} See Proposing Release at n.124.
^{157} See, e.g., NASAA Comment Letter; IAA Comment Letter 1.

d. Timing Requirements

(1) General Timing Requirements
Consistent with the proposal, the final amendments require covered institutions to provide notices to affected individuals as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred, except under the limited circumstances discussed below. ^{158} This approach reflects the goal of giving covered institutions adequate time to make an initial assessment of an incident and prepare and send notices to affected individuals, while helping to ensure that those individuals receive sufficient notice to protect themselves.
^{158} See final rule 248.30(a)(4)(iii); see also section II.A.3.d(2) (discussing the national security and public safety delay to the notification timing requirements).
A few commenters expressed support for the proposed notification timing requirements. ^{159} As described above, these commenters viewed timeliness as important because any delay in notification could impact individuals' ability to take steps to protect themselves from the downstream impacts resulting from the unauthorized access to or use of their sensitive customer information. ^{160} One commenter asserted that 30 days after becoming aware of an incident is more than an ample amount of time for covered institutions to determine the scope of the compromised information and compile a list of affected customers that must be notified. ^{161} Accordingly, this commenter suggested that the Commission should shorten the outside notification date from 30 days after becoming aware of a data security incident to 14 days, asserting that the longer an instance of identity theft goes undetected, the greater the damage that usually follows.
^{159} EPIC Comment Letter; Better Markets Comment Letter.
^{160} See supra section II.A.3.a.
^{161} Better Markets Comment Letter.
In contrast, some commenters objected to the proposed notification timing requirements because, in their view, it provided an insufficient amount of time to notify affected individuals. ^{162} These commenters emphasized the logistical tasks associated with responding to an information breach, asserting that in some cases it would be impossible to accomplish these steps within 30 days. ^{163} Commenters expressed that these steps often include remediating the security incident directly, conducting a risk assessment and investigation to determine what information may have been affected, obtaining the information needed to make notification to affected individuals, arranging identity protection services for affected individuals, and generating and delivering the notifications to affected individuals, all while simultaneously engaging in extensive communication with and oversight from senior management, the board of directors, and external parties (such as outside counsel, expert consultants, and regulators). ^{164}
^{162} See, e.g., SIFMA Comment Letter 2; IAA Comment Letter 1; FSI Comment Letter; NASDAQ Comment Letter; CAI Comment Letter.
^{163} For example, one commenter offered the example of a ransomware attack that successfully shuts down systems and requires significant remediation to recover backup systems, as well as rebuilding and redeploying essential systems prior to conducting a forensic investigation to determine the scope of data subject to unauthorized access or use. See CAI Comment Letter. According to this commenter, it would be practically impossible to accomplish these tasks within 30 days of becoming aware of a possible issue, as required under the proposed rules.
^{164} See, e.g., CAI Comment Letter, NASDAQ Comment Letter; IAA Comment Letter 1.
Some commenters also suggested that the proposed timing requirements would lead to covered institutions delivering unnecessary or incomplete notifications to customers, which would have the result of confusing or desensitizing customers to such notifications. ^{165} Similarly, commenters expressed that requiring a covered institution to notify affected individuals before the covered institution has had time to fully assess an incident could result in incorrect or incomplete conclusions being drawn and disclosed. ^{166} One commenter suggested, for this reason, that notices would be subject to continuous revision during an ongoing investigation. ^{167} Accordingly, commenters stated that the Commission should revise the proposal to allow more time for covered institutions to provide notices to affected individuals, asserting that premature, incomplete, or frequent notifications would ultimately mislead and confuse customers rather than provide clarity about an incident. ^{168}
^{165} See, e.g., ACLI Comment Letter; AWS Comment Letter, NASDAQ Comment Letter.
^{166} NASDAQ Comment Letter; AWS Comment Letter.
^{167} AWS Comment Letter.
^{168} ACLI Comment Letter; AWS Comment Letter, NASDAQ Comment Letter.
Several commenters suggested alternatives to the proposed timing requirements. ^{169} For instance, a few commenters urged the Commission to expand the 30-day outside date to 45 or 60 days, stating that this modification would allow more time for a proper investigation and notification process. ^{170} In addition, a couple of commenters suggested that the rule should not specify a number of days at all. ^{171} One of these commenters stated that simply requiring a covered institution to notify affected individuals as soon as possible after the conclusion of an investigation, without including an outside date timeframe, would permit appropriate notification in both simple cases—where notification in less than 30 days may be appropriate—and more complex cases—where it may take significantly longer to identify the appropriate notice population and prepare and deliver notifications. ^{172}
^{169} See, e.g., IAA Comment Letter 1; FSI Comment Letter; Cambridge Comment Letter; Federated Comment Letter; SIFMA Comment Letter 2.
^{170} See FSI Comment Letter; Cambridge Comment Letter; IAA Comment Letter 1.
^{171} Federated Comment Letter; SIFMA Comment Letter 2.
^{172} SIFMA Comment Letter 2.
Some commenters suggested that the trigger for notification should be the completion of a reasonable investigation and conclusion of the incident response process following the actual or reasonably likely unauthorized access to or use of sensitive customer information, rather than the proposal's trigger of a covered institution “becoming aware” of a breach of customer information. ^{173} These commenters stated this alternative would allow covered institutions sufficient time to engage in system and data analysis to determine what data was impacted and what individuals were affected. Moreover, some commenters stated that their suggested alternatives would harmonize the rule's approach to timing with existing data breach requirements and guidance, such as the Banking Agencies' Incident Response Guidance and some current State laws. ^{174} Lastly, one commenter urged that the 30-day outside timeframe to provide notices should run from the time that the covered institution determines that an incident involved “sensitive customer information,” rather than “customer information” as proposed. ^{175}
^{173} See SIFMA Comment Letter 2; ACLI Comment Letter; see also CAI Comment Letter (suggesting that a revised rule could require covered institutions to conduct a prompt investigation of potential incidents to address concerns about lengthy investigations unduly delaying customer notification.).
^{174} See FSI Comment Letter; SIFMA Comment Letter 2 (suggesting conforming to Banking Agencies' Incident Response Guidance which does not mandate specific number of days to provide notices); see also IAA Comment Letter 1 (stating that “over half of state data breach notification laws do not specify a number of days to report a breach and a majority of those states that do require notification allow for 45-60 days for reporting”).
^{175} IAA Comment Letter 1 (suggesting that referring to “customer information,” rather than “sensitive customer information,” in this part of the proposed rule was an inadvertent omission).
After considering comments and alternatives suggested by commenters, we are adopting the final amendments as proposed. We considered the concern raised by commenters that it may be logistically challenging for covered institutions to provide notice to affected individuals within the proposed rule's notification timing requirements, particularly for more complex data breach incidents. ^{176} We recognize that modifying the timing trigger in the rule to start after a covered institution has completed an investigation that comes to a definitive conclusion about the precise details of the breach, as suggested by some commenters, could avoid over-notification in cases where a covered institution is able to determine that a given individual's customer information ultimately was not affected after a lengthy investigation. We agree with commenters, however, that timeliness is important in the context of a breach of sensitive customer information because delay in notification would impact the ability of affected individuals to take measures to protect themselves. Accordingly, the final amendments maintain the proposed timing trigger of after the covered institution “becomes aware” that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. ^{177}
^{176} See, e.g., CAI Comment Letter; ACLI Comment Letter.
^{177} While this “becoming aware” standard differs from the reporting trigger in the Public Company Cybersecurity Rules (which require public disclosure of public issuer cybersecurity incidents four business days from when an issuer determines that a cybersecurity incident that it has experienced is material), that difference is attributable to the different purposes underlying the rules. The Public Company Cybersecurity Rules were designed to inform investment and voting decisions and to reduce information asymmetry and mispricing in the market, and therefore tie public disclosure to an issuer making a determination that information about an incident would be material, meaning there would be a substantial likelihood that a reasonable shareholder would consider it important in making an investment decision. As we stated in that release, “we reiterate, consistent with the standard set out in the cases addressing materiality in the securities laws, that information is material if `there is a substantial likelihood that a reasonable shareholder would consider it important' in making an investment decision, or if it would have `significantly altered the “total mix” of information made available.' ” See Public Company Cybersecurity Rules. By contrast, the notice provisions under these final rules do not require covered institutions to make a materiality determination, and balance the need for timely notifications with a regime that allows for reasonable investigations to avoid over-notification by allowing covered institutions up to 30 days to conduct a reasonable investigation after becoming aware of an incident. In light of this 30-day window, and the fact that covered institutions are not required to make a materiality determination, there is less need for a trigger based on a determination standard, and greater risk of harm to affected individuals if customer notification were further delayed by requiring that a covered institution come to a determination before triggering the 30-day notification window.
In addition, the final amendments adopt the proposed 30-day outside date. We disagree that the rule should not include a specified notification deadline, as such an approach would diminish the goal of providing customers (regardless of State residency) with early and consistent notification of data breaches so that they may take remedial action because many States do not have any specific deadline for sending notices or provide deadlines exceeding 30 days. ^{178}
^{178} See infra section IV.D.1.b(2).
We understand that there are a number of steps a covered institution may have to take after becoming aware of a data breach incident to determine if it has met the standard for providing notice. In the context of the final amendments, 30 days should be sufficient to conduct an initial assessment and notify affected individuals. While a covered institution may still be working towards remediating the breach after the 30-day timeframe, the final amendments require a covered institution to notify affected customers within the 30-day timeframe so that affected individuals may take measures to protect themselves. The final amendments remove the specific requirement in the proposal that the notice describe what has been done to protect the sensitive customer information from further unauthorized access or use. ^{179} This change will help address some of the timing and logistical concerns raised by commenters because the process of preparing the requisite notices will be less time intensive, such that, once a covered institution has made its initial assessment of the incident and determined the universe of affected individuals, it should possess the information necessary to provide the requisite notices.
^{179} See final rule 248.30(a)(4)(iv); infra section II.A.3.e. (discussing in more detail the modification to the notice content requirements).
In addition, with regard to the commenter concern that it may be logistically challenging to provide a notice within the rule's timing requirements in cases where a ransomware attack has denied the covered institution access to its systems, ^{180} that comment does not account for the fact that, under the proposed and final amendments, covered institutions will now be required to have an incident response program that includes policies and procedures to, among other things, assess the nature and scope of any qualifying incidents, identify customer information systems and types of customer information that may have been accessed or used without authorization, and respond to and recover from those incidents. ^{181} Thus, as proposed, consistent with the final amendments, covered institutions will need to anticipate and prepare for the possibility that they may be denied access to a particular system (such as in the ransomware example offered by one commenter) and have procedures in place for complying with the notice requirements when applicable.
^{180} See CAI Comment Letter.
^{181} See supra section II.A; final rule 248.30(a).
Consistent with the proposal, the final amendments will require that covered institutions provide notices “as soon as practicable,” but not more than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. The amount of time that would constitute “as soon as practicable” may vary based on several factors, such as the time required to assess, contain, and control the incident. ^{182} The requirement to notify affected individuals as soon as practicable but not more than 30 days in the final amendments is consistent with the purposes of the GLBA and reflects the importance of expeditious notification. The amendments are designed to help ensure that customers receive notification in a timely manner. It would be contrary to this policy goal for a covered institution to unduly delay notification to customers, for example by delaying notice until it has definitively concluded that a data breach incident has occurred, because this could result in excessively delayed notifications that could unnecessarily hinder affected customers from engaging their own remedial measures to protect their data. A covered institution should act promptly and must not delay its initial assessment of the available details of the incident as delaying notices could deprive customers of the ability to take prompt action to protect themselves.
^{182} For example, an incident of unauthorized access by a single employee to a limited set of sensitive customer information may take only a few days to assess, remediate, and investigate. In those circumstances a covered institution generally should provide notices to affected individuals at the conclusion of those tasks and as soon as the notices have been prepared. See Proposing Release at n.133.
The 30-day outside timeframe under both the proposed and final rules begins following an incident involving customer information. This is consistent with the scope of the incident response program, which is required to address unauthorized access to or use of customer information. The outside timeframe does not begin from the time that the covered institution determines that an incident involved “sensitive customer information,” as suggested by one commenter. ^{183} The commenter's suggested modification would likely delay notification as compared to the final rule because covered institutions could take considerable time to determine that an incident involved sensitive customer information before the outside timeframe would begin and this could further delay any potential notice to affected individuals.
^{183} IAA Comment Letter 1.

(2) National Security and Public Safety Delay
The final amendments will allow covered institutions to delay providing notice if the Attorney General determines that the notice required under the final amendments poses a substantial risk to national security or public safety, and notifies the Commission of such determination in writing, in which case the covered institution may delay such notice for a time period specified by the Attorney General, up to 30 days following the date when such notice was otherwise required to be provided. ^{184} Previously referred to as the “law enforcement exception” in the proposal, the national security and public safety delay has been expanded to incorporate risks related to public safety in addition to national security. In a modification of the proposal, in which the Attorney General would have informed only the covered institution in cases where this delay is granted, in the final amendments the Attorney General will instead inform the Commission, in writing, if the Attorney General determines that the notice poses a substantial risk to national security or public safety. This modification is designed to ensure that the Commission receives information related to a delay in notice in an efficient and timely manner. We have consulted with the Department of Justice to establish an interagency communication process to allow for the Attorney General's determination to be communicated to the Commission in a timely manner. The Department of Justice will notify the covered institution that communication to the Commission has been made so that the covered institution may delay providing the notice.
^{184} See final rule 248.30(a)(4)(iii).
In another change from the proposal, the notice may be delayed for an additional period of up to 30 days if the Attorney General determines that the notice continues to pose a substantial risk to national security or public safety and notifies the Commission of such determination in writing. In a further change in response to comments, in extraordinary circumstances, notice may be delayed for a final additional period of up to 60 days if the Attorney General determines that notice continues to pose a substantial risk to national security and notifies the Commission of such determination in writing. Beyond the final 60-day delay, if the Attorney General indicates that further delay is necessary, the Commission will consider additional requests for delay and may grant such delay through a Commission exemptive order or other action. By contrast, the proposed rules would have allowed a covered institution to delay notice only for an aggregate period of 30 days following a written request from the Attorney General to the covered institution, upon the expiration of which the covered institution would have been required to provide notice immediately. The modification to the proposed rule is designed to respond to concerns raised by commenters. ^{185}
^{185} The final amendments will align more closely with the Public Company Cybersecurity Rules on this point by incorporating a similar scope and timing for its national security and public safety delay.
One commenter stated that a delay in notifying affected individuals for law enforcement activity may cause harm to customers whose personal information has been exposed. ^{186} In addition, this commenter asserted that notifying affected individuals would not impede a law enforcement investigation of the data security incident.
^{186} Better Markets Comment Letter.
Other commenters, however, urged the Commission to expand the proposed law enforcement exception because, in their view, the proposed exception was too narrowly drawn. ^{187} Several of these commenters expressed concern that requests by local or State police, or even other Federal agencies, would not be sufficient to delay notification under the proposed rule. ^{188} Some commenters stated concerns about the feasibility and process of reaching out to the Attorney General to request a delay in support of expanding the exception to permit other law enforcement agencies to direct a covered institution to delay a notice. ^{189} Commenters also expressed particular concern around competing requirements, noting that many State regulations include a more permissive delay and that covered institutions, in an effort to comply with the proposed exception, may be put into the difficult and unnecessary position of being subject to conflicting requirements from the Commission and a State law enforcement entity. ^{190} Further, commenters articulated that the proposed exception is excessively narrow because it only accommodates law enforcement actions that address concerns that rise to the level of “national security.” ^{191}
^{187} See, e.g., IAA Comment Letter 1; SIFMA Comment Letter 2; NASDAQ Comment Letter; CAI Comment Letter; FII Comment Letter.
^{188} See, e.g., CAI Comment Letter; ICI Comment Letter 1; FII Comment Letter; SIFMA Comment Letter 2 (suggesting that the proposed law enforcement exception should also contemplate foreign law enforcement and include cooperation with international authorities).
^{189} See ICI Comment Letter; SIFMA Comment Letter 2.
^{190} See, e.g., ICI Comment Letter 1; NASDAQ Comment Letter; FII Comment Letter; IAA Comment Letter 1 (viewing the proposed exception as creating broader security risks for clients and advisers and forcing an adviser to choose between disregarding a law enforcement request or violating the rule).
^{191} CAI Comment Letter; ICI Comment Letter 1; SIFMA Comment Letter 2.
In addition to concerns regarding the scope of the proposed law enforcement exception, several commenters opposed the length of time that a covered institution would be permitted to delay notice under the proposed rule. ^{192} These commenters suggested that there should be no outside time limitation on the proposed law enforcement exception, asserting that the judgment of any law enforcement agency investigating a breach should be an adequate and respected basis for delaying a regulatory notice regarding such breach. Commenters urged the Commission to expand the scope and timing requirements of the proposed law enforcement exception, expressing that they failed to understand the public purpose that would be served by ignoring the request of a law enforcement agency to delay notification. ^{193}
^{192} See, e.g., IAA Comment Letter 1; ICI Comment Letter 1; NASDAQ Comment Letter; SIFMA Comment Letter 2; CAI Comment Letter.
^{193} See, e.g., IAA Comment Letter 1; NASDAQ Comment Letter; see also SIFMA Comment Letter 2 (stating its view that only for a limited number of cases would delay be requested or mandated by other government entities, or court orders, so notification delays would not become routine or be otherwise abused).
In response to commenters' concerns, we have broadened both the scope and timing requirements of the delay in the final amendments. The final amendments will allow covered institutions to delay notice in cases where disclosure would pose a substantial risk to national security or public safety, contingent on a written notification by the Attorney General to the Commission. ^{194} This provision has been expanded to incorporate risks related to public safety, and not just national security, as proposed. This expansion allows for notice delay in scenarios where there may be significant risk of harm from disclosure; however, there may not be a substantial risk to national security. This modification should make the provision sufficiently expansive to protect against significant risks of harm from disclosure—such as the risk of alerting malicious actors targeting critical infrastructure that their activities have been discovered—while also helping to ensure that individuals are not unduly denied timely access to information about the unauthorized access to or use of their sensitive customer information.
^{194} A covered institution requesting that the Attorney General determine that notification under the rule would pose a substantial risk to national security or public safety does not change the covered institution's obligation to provide notice to affected customers within the timing required under the final amendments. This is because the rule permits a delay only upon the Attorney General making that determination and communicating it to the Commission in writing.
With respect to commenters who recommended that other Federal agencies, State and local law enforcement agencies, and foreign law enforcement authorities also be permitted to trigger a delay or suggested that the perceived limited nature of this delay would cause conflict with State authorities, the rule does not preclude any such entity from requesting that the Attorney General determine that the disclosure poses a substantial risk to national security or public safety and communicate that determination to the Commission. Designating a single law enforcement agency as the point of contact for both the covered institution and the Commission on such delays is critical to ensuring that the rule is administrable. Some commenters stated concerns about the feasibility and process of reaching out to the Attorney General to request a delay, urging the Commission to expand the delay to apply to requests made by other law enforcement agencies in addition to the Attorney General. The FBI, in coordination with the Department of Justice, has since provided guidance on how firms can request disclosure delays for national security or public safety reasons in connection with the Public Company Cybersecurity Rules. ^{195} To the extent needed, further guidance may be issued on how other law enforcement agencies may contact the Department of Justice to request a delay.
^{195} See FBI Guidance to Victims of Cyber Incidents on SEC Reporting Requirements, available at: https://www.fbi.gov/investigate/cyber/fbi-guidance-to-victims-of-cyber-incidents-on-sec-reporting-requirements.
The final amendments also will expand the amount of time that a covered institution can delay notice under this provision. However, we are not persuaded, as some commenters suggested, that the rules should not incorporate a timing component at all because such an approach would diminish the goal of providing customers (regardless of State residency) with timely and consistent notification of data breaches so that they may take remedial action. This includes permitting, in extraordinary circumstances, a delay for a final additional period of up to 60 days—following two previous 30-day extensions—if the Attorney General determines that disclosure continues to pose a substantial risk to national security and notifies the Commission of such determination in writing. We are providing for this additional delay period in the final amendments, beyond what was originally proposed, and in addition to the two 30-day delays that may precede it, in recognition that, in extraordinary circumstances, national security concerns may justify additional delay beyond that warranted by public safety concerns, due to the relatively more critical nature of national security concerns. ^{196} Beyond the final 60-day delay, if the Attorney General indicates to the Commission in writing that further delay is necessary, the covered institution can request an additional delay that the Commission may grant through exemptive order or other action. These modifications acknowledge that additional time beyond that proposed may be necessary, as called for by commenters, while balancing national security and public safety concerns against affected individuals' informational needs.
^{196} Under the proposal, in contrast, the covered institution could delay a notice if the Attorney General informed the covered institution, in writing, that the notice poses a substantial risk to national security. The proposal provided that the covered institution could delay such a notice for a time period specified by the Attorney General, but not for longer than 15 days, plus an additional period of up to 15 days if the Attorney General determines that the notice continues to pose a substantial risk to national security.

e. Notice Contents and Format
The final amendments, consistent with the proposal, require that notices include key information with details about the incident, the breached data, and how affected individuals can respond to the breach to protect themselves. This requirement is designed to help ensure that covered institutions provide basic information to affected individuals that will help them avoid or mitigate substantial harm or inconvenience. In a modification from the proposal, however, the final amendments will not require the notice to “[d]escribe what has been done to protect the sensitive customer information from further unauthorized access or use.”
Some of the information required by the final amendment, including information regarding a description of the incident, and the type of sensitive customer information accessed or used without authorization, will provide affected individuals with basic information to help them understand the scope of the incident and its potential ramifications. As proposed, the final amendments will require covered institutions to include contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance, so that affected individuals can easily seek additional information from the covered institution. All of this information may help affected individuals assess the risk posed by the incident and whether to take additional measures to protect against harm from unauthorized access or use of their information.
Similarly, as proposed, the final amendments will require information regarding the date of the incident, the estimated date of the incident, or the date range within which the incident occurred, if such information is reasonably possible to determine at the time the notice is provided. This requirement reflects the reality that a covered institution may have difficulty determining a precise date range for certain incidents because it may only discover an incident well after an initial time of access. ^{197}
^{197} See Proposing Release at n.142.
In addition, as proposed, the final amendments will require that covered institutions include certain information to assist affected individuals in evaluating how they should respond to the incident. Specifically, if the affected individual has an account with the covered institution, the final amendments will require the notice to recommend that the customer review account statements and immediately report any suspicious activity to the covered institution. The final amendments will also require the notice to explain what a fraud alert is and how an affected individual may place a fraud alert in credit reports. Further, the final amendments will require that the notice recommend that the affected individual periodically obtain credit reports from each nationwide credit reporting company and that the individual have information relating to fraudulent transactions deleted. The notice must also explain how a credit report can be obtained free of charge. Lastly, the final amendments require that notices include information regarding FTC and usa.gov guidance on steps an affected individual can take to protect against identity theft, a statement encouraging the individual to report any incidents of identity theft to the FTC, and the FTC's website address. These specific requirements are designed to give affected individuals resources and additional information to help them evaluate how they should respond to the incident.
As proposed, under the final rules covered institutions will be required to provide the information specified in the final amendments in each required notice. While we recognize that relevant information may vary based on the facts and circumstances of the incident, customers will benefit from the same minimum set of basic information in all notices. Accordingly, the final amendments will permit covered institutions to include additional information but will not permit omission of the prescribed information. In addition, the final amendments will require covered institutions to provide notice in a clear and conspicuous manner and by means designed to ensure that the customer can reasonably be expected to receive actual notice in writing. ^{198} Pursuant to 17 CFR 248.3, notices will therefore be required to be reasonably understandable and designed to call attention to the nature and significance of the information required to be provided in the notice. ^{199} To the extent that a covered institution includes information in the notice that is not required to be provided to customers under the final amendments or provides notice contemporaneously with other disclosures, the covered institution will still be required to ensure that the notice is designed to call attention to the important information required to be provided under the final amendments; the inclusion of any additional information in the notice may not prevent the required information from being presented in a clear and conspicuous manner. The requirement to provide notices in writing, further, will ensure that customers receive the information in a format appropriate for receiving important information, with accommodation for those customers who agree to receive the information electronically. ^{200} These requirements are designed to help ensure that customers are provided informative notifications and alerted to their importance.
^{198} See final rule 248.30(a)(4)(i); see also 17 CFR 248.9(a) (delivery requirements for privacy and opt out notices) and 17 CFR 248.3(c)(1) (defining “clear and conspicuous”).
^{199} See 17 CFR 248.3(c)(2) (providing examples explaining what is meant by the terms “reasonably understandable” and “designed to call attention”).
^{200} This requirement to provide notice “in writing” could be satisfied either through paper or, for customers who agree to receive information electronically, though electronic means consistent with existing Commission guidance on electronic delivery of documents. See Use of Electronic Media by Broker Dealers, Transfer Agents, and Investment Advisers for Delivery of Information; Additional Examples Under the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Company Act of 1940 [61 FR 24644 (May 15, 1996)]; Use of Electronic Media, [65 FR 25843 (May 4, 2000)].
Several commenters broadly supported the proposed notice contents and format requirements. ^{201} One commenter stated that the provision will lead to notices that contain important information in a clear and conspicuous manner, which will allow affected individuals to assess the risk of the incident paired with guidance on potential protective measures to take. ^{202} Another commenter agreed with the proposed approach of requiring notices to contain certain information but not prescribing the specific format for the notices, asserting that this approach will “make it easier for covered institutions to fulfill all their notice obligations under Federal and State laws with as few notice documents as possible (ideally through a single notice to all affected customers nationwide).” ^{203}
^{201} See, e.g., Better Markets Comment Letter, IAA Comment Letter 1; NASAA Comment Letter.
^{202} Better Markets Comment Letter (stating that the provision “avoids some common problems with the content of many data breach notifications, such as confusing language, a lack of details, and insufficient attention to the practical steps customers should take in response.”).
^{203} See NASAA Comment Letter (stating that “[b]eing prescriptive here could potentially create inconsistencies with current or future State notice laws, which in turn could cause covered institutions to feel compelled to deliver entirely duplicative notices to customers simply for reasons of form. Customers should not be burdened in this way, and the Reg. S-P Proposal rightly takes this into account.”).
Conversely, a few commenters opposed certain aspects of the notice content and format requirements. ^{204} One commenter expressed concern related to the proposed requirement for covered institutions to include in the notice specific efforts they have taken to protect the sensitive customer information from further unauthorized access or use. ^{205} This commenter articulated that this information could be extremely useful to threat actors and not particularly useful to affected individuals. ^{206} Another commenter urged the Commission to remove the requirement for covered institutions to provide “the date of the incident, the estimated date of the incident, or the date range,” asserting that this specific information is not required by the Banking Agencies' Incident Response Guidance and should not be included in an amended Regulation S-P. ^{207} In addition, two commenters suggested that the final amendments should provide more flexibility for covered institutions to determine the manner and method in which they should be contacted by affected individuals inquiring about an incident. ^{208} Lastly, one commenter urged the Commission to consider whether it should require specific notice obligations at all, asserting that Federal notice would simply add another layer on top of existing State data breach notice requirements and would offer limited benefits to affected individuals. ^{209}
^{204} See, e.g., CAI Comment Letter; ICI Comment Letter 1; IAA Comment Letter.
^{205} IAA Comment Letter 1.
^{206} Id. (further stating that in many cases “the adviser will have already remediated the vulnerability, making the information even less relevant to a client's decision.”).
^{207} ICI Comment Letter 1.
^{208} CAI Comment Letter; SIFMA Comment Letter 2 (asserting that the rule should not require each of a telephone number, an email address, a postal address and a specific office contact, but rather should allow covered institutions to choose one or more of those contact options based on how the covered institution normally interacts with its customers).
^{209} See CAI Comment Letter; see also NASDAQ Comment Letter (asserting that covered institutions “should be permitted to comply with various State and Federal cybersecurity notification obligations with a single streamlined form.”).
After considering comments, we are removing the specific requirement in the proposal that the notice “[d]escribe what has been done to protect the sensitive customer information from further unauthorized access or use.” We agree that this information has the potential to advantage threat actors and does not provide actionable information for affected individuals. Accordingly, the provision has been removed from the final amendments, which should reduce the perceived risk of providing a roadmap for threat actors compared with the proposal. Covered institutions may, however, voluntarily disclose details related to the incident's remediation status.
The final amendments do not modify the proposed requirement for covered institutions to provide information about the date of the incident, as suggested by one commenter. ^{210} Providing this information to affected individuals, to the extent the information is reasonably possible to determine, can help affected individuals identify the point in time in which their sensitive customer information was compromised, thus providing critical details that affected individuals can use to take targeted protective measures ( e.g., review account statements) to mitigate the potential harm that could result from the unauthorized access to or use of their sensitive customer information. For this reason, we disagree with the commenter that stated firms should not be required to provide this information in their notice.
^{210} ICI Comment Letter 1.
Similarly, the final amendments do not modify the requirement for notices to include the prescribed contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident. We understand that covered institutions communicate with their customers using many different methods and formats. However, providing a telephone number, an email address or equivalent method or means ( e.g., an online submission form), a postal address, and the name of a specific office to contact, is designed to provide sufficient optionality for affected individuals, who may have differing preferences and aptitudes in their use of contact methods. ^{211} Nothing in this requirement, however, prevents a covered institution from choosing to provide additional contact methods.
^{211} In addition, the final rule's requirement to provide contact information sufficient to permit an affected individual to inquire about the incident does not preclude a covered institution from providing the contact information of a third-party service provider that has been engaged by the covered institution to provide specialized information or assistance about the unauthorized access or use of sensitive customer information on the covered institution's behalf. See CAI Comment Letter (asserting that it is current business practice for companies to hire vendors who provide specialized breach response call centers to handle consumer inquiries).
Lastly, the final amendments do not prescribe a specific format for the notice to affected customers. We agree with the commenter that asserted that such flexibility will make it easier for covered institutions to provide notices that meet the requirements of the final amendments while also meeting the requirements of other notice obligations, such as certain State requirements, and thereby mitigates commenter concerns about the potential for more than one notice covering a given incident.

4. Service Providers
The final amendments require that each covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence on and monitoring, of service providers, including to ensure that the covered institution satisfies the customer notification requirements set forth in paragraph (a)(4) of the final amendments. ^{212} In a modification from the proposal, rather than requiring written policies and procedures requiring the covered institution to enter into a written contract with its service providers to take certain appropriate measures, the policies and procedures required by the final amendments must be reasonably designed to ensure service providers take appropriate measures to: (A) protect against unauthorized access to or use of customer information; and (B) provide notification to the covered institution as soon as possible, but no later than 72 hours after becoming aware of a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider. ^{213}
In a modification from the proposal, upon receipt of such notification, a covered institution must initiate its incident response program pursuant to paragraph (a)(3) of this section. ^{214} The final amendments thus modify the proposal by removing the written contract requirement and shifting the notification deadline for the service provider's notification of the covered institution from 48 to 72 hours, while retaining the notice trigger of the service provider “becoming aware of” a breach in security resulting in unauthorized access to a customer information system maintained by the service provider. ^{215}
^{212} See final rule 248.30(a)(5)(i).
^{213} See id. In the proposal, the covered institution's written contract with its service provider would have needed to require the service providers to take appropriate measures designed to protect against unauthorized access to or use of customer information, including notification to the covered institution as soon as possible, but no later than 48 hours after becoming aware of a breach in security resulting in unauthorized access to a customer information system maintained by the service provider to enable the covered institution to implement its response program. See proposed rule 248.30(b)(5)(i).
^{214} See id. As discussed further below, this modification responds to comments by incorporating into rule text the Commission's intention that covered institutions would “expeditiously” implement their incident response program following the receipt of such notification from a service provider, as discussed in the Proposing Release. See infra footnote 223 and accompanying discussion on clarifying modifications. See also Proposing Release at Section II.A.3.
^{215} See final rule 248.30(a)(5)(i).
However, the Commission is adopting as proposed final amendments that provide that a covered institution, as part of its incident response program, may enter into a written agreement with its service provider to notify affected individuals on the covered institution's behalf in accordance with paragraph (a)(4) of the final amendments. ^{216} In a modification from the proposal, the final amendments provide that even where a covered institution uses a service provider in accordance with paragraphs (a)(5)(i) and (ii) of the final amendments, the covered institution's obligation to ensure that affected individuals are notified in accordance with paragraph (a)(4) of the final amendments rests with the covered institution. ^{217}
^{216} See final rule 248.30(a)(5)(ii).
^{217} See final rule 248.30(a)(5)(iii). As discussed further below, this modification is intended to clarify covered institutions' responsibilities under the final amendments by incorporating into rule text the Commission's intended scope, as discussed in the Proposing Release. See discussion on Delegation of Notice and Covered Institutions' Customer Notification Obligations infra Section II.A.4.c. and footnote 264, including accompanying discussion on clarifying modifications.
Finally, the Commission is also defining a “service provider” at adoption to mean any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution. ^{218} As discussed further below, this definition removes language from the proposed definition relating to third parties, but does so solely to make plain that the definition of a “service provider” can include affiliates of a covered institution. ^{219}
^{218} See final rule 248.30(d)(10).
^{219} As stated below, this modification from the proposal responds to comments by incorporating into rule text the Commission's intended scope of the “service provider” definition, as discussed in the Proposing Release. See discussion on the Service Provider definition infra footnote 271, including accompanying discussion on clarifying modifications. See also proposed rule 248.30(e)(10).

a. Covered Institutions' Incident Response Program Obligations Regarding Service Providers
In a change from the proposed rule, the Commission is adopting the final amendments without requiring covered institutions to enter into a written contract with their service providers. ^{220} Instead, the final amendments require that a covered institution's incident response program “include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of the covered institution's service providers, including to ensure that the covered institution notifies affected individuals as set forth in paragraph (a)(4),” in the event of a breach at the service provider. ^{221} Further, while the final amendments do not require covered institutions to enter into a written contract, the final amendments incorporate the protections that would have been required in the proposed written contract ^{222} by requiring that a covered institution's policies and procedures be reasonably designed to ensure service providers take the appropriate measures to: (A) protect against unauthorized access to or use of customer information, and (B) provide notification to the covered institution in the event of a breach resulting in unauthorized access to a customer information system maintained by the service provider, in accordance with the timing and notice trigger conditions discussed further below. Finally, in a modification from the proposal, upon receipt of such notification, a covered institution must initiate its incident response program adopted pursuant to paragraph (a)(3) of this section. ^{223}
^{220} See proposed rule 248.30(b)(5)(i). See also supra footnote 213 and accompanying discussion.
^{221} See final rule 248.30(a)(5)(i). In the Proposing Release, we requested comment on whether the proposed written contract requirement should instead require that a covered institution adopt policies and procedures that “require due diligence of or some type of reasonable assurances from its service providers.” See Proposing Release at section II.A.3. We also encouraged commenters to review our separate proposal to prohibit registered investment advisers from outsourcing certain services or functions without first meeting minimum due diligence and monitoring requirements to determine whether that proposal might affect their comments on the Proposing Release. See Proposing Release at section G.2, n.300; see also Outsourcing by Investment Advisers, Investment Advisers Act Release No. 6176 (Oct. 26, 2022) [87 FR 68816 (Nov. 16, 2022)]. The due diligence standards we are adopting are intended to address related concerns raised by commenters who requested that we adopt a more principles-based set of requirements.
^{222} See supra footnote 213 and accompanying discussion of the substantive obligations that were included in the proposal's written contract requirement.
^{223} See final rule 248.30(a)(5)(i).
Two commenters expressed varying degrees of support for requiring a written contract between a covered institution and its service providers. ^{224} One such commenter expressed support for requiring a specific contractual agreement with a service provider, stating that the information covered by the service provider provision is already subject to a contractual agreement between the covered institution and the service provider. ^{225} The other commenter agreed that service providers should be contractually required to take appropriate risk-based measures and due diligence to protect against unauthorized access to or use of customer information, but suggested that for flexibility in oversight covered institutions should be permitted to rely on “reasonable assurances” from service providers that they have taken appropriate measures to protect customer information. ^{226}
^{224} See ICI Comment Letter. While this commenter supported a written contract requirement, it did assert that the Commission should adopt a longer compliance period due to the necessity of renegotiating existing contracts with service providers to align the breach notification provisions in those contracts to the rule's requirements. This comment is separately addressed below. See also SIFMA Comment Letter 2.
^{225} See ICI Comment Letter. Specifically, this commenter stated that the information that is covered by proposed rule 248.30(b)(5) “is already subject to a contractual agreement between the covered institution and the service provider.” Id. This commenter further explained it is opposing the contractual requirement because of its very narrow scope, specifically stating that “as drafted, [the requirement] would only apply to any service provider that receives, maintains, processes, or otherwise is permitted access to customer information through the service provider's provision of services directly to the covered institution.” Id.
^{226} See SIFMA Comment Letter 2.
Several commenters opposed this proposed requirement. ^{227} Specifically, two commenters asserted that the written contract requirement would harm covered institutions, which may not have the negotiating power or leverage to demand specific contractual provisions from large third-party service providers, particularly where specific provisions are “inconsistent with the business imperatives” of the service provider and/or in the case of small covered institutions. ^{228} A number of commenters also suggested alternatives to either adopting a written contract requirement or, if such a requirement is adopted, to mandating specified contractual requirements. ^{229} Two commenters suggested that rather than requiring specific practices to be included within a written contract, the Commission should structure the final amendments to enable covered institutions to take a risk-based approach to due diligence and third-party risk management that integrates reliance on independent certifications, attestations, and industry standards as a sufficient means of assessing and determining whether the service provider is appropriately addressing these risks to an adequate standard. ^{230} Meanwhile, another commenter who opposed the contractual requirement suggested the Commission should provide covered institutions with the flexibility to oversee their service providers “based on the nature and size of their businesses and in light of the risks posed by the facts and circumstances.” ^{231} Finally, one commenter suggested that it was unclear how a third-party service provider's notice to a covered institution would affect a covered institution's own obligations. ^{232}
^{227} See, e.g., AWS Comment Letter; IAA Comment Letter 1 (stating that [covered institutions] should not be required to enter into written agreements with service providers); Google Comment Letter; STA Comment Letter 2; and CAI Comment Letter (stating that many leading service providers (such as cloud service providers) do not negotiate the standard terms of their services with customers and those standard terms generally would not meet the proposed contractual requirements).
^{228} See IAA Comment Letter 2; see also STA Comment Letter 2.
^{229} See SIFMA Comment Letter 2; AWS Comment Letter; Google Comment Letter; and IAA Comment Letter 1.
^{230} See AWS Comment Letter (suggesting that in order to address the practical difficulties of compliance, the Commission should provide covered institutions with a flexible approach to achieving compliance with the service provider provisions that relies on the use of independent certifications, attestations, and adherence to industry standards); see also Google Comment Letter (suggesting that rather than prescribing the specific practices that must be included in the contract, (a) contracts should require service providers to implement and maintain appropriate measures that are consistent with industry standards, and (b) each covered entity should oversee its providers to assess if the provider addresses the relevant practices to an adequate standard—noting this activity can be supported with third party certifications and standards).
^{231} See IAA Comment Letter 1.
^{232} See ACLI Comment Letter.
Eliminating the written contract requirement from the final amendments, while enhancing the policies and procedures obligation, strikes an appropriate balance between providing covered institutions with greater flexibility in achieving compliance with the requirements of this rule within the context of their service provider relationships, while also helping to ensure the investor protections afforded by the final amendments are maintained when covered institutions utilize service providers.
In particular, as adopted, the enhanced policies and procedures obligations will enable covered institutions to identify and utilize the most appropriate means for their business of achieving compliance with the final amendments through policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of their service providers. Providing this flexibility will help address commenters' concerns about imposing a written contractual agreement for covered institutions, particularly those that are small entities, which may not have sufficient negotiating power or leverage to demand specific contractual provisions from a large third-party service provider. At the same time, the enhanced policies and procedures requirements will provide for effective safeguarding of customer information when it is received, maintained, processed, or otherwise accessed by a service provider, as well as timely notice to customers affected by a breach at a covered institution's service provider, by requiring that the policies and procedures be reasonably designed to: (1) require oversight, including through due diligence and monitoring, of service providers, including to ensure that the covered institution notifies affected individuals as required in paragraph (a)(4) and (2) ensure service providers take appropriate measures to protect against the unauthorized access to or use of customer information and provide covered institutions with timely notification of a breach so that the covered institution can carry out their incident response program.
While the final amendments thus provide increased flexibility as to a covered institution's means of overseeing its service providers, the modification the Commission is making at adoption does not lower the standard of a covered institution's substantive oversight obligations. Some covered institutions may find that such oversight can be accomplished more easily and less expensively through less formal arrangements in certain circumstances, based on the covered institution's relationship with its service provider, as well as the scope of the services that are now or will be provided over the course of the relationship. ^{233} However, regardless of the means and arrangements employed, the covered institution must ensure that any service provider it decides to utilize takes appropriate measures to (A) protect against unauthorized access to or use of customer information, and (B) provide breach notifications to the covered institution as required by these final amendments.
^{233} Although a written contract is not required under the final amendments, covered institutions should generally consider whether a written contract that memorializes the expectations of both covered institutions and their service providers is appropriate.
Further, while it may be helpful to a covered institution in achieving compliance with the final amendments to receive “reasonable assurances” from its service providers that they have taken appropriate measures to both protect customer information and provide timely notification to the covered institution in the event of a relevant breach of the service provider's customer information systems, reliance solely on such assurances may be insufficient depending on the facts and circumstances, for example when a covered institution knows, or has reason to know, that such assurance is inaccurate. Instead, the final rules require the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of the service provider to ensure the covered institution will be able to satisfy the obligations of paragraph (a)(4). Further, covered institutions generally should consider reviewing and updating these policies and procedures periodically throughout their relationship with a service provider, including updates designed to address any information learned during the course of their monitoring.
The final amendments provide covered institutions with flexibility in overseeing their service provider relationships, while helping to ensure the additional investor protections intended by these final amendments are still achieved. Consistent with this risk-based approach, covered institutions may wish to consider employing such tools as independent certifications and attestations obtained from the service provider, as suggested by some commenters, as part of their policies and procedures to require oversight, including through due diligence and monitoring, of the service provider. However, the covered institution's written policies and procedures must be reasonably designed under the circumstances, and the covered institution's oversight of its service providers pursuant to those written policies and procedures generally should be tailored to the facts and circumstances of the two parties' relationship, which may or may not include the use of such tools.
Further, as stated above, we are modifying the proposed rule to state that upon a covered institution's receipt of a service provider's notification, the covered institution must initiate its incident response program required by paragraph (a)(3) of the rule. ^{234} The Commission is adopting this modification in response to comment requesting clarification of a covered institution's obligations upon receipt of service provider breach notifications. ^{235} Further, this modification helps further align the final amendments with the intended purpose of the service provider's breach notifications, as discussed in the Proposing Release. ^{236} While receipt of such notice automatically triggers the covered institution's obligation to initiate the procedures of its incident response program, such notice is not a necessary predicate to trigger this obligation for incidents occurring at the service provider. A covered institution also must initiate its incident response program where the covered institution has otherwise independently detected an incident of unauthorized access to or use of customer information at the service provider. ^{237}
^{234} See final rule 248.30(a)(5)(i).
^{235} See ACLI Comment Letter.
^{236} This modification is consistent with the intended purpose of this notification, as discussed in the Proposing Release. See Proposing Release at Section II.A.3 stating that the purpose of breach notifications to be provided by service providers to a covered institution is “to enable the covered institution to implement its incident response program expeditiously.”
^{237} See final rule 248.30(a)(3). See also discussion on covered institutions' required Incident Response Program Including Customer Notification supra Section II.A.
Finally, some commenters asked that we consider making any new obligations with respect to a written contract requirement forward-looking so as not to disrupt contracts already in existence by requiring renegotiation, and that we should further extend the compliance date to address this. ^{238} As we are adopting the rule without a written contract requirement, these comments have become moot. ^{239}
^{238} See, e.g., Computershare Comment Letter; Google Comment Letter; ICI Comment Letter.
^{239} See discussion of compliance date infra section II.F.

b. Deadline for Service Provider Notice to Covered Institutions and Notice Trigger
As described above, the final amendments require that a covered institution's policies and procedures be reasonably designed to ensure service providers take appropriate measures to provide covered institutions with notice “as soon as possible, but no later than 72 hours after becoming aware of a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider.” ^{240} This modification extends the proposed timeframe for service providers to provide such notice to 72 hours, but maintains the proposed notice triggering event to initiate this timeframe of the service provider becoming aware of a breach.” ^{241}
^{240} See final rule 248.30(a)(5)(i). In the proposed rule, such notice would have been required “as soon as possible, but no later than 48 hours after becoming aware of a breach, in the event of any breach in security resulting in unauthorized access to a customer information system maintained by the service provider.” See proposed rule 248.30(a)(5)(i).
^{241} See Proposing Release at section II.A.3.
Commenters addressed both the notification deadline and the triggering event for notifications to be provided by service providers to covered institutions in the event of a relevant breach involving unauthorized access to a customer information system maintained by the service provider. As to the notification deadline, one commenter supported requiring service providers to notify a covered institution within 48 hours of a breach impacting the covered institution or affected individuals, stating its understanding is that this is “not an uncommon arrangement” today between covered institutions and service providers maintaining their nonpublic personal information ( e.g., between investment companies and transfer agents). ^{242} Another commenter raised concerns that a standard of “as soon as possible, but no later than 48 hours after becoming aware of a breach,” when paired with a written contract requirement, might impose formidable challenges to covered institutions in mandating such contractual provisions with service providers who are not explicitly subject to Commission jurisdiction, and may have their own policies and procedures addressing breaches. ^{243} Several commenters suggested the Commission adopt a 72-hour notification deadline. ^{244} In particular, one such commenter stated that this notification provision should be extended to “as soon as possible but no later than 72 hours,” to harmonize the Commission's standard with a number of related Federal, State, and international regulatory deadlines governing required service provider notification to financial institutions in the event of a cyber incident, and also further the White House's and Congress's express policy of harmonizing cyber incident reporting requirements. ^{245} Finally, this commenter stated that a consistent 72-hour reporting deadline would promote more effective cybersecurity incident response and cyber threat information sharing than shorter, or varied reporting periods, and that a 48-hour deadline in the commenter's experience would lead to “premature reporting” that increases the likelihood of reporting inaccurate or incomplete information and tends to create confusion and uncertainty. ^{246}
^{242} See ICI Comment Letter.
^{243} See Computershare Comment Letter.
^{244} See Letter from Microsoft Corporation (June 5, 2023) (“Microsoft Comment Letter”); AWS Comment Letter (this commenter “encourage[d] the Commission” to consider a longer reporting deadline than 48 hours to “support the dedication of resources needed to discover and mitigate potential harm caused by an incident,” and highlighted the 72-hour reporting timeframe that “CIRCIA contemplates. . .for national critical infrastructure, including the financial services sector” in the alternative.).
^{245} See Microsoft Comment Letter (explaining that use of this 72-hour reporting deadline would align the SEC's rules with other notification requirements that may apply to entities covered by the Proposed Rules, and identifying additional authorities that use the 72-hour deadline, such as the CIRCIA, Pub. L. 117-103, 136 Stat. 49 (2022); Executive Order 14028, “Improving the Nation's Cybersecurity,” 86 FR 26,633 (May 12, 2021), directing the Federal government to incorporate a 72-hour reporting period into the Federal Acquisition Regulation (“FAR”); the Defense Federal Acquisition Regulation Supplement (“DFARS”), 48 CFR 204.7302(b) and 252.204-7012(c); the New York State Department of Financial Services' (“NYDFS”) Cybersecurity Requirements for Financial Service Companies, 23 NYCRR section 500.17(a); the European Union's General Data Protection Regulation (“GDPR”), Regulation (EU) 2016/679; and Article 23 of the EU's new Network and Information Security Directive (“NIS 2 Directive”), Directive (EU) 2022/2555).
^{246} Id.
In contrast, some commenters recommended modifying the proposal to remove any specified duration for a reporting deadline. ^{247} Several commenters suggested that rather than an inflexible time deadline, the Commission should require that notification be provided without unreasonable delay after a reasonable investigation has been performed by the service provider. ^{248} Another commenter stated that rather than mandating any form of a deadline, the time period should be left to covered institutions and service providers to negotiate, accounting for the nature of services and customer data. ^{249}
^{247} See, e.g., Schulte Comment Letter; SIFMA Comment Letter 2.
^{248} See, e.g., SIFMA Comment Letter 2 (stating this modification would harmonize with the Proposed Interagency Guidance on Third-Party Relationships: Risk Management, 86 FR 38182, 38184 (proposed July 19, 2021)); ACLI Comment Letter (stating this modification would harmonize service provider and covered entity requirements); and Federated Comment Letter.
^{249} See Schulte Comment Letter. This commenter stated that by mandating a 48-hour limit, service providers would be “left with the impractical challenge of allocating resources to making disclosures to counterparties (i) when resources could be better allocated to identifying and containing the scope of the data breach, and (ii) before the service provider has a complete picture of the impact of a data breach.” See id.
As to the triggering event requiring service providers to notify covered institutions of a relevant breach, one commenter urged the Commission to shift from the service provider “becoming aware” of a breach that entailed unauthorized access to customer information, to the service provider “determining” that such a breach had occurred. ^{250} This commenter asserted that the process of “becoming aware” will involve time and resources to investigate and that changing to a “determining” standard may minimize pressure on the service provider to report prior to performing sufficient investigation, while helping harmonize regulatory approaches across the financial sector, as it would align with similar requirements adopted by Federal banking agencies related to notice provided by bank service providers. ^{251} Another commenter stated the Commission should, in addition to shifting to a 72-hour reporting deadline, amend the trigger initiating this reporting deadline to the moment the service provider “has a reasonable basis to conclude that a notifiable incident has occurred or is occurring.” ^{252}
^{250} See Google Comment Letter.
^{251} See Google Comment Letter (referencing Computer-Security Incident Notification Requirements for Banking Organizations and Their Bank Service Providers, available at:
fdic.gov/news/board-matters/2021/2021-11-17-notational-fr.pdf?source=govdelivery&utm_medium=email&utm_source=govdelivery ).
^{252} See Microsoft Comment Letter.
Other commenters suggested narrowing the scope of incidents that would trigger required notice by service providers to a covered institution. ^{253} One commenter asserted that incident response program requirements should only address and be triggered by incidents that involve unauthorized access to or use of a subset of customer information ( e.g., sensitive customer information). ^{254} Another commenter stated that the proposal would result in notices to a covered institution if there has been unauthorized access to the service provider's customer information system, regardless of whether the covered institution's customers were in any way affected by the breach. ^{255} Instead, the commenter stated that the Commission should limit the scope of incidents requiring notification to a covered institution to only those resulting in unauthorized access to that covered institution's “customer information” maintained by the service provider. ^{256}
^{253} See Schulte Comment Letter; SIFMA Comment Letter 2.
^{254} See Schulte Comment Letter.
^{255} See SIFMA Comment Letter 2.
^{256} See id.
After consideration, the Commission is extending the deadline for providing notification from 48 to 72 hours. Although we appreciate that the 48-hour standard in the proposed amendments may not be an uncommon arrangement between covered institutions and their service providers in the market today, extending this deadline by 24 hours will provide service providers with additional time to conduct more effective investigations of a breach at the service provider, resulting in more relevant and accurate notifications to the covered institution. Further, the 72-hour standard brings this notification deadline in alignment with other existing regulatory standards, which should reduce costs to service providers and covered institutions without sacrificing the investor protection benefits of the rule. ^{257}
^{257} As discussed above, a 72-hour reporting deadline aligns with, among others, requirements in CIRCIA that include a 72-hour deadline for entities to report cyber incidents to CISA, Executive Order 14028 on “Improving the Nation's Cybersecurity,” which directs the Federal government to incorporate a 72-hour reporting period into the FAR, the DFARS, NYDFS's cybersecurity regulations, which include a 72-hour reporting deadline to NYDFS after any determination that a cybersecurity incident has occurred at the covered entity, its affiliates, or a third-party service provider, the European Union's GDPR, as well as the European Union's NIS 2 Directive. See discussion of Microsoft Comment Letter and cited regulatory frameworks supra footnote 245.
The Commission disagrees that there should be no specified notification deadline and that covered institutions and service providers should be able to negotiate the appropriate timing for such notification. As discussed above, upon receipt of the breach notification from the service provider, a covered institution must initiate its incident response program adopted pursuant to paragraph (a)(3) of the final amendments. ^{258} As covered institutions cannot reasonably be expected to initiate their incident response programs for incidents occurring at a service provider that the covered institution is not yet aware have occurred, providing the indefinite timeline commenters suggest could significantly hinder the effectiveness of covered institutions' incident response programs. ^{259} For example, delays in the service provider's notification to the covered institution of a breach could result in further delays in the initiation of the incident containment and control procedures the covered institution has adopted pursuant to its incident response program obligations, consequently diminishing their effectiveness. Further, any excess delay in the service provider's notification to the covered institution and resulting delay in the covered institution's initiation of its incident response program, could significantly hinder the goal of the final amendments of providing customers with timely notification of data breaches so that they may take remedial action. In light of this, reasonably designed policies and procedures generally should also account for instances where the covered institution determines that a service provider has failed to provide notice to the covered institution within 72 hours as required. In such circumstances, in addition to initiating its incident response program upon receipt of the notice as required, a covered institution generally should reevaluate its policies and procedures governing its relationship with the service provider and make adjustments as necessary to ensure the service provider will take the required appropriate measures going forward.
^{258} See supra footnote 237 and accompanying discussion.
^{259} While a covered institution's receipt of such notice from a service provider establishes such awareness, as discussed above, where a covered institution has otherwise independently detected an incident of the unauthorized access to or use of customer information at the service provider, it must implement its incident response program under paragraph (a)(3) of the final amendments regardless of any notice provided by the service provider. See supra footnote 237 and accompanying discussion. See also final rule 248.30(a)(3).
Further, the Commission is adopting as proposed the “becoming aware of” standard for triggering a service provider's breach notifications to a covered institution. This standard is intended to enable the covered institution to implement its incident response program expeditiously. While the Commission believes it is appropriate, as discussed above, to extend the timeframe for service provider notifications from 48 to 72 hours, adopting either a “having a reasonable basis to conclude” standard or a “determining” standard could frustrate the investor protection goals of these final amendments. Specifically, adopting either of these alternative standards could result in undue delays in a service provider's notification to the covered institution beyond the point at which the service provider is already aware that a relevant breach has occurred. Such a delay would frustrate the goal of both enabling covered institutions to initiate their incident response program expeditiously, as well as the goal of providing timely notification to affected individuals. For similar reasons, given that the “determining” standard used by Federal banking regulators involves a different context—notice to the banking organization of downgraded or degraded services—adopting it here solely to harmonize regulatory approaches would be inappropriate. ^{260} Accordingly, the final amendments maintain the proposed “becoming aware of” standard for triggering a service provider's notification.
^{260} Specifically, the Federal banking agency regulations require notification from the bank service provider to “each affected banking organization customer as soon as possible when the bank service provider determines that it has experienced a computer-security incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, covered services provided to the banking organization for four or more hours.” See 12 CFR 304.24(a).
The Commission also is not limiting the scope of incidents to be reported to covered institutions to only those involving “sensitive customer information” or alternatively to breaches that result in unauthorized access to “customer information” maintained by the service provider rather than those that result in unauthorized access to a service provider's “customer information system.” Under the final amendments, a covered institution's incident response program must be reasonably designed to “detect, respond to, and recover from unauthorized access to or use of customer information,” and must include provisions to assess such incidents to “identify the customer information systems and types of customer information that may have been accessed or used without authorization” and take appropriate steps to “contain and control the incident to prevent further unauthorized access to or use of customer information.” ^{261} As discussed above, in doing so, we are requiring that covered institutions' incident response programs address any incident involving customer information—not merely those involving sensitive customer information—and also account for the identification of affected customer information systems in addition to the types of customer information that may have been accessed or used without authorization. ^{262} For the same reasons, we are not limiting the scope of reportable incidents to only those breaches in security at the service provider that result in unauthorized access to sensitive customer information, or alternatively to only those breaches that result in unauthorized access to “customer information” maintained by the service provider.
^{261} See final rule 248.30(a)(3)(i) and (ii). See also discussion of the Assessment and Containment and Control portions of covered institutions' incident response program requirements supra sections II.A.1 and II.A.2.
^{262} See discussion of incident response program Assessment and Containment and Control requirements, and the reasons for not restricting such requirements to only “sensitive customer information” supra Sections II.A.1 and II.A.2. See also discussion of incident response program Containment and Control requirements and the reasons for requiring identification of both the customer information systems as well as types of customer information that may have been accessed or used without authorization supra Section II.A.2.

c. Delegation of Notice and Covered Institutions' Customer Notification Obligations
The Commission is adopting as proposed language that permits covered institutions, as part of their incident response programs, to enter into a written agreement with their service providers to notify affected individuals on the covered institution's behalf. ^{263} However, the Commission is also adopting a new paragraph that states that, notwithstanding any covered institution's use of a service provider, the covered institution's obligation to ensure that affected individuals are notified in accordance with this rule rests with the covered institution. ^{264}
^{263} See final rule 248.30(a)(5)(ii) (stating “As part of its incident response program, a covered institution may enter into a written agreement with its service provider to notify affected individuals on its behalf in accordance with paragraph (a)(4) of this section.”); see also proposed rule 248.30(b)(5)(ii).
^{264} See final rule 248.30(a)(5)(iii).
One commenter stated that it is appropriate to permit a covered institution to enter into a written agreement with its service provider to notify affected individuals on the covered institution's behalf, so long as the notification is actually ultimately provided to customers in a manner that satisfies the covered institution's notice obligations. ^{265} The Commission agrees that there may be situations where a covered institution's service provider is better situated than the covered institution to provide a customer a breach notification. Thus, the Commission is adopting paragraph (a)(5)(ii) as proposed. ^{266}
^{265} See Schulte Comment Letter (stating that if the service provider was the victim of a cyber-attack that included unauthorized access to the covered institution's sensitive customer information, the service provider would be better situated to notify the affected customers).
^{266} As discussed below infra footnote 391 and in the accompanying discussion, in accordance with the recordkeeping provisions adopted in these final amendments, covered institutions, other than funding portals, are required to preserve a copy of any notice transmitted by the service provider to any customer on the covered institution's behalf following the covered institution's determination made regarding whether notification is required pursuant to 17 CFR 248.30(a)(4). See also discussion of funding portal recordkeeping requirements infra footnote 385.
At the same time, the Commission is adopting a new paragraph (a)(5)(iii) to specify that even where a covered institution uses a service provider, the obligation to ensure that affected individuals are notified in accordance with the rule rests with the covered institution. ^{267} While the proposing release included similar language, ^{268} the final rule explicitly provides that the covered institution will be obligated to satisfy the customer notification requirements of paragraph (a)(4) in the event of a relevant breach occurring at the service provider. The Commission agrees that in providing flexibility to covered institutions by permitting them to enter into a written agreement with their service providers to notify affected individuals on the covered institution's behalf, such notification to customers should be provided in a manner that satisfies the covered institution's notice obligations. Accordingly, where a covered institution has entered into a written agreement with its service provider to provide notice on the covered institution's behalf, the covered institution must ensure that the service provider has satisfied the customer notification obligations. ^{269} To accomplish this, the covered institution's policies and procedures should consider including steps for conducting reasonable due diligence to confirm that the service provider has provided notice to affected customers. In addition to maintaining a copy of any notice transmitted to affected individuals by the service provider on the covered institution's behalf as required by the covered institution's (other than funding portals) recordkeeping obligations under the final amendments, ^{270} effective due diligence might also include obtaining confirmation of delivery of such notification in the form of attestations or certifications made by the service provider. Covered institutions could also consider confirming with a sample of affected customers that they received such service provider notifications.
^{267} See final rule 248.30(a)(5)(iii) (specifically stating “Notwithstanding a covered institution's use of a service provider in accordance with paragraphs (a)(5)(i) and (ii), the obligation to ensure that affected individuals are notified in accordance with paragraph (a)(4) of this section rests with the covered institution”).
^{268} In the proposal, the Commission stated that in such a circumstance where the covered institution has delegated performance of its notice obligation to a service provider through written agreement, the covered institution would remain responsible for any failure to provide a notice as required by the proposed rule. See Proposing Release at II.A.3. The Commission also stated in the proposal that covered institutions may delegate other functions to service providers, such as reasonable investigation to determine whether sensitive customer information has not been and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience, but covered institutions would remain responsible for these functions even if they are delegated to service providers. See id. at footnote 93; see also discussion of paragraph (a)(4) customer notification obligations supra section II.A.3. Under new paragraph (a)(5)(iii), covered institutions may still delegate such functions to service providers as stated in the proposal, but the rule text expressly states that the ultimate obligation to ensure affected individuals are notified in accordance with paragraph (a)(4) will remain with the covered institution.
^{269} See final rule 248.30(a)(5)(iii); see also final rule 248.30(a)(4) (enumerating the scope of the covered institution's customer notification obligations).
^{270} See, e.g. final rule 17 CFR 240.17a-4(e)(14)(iii). See also discussion on a covered institution's recordkeeping obligations as to notices delivered to customers by its service providers infra footnote 391 and accompanying discussion. Funding portals generally should maintain all copies of such notices in connection with their own requirements to demonstrate compliance with Regulation S-P. See discussion of existing funding portal recordkeeping obligations infra footnote 385.
In addition, where the covered institution has entered into a written agreement with its service provider to provide notice on the covered institution's behalf pursuant to paragraph (a)(5)(ii), and the covered institution determines that the service provider has not provided such notifications in a manner that satisfies the conditions of paragraph (a)(4), the covered institution must still ensure that notification is provided to the customer, and the covered institution's policies and procedures generally should be designed to address these instances. To accomplish this, the covered institution generally should conduct timely due diligence to identify any lack of notification by the service provider to the customer and remedy the matter in advance of the deadline set out in paragraph (a)(4).

d. Service Provider Definition
The Commission is adopting the definition of “service provider” to mean “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.” ^{271} This definition thereby includes affiliates of covered institutions if they are permitted access to this information through their provision of services. The scope of this definition is intended to help protect against the risk of harm that may arise from service providers' access to a covered institution's customer information and customer information systems. ^{272}
^{271} See final rule 248.30(d)(10); see also proposed rule 248.30(e)(10).
^{272} For example, in 2015, Division of Examinations staff released observations following the examinations of some institutions' cybersecurity policies and procedures relating to vendors and other business partners, which revealed mixed results with respect to whether the firms had incorporated requirements related to cybersecurity risk into their contracts with vendors and business partners. See EXAMS, Cybersecurity Examination Sweep Summary, National Exam Program Risk Alert, Volume IV, Issue 4 (Feb. 3, 2015), at 4, available at https://www.sec.gov/about/offices/ocie/cybersecurity-examination-sweep-summary.pdf .
A number of commenters addressed the scope of the proposed definition. Several commenters suggested narrowing the scope of the service provider definition by revising it to exclude affiliates or other GLBA regulated entities. ^{273} Similarly, three commenters asserted that the Commission should revise the definition to exclude affiliates and other entities under common control with the covered institution, as those affiliates are typically subject to the same cybersecurity and privacy programs, including service provider management, which are frequently structured and operate on a group-wide basis. ^{274} One of these commenters also stated the Commission should also exclude entities subject to the GLBA that have direct contractual relationships with the client. ^{275} This commenter separately asserted that the service provider definition should be narrowed to only cover those persons or entities that are a third party and receive, maintain, process, or otherwise are permitted access to sensitive customer information, so that covered institutions can prioritize “higher-risk service providers” and not expend resources unnecessarily on an overly broad set of service providers. ^{276} Finally, one commenter requested that the Commission “clarify the scope of the service provider definition, including whether service providers would include financial counterparties such as brokers, clearing and settlement firms, and custodial banks.” ^{277}
^{273} See, e.g., CAI Comment Letter; IAA Comment Letter 1; SIFMA Comment Letter 2; and Schulte Comment Letter.
^{274} See CAI Comment Letter; IAA Comment Letter 1, SIFMA Comment Letter 2.
^{275} See IAA Comment Letter 1.
^{276} See id.
^{277} See SIFMA Comment Letter 2.
As stated above, we are modifying the definition of service provider from the proposal to remove reference to third parties in response to commenters to incorporate into rule text the Commission's intended scope of the “service provider' definition, as discussed in the Proposing Release. ^{278} It would not be appropriate to narrow the definition to exclude affiliates or non-affiliates that are also subject to the GLBA, as commenters have suggested. While a covered institution's affiliates may collectively operate under the same cybersecurity and privacy programs, such uniformity in approach does not diminish the risk of harm to the institution's customers in the event of a cyber incident involving unauthorized access to or use of customer information at the affiliate. ^{279} This risk is similarly not diminished where a cyber incident involving unauthorized access to or use of customer information occurs at a covered institution's unaffiliated service provider that is subject to the GLBA, even where the service provider has a direct contractual relationship with the client. In such instances, maintaining such an entity's inclusion within the service provider definition will help ensure that the covered institution is made aware of cyber incidents that occur at the service provider to aid in both the covered institution's oversight of its service providers, as well as satisfaction of its customer notification and broader customer information safeguarding obligations under the final amendments. It is thus important for the service provider definition to remain sufficiently broad to address these risks by setting out clear obligations for all parties possessing legitimate access to customer information regarding both the safeguarding of that information, and, where necessary, ensuring notification to the affected customers in the event of a breach involving unauthorized access to or use of customer information. However, while we are not narrowing the scope of the “service provider” definition to exclude either affiliates of the covered institution or unaffiliated service providers that are independently subject to the GLBA, pursuant to paragraph (a)(5)(ii) of these final amendments the covered institution and a service provider may enter into a written agreement for the service provider to notify affected individuals on its behalf in in the event of a breach at the service provider, as discussed above. ^{280}
^{278} See Proposing Release at Section II.A.3, stating “This definition would include affiliates of covered institutions if they are permitted access to this information through their provision of services.”
^{279} While we are not narrowing the service provider definition to exclude affiliates of the covered institution, in most instances it generally should be appropriate for the covered institution to rely upon the adherence of any affiliated service provider to enterprise-wide cybersecurity and privacy programs that cover both the covered institution and its affiliates, so long as such programs satisfy the requirements of the final rules and the covered institution does not know, or have reason to know, that the affiliate is not adhering to such enterprise-wide programs.
^{280} See discussion on Delegation of Notice and Covered Institutions' Customer Notification Obligations supra Section II.A.4.c. See also 17 CFR 248.30(a)(5)(ii). The permissibility of such written agreements between covered institutions and their service providers, including both their affiliates and those unaffiliated service providers that are also subject to the GLBA, may also help reduce costs related to customer notifications at the covered institution, and help reduce the risk of over-notification of affected individuals in instances where both the covered institution and its affiliated service provider are independently subject to customer notification obligations for the same breach in security.
Further, it would not be appropriate to narrow the service provider definition to only address those persons or entities that operate as “higher-risk service providers” that receive, maintain, process, or are otherwise permitted access to sensitive customer information, as one commenter suggested. As discussed above, the scope of information covered by the assessment and containment and control requirements of the final amendments is designed to help ensure all information covered by the requirements in the GLBA is appropriately safeguarded, and that sufficient information is assessed to fulfill the more narrowly tailored obligation to notify affected individuals. ^{281} Specifically, consistent with the GLBA, the final amendments are tailored to require that a covered institution's written policies and procedures must be reasonably designed to protect against unauthorized access to or use of customer information that could result in substantial harm or inconvenience to any customer, not merely all sensitive customer information. ^{282} Narrowing the service provider definition in a manner that would fail to cover the full scope of information that the GLBA requires to be covered in a covered institution's safeguarding policies and procedures, as would result from commenters' suggestion, would be inappropriate. ^{283} Further, we are also concerned that limiting the service provider definition to only address those persons or entities that receive, maintain, process, or are otherwise permitted access to sensitive customer information, as commenters suggest, would result in insufficient notification to covered institutions in the event of a breach at a service provider. The purpose of this service provider notification is to enable the covered institution to begin carrying out its response program, which requires an assessment of the nature and scope of any incident involving unauthorized access to or use of customer information, not merely those involving sensitive customer information. ^{284} For these reasons, the Commission is adopting the service provider definition as modified.
^{281} See discussion on Incident Response Program Including Customer Notification supra Section II.A.
^{282} See 17 CFR 248.30(a)(2)(iii). See also 15 U.S.C. 6801(b)(3) (mandating that the Commission shall establish appropriate standards for the financial institutions subject to its jurisdiction relating to administrative, technical, and physical safeguards “to protect against unauthorized access to or use of such records or information which could result in substantial harm or inconvenience to any customer.”).
^{283} As discussed below, the definition of “customer information” we are adopting in these final amendments is intended to ensure that the standard for covered institutions' safeguards rule policies and procedures is consistent with the objectives of the GLBA, which focuses on protecting “nonpublic personal information” of those who are “customers” of financial institutions. See discussion on the Definition of Customer Information infra Section II.B.1. See also 17 CFR 248.30(d)(5) (defining “customer information”). In contrast, the definition of “sensitive customer information” that we are adopting is more narrowly tailored to only cover any component of customer information alone or in conjunction with any other information, the compromise of which could create a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information. See 17 CFR 248.30(d)(9)(i). As discussed above, this definition is more narrowly tailored, and has been specifically calibrated to include types of information that, if exposed, could put affected individuals at a higher risk of suffering substantial harm or inconvenience through, for example, fraud or identity theft enabled by the unauthorized access to or use of the information. See discussion on the Definition of “Sensitive Customer Information” supra Section II.A.3.b. The narrower tailoring than is used in the “customer notification” definition is intended to protect customers by ensuring that they can take the necessary steps to minimize their exposure to these risks, while also being mindful of concerns of how a broader definition could increase the potential for over-notification of customers to address such risks. See id.
^{284} See final rule 248.30(b)(i). See also discussion on the assessment required by paragraph (a)(3) as to a covered institution's incident response program supra section II.A.1 above.
The Commission also acknowledges the request to clarify the scope of what is included within the service provider definition, including “whether service providers would include financial counterparties such as brokers, clearing and settlement firms, and custodial banks.” In alignment with the service provider definition we are adopting, covered institutions should make this determination based on the facts and circumstances about the substance of the relationship with the covered institution, rather than the form of the entity in question. Where financial counterparties receive, maintain, or otherwise are permitted access to customer information through the provision of services directly to the covered institution, they meet the service provider definition as adopted.

B. Scope of Safeguards Rule and Disposal Rule

1. Scope of Information Protected
We are adopting amendments to rule 248.30 that define the scope of information covered by the safeguards and disposal rules. These amendments will broaden and more closely align the scope of both rules by applying them to the information of not only a covered institution's own customers, but also the customers of other financial institutions that has been provided to the covered institution. ^{285} These amendments further specify that the rules also apply to customer information handled or maintained on behalf of the covered institution. ^{286} We are adopting these changes substantively as proposed, with changes to the structure of the rule in response to comments as discussed in more detail below.
^{285} Final rule 248.30(a), (b), and (d)(5)(i). Regulation S-P defines “financial institution” generally to mean any institution the business of which is engaging in activities that are financial in nature or incidental to such financial activities as described in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). 17 CFR 248.3(n).
^{286} Final rule 248.30(d)(5)(i).
Specifically, the amendments:
• Adopt a new definition of “customer information” defining the scope of information covered by both the safeguards and disposal rules. These amendments provide greater specificity regarding what constitutes customer information that must be protected under the safeguards rule. They also expand the scope of the disposal rule, which currently applies only to consumer information (defined as “consumer report information” in the current rule) so that it applies to both customer and consumer information.
• Provide that customer information protected under both the safeguards and disposal rules includes both customer information in the possession of a covered institution as well as customer information handled or maintained on its behalf.
• Provide that both customer and consumer information include information that pertains to individuals with whom the covered institution has a customer relationship, as well as to the customers of other financial institutions where such information has been provided to the covered institution. We are adopting this expansion as proposed but, as discussed below, have reorganized the rule provisions effectuating the change in response to comments.

Definition of Customer Information
Currently, Regulation S-P's protections under the safeguards rule and disposal rule apply to different, and at times overlapping, sets of information. ^{287} Specifically, as required under the GLBA, the safeguards rule currently requires broker-dealers, investment companies, and registered investment advisers (but not transfer agents) to maintain written policies and procedures to protect “customer records and information,” ^{288} which is not defined in the GLBA or in Regulation S-P. The disposal rule requires every covered institution properly to dispose of “consumer report information,” a different term, which Regulation S-P defines consistently with the FACT Act provisions. ^{289}
^{287} See Disposal of Consumer Report Information, Investment Company Act Release No. 26685 (Dec. 2, 2004) [69 FR 71322 (Dec. 8, 2004)], at n.13 (“Disposal Rule Adopting Release”).
^{288} See 17 CFR 248.30; 15 U.S.C. 6801(b)(1).
^{289} See 17 CFR 248.30(b)(2). Section 628(a)(1) of the FCRA directed the Commission to adopt rules requiring the proper disposal of “consumer information, or any compilation of consumer information, derived from consumer reports for a business purpose.” 15 U.S.C. 1681w(a)(1). Regulation S-P currently uses the term “consumer report information,” defined to mean a record in any form about an individual “that is a consumer report or is derived from a consumer report.” 17 CFR 248.30(b)(1)(ii). “Consumer report” had the same meaning as in section 603(d) of the Fair Credit Reporting Act (15 U.S.C. 1681(d)). 17 CFR 248.30(b)(1)(i). We are amending the term “consumer report information” currently in Regulation S-P to “consumer information” (without changing the definition) to conform to the term used by other Federal financial regulators in their guidance and rules. See, e.g., 16 CFR 682.1(b) (FTC); 17 CFR 162.2(g) (CFTC); OCC Information Security Guidance at I.C.2.b; FRB Information Security Guidance”) at I.C.2.b; FDIC Information Security Guidance at I.C.2.b.
To align more closely the information protected by both rules, as proposed, we are amending rule 248.30 by replacing the term “customer records and information” in the safeguards rule with a newly defined term “customer information” and by adding customer information to the coverage of the disposal rule. For covered institutions other than transfer agents, the term “customer information” will mean, as proposed, “any record containing nonpublic personal information as defined in section 248.3(t) about a customer of a financial institution, whether in paper, electronic, or other form.” ^{290}
^{290} As discussed below, the customer information definition also specifies that the definition covers information in the possession of a covered institution or that is handled or maintained by the covered institution or on its behalf, regardless of whether such information pertains to individuals with whom the covered institution has a customer relationship or the customers of other financial institutions where such information has been provided to the covered institution. This is being adopted substantively as proposed, but reflects structural modifications to the rule text to address the concerns of a commenter who asked for increased clarity. See infra section II.B.2 for a discussion of the term customer information with respect to transfer agents.
Commenters did not object to the proposed definition of “customer information.” As discussed in the Proposing Release, the customer information definition in the coverage of the safeguards rule is intended to be consistent with the objectives of the GLBA, which focuses on protecting “nonpublic personal information” of those who are “customers” of financial institutions. ^{291} The customer information definition is also based on the definition of “customer information” in the safeguards rule adopted by the FTC. ^{292}
^{291} See 15 U.S.C. 6801(a).
^{292} See 16 CFR 314.2(d) (The FTC safeguards rule defining “customer information” to mean “any record containing nonpublic personal information, as defined in 16 CFR 313.3(n) about a customer of a financial institution, whether in paper, electronic, or other form, that is handled or maintained by or on behalf of you or your affiliates”). The final amendments do not require covered institutions to be responsible for their affiliates' policies and procedures for safeguarding customer information because covered institutions affiliates generally are financial institutions subject to the safeguards rules of other Federal financial regulators.
Additionally, adding customer information to the coverage of the disposal rule is also consistent with the objectives of the GLBA. Under the GLBA, an institution has a “continuing obligation” to protect the security and confidentiality of customers' nonpublic personal information. ^{293} The final amendments specify that this obligation continues through disposal of customer information. The final amendments also are consistent with the objectives of the FACT Act, which focuses on protecting “consumer information,” a category of information that will remain within the scope of the disposal rule. ^{294} Adding customer information to the disposal provisions will simplify compliance with the FACT Act by eliminating a covered institution's need to determine whether its customer information is also consumer information subject to the disposal rule. Covered institutions should also be less likely to fail to dispose of consumer information properly by misidentifying it as customer information only. In addition, including customer information in the coverage of the disposal rule would conform the rule more closely to the Banking Agencies' Safeguards Guidance. ^{295} Commenters did not address the expansion of the disposal rule to cover customer information.
^{293} See 15 U.S.C. 6801(a).
^{294} See 15 U.S.C. 1681w(a)(1); proposed rule 248.30(c)(1). “Consumer information” is not included within the scope of the safeguards rule, except to the extent it overlaps with any “customer information,” because the safeguards rule is adopted pursuant to the GLBA and therefore is limited to information about “customers.”
^{295} See, e.g., OCC Information Security Guidance (OCC guidelines providing that national banks and Federal savings associations' must develop, implement, and maintain appropriate measures to properly dispose of customer information and consumer information.”); FRB Information Security Guidance (similar Federal Reserve Board provisions for State member banks). See also 15 U.S.C. 6804(a) (directing the agencies authorized to prescribe regulations under title V of the GLBA to assure to the extent possible that their regulations are consistent and comparable); 15 U.S.C. 1681w(2)(B) (directing the agencies with enforcement authority set forth in 15 U.S.C. 1681s to consult and coordinate so that, to the extent possible, their regulations are consistent and comparable).
One commenter sought clarification regarding the proposal's coverage of customer information handled or maintained on behalf of a covered institution. This commenter stated that proposed paragraph (a) of rule 248.30, which set out the scope of information collectively covered under the safeguards and disposal rules, could be interpreted to limit the application of the rules to customer information in the possession of the covered institution, while proposed paragraph (e)(5) defined customer information to include information that is handled or maintained on behalf of the covered institution. The proposal included both customer information in the possession of a covered institution as well as customer information handled or maintained on its behalf in both the safeguards and disposal rules. This is because rule 248.30 provided the rules applied to “customer information” and, as the commenter observed, the proposal defined customer information to include “any record containing nonpublic personal information as defined in § 248.3(t) about a customer of a financial institution, whether in paper, electronic or other form, that is handled or maintained by the covered institution or on its behalf.” Applying these rules to information handled or maintained on behalf of a covered institution is necessary so that the incident response program applies to information about a covered institution's customers that is handled or maintained by a service provider on the covered institution's behalf and to require that such information is disposed of properly.
In response to this comment, we have removed the dedicated scope paragraph (a) from the proposed rule and moved all the requirements for customer information and consumer information into the definitions of those terms, now in renumbered paragraphs (d)(5)(1) and (d)(1) respectively. Accordingly, and substantively as proposed, the definition of consumer information covers information that a covered institution maintains or otherwise possesses for a business purpose, and the customer information definition covers information in the possession of a covered institution or that is handled or maintained by the covered institution or on its behalf. ^{296} These structural changes do not change the scope of the proposed rule, but rather consolidate in each definition the scope of covered information as opposed to referring to information possessed by a covered institution in one paragraph of the rule and referring to information handled on its behalf in another.
^{296} We also eliminated language in paragraph (b)(1) that now appears in the final amendments' definitions of customer information and consumer information.

Safeguards Rule and Disposal Rule Coverage of Customer Information
We also are adopting the requirement, substantively as proposed, that both the safeguards rule and the disposal rule apply to the information specified in those definitions regardless of whether such information pertains to (a) individuals with whom the covered institution has a customer relationship or (b) the customers of other financial institutions where such information has been provided to the covered institution. ^{297} As discussed above, however, we are structurally reflecting this requirement in the definitions of customer information and consumer information, rather than in proposed paragraph (a).
^{297} The safeguards rule is applicable to “consumer information” only to the extent it overlaps with “customer information.” See supra footnote 291. Regulation S-P defines “financial institution” generally to mean any institution the business of which is engaging in activities that are financial in nature or incidental to such financial activities as described in section 4(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1843(k)). Rule 248.3(n).
Comments were mixed on expanding the safeguards and disposal rules to cover nonpublic personal information received by covered institutions from third party financial institutions. Some commenters supported the expansion. ^{298} Two of these commenters stated that sensitive nonpublic information should be protected regardless of how it came into a covered institution's possession. ^{299} Other commenters opposed the proposed expansion, suggesting that the rules should be limited to the customer information of the covered institution's own customers and stating that the safeguards rule in its current form is appropriately calibrated. ^{300} One of these commenters stated that requiring notification of customers of other financial institutions under the proposed expansion would be confusing to customers and impractical for covered institutions. ^{301}
^{298} See EPIC Comment Letter; ICI Comment Letter; Better Markets Comment Letter.
^{299} See ICI Comment Letter; Better Markets Comment Letter.
^{300} See SIFMA Comment Letter 2; CAI Comment Letter.
^{301} See SIFMA Comment Letter 2; see also supra footnote 110 and accompanying text.
After considering comments, the final amendments provide that the safeguards rule and disposal rule apply to both nonpublic personal information that a covered institution collects about its own customers and to nonpublic personal information it receives from another financial institution about that institution's customers. Currently, in contrast, Regulation S-P defines “customer” as “a consumer who has a customer relationship with you.” The safeguards rule, therefore, only protects the “records and information” of individuals who are customers of the particular institution and not others, such as individuals who are customers of another financial institution. The disposal rule, on the other hand, requires proper disposal of certain records about individuals without regard to whether the individuals are customers of the particular institution. The final amendments better align the scope of the safeguards and disposal rules by requiring that a covered institution protect the information of individuals even if those individuals are not customers of that particular institution but customers of another financial institution.
The amendments also are designed to help ensure that the nonpublic personal information of covered institution customers is better protected from unauthorized disclosure on an ongoing basis, regardless of what entity is maintaining or handling that information. ^{302} For example, information that a registered investment adviser has received from the custodian of a former client's assets would be covered under both the safeguard and disposal rules if the former client remains a customer of either the custodian or of another financial institution, even though the individual no longer has a customer relationship with the investment adviser. ^{303} Applying the safeguards rule and the disposal rule to customer information that a covered institution receives from other financial institutions will help ensure customer information safeguards are not lost because a third party financial institution shares that information with a covered institution.
^{302} See Proposing Release at the text accompanying nn.156-158.
^{303} See final rule 248.30(d)(5)(i) (customer information is covered by the rule if it pertains to “the customers of other financial institutions where such information has been provided to the covered institution”).

2. Extending the Scope of the Safeguards Rule and the Disposal Rule To Cover All Transfer Agents
As discussed in more detail below, the final amendments, which are the same as proposed except for the modifications to the structure of the rules discussed above, ^{304} extend both the safeguards rule and the disposal rule to apply to any transfer agent registered with the Commission or another appropriate regulatory agency. ^{305} We are extending these provisions to transfer agents because, as discussed in the Proposing Release, transfer agents maintain sensitive, detailed information related to securityholders. ^{306} Like other market participants, systems maintained by transfer agents are subject to threats and hazards to the security or integrity of those systems. Likewise, the individuals whose information is maintained by those transfer agents' systems are subject to similar risks of substantial harm and inconvenience as individuals whose customer information is maintained by other covered institutions. Yet, prior to the amendments, the safeguards rule did not apply to any transfer agents, and the disposal rule applied only to those transfer agents registered with the Commission. To address these risks, and help ensure that individuals whose customer information is held by a transfer agent are protected and receive appropriate notice of a breach in the same manner as individuals whose customer information is held by any other covered institution, the final amendments apply both the safeguards rule and the disposal rule to all transfer agents, even if the transfer agent is registered with another appropriate regulatory agency. The final amendments do this by including “transfer agents registered with the Commission or another appropriate regulatory agency” in the definition of a “covered institution,” in the same manner as we proposed. ^{307}
^{304} See supra section II.B.1 (discussing the changes to the structure of final rule 248.30(d)).
^{305} The term “transfer agent” is defined by rule 248.30(d)(12) to have the same meaning as in section 3(a)(25) of the Exchange Act (15 U.S.C. 78c(a)(25)).
^{306} See Proposing Release at section II.C.3.
^{307} Final rule 248.30(d)(3).
As proposed, the final amendments also account for the fact that transfer agents' clients generally are the issuers whose securities are held by investors, not the individual investors themselves, by defining “customer” with respect to a transfer agent registered with the Commission or another appropriate regulatory agency as any natural person who is a securityholder of an issuer for which the transfer agent acts or has acted as a transfer agent. Some commenters supported extending these rules to all transfer agents. These commenters stated that doing so would: (i) be consistent with current market practice; (ii) benefit investors; and (iii) create a single, equal standard for all transfer agents. ^{308} Other commenters opposed extension of the safeguards rule and disposal rule to all transfer agents. In general, these commenters stated that doing so would: (i) exceed the scope of the Commission's authority; (ii) fail to recognize that a transfer agent's customer is an issuer of securities; (iii) potentially conflict with State law; (iv) confuse securityholders; and (v) impose unnecessary costs on transfer agents. ^{309} As discussed below, the Commission agrees with the commenters who supported extending the safeguards rule and disposal rule to all transfer agents and is adopting the amendments as proposed.
^{308} See Better Markets Comment Letter, ICI Comment Letter 1, EPIC Comment Letter.
^{309} See SIFMA Comment Letter 2, Comment Letter from the Securities Transfer Association (May 10, 2023) (“STA Comment Letter 1”), STA Comment Letter 2, Computershare Comment Letter.

Extending to All Transfer Agents, Including Transfer Agents Subject to Existing Federal and State Requirements, and Scope of the Commission's Authority
We received some comments in support of our proposed extension of scope to include transfer agents. One commenter stated that extending the protections of the safeguards rule and the disposal rule to all transfer agents would benefit the public and protect investors, due to the sensitive information they possess, and would equalize the standards that are applicable to transfer agents. ^{310} This commenter stated that due to their role, transfer agents have information related to securityholders that may include names, addresses, phone numbers, email addresses, employers, employment history, bank account information, credit card information, transaction histories, and securities holdings. ^{311} This commenter further stated that the systems transfer agents maintain are subject to the same risks of a breach as other covered institutions, and therefore the individuals whose customer information transfer agents maintain are subject to the same risks as customers of other covered institutions. ^{312} Finally, the commenter stated that extending the safeguards rule and disposal rule to all transfer agents will promote regulatory parity and fair competition among firms, regardless of their registration status. ^{313}
^{310} See Better Markets Comment Letter.
^{311} See id.
^{312} See id.
^{313} See id.
Similarly, one commenter supported including transfer agents and requiring breach notifications, ^{314} and another commenter stated that establishing incident response and minimum data breach reporting requirements for transfer agents would be a significant step toward a stronger and more comprehensive national data breach regime. ^{315}
^{314} See ICI Comment Letter 1.
^{315} See EPIC Comment Letter.
Other comments, however, objected to scoping transfer agents into the Safeguards Rule. For example, one commenter suggested that applying the rules to all transfer agents could subject transfer agents registered with an appropriate regulatory agency that is not the Commission to conflicting data security requirements from those regulators, resulting in regulatory confusion. ^{316} One commenter stated that extending the rules to all transfer agents would exceed the scope of the Commission's authority. ^{317} Similarly, two commenters stated that the Commission should exempt certain transfer agents from the safeguards rule, such as transfer agents subject to existing State and Federal banking laws addressing privacy and safeguarding customer information, or those that do not engage in paying agent services. ^{318} One of these commenters stated that transfer agents “do not have the type or scope of personal information which could lead to further complications for securityholders” because transfer agents are not subject to know-your-customer obligations, do not have extensive background information concerning securityholders, and generally do not have possession of shareholder assets or have information which could be used to take or transfer assets of shareholders. ^{319} One of these commenters also stated that it is already subject to banking laws and inter-agency guidelines that address privacy, breach notification, and disposal of personal information, such as the Banking Agencies' Incident Response Guidance. ^{320}
^{316} See SIFMA Comment Letter 2.
^{317} See SIFMA Comment Letter 2.
^{318} See STA Comment Letter 2 and Computershare Comment Letter. We use the term “paying agent services” to refer to administrative, recordkeeping, and processing services related to the distribution of cash and stock dividends, bond principal and interest, mutual fund redemptions, and other payments to securityholders.
^{319} See STA Comment Letter 2.
^{320} See Computershare Comment Letter.
The Commission does not agree that extending the rules to all transfer agents would result in regulatory confusion. As discussed above, the GLBA and FACT Act oblige us to adopt regulations, to the extent possible, that are consistent and comparable with those adopted by the Banking Agencies, the CFPB, and the FTC. ^{321} The Commission has been mindful of the need to set standards for safeguarding customer records and information that are consistent and comparable with the corresponding standards set by these agencies, and to this end, we have modified the final amendments from the proposal to promote greater consistency with other applicable Federal safeguard standards where such changes do not affect the investor protection purposes of this rulemaking, as discussed in more detail above. ^{322} Thus, although there are some differences, the final amendments are largely aligned with the Banking Agencies' Incident Response Guidance and Safeguards Guidance to which some transfer agents supervised by one of the Banking Agencies are already subject. ^{323} We recognize, however, that transfer agents registered with the Banking Agencies are already subject to the Banking Agencies' Incident Response Guidance and Safeguards Guidance and therefore may need to review their existing procedures under the Banking Agencies' Guidance for compliance with the final amendments. To the extent there are differences between their existing procedures and the final amendments, given the Commission's efforts to promote consistency between the final amendments and other Federal safeguards standards, it will be possible for transfer agents to update their existing policies, procedures, and practices to ensure consistency with both the Banking Agencies' Guidance and the final amendments. ^{324} Finally, even if the final amendments impose additional requirements on some transfer agents already subject to the Banking Agencies' Guidance, it is appropriate to establish a minimum nationwide standard for the notification of securityholders who are affected by a transfer agent data breach that is tailored to the Commission's mission and the specific requirements. ^{325} For these reasons, the Commission does not agree that it should exempt from the safeguards rule transfer agents that are subject to existing Federal banking laws addressing privacy and safeguarding customer information.
^{321} See supra section I.
^{322} For example, the final amendments require covered institutions to ensure that their service providers provide notification as soon as possible, but no later than 72 hours after becoming aware that an applicable breach has occurred, which is informed by the 72-hour deadline that is required under CIRCIA. See supra section II.A.4.b.
^{323} See infra sections IV.C.2.b and IV.D.2.b.
^{324} See supra section I.
^{325} See supra section I.
Moreover, the Commission is not exempting from the safeguards rule transfer agents that do not engage in paying agent services. The population of transfer agents that maintain sensitive, detailed and individualized information related to securityholders is not limited to those transfer agents that engage in paying agent services. Providing the exemption suggested by this commenter would deprive securityholders whose sensitive customer information is maintained by a non-paying agent transfer agent of the important protections afforded under the final amendments.
The Commission does not agree that extending the rules to all transfer agents would exceed the scope of the Commission's authority. As discussed in the proposal, when the Commission initially proposed and adopted the disposal rule, it did so to implement the congressional directive in section 216 of the FACT Act to adopt regulations to require any person who maintains or possesses a consumer report or consumer information derived from a consumer report for a business purpose to properly dispose of the information. ^{326} The Commission determined at that time that, through the FACT Act, Congress intended to instruct the Commission to adopt a disposal rule to apply to transfer agents registered with the Commission. ^{327} The Commission also stated at that time that the GLBA did not include transfer agents within the list of covered entities for which the Commission was required to adopt privacy rules. ^{328} The Commission extended the disposal rule only to those transfer agents registered with the Commission to carry out its directive under the FACT Act, while deferring to the FTC to utilize its “residual jurisdiction” under the same congressional mandate, to enact both a disposal rule and broader privacy rules that might apply to transfer agents registered with another appropriate regulatory agency. ^{329}
^{326} See Proposing Release at section II.C.3; see also 15 U.S.C. 1681w.
^{327} See Disposal of Consumer Report Information, Exchange Act Release No. 50361 (Sept. 14, 2004), 69 FR 56307 at n.23 (Sept. 20, 2004).
^{328} See id. at n.27.
^{329} See id.
The Commission, however, has broad authority under Section 17A of the Exchange Act that is independent of either the FACT Act or the GLBA, to prescribe rules and regulations for transfer agents as necessary or appropriate in the public interest, for the protection of investors, for the safeguarding of securities and funds, or otherwise in furtherance of the purposes of Title I of the Exchange Act. ^{330} Specifically, whether transfer agents initially register with the Commission or another appropriate regulatory agency, ^{331} section 17A(d)(1) of the Exchange Act authorizes the Commission to prescribe such rules and regulations as may be necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Exchange Act with respect to any transfer agents registered with either the Commission or another appropriate regulatory agency. Once a transfer agent is registered with any appropriate regulatory agency, the Commission “is empowered with broad rulemaking authority over all aspects of a transfer agent's activities as a transfer agent.” ^{332} Pursuant to its statutory authority, the Commission has adopted rules that address various aspects of transfer agents' activities, including annual disclosures, transaction processing, responses to written inquiries, recordkeeping, safeguarding of funds and securities, lost securityholder searches, among others. ^{333} These and the Commission's other transfer agent rules ^{334} currently apply to and are enforceable against all registered transfer agents, including those that initially registered with an appropriate regulatory agency other than the Commission. ^{335}
^{330} See 15 U.S.C. 78q-1.
^{331} See Exchange Act Section 17A(d)(1), 15 U.S.C. 78q-1(d)(1) (providing that “no registered clearing agency or registered transfer agent shall . . . engage in any activity as . . . transfer agent in contravention of such rules and regulations” as the Commission may prescribe); Exchange Act Section 17A(d)(3)(b), 15 U.S.C. 78q-1(d)(3)(b) (providing that “Nothing in the preceding subparagraph or elsewhere in this title shall be construed to impair or limit . . . the Commission's authority to make rules under any provision of this title or to enforce compliance pursuant to any provision of this title by any . . . transfer agent . . . with the provisions of this title and the rules and regulations thereunder.”).
^{332} See Senate Report on Securities Act Amendments of 1975, S. Rep. No. 94-75.
^{333} See, e.g., SEC Form TA-2, 17 CFR 249b.102 (Form for Reporting Activities of Transfer Agents Registered Pursuant to Section 17A of the Securities Exchange Act of 1934) (annual disclosures); Exchange Act Rule 17Ad-2, 17 CFR 240.17Ad-2 (transaction processing); Exchange Act Rule 17Ad-5, 17 CFR 240.17Ad-5 (written inquiries); Exchange Act Rule 17Ad-6, 17 CFR 240.17Ad-6 (recordkeeping); Exchange Act Rule 17Ad-7, 17 CFR 240.17Ad-7 (record retention); Exchange Act Rule 17Ad-12, 17 CFR 240.17Ad-12 (safeguarding); Exchange Act Rule 17Ad-17, 17 CFR 240.17Ad-17 (lost securityholder searches).
^{334} See, e.g., Exchange Act Rules 17Ad-1 through 17Ad-20, 17 CFR 240.17Ad-1 through 240.17Ad-20.
^{335} For example, the Commission has found bank-registered transfer agents in violation of various Commission rules. See In the Matter of Citibank, N.A., Exchange Act Release No. 31612 (Dec. 7, 1992) (settled matter) (Exchange Act Rules 17Ad-12 and 17f-1); In the Matter of the Chase Manhattan Bank, Exchange Act Release No. 44835 (Sept. 24, 2001) (settled matter) (Exchange Act Rules 17Ac2-2, 17Ad-10, and 17Ad-11); In the Matter of Wilmington Trust Company, Exchange Act Release No. 49904 (Jun. 23, 2004) (settled matter) (Exchange Act Rules 17Ac2-2, 17Ad-10, 17Ad-11, and 17Ad-13); In the Matter of the Bank of New York, Exchange Act Release No. 53709 (Apr. 24, 2006) (settled matter) (Exchange Act Rule 17Ad-17).
The FTC has not adopted disposal and privacy rules to govern transfer agents registered with an appropriate regulatory agency that is not the Commission. The Commission is exercising its authority under section 17A(d)(1) of the Exchange Act to extend the safeguards rule to apply to any transfer agent registered with either the Commission or another appropriate regulatory agency and to extend the disposal rule to apply to transfer agents registered with another appropriate regulatory agency. The Commission does so to address the risks of market disruptions and investor harm posed by cybersecurity and other operational risks faced by transfer agents. Extending the safeguards rule and disposal rule to address those risks is in the public interest, and necessary for the protection of investors and for the safeguarding of funds and securities.
As explained in the proposal, transfer agents are subject to many of the same risks of data system breach or failure that other market participants face. ^{336} For example, transfer agents are vulnerable to a variety of software, hardware, and information security risks that could threaten the ownership interests of securityholders or disrupt trading within the securities markets. ^{337} A software, hardware, or information security breach or failure at a transfer agent could result in the corruption or loss of securityholder information, erroneous securities transfers, or the release of confidential securityholder information to unauthorized individuals. A concerted cyber attack or other breach could have the same consequences, or result in the theft of securities and other crimes. A transfer agent's failure to account for such risks and take appropriate steps to mitigate them can directly lead to the loss of funds or securities, including through theft or misappropriation, due to the information about securityholders that transfer agents maintain. ^{338}
^{336} See Proposing Release at section II.C.3.
^{337} See generally SEC Cybersecurity Roundtable transcript (Mar. 26, 2014), available at https://www.sec.gov/spotlight/cybersecurity-roundtable/cybersecurity-roundtable-transcript.txt .
^{338} See Proposing Release at section II.C.3.
At the same time, the scope and volume of funds and securities that are processed or held by transfer agents have increased dramatically since Regulation S-P was first adopted. ^{339} The risk of loss of such funds and securities presents significant risks to issuers, securityholders, other industry participants, and the U.S. financial system as a whole. For example, transfer agents that provide paying agent services on behalf of issuers play a significant role within that system. According to Form TA-2 filings in 2023, transfer agents distributed approximately $3.68 trillion in securityholder dividends and bond principal and interest payments. Critically, because Form TA-2 does not include information relating to the value of purchase, redemption, and exchange orders by mutual fund transfer agents, the $3.68 trillion amount stated above does not include these amounts. If the value of such transactions by mutual fund transfer agents was captured by Form TA-2 it is possible that the $3.68 trillion number would be significantly higher. ^{340}
^{339} See id.
^{340} As stated in the proposal, Commission staff has observed through supervisory activities that aggregate gross purchase and redemption activity for some of the larger mutual fund transfer agents has ranged anywhere from $3.5 trillion to nearly $10 trillion just for a single entity in a single year. See Proposing Release at section II.C.3.
Moreover, contrary to some commenters' statements, transfer agents do maintain personal information about individual securityholders that could be used to take or transfer assets of securityholders or otherwise lead to further complications for securityholders. As stated in the proposal, transfer agents may obtain, share, and maintain personal information on behalf of securityholders who hold securities in registered form ( i.e., in their own name rather than indirectly through a broker). ^{341} For example, any registered transfer agent that maintains a master securityholder file on behalf of an issuer must post to that file debits and credits containing minimum and appropriate certificate detail representing every security transferred, purchased, redeemed, or issued. ^{342} Pursuant to Exchange Act Rule 17Ad-9, certificate detail must include, among other things, the name and address of the registered securityholder, the number of shares or principal dollar amount of the equity or debt security, and any other identifying information about the securityholder or the securityholder's securities that the transfer agent reasonably deems essential to its recordkeeping system for the efficient and effective research of record differences. ^{343} This can include date of birth, social security or tax payer identification number, phone numbers, email addresses, information about relatives, and other sensitive personal information. ^{344} Transfer agents also maintain additional personal information about securityholders in connection with ancillary account, administrative, and other services transfer agents provide to securityholders on behalf of issuers, such as plan administration, proxy services, corporate action processing, and disbursement of dividend and interest payments. ^{345} This is the same type of customer information collected and maintained by other covered institutions and warrants the same level of protection. For example, the Commission is aware of instances in which threat actors have utilized securityholder information obtained from a transfer agent to steal securities and funds from those securityholders. ^{346}
^{341} See Proposing Release at section I, section II.C.3.
^{342} See 17 CFR 240.17Ad-10.
^{343} See 17 CFR 240.17Ad-9(a).
^{344} See In the Matter of Columbia Management Investment Services Corp., Exchange Release No. 80016 (Feb. 10, 2017) (settled matter) (finding that the transfer agent's Records Management Manager “viewed sensitive personal account information such as addresses, dates of birth, and identification numbers” to misappropriate foreign deceased shareholders' funds and securities).
^{345} See Proposing Release at section II.C.3 (discussing generally the services provided by transfer agents); Advanced Notice of Proposed Rulemaking, Concept Release, Transfer Agent Regulations, Exchange Act Release No. 76743 (Dec. 22, 2015), 80 FR 81948 (Dec. 31, 2015) (describing the recordkeeping, shareholder communications, securities issuance, and tax reporting services provided by transfer agents).
^{346} See In the Matter of Columbia Management Investment Services Corp., Exchange Act Release No. 80016 (Feb. 10, 2017) (settled matter) (finding that the transfer agent's Records Management Manager “viewed sensitive personal account information such as addresses, dates of birth, and identification numbers” to misappropriate foreign deceased shareholders' funds and securities).
For these reasons, the Commission is extending the safeguards rule and disposal rule to cover all registered transfer agents because it is in the public interest and will help protect investors and safeguard their securities and funds. Extending the safeguards rule to cover any registered transfer agent addresses the risks to the security and integrity of customer information associated with the systems those transfer agents maintain. This in turn helps prevent securityholders' customer information from being compromised, which, as discussed above, could threaten the ownership interest of securityholders or disrupt trading within the securities markets. Extending the final amendments to all registered transfer agents also helps establish minimum nationwide standards for the notification of securityholders who are affected by a transfer agent data breach that leads to the unauthorized access or use of their information so that affected securityholders could take additional mitigating actions to protect their customer information, ownership interest in securities, and trading activity. Finally, as discussed above, extending the disposal rule to cover those transfer agents registered with another appropriate regulatory agency helps ensure all registered transfer agents are subject to the same minimum nationwide standard, tailored to the Commission's mission and requirements, and will protect investors and safeguard their securities and funds by reducing the risk of fraud or related crimes, including identity theft, which can lead to the loss of securities and funds.

Definition of a Transfer Agent's Customer
As stated above, the final amendments include a definition of customer that is specific to transfer agents, which is being adopted as proposed, except for a clarification noted below. For a transfer agent, customer means any natural person who is a securityholder of an issuer for which the transfer agent acts or has acted as a transfer agent. ^{347} The Commission is clarifying that this definition applies for purposes of section 248, meaning that it does not apply to any other rules, including those specific to transfer agents codified at 17 CFR 240.17Ad. Unless specified, securityholders of issuers are not customers of transfer agents for purposes of other rules. The Commission is adopting this definition because, as discussed above, although transfer agents' customers generally are issuers of securities, transfer agents collect and maintain non-public personal information about the individual registered owners who hold those issuers' securities in connection with various services and activities they engage in on behalf of issuers.
^{347} See final rule 248.30(d)(4)(ii).
Some commenters supported this definition and approach of treating securityholders of an issuer as a transfer agent's customer, while other commenters did not. One commenter stated that this approach would close a “regulatory gap”—despite possessing and maintaining sensitive information about securityholders, no transfer agents are currently subject to the safeguards rule, and only transfer agents registered with the Commission are subject to the disposal rule. ^{348} Similarly, one commenter supported protecting customer information by subjecting that information to Regulation S-P, regardless of how it comes into the covered institution's possession. ^{349} On the other hand, one commenter opposed this proposed definition, stating that the need for a specific defined term for transfer agents indicated that the amendments were not well suited for transfer agents. ^{350} Three commenters stated that securityholders of issuers are not customers of the transfer agent, rather the issuer is the customer of the transfer agent. ^{351}
^{348} See Better Markets Comment Letter.
^{349} See ICI Comment Letter 1.
^{350} See STA Comment Letter 2.
^{351} See STA Comment Letter 2, Computershare Comment Letter, and SIFMA Comment Letter 2.
The Commission agrees that customer information held by a covered institution must be protected, regardless of how that customer information comes into the covered institution's possession. As discussed in the proposal and above, transfer agents obtain, share, and maintain personal information on behalf of securityholders who hold securities in registered form ( i.e., in their own name rather than indirectly through a broker). ^{352} They also collect detailed personal information in connection with various services provided directly to individual securityholders, such as facilitating legal and other transfers of securities, replacing lost or stolen securities certificates, facilitating corporate communications with investors, providing cost-basis calculations for tax purposes, and other services. ^{353} The fact that a transfer agent may not have a direct contractual relationship with an individual securityholder does not eliminate the need for transfer agents to protect the sensitive personal information about individual securityholders that is collected and maintained by the transfer agent.
^{352} See Proposing Release at section I; section II.C.3; see also supra the text accompanying footnote 285.
^{353} See Proposing Release at section II.C.3 (discussing generally the services provided by transfer agents); Advanced Notice of Proposed Rulemaking, Concept Release, Transfer Agent Regulations, Exchange Act Release No. 76743 (Dec. 22, 2015), 80 FR 81948 (Dec. 31, 2015) (describing the recordkeeping, shareholder communications, securities issuance, and tax reporting services provided by transfer agents).
Contrary to some commenters' statements, adopting a transfer agent-specific definition of customer does not indicate that the safeguards rule and disposal rule are not well-suited for transfer agents. Rather, it helps ensure that the rule is appropriately tailored to address transfer agents and the specific type of customer information they collect and maintain. Tailoring specific rule provisions to specific types of entities to address their unique functions, structures, and businesses does not render the rule inappropriate to the entity for which the provisions are being tailored, nor is it an approach that is unique to transfer agents or to Regulation S-P. For example, since the adoption of Exchange Act Rule 17Ad-12, transfer agents have been required to safeguard any funds and securities, including securityholder funds and securities, in the transfer agent's possession or control. ^{354} This is the case although securityholders may not be direct customers of transfer agents. As another example, final rule 248.30(d)(5)(i) defines customer information, for any covered institution other than a transfer agent as any record containing nonpublic personal information as defined in final rule 248.3(t) about a customer of a financial institution, whether in paper, electronic or other form, in the possession of a covered institution or that is handled or maintained by the covered institution or on its behalf, regardless of whether such information pertains to (a) individuals with whom the covered institution has a customer relationship, or (b) the customers of other financial institutions where such information has been provided to the covered institution. ^{355} The fact that the securityholder whose funds and securities the transfer agent is in possession of is not a direct customer of the transfer agent does not eliminate the need for the transfer agent to safeguard those funds and securities. The same is true for customer information in the possession of a transfer agent or that is handled or maintained by the transfer agent or on its behalf.
^{354} See 17 CFR 240.17Ad-12.
^{355} See final rule 248.30(d)(5)(i).
Finally, two commenters stated that the Commission should propose a rule specific to transfer agents as part of the existing rules that apply specifically to transfer agents. ^{356} In these commenters' views, such a rule would impose obligations similar to the final amendments but would apply only to transfer agents. One of these commenters further explained that it would support general safeguarding of securityholder information requirements, similar to those set forth in the safeguard rule, if the Commission enacted them as part of the regulations specific to transfer agents codified at 17 CFR 240.17Ad. ^{357}
^{356} See STA Comment Letter 2 and Computershare Comment Letter.
^{357} See Computershare Comment Letter.
The Commission is not taking the approach suggested by the commenters. The final amendments will accomplish a similar result to a transfer agent-specific rule, while helping to ensure consistent requirements among covered institutions. Further, the commenters did not explain how such a rule would differ from the final amendments, other than being in a different set of Commission regulations, or how such a rule would be a material improvement over the approach being adopted as proposed. The Commission does not agree that adopting something different from the final amendments is necessary to achieve the “Commission's privacy and cybersecurity goals in a manner specific to the business and role of transfer agents.” ^{358} Rather, doing so would undermine the Commission's goal of establishing a consistent minimum nationwide standard. Further, where necessary, the Commission has already tailored the final amendments in a manner specific to transfer agents. As noted above, the final amendments include a definition of customer that it is specific to transfer agents. Finally, to the extent one of commenters' goals is ensuring that all transfer agent rules are codified in the same place, specifically 17 CFR 240.17Ad, commenters' suggestion would not further that goal. Transfer agents registered with the Commission are already subject to the disposal rule, which is not part of the existing rule set codified at 17 CFR 240.17Ad, and a new safeguards or disposal rule within that section would necessarily cite to Regulation S-P for defined terms and other references.
^{358} STA Comment Letter 2.

Application of Laws, Requirements, and Contractual Provisions
Some commenters raised concerns about potential conflicts with, or duplication, of State law requirements. One commenter stated that securityholders of issuers are not customers of the transfer agent and imposing obligations on them creates conflicting and duplicative requirements to those already in place through State laws to safeguard securityholders' personal information. ^{359} Another commenter stated that under State law, transfer agents do not notify securityholders of a breach but issuers do. ^{360} Specifically, this commenter stated that all fifty States have laws that require transfer agents to notify their issuer clients of unauthorized access to personal information of securityholders, and issuers may then be required to notify securityholders depending on whether the standards of the State law have been met. This commenter also stated that its existing policies, procedures, and contractual obligations are designed to track these State law requirements and that certain provisions in transfer agents' contracts with issuer clients could prohibit transfer agents from notifying securityholders of data breaches in the manner required by the amendments. ^{361} Both commenters stated that the Commission should consider preempting State laws to minimize the potential for multiple and competing obligations, and if not, prepare and produce a cost-benefit analysis to identify the specific ways in which the amendments would be an improvement over existing law. ^{362} This commenter further explained that the issuer client would notify securityholders depending on whether the standards of the State law have been met. ^{363}
^{359} See STA Comment Letter 2.
^{360} See Computershare Comment Letter.
^{361} See Computershare Comment Letter.
^{362} See STA Comment Letter 2 and Computershare Comment Letter. See also infra section IV.D.2.b.
^{363} See id.
While we acknowledge the commenters' concerns, the final amendments permit transfer agents and issuers to develop arrangements to address them. Nothing in the final amendments will prohibit or limit transfer agents' ability to enter into or modify their contracts with issuer clients in a manner that allows the transfer agent to comply with applicable legal requirements. Indeed, some transfer agents already send customer notices on behalf of their issuer clients. As one commenter stated in requesting that the Commission permit covered institutions to have their service providers send breach notices to affected individuals on their behalf, it is a common practice today for investment companies to have their transfer agents assume responsibility for sending affected customers breach notices. ^{364} The Commission acknowledges that, to the extent a transfer agent has contractual provisions with issuer clients that prevent securityholders from receiving notice of a breach directly from the transfer agent, the transfer agent may determine to amend those contractual provisions to comply with the final amendments. Further, as discussed above, in a modification from the proposal, the final amendments provide that a covered institution that is required to notify affected individuals may satisfy that obligation by ensuring that the notice is provided by another party (as opposed to providing the notice itself). Accordingly, if a transfer agent experiences an incident affecting securityholders of another covered institution, it would have the option of coordinating with the covered institution as to which institution will actually send the notice. ^{365}
^{364} See ICI Comment Letter 1.
^{365} See supra section II.A.3.a.
As explained in the proposal, the Commission understands that State laws generally require persons or entities that own or license computerized data that includes private information to notify residents of the State when a data breach results in the compromise of their private information. ^{366} In addition, State laws generally require persons and entities that do not own or license such computerized data, but that maintain such computerized data for other entities, to notify the affected entity in the event of a data breach (so as to allow that entity to notify affected individuals). However, the specific requirements regarding the timing of the notice, content of the notice, types of data covered, and other aspects may vary. ^{367} Indeed, one commenter highlighted the variation and uncertainty among different State law requirements. ^{368} Thus, while transfer agents may already be complying with one or more State notification laws, variations in these State laws could result in residents of one State receiving notice while residents of another do not receive notice, or receive it later, or receive different information for the same data breach incident. The final amendments address this concern by imposing a Federal minimum standard for customer notification, which will help ensure timely, consistent notice to affected securityholders regardless of their State of residence.
^{366} See Proposing Release at section III.C.2.
^{367} See supra section I.
^{368} See Computershare Comment Letter.

Impact of Notices From Transfer Agents
One commenter stated that the proposal would equalize standards governing transfer agents, and in doing so, promote investor protection. ^{369} On the other hand, several commenters stated that the proposed rule regarding transfer agents would confuse securityholders. One commenter suggested that requiring a transfer agent to identify and contact customers of another institution may cause those customers to be confused and concerned. ^{370} Two commenters similarly stated that the notification requirement is likely to confuse securityholders because it would result in securityholders receiving notice from both the transfer agent and the issuer with respect to the same breach. ^{371} One commenter further stated that a transfer agent should only be required to notify an issuer of an incident. ^{372}
^{369} See Better Markets Comment Letter.
^{370} See SIFMA Comment Letter 2.
^{371} See STA Comment Letter 2 and Computershare Comment Letter.
^{372} See SIFMA Comment Letter 2.
We acknowledge that due to existing State law provisions, individuals affected by a breach at a transfer agent may receive notice from the issuer and the transfer agent with respect to the same breach. Moreover, transfer agents subject to the Banking Agencies' Incident Response Guidance may send notices under those provisions as well, and it is possible that an issuer may also send notices to securityholders, pursuant to State law or other requirements. We acknowledge that these existing provisions, coupled with the requirements of the final amendments, may result in multiple notices being sent for the same incident. That said, as explained above, we have modified the final amendments to minimize the likelihood of multiple notices being sent by covered institutions for the same incident. ^{373}
^{373} See supra section II.A.3.a.
Regardless, we do not agree that individuals who receive a notice from both a transfer agent and the issuer with respect to the same breach or who are contacted by a transfer agent on behalf of another institution will be confused. Any potential confusion could be ameliorated through a clear description of the specific incident that would allow an individual to determine whether it is covered by a notice from any covered institution. ^{374} Rather than create confusion, as some commenters assert, the final amendments will establish a Federal minimum standard for covered institutions, thereby reducing any extant or potential confusion. As discussed in the proposal, there are variations in existing State laws regarding a firm's duty to investigate a data breach, the specific events that trigger when notice of a breach is required, the timing of any such notices, and other details of a notice. The Federal minimum standard established by the final amendments will eliminate this confusion by ensuring that all affected securityholders receive an appropriate notice, regardless of the securityholder's State of residence, thereby enhancing investor protection overall. This benefit justifies the remote risk of potential confusion suggested by some commenters.
^{374} It is possible that customers may not be aware of their relationship with a transfer agent or otherwise may not recognize the transfer agent and therefore could read the notification as a phishing attempt or another nefarious scheme. See infra section IV.D.2.b.

3. Maintaining the Current Regulatory Framework for Notice-Registered Broker-Dealers
The final amendments will, as proposed, contain a number of amendments to Regulation S-P that result in the continuation of the same regulatory treatment for notice-registered broker-dealers as they were subject to under the existing safeguards rule and disposal rule. ^{375} Specifically, notice-registered broker-dealers are explicitly excluded from the scope of the disposal rule, ^{376} but subject to the safeguards rule. However, under substituted compliance provisions, notice-registered broker-dealers are deemed to comply with the safeguards rule (and all other aspects of Regulation S-P, other than the disposal rule) if they are subject to, and comply with, the financial privacy rules of the CFTC, ^{377} including similar obligations to safeguard customer information. ^{378} The Commission initially adopted substituted compliance provisions with regard to the safeguards rule in acknowledgment that notice-registered broker-dealers are subject to primary oversight by the CFTC, and to mirror similar substituted compliance provisions afforded by the CFTC to broker-dealers registered with the Commission. ^{379} When the Commission later adopted the disposal rule, it excluded notice-registered broker-dealers from the rule's scope, stating its belief that Congress did not intend for the Commission's FACT Act rules to apply to entities subject to primary oversight by the CFTC. ^{380} For these reasons, the Commission tailored the proposal to ensure there would be no change in the treatment of notice-registered broker-dealers under the safeguards rule and the disposal rule. ^{381}
^{375} Notice-registered broker-dealers are futures commission merchants and introducing brokers registered with the CFTC that are permitted to register as broker-dealers by filing a notice with the Commission for the limited purpose of effecting transactions in security futures products. See Registration of Broker-Dealers Pursuant to section 15(b)(11) of the Securities Exchange Act of 1934, Exchange Act Release No. 44730 (Aug. 21, 2001) [66 FR 45138 (Aug. 27, 2001)] (“Notice-Registered Broker-Dealer Release”).
^{376} See 17 CFR 248.30(b)(2)(i).
^{377} See 17 CFR 248.2(c) and 248.30(b). Under the substituted compliance provision in rule 248.2(c), notice-registered broker-dealers operating in compliance with the financial privacy rules of the CFTC are deemed to be in compliance with Regulation S-P, except with respect to Regulation S-P's disposal rule (currently rule 248.30(b)).
^{378} See 17 CFR 160.30.
^{379} See Notice-Registered Broker-Dealer Release; see also CFTC, Privacy of Customer Information [66 FR 21236 (Apr. 27, 2001)].
^{380} See Proposing Release at n.203.
^{381} This approach will provide notice-registered broker-dealers with the benefit of consistent regulatory treatment under Regulation S-P, without imposing any additional costs, while also maintaining the same investor protections that the customers of notice-registered broker-dealers currently receive. To the extent notice-registered broker-dealers opt to comply with Regulation S-P and the proposed safeguards rule rather than avail themselves of substituted compliance by complying with the CFTC's financial privacy rules, the benefits and costs of complying with the proposed rule would be the same as those for other broker-dealers. Notice-registered broker-dealers should not face additional costs under the final rule related to the disposal rule, as they would remain excluded from its scope. See Proposing Release.
No comments were received regarding the treatment of notice-registered broker-dealers under the safeguards rule and the disposal rule. For the reasons outlined in the Proposing Release, the Commission is adopting the amendments as proposed. ^{382} Specifically, as proposed, the definition of a “covered institution” includes “any broker or dealer,” without excluding notice-registered broker-dealers, thus ensuring that Regulation S-P's substituted compliance provisions still apply to notice-registered broker-dealers with respect to the safeguards rule. ^{383} In addition, the final amendments include the “covered institution” defined term within the disposal rule, while retaining the disposal rule's existing exclusion for notice-registered broker-dealers. ^{384}
^{382} See Proposing Release at Section II.C.4.
^{383} See proposed rule 248.30(e)(3); see also 17 CFR 248.2(c).
^{384} See proposed rule 248.30(c)(1). As we are not adopting the paragraph in proposed rule 248.30(a), we are similarly not adopting the proposed technical amendment to 17 CFR 248.2(c), which, as to the disposal rule, provides an exception from the substituted compliance regime afforded to notice-registered broker-dealers for Regulation S-P. See proposed rule 248.2(c); see also discussion on Scope of Information Protected supra Section II.B.1. This proposed technical amendment was intended to reflect the proposed shift in the disposal rule's citation from paragraph (b) of rule 248.30 to paragraph (c) of rule 248.30, to ensure continuity in the treatment of notice-registered broker-dealers under Regulation S-P. As the final amendments will not result in such a shift to the disposal rule's citation, this proposed technical amendment has been rendered unnecessary.

C. Recordkeeping
We are adopting amendments to require covered institutions to make and maintain written records documenting compliance with the requirements of the safeguards rule and of the disposal rule as outlined in the table below (collectively, “recordkeeping requirements”). ^{385} We are adopting these amendments substantially as proposed, but, in response to a comment, with modifications designed to provide additional specificity to the scope of certain of the recordkeeping requirements as discussed below. The table below reflects the time periods that covered institutions will be required to preserve these records, which are as proposed. These times vary by covered institution but are consistent with existing recordkeeping rules for these entities to the extent they have pre-existing recordkeeping obligations.
^{385} As discussed previously, pursuant to Regulation Crowdfunding, funding portals must comply with the requirements of Regulation S-P as they apply to brokers. Funding portals are not, however, subject to the recordkeeping obligations for brokers found under Rule 17a-4. See 17 CFR 240.17a-4; see also supra footnote 5 and accompanying text. Instead, funding portals are already obligated, pursuant to Rule 404 of Regulation Crowdfunding, to make and preserve all records required to demonstrate their compliance with, among other things, Regulation S-P for five years, the first two years in an easily accessible place. See 17 CFR 227.404(a)(5). While the final amendments do not modify funding portals' recordkeeping requirements to include the same enumerated list of obligations as those applied to brokers under the amendments to Rule 17a-4, funding portals generally should look to make and preserve the same scope of records in connection with demonstrating their compliance with this portion of Regulation S-P.
Table 1—Recordkeeping Requirements
Covered institution | Rule | Retention period
Registered Investment Companies | 17 CFR 270.31a-1(b) 17 CFR 270.31a-2(a) | Policies and Procedures. A copy of policies and procedures in effect, or that at any time in the past six years were in effect, in an easily accessible place.
| | Other records. Six years, the first two in an easily accessible place.
Unregistered Investment Companies ^1 | 17 CFR 248.30(c) | Policies and Procedures. A copy of policies and procedures in effect, or that at any time in the past six years were in effect, in an easily accessible place.
| | Other records. Six years, the first two in an easily accessible place.
Registered Investment Advisers | 17 CFR 275.204-2(a) | All records for five years, the first two in an easily accessible place. ^2
Broker-Dealers | 17 CFR 240.17a-4(e) | All records for three years, in an easily accessible place.
Transfer Agents | 17 CFR 240.17ad-7(k) | All records for three years, in an easily accessible place.
Note:
^1 Regulation S-P applies to investment companies as the term is defined in section 3 of the Investment Company Act (15 U.S.C. 80a-3), whether or not the investment company is registered with the Commission. See 17 CFR 248.3(r). Thus, a business development company, which is an investment company but is not required to register as such with the Commission, is subject to Regulation S-P. Similarly, employees' securities companies—including those that are not required to register under the Investment Company Act—are investment companies and are, therefore, subject to Regulation S-P. By contrast, issuers that are excluded from the definition of investment company—such as private funds that are able to rely on section 3(c)(1) or 3(c)(7) of the Investment Company Act—are not subject to Regulation S-P.
^2 All books and records required to be made under the provision of 17 CFR 275.204-2(a) must be maintained and preserved in an easily accessible place for a period of not less than five years. 17 CFR 275.204-2(e).
These recordkeeping requirements should aid covered institutions in periodically reassessing the effectiveness of their safeguarding and disposal programs by helping to ensure that those institutions have the records needed to perform that assessment. Additionally, maintenance of these records for sufficiently long periods of time and in accessible locations will help the Commission and its staff to monitor compliance with the requirements of the amended rules. We received one comment broadly in support of these recordkeeping requirements. ^{386}
^{386} ICI Comment Letter.
The text of the proposed recordkeeping rules were worded differently for different covered institutions. For example, the proposed recordkeeping rule text for broker-dealers and transfer agents detailed the specific records to be kept whereas the proposed rule for advisers stated that advisers would be required to make and keep true, accurate and current a copy of the written records documenting compliance with the requirements of the safeguards and disposal rules. ^{387} The Commission sought comment on whether the detailed requirements proposed for broker-dealers and transfer agents should be included in the recordkeeping rules for other covered entities. While no commenter specifically responded to this request, one commenter did suggest that a clarification of the adviser recordkeeping rule could assist in understanding their obligations under the rule. ^{388} We are modifying the text of the proposed recordkeeping rules for registered investment advisers and registered and unregistered investment companies to provide in the final amendments the same detailed description as found in the rule text for broker-dealers and transfer agents. This should provide specificity as to what records are required to be kept under all of the recordkeeping rules. ^{389} In addition, and in a change from the proposal, we are modifying the final rules to require a covered institution to retain any written documentation from the Attorney General related to a delay in notice. ^{390} This should help ensure that a covered institution can justify a valid delay in sending notifications to affected individuals and aid the Commission's examination and oversight program.
^{387} See proposed 17 CFR 240.17a-4, 17 CFR 240.17ad-7, and 17 CFR 275.204-2.
^{388} IAA Comment Letter.
^{389} See Proposing Release at section II.D.
^{390} See e.g., final 17 CFR 240.17a-4(e)(14)(iii) and final rule 248.30(c)(iii).
The records that will be required under these amendments are:
• Written policies and procedures required to be adopted and implemented pursuant to final rule 248.30(a)(1), which requires policies and procedures to address administrative, technical, and physical safeguards for the protection of customer information;
• Written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by final rule 248.30(a)(3);
• Written documentation of any investigation and determination made regarding whether notification to affected individuals is required pursuant to final rule 248.30(a)(4), including the basis for any determination made, any written documentation from the Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination; ^{391}
^{391} Covered institutions are required to preserve a copy of any notice transmitted following the determination required under the final amendments, including those notices provided by the service provider to the covered institution's customers on behalf of the covered institution. See e.g., final 17 CFR 270.31a-1(b)(13)(iii) (requiring registered investment companies to keep a copy of “ any notice transmitted following such determination”) (emphasis added); see also supra Section II.A.4.c.
• Written policies and procedures required to be adopted and implemented pursuant to final rule 248.30(a)(5)(i), which requires policies and procedures to oversee, monitor, and conduct due diligence on service providers, including to ensure that the covered institution is notified when a breach in security has occurred at the service provider;
• Written documentation of any contract or agreement between a covered institution and a service provider entered into pursuant to final rule 248.30(a)(5); and
• Written policies and procedures required to be adopted and implemented pursuant to final rule 248.30(b)(2), which requires policies and procedures to address the proper disposal of consumer information and customer information.
The records that will be required include records of policies and procedures under the safeguards rule that address administrative, technical, and physical safeguards for the protection of customer information. ^{392} The requirements will also include records documenting, among other things: (i) a covered institution's assessments of the nature and scope of any incidents involving unauthorized access to or use of customer information; (ii) steps taken to contain and control such incidents; and (iii) a covered institution's notifications to affected individuals consistent with the requirements of the final amendments as discussed above, or, where applicable, any determination that notification is not required after a reasonable investigation of the incident. ^{393} Records required to be made and maintained will also include records of those written policies and procedures associated with the service provider notification requirements of the final amendments as well as related records of written contracts and agreements between the covered institution and the service provider. ^{394}
^{392} See, e.g., final 17 CFR 240.17a-4(e)(14)(i) and final 17 CFR 270.31a-1(b)(13)(i); see also final rule 248.30(a)(1).
^{393} See, e.g., final 17 CFR 17a-4(e)(14)(ii) and (iii) and final 17 CFR 270.31a-1(b)(13)(ii) and (iii); see also final rule 248.30(a)(3)(i) through (iii).
^{394} See, e.g., final 17 CFR 17a-4(e)(14)(iv) and (v) and final 17 CFR 270.31a-1(b)(13)(iv) and (v); see also final rule 248.30(a)(5)(i) through (ii).
The disposal rule, as amended, will require that every covered institution adopt and implement written policies and procedures that address the proper disposal of consumer information and customer information. ^{395} The only record required under the final amendments for purposes of the disposal rule is these written policies and procedures. ^{396}
^{395} See final rule 248.30(b)(2). While the disposal rule does not currently require covered institutions to adopt and implement written policies and procedures, those adopted pursuant to the current safeguards rule should already cover disposal. See Disposal Rule Adopting Release at text accompanying n.20 (“proper disposal policies and procedures are encompassed within, and should be a part of, the overall policies and procedures required under the safeguard rule.”). Therefore, rule 248.30(b)(2) is intended primarily to seek sufficient documentation of policies and practices addressing the specific provisions of the disposal rule.
^{396} See, e.g., final 17 CFR 17a-4(e)(14)(vi) and final 17 CFR 270.31a-1(b)(13)(vi); see also final rule 248.30(b)(2).

D. Exception From Requirement To Deliver Annual Privacy Notice
Currently, Regulation S-P generally requires broker-dealers, investment companies, and registered investment advisers to provide customers with annual notices informing them about the institutions' privacy practices (“annual privacy notice”). ^{397} The Commission is adopting as proposed amendments to conform Regulation S-P to the requirements of the Fixing America's Surface Transportation Act (“FAST Act”), ^{398} which provides an exception to the annual privacy notice required by Regulation S-P, provided certain requirements are met. As proposed, we are amending Regulation S-P to include an exception to the annual privacy notice requirement if the institution (1) only provides non-public personal information to non-affiliated third parties when an exception to third-party opt-out applies and (2) the institution has not changed its policies and practices with regard to disclosing non-public personal information from its most recent disclosure sent to customers. ^{399} The amendments also, as proposed, provide the timing for when an institution must resume providing annual privacy notices in the event that the institution changes its policies and practices such that the exception no longer applies. We received one comment supporting the proposed exception and timing requirements. ^{400}
^{397} 17 CFR 248.4; 248.5. “Annually” for these purposes is defined as at least once in any period of 12 consecutive months during which that relationship exists. Institutions are permitted to define the 12-consecutive-month period, but must apply it to the customer on a consistent basis. 17 CFR 248.5(a)(1). The institution does not need to provide an annual notice in addition to an initial notice in the same 12-month period.
^{398} Public Law 114-94, Sec. 75001, 129 Stat. 1312 (2015) (adding section 503(f) to the GLBA, codified at 15 U.S.C. 6803(f)).
^{399} See final 17 CFR 248.5(e)(1).
^{400} ICI Comment Letter.
We are adopting as proposed amendments to the annual notice provision requirement of Regulation S-P to include the exception to the annual notice delivery added by the statutory exception Congress enacted in the FAST Act. The statutory exception states that a financial institution that meets the requirements for the annual privacy notice exception will not be required to provide annual privacy notices “until such time” as that financial institution fails to comply with the conditions to the exception, but does not specify a date by which the annual privacy notice delivery must resume. ^{401} The amended timing requirements are designed to be consistent with the existing timing requirements for privacy notice delivery in Regulation S-P. Specifically, if the change in policies and practices will also result in the institution being required to send a revised privacy notice under the current requirements, the revised notice will be treated as an initial notice for the purpose of the timing requirement and the institution will be required to resume notices at the same time it otherwise provides annual privacy notices. ^{402} If a revised notice is not required, the institution will be required to resume providing annual privacy notices within 100 days of the change. The amendments allow institutions to preserve their existing approach to selecting a delivery date for annual privacy notices, thereby avoiding the potential burdens of determining delivery dates based on a new approach and any 100-day period will accommodate the institution delivering the privacy notice alongside any quarterly reporting to customers. The amendments also are intended to be consistent with existing privacy notice delivery requirements of the CFTC, CFPB, and FTC. ^{403}
^{401} See supra footnote 398.
^{402} See 17 CFR 248.8.
^{403} See 17 CFR 160.5(D) (CFTC); 12 CFR 1016.5(e)(2) (CFPB); 16 CFR 313.5(e)(2) (FTC). See also CFTC, Privacy of Consumer Financial Information—Amendment to Conform Regulations to the Fixing America's Surface Transportation Act, 83 FR 63450 (Dec. 10, 2018), at n.17; CFPB, Amendment to the Annual Privacy Notice Requirement Under the Gramm-Leach-Bliley Act (Regulation P) 83 FR 40945 (Aug. 17, 2018); FTC, Privacy of Consumer Financial Information Rule Under the Gramm-Leach-Bliley Act, 84 FR 13150 (Apr. 4, 2019).

E. Existing Staff No-Action Letters and Other Staff Statements
As stated in the Proposing Release, certain staff letters and other staff statements addressing Regulation S-P and other matters covered by the final amendments may be withdrawn or rescinded in connection with this adoption. Upon the compliance date of these rules, staff letters and other staff statements, or portions thereof, will be withdrawn or rescinded to the extent that they are moot, superseded, or otherwise inconsistent with the rules. This may include the letters and statements below. To the extent any staff statement is inconsistent or conflicts with the requirements of the rules, even if not specifically identified below, that statement is superseded.
Table 2—Letters and Statements
Name of letter or statement | Date issued
Staff Responses to Questions about Regulation S-P | Jan. 23, 2003.
Certain Disclosures of Information to the CFP Board | Mar. 11, 2011; Dec. 11, 2014.
Investment Adviser and Broker-Dealer Compliance Issues Related to Regulation S-P—Privacy Notices and Safeguard Policies | Apr. 16, 2019.

F. Compliance Period
The Commission is providing an 18-month compliance period after the date of publication in the Federal Register for larger entities, and a 24-month compliance period after the date of publication in the Federal Register for smaller entities. Table 3 below outlines which entities will be considered “larger entities” for these purposes. Smaller entities will be those covered institutions that do not meet these standards. The Commission generally has approved similar tiered compliance dates with respect to smaller versus larger entities in the past and, in our experience, these thresholds are a reasonable means of distinguishing larger and smaller entities for purposes of tiered compliance dates for rules affecting these entities. ^{404}
^{404} See, e.g., Investment Company Names, Investment Company Act Release No. 35000 (Sept. 20, 2023) [88 FR 70436 (Oct. 27, 2023)]; Investment Company Reporting Modernization, Investment Company Act Release No. 32314 (Oct. 13, 2016) [81 FR 81870 (Nov. 18, 2016)]; Investment Company Liquidity Risk Management Programs, Investment Company Act Release No. 32315 (Oct. 13, 2016) [81 FR 82142 (Nov. 18, 2016)]; Inline XBRL Filing of Tagged Data, Securities Act Release No. 10514 (June 28, 2018) [83 FR 40846 (Sept. 17, 2018)]; and Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews, Investment Advisers Act Release No. 6383 (Aug. 23, 2023) [88 FR 63206 (Sept. 14, 2023)].
Table 3—Designation of Larger Entities
Entity | Qualification to be considered a “larger entity”
Investment companies together with other investment companies in the same group of related investment companies ^1 | Net assets of $1 billion or more as of the end of the most recent fiscal year.
Registered investment advisers ^2 | $1.5 billion or more in assets under management.
Broker-dealers ^3 | All broker-dealers that are not small entities under the Securities Exchange Act for purposes of the Regulatory Flexibility Act.
Transfer agents ^4 | All transfer agents that are not small entities under the Securities Exchange Act for purposes of the Regulatory Flexibility Act.
Note:
^1 “Group of related investment companies” is as defined in 17 CFR 270.0-10. We estimate that, as of September 2023, 77% of registered investment companies would be considered to be larger entities. This estimate is based on data reported in response to Items B.5, C.19, and F.11 on Form N-CEN.
^2 We estimate that, as of September 2023, 23% of registered investment advisers would be considered to be larger registered investment advisers. This estimate is based on data reported in response to Items 2.A and 5.F.2.(c) on Form ADV.
^3 A broker or dealer is a small entity if it: (i) had total capital of less than $500,000 on the date in its prior fiscal year as of which its audited financial statements were prepared or, if not required to file audited financial statements, on the last business day of its prior fiscal year; and (ii) is not affiliated with any person that is not a small entity. This threshold was chosen to include all broker-dealers who do not fall within the definition of a small entity under the Regulatory Flexibility Act (5 U.S.C. 553). Based upon FOCUS filings for the third quarter of 2023, we estimate approximately 77% of broker-dealers, not including funding portals, would be considered larger entities. Based upon staff analysis and review of public filings, we estimate approximately 3% of funding portals would be considered larger entities.
^4 A transfer agent is a small entity if it: (i) received less than 500 items for transfer and less than 500 items for processing during the preceding six months; (ii) transferred items only of issuers that are small entities; (iii) maintained master shareholder files that in the aggregate contained less than 1,000 shareholder accounts or was the named transfer agent for less than 1,000 shareholder accounts at all times during the preceding fiscal year; and (iv) is not affiliated with any person that is not a small entity. 17 CFR 240.0-10. This threshold was chosen to include all transfer agents who do not fall within the definition of a small entity under the Regulatory Flexibility Act. Based on the number of transfer agents that reported a value of fewer than 1,000 for items 4(a) and 5(a) on Form TA-2 filed with the Commission as of September 30, 2023, we estimate approximately 132 transfer agents may be considered small entities, of 315 total registered transfer agents. See infra section VI.
We proposed a 12-month transition period from the effective date for all covered institutions, regardless of asset size, and we solicited comment on whether the compliance period should be shorter or longer, and whether it should be the same for all covered institutions. Commenters that addressed this aspect of the proposal urged the Commission to provide additional time, generally suggesting a two-year or three-year period to provide time for covered institutions to prepare to comply with the rule's requirements. ^{405} Commenters suggested that the proposed compliance period underestimates the time it would take to implement any final rule. ^{406} In particular, commenters expressed that advisers will need to holistically reassess their current service provider infrastructure and may need time to find new service providers or renegotiate terms of service provider agreements in order to comply with the rule's requirements. ^{407} Separately, two commenters urged the Commission to consider a tiered compliance period that staggers the compliance date based on firm size, with larger firms having to comply with the rule's requirements prior to smaller firms. ^{408} These commenters asserted that a longer compliance period for smaller broker-dealers and investment advisers would allow these firms to benefit from the implementation of larger industry participants.
^{405} See, e.g., SIFMA Comment Letter 2; Computershare Comment Letter; ICI Comment Letter 1; Federated Comment Letter; Google Comment Letter.
^{406} See, e.g., IAA Comment Letter 1; FII Comment Letter; SIFMA Comment Letter 2; ICI Comment Letter 1; see also IAA Comment Letter 2 (stating that “advisers would need to holistically reassess their current service provider infrastructure and undergo the time-consuming and expensive process of negotiating terms with each Service Provider, re-evaluate their current policies, procedures, and practices in light of any new requirements, prepare for new and/or different client notification obligations, and create and implement modified written incident response program policies and procedures and recordkeeping requirements”).
^{407} See, e.g., Google Comment Letter; Federated Comment Letter; SIFMA Comment Letter 2; AWS Comment Letter; FII Comment Letter.
^{408} IAA Comment Letter 1; FSI Comment Letter.
We have taken commenter concerns into account in determining the compliance schedule, ^{409} and we are adopting a compliance period of 18-months following the date of publication of the final amendments in the Federal Register for larger entities, and 24-months following the date of publication in the Federal Register for smaller entities. ^{410} The compliance period we are adopting is designed to strike the appropriate balance between allowing covered institutions adequate time to establish or adjust their data notification compliance practices and allowing customers and investors to benefit from the amended RegulationS-P framework. Taking concerns of smaller entities into account, smaller entities will benefit from having an additional six months to come into compliance with the final amendments, based on feedback from commenters and to the extent that smaller entities may face additional or different challenges in coming into compliance with the final amendments than larger entities. Although we are providing for a longer compliance period than proposed, we are not providing more than 18 or 24 months, as suggested by some commenters, because we have made modifications from the proposal that should alleviate commenters' concerns related to time needed to establish and implement processes to comply with the final amendments. In a modification from the proposal, the final amendments will no longer require covered institutions to have a written contract with its service providers mandating that service providers take appropriate measures to protect against unauthorized access to or use of customer information, but will instead require covered institutions to establish written policies and procedures reasonably designed to oversee, monitor, and conduct due diligence on service providers. ^{411} Accordingly, the compliance dates will provide an appropriate amount of time for covered institutions to comply with the final amendments.
^{409} ICI Comment Letter 1; Schulte Comment Letter; IAA Comment Letter 2 (asserting that the Commission's new rules could potentially require investment advisers to establish and implement new regulatory requirements during compressed and overlapping compliance periods while attempting to comply with existing ongoing regulatory obligations). For further discussion of other recent Commission rules that may have overlapping compliance periods for some covered entities, as well as the potential associated costs associated with implementing multiple rules at once, see infra section IV.
^{410} With respect to the compliance period, commenters requested the Commission consider interactions between the proposed rule and other recent Commission rules. In determining compliance dates, the Commission considers the benefits of the rules as well as the costs of delayed compliance dates and potential overlapping compliance dates. For the reasons discussed throughout the release, to the extent that there are costs from overlapping compliance dates, the benefits of the rule justify such costs. See infra section IV for a discussion of the interactions of the final amendments with certain other Commission rules.
^{411} See supra section II.A.4.

III. Other Matters
Pursuant to the Congressional Review Act, ^{412} the Office of Information and Regulatory Affairs has designated the final amendments as a “major rule” as defined by 5 U.S.C. 804(2). If any of the provisions of these rules, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.
^{412} 5 U.S.C. 801 et seq.

IV. Economic Analysis

A. Introduction
The Commission is mindful of the economic effects, including the benefits and costs, of the adopted amendments. Section 3(f) of the Exchange Act, section 2(c) of the Investment Company Act, and section 202(c) of the Investment Advisers Act provide that when engaging in rulemaking that requires us to consider or determine whether an action is necessary or appropriate in or consistent with the public interest, to also consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation. Section 23(a)(2) of the Exchange Act also requires us to consider the effect that the rules will have on competition and prohibits us from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the Exchange Act. The analysis below addresses the likely economic effects of the final amendments, including the anticipated and estimated benefits and costs of the amendments and their likely effects on efficiency, competition, and capital formation. The Commission also discusses the potential economic effects of certain alternatives to the approaches taken in this adoption.
The final amendments require every broker-dealer, ^{413} every funding portal, ^{414} every investment company, every registered investment adviser, and every transfer agent to notify affected customers of certain data breaches. ^{415} To that end, the final amendments require these covered institutions to develop, implement, and maintain written policies and procedures that include an incident response program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, ^{416} and that includes a customer notification component for cases where sensitive customer information has been, or is reasonably likely to have been, accessed or used without authorization. ^{417} The final amendments also define the scope of information covered by the safeguards rule and by the disposal rule, ^{418} and extend the covered population to all transfer agents registered with the Commission or with another appropriate regulatory agency. ^{419} Finally, the final amendments impose various related recordkeeping requirements, ^{420} and include in the regulation an existing statutory exception to annual privacy notice requirements. ^{421}
^{413} Notice-registered broker-dealers subject to and complying with the financial privacy rules of the CFTC will be deemed to be in compliance with the final provision through the substituted compliance provisions of Regulation S-P. See supra section II.B.3. As discussed above, unless otherwise stated, references elsewhere in this release to “brokers” or “broker-dealers” include funding portals. See supra footnote 5. For the purposes of this economic analysis, however, “broker” and “broker-dealer” do not include funding portals because the economic effects of the final amendments on funding portals differ in some respects from the effects on broker-dealers.
^{414} Pursuant to Regulation Crowdfunding, funding portals “must comply with the requirements of [Regulation S-P] as they apply to brokers.” See 17 CFR 227.403(b); see also supra footnote 5 and accompanying text.
^{415} Notification is required in the event that sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. See final rule 248.30(a)(4)(i).
^{416} As discussed above, “customer information” includes not only information of customers of the aforementioned entities, but also information of customers of other financial institutions in the possession of covered institutions. See supra section II.B.1 and final rule 248.30(d)(5)(i). In addition, with respect to transfer agents, “customers” refers to “any natural person who is a securityholder of an issuer for which the transfer agent acts or has acted as a transfer agent.” See final rule 248.30(d)(4)(ii).
^{417} See final rule 248.30(a)(4); see also supra section II.A. Notice will not be required, however, if a covered institution has determined, after a reasonable investigation of the facts and circumstances of an incident of unauthorized access to or use of sensitive customer information, that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
^{418} Under the final amendments, the safeguards rule applies to “customer information” and the disposal rule applies to “consumer information” and “customer information.” See final rule 248.30(a)(1), 248.30(b), 248.30(d)(1), and 248.30(d)(5).
^{419} See final rule 248.30(d)(3).
^{420} See, e.g., final rule 17 CFR 275.204-2(a). See also supra section II.C and footnote 385.
^{421} See final rule 248.5(e).
The final amendments will affect covered institutions as well as customers who will receive the required notices. The final amendments will also have indirect effects on service providers that receive, maintain, process, or otherwise are permitted access to customer information on behalf of covered institutions: under the final amendments, unauthorized access to or use of sensitive customer information via service providers will fall under the customer notification requirement. The final amendments require that a covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers. ^{422} These policies and procedures must be reasonably designed to ensure that service providers take appropriate measures to protect against unauthorized access to or use of customer information and provide notification to the covered institution of a breach of security resulting in unauthorized access to a customer information system maintained by the service provider. ^{423}
^{422} See final rule 248.30(a)(5).
^{423} See id.
The main economic effects of the final amendments will result from the notification and incident response program requirements applicable to all covered institutions. ^{424} For reasons discussed later in this section, the extension of Regulation S-P to transfer agents will have more limited economic effects. ^{425} Finally, we anticipate the recordkeeping requirements and the incorporation of the existing statutory exception to annual privacy notice requirements to have minimal economic effects, as discussed further below. ^{426}
^{424} See infra sections IV.D.1.a and IV.D.1.b.
^{425} See infra section IV.D.2.b.
^{426} See infra sections IV.D.3 and IV.D.4.
The main economic benefits of the final notification and incident response program requirements, as well as the extension of Regulation S-P to include all transfer agents, will result from enhanced protection of customer information. Customers will directly benefit from the opportunity to take appropriate mitigating actions to protect their accounts and information in the event of unauthorized access to or use of their sensitive information. Direct benefits will result from covered institutions allocating additional resources towards policies and procedures, information safeguards, and cybersecurity to comply with the final requirements. There may lastly be indirect benefits from covered institutions undertaking these actions to the extent they seek to avoid reputational harm resulting from the mandated notifications. These additional resources will contribute to reducing the exposure of covered institutions, and of the broader financial system, to incidents resulting in unauthorized access to or use of customer information. ^{427} The main economic costs from these new requirements will be compliance costs related to the development and implementation of the required policies and procedures, reputational costs borne by firms that would not otherwise have notified customers of a data breach, and indirect costs from increased expenditures on additional safeguards for covered institutions who will choose to make such investments to avoid such reputational costs. ^{428}
^{427} While the scope of the safeguards rule and of the final amendments is not limited to cybersecurity, in the contemporary context, their main economic effects are realized through their effects on cybersecurity. See infra footnote 507.
^{428} Throughout this economic analysis, “compliance costs” refers to the direct costs that must be borne in order to avoid violating the Commission's rules. This includes costs related to the development of policies and procedures required by the regulation, costs related to delivery of the required notices, and the direct costs of any other required action. As used here, “compliance costs” excludes costs that are not required, but may nonetheless arise as a consequence of the Commission's rules ( e.g., reputational costs resulting from disclosure of data breach, or increased cybersecurity spending aimed at avoiding such reputational costs).
We anticipate that the economic benefits and costs of the final notification requirements will—in the aggregate—be limited because all States already require some form of customer notification of certain data breaches, ^{429} and because many entities are likely to already have response programs in place. ^{430} Many customers already receive some level of data breach notification under other laws. This means that the benefits and costs, both direct and indirect, will only accrue from actions taken by covered institutions that are not already required by existing rules or caused by existing competitive forces. The final amendments will, however, afford many individuals greater protections by, for example, defining “sensitive customer information” more broadly than the current definitions used by certain States; ^{431} providing for a 30-day notification outside timeframe that is shorter than the timing currently mandated by many States, including States providing for no deadline or those allowing for various delays; ^{432} and providing for a more robust notification trigger than in many States. ^{433} The final amendments also limit the time a service provider can take to notify a covered institution of a breach to 72 hours, which is a shorter period of time than mandated by many States, allowing covered institutions to notify their customers faster if such notification is required under the final amendments. ^{434} Further, in certain States, State customer notification laws do not apply to entities subject to or in compliance with the GLBA, and the final amendments will help ensure that customers residing in these States receive notice of a breach if it occurs. ^{435} The final amendments will help ensure that all customers, regardless of where they reside, receive a minimum of information regarding a given breach affecting their information and are therefore equally able to take appropriate mitigating actions.
^{429} See infra section IV.C.2.a.
^{430} See infra sections IV.C.1 and IV.C.2.
^{431} See infra section IV.D.1.b(3).
^{432} See infra section IV.D.1.b(2).
^{433} See infra section IV.D.1.b(4).
^{434} Upon receipt of such a notification from a service provider, a covered institution must initiate its incident response program. This may or may not result in the covered institution having to notify customers. See final rule 248.30(a)(5)(i); infra section IV.D.1.c.
^{435} See infra section IV.D.1.b(1).
For these reasons, the final requirements will improve customers' knowledge of when their sensitive information has been compromised. Specifically, we expect that the adopted Federal minimum standard for notifying customers of certain types of data breaches, along with the preparation of written policies and procedures for incident response, will result in more customers being notified of these data breaches as well as faster notifications for some customers, and that both of these effects will improve customers' ability to act to protect their personal information. Moreover, such improved notification will—in many cases—become public and impose additional reputational costs on covered institutions that fail to safeguard customers' sensitive information. We expect that these potential additional reputational costs will increase the disciplining effect on covered institutions, incentivizing them to improve customer information safeguards and reduce their exposure to data breaches, thereby improving the resilience of the financial system more broadly. ^{436} This will reduce economic inefficiency in that it will better align customers' and covered institutions' incentives to safeguard customer information, but will also result in new indirect costs for covered institutions who choose to undertake these improvements in order to avoid those potential reputational costs. In addition, by revealing when breaches occur, the final amendments will help provide customers with information on the effectiveness of covered institutions' customer information safeguards, further helping customers make better-informed decisions when choosing a covered institution. ^{437}
^{436} As discussed below, the final amendments could result in unnecessary notification, which could lead to customer desensitization. See infra section IV.D.1. Unnecessary notification could decrease covered institutions' incentives to invest in customer information safeguards in order to avoid reputational costs if unnecessary notification, for example, desensitizes customers to notices. In that scenario, those reputational costs are themselves reduced as a result of unnecessary notification. See infra section IV.D.1.b(4) for a discussion of the effects of unnecessary notification.
^{437} See infra section IV.B.
To the extent that a covered institution does not have policies and procedures to safeguard customer information and respond to unauthorized access to or use of customer information, it will bear the costs to develop and implement the required policies and procedures for the incident response program. ^{438} Moreover, transfer agents—who were not subject to any of the customer information safeguard provisions of Regulation S-P prior to this adoption—will face additional compliance costs related to the development of policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information. ^{439}
^{438} See infra section IV.D.1 for a discussion of these costs.
^{439} That is, they will face the compliance costs of the provisions of Regulation S-P not applicable to registered transfer agents before this adoption. See 17 CFR 248.30(a). In addition, transfer agents registered with a regulatory agency other than the Commission will face additional compliance costs to develop, implement, and maintain written policies and procedures that address the proper disposal of customer information, as these transfer agents were not subject to the disposal rule before this adoption. See 17 CFR 248.30(b); see also infra section IV.D.2.b for a discussion of these costs.
As adopting policies and procedures involves fixed costs, doing so is very likely to impose a proportionately larger compliance cost on smaller covered institutions as compared to larger covered institutions. ^{440} This may reduce smaller covered institutions' ability to compete with their larger peers, for whom the fixed costs are spread over more customers. ^{441} However, given the considerable competitive challenges arising from economies of scale and scope already faced by smaller firms, we do not anticipate that the costs associated with this adoption will significantly alter these challenges. Similarly, although the final amendments may lead to improvements to capital formation, existing State rules are similar in many respects to the amendments, and so we do not expect the amendments to have a significant impact on capital formation vis-à-vis the baseline. ^{442}
^{440} If both large and small covered institutions were to undertake the same compliance activities, the fixed costs associated with these activities would impose a proportionately larger compliance cost on smaller covered institutions. See infra footnote 722. As discussed below, smaller covered institutions may have to undertake additional activities compared to larger covered institutions, which would result in additional burdens. See, e.g., infra section IV.D.1.a.
^{441} See infra sections IV.D.1 and IV.E.
^{442} We acknowledge, however, that the final amendments could have incremental effects on capital formation, and we discuss these effects below. See infra section IV.E.
Many of the benefits and costs discussed below are difficult to quantify. Doing so would involve estimating the losses likely to be incurred by a customer in the absence of mitigation measures, the efficacy of mitigation measures implemented with a given delay, and the expected delay before notification can be provided under the final amendments. In general, data needed to arrive at such estimates are not available to the Commission. Thus, while we have attempted to quantify economic effects where possible, much of the discussion of economic effects is qualitative in nature.

B. Broad Economic Considerations
In a market with complete information, customers are able to perfectly observe the quality of the goods and services being provided and the processes and service provider relationships by which they are being provided. Fully informed customers can then decide what level of quality of good or service to consume, based on their own personal preferences. In this context, one element of a financial service's quality is the customer information safeguards of the firm providing the service, which capture the likelihood of a customer's information being exposed in the event of a breach, as well as the firm's response to such a breach if it were to occur. ^{443} Under this assumption, a customer is then able to choose a financial firm that offers a service of a quality that meets his or her preferences. ^{444}
^{443} The response includes elements such as detection, assessment, recovery, and the communication of the breach to the firm's customers.
^{444} For example, a customer may be particularly averse to risk and consequently choose a financial firm with a higher level of information safeguards, even if this firm's service is being provided for a higher price.
In the context of covered institutions—firms whose services frequently involve custody of highly sensitive customer information—the assumption of complete information is unrealistic. Customers have little visibility into the internal processes of a firm and those of its service providers, so it is impractical for them to directly observe the level of customer information safeguards that a firm is employing. ^{445} In addition, customers generally do not know how a firm would respond to a breach, including whether and to what extent a firm would inform its customers about such breach. ^{446} In fact, firms often lack incentives to voluntarily disclose when information breaches occur (and likely have substantial incentives to avoid such disclosures). Hence, customer information could be compromised without the customers being informed or with the customers being only partially informed. ^{447} As a result, prospective customers have limited ability to choose a covered institution that is offering the service that most closely meets their needs. In addition, current customers may be paying for a service that is of lower quality than they expect. ^{448} In both cases, customers have limited ability to avoid covered institutions that fail to protect customer information to the level expected by these customers. ^{449} Hence, this information asymmetry prevents market forces from penalizing covered institutions that fail to protect customer information, and therefore prevents market forces from yielding economically efficient outcomes. This market failure serves as the economic rationale for this regulatory intervention.
^{445} As discussed below, customers already receive some information on covered institutions' customer information safeguards and disclosure of nonpublic personal information to third parties. See infra section IV.C.2.c.
^{446} Even if a firm has been the subject of a breach in the past, it may have changed its procedures since the last breach. In this case, even knowing the firm's response to a previous breach would not be fully informative to customers.
^{447} Here, customers are “partially informed” if the information they receive about the breach is not sufficient to allow them to take appropriate mitigating actions.
^{448} It could also be the case that the true quality of the service is higher than what customers expect. In this case, the customers would not be harmed, but the firm would not be fully realizing the benefits from its investment in customer information safeguards.
^{449} The release of information about data breaches can lead to loss of customers, reputational harm, litigation, or regulatory scrutiny. See, e.g., U.S. Fed. Trade Comm'n, Press Release, Equifax to Pay $575 Million as Part of Settlement with FTC, CFPB, and States Related to 2017 Data Breach (July 22, 2019), available at https://www.ftc.gov/news-events/news/press-releases/2019/07/equifax-pay-575-million-part-settlement-ftc-cfpb-states-related-2017-data-breach . See also James Mackay, 5 Damaging Consequences of Data Breach: Protect Your Assets (Dec. 15, 2023), available at https://www.metacompliance.com/blog/data-breaches/5-damaging-consequences-of-a-data-breach (stating that research has shown that up to a third of customers in retail, finance and healthcare would stop doing business with organizations that have been breached and that 85% would tell others about their experience) and 2019 Consumer Survey: Trust and Accountability in the Era of Data Misuse, Ping Identity, available at https://www.pingidentity.com/en/resources/content-library/misc/3464-2019-consumer-survey-trust-accountability.html (last visited Apr. 9, 2024) (describing a survey of more than 4,000 individuals across the U.S., U.K., Australia, France, and Germany which found that 81% of people would stop engaging with a brand online following a data breach; this includes 25% who would stop interacting with the brand in any capacity).
The information asymmetry can lead to three inefficiencies. First, the information asymmetry about specific information breaches that have occurred prevents individual customers whose information has been compromised from taking timely actions ( e.g., increased monitoring of account activity or placing blocks on credit reports) necessary to mitigate the potential consequences of such breaches. Second, the information asymmetry about covered institutions' efforts at avoiding and limiting the consequences of such breaches can lead to customers choosing financial firms with levels of safeguards different from what they expect, which can result in customers choosing firms that they would not have otherwise chosen if provided with better information. Third, this asymmetry can also reduce covered institutions' incentives to sufficiently safeguard customer information. As a result, they could devote too little effort ( i.e., “underspend”) toward safeguarding this information, thereby increasing the probability of the information being compromised in the first place. ^{450} This scenario is often characterized as a moral hazard problem. When an agent's actions cannot be observed or directly contracted for by the principal, it is difficult to induce the agent to supply the proper amounts of productive inputs. ^{451} In other words, information asymmetry prevents covered institutions (the agents) that spend more effort on safeguarding customer information from having customers (the principals) recognize their extra efforts and therefore prevents the covered institutions from realizing some of the benefits associated with this additional effort. ^{452} This reduces the incentives for covered institutions to exert effort towards safeguarding information. ^{453}
^{450} For example, in a recent survey of financial firms, 58% of the respondents self-reported “underspending” on cybersecurity. See McKinsey & Co. and Institute of International Finance, IIF/McKinsey Cyber Resilience Survey (Mar. 2020), available at
https://www.iif.com/portals/0/Files/content/cyber_resilience_survey_3.20.2020_print.pdf (“IIF/McKinsey Report”). A total of 27 companies participated in the survey, with 23 having a global footprint. Approximately half of respondents were European or U.S. Globally Systemically Important Banks (G-SIBs).
^{451} See, e.g., Bengt Holmstrom, Moral Hazard and Observability, 10 Bell J. Econ. 74-91 (1979) (“It has long been recognized that a problem of moral hazard may arise when individuals engage in risk sharing under conditions such that their privately taken actions affect the probability distribution of the outcome [. . .]. The source of this moral hazard or incentive problem is an asymmetry of information among individuals that results because individual actions cannot be observed and hence contracted upon.”); Bengt Holmstrom, Moral Hazard in Teams, 13 Bell J. Econ. 324-340 (1982) (“Moral hazard refers to the problem of inducing agents to supply proper amounts of productive inputs when their actions cannot be observed and contracted for directly.”). In other contexts, moral hazard refers to a party taking on excessive risk when knowing another party will be responsible for negative outcomes. This alternative definition may be viewed as a special case within the broader economic definition associated with the difficulty of contracting for privately taken actions. See, e.g., Adam Carpenter, Moral Hazard Definition, U.S. News (Aug. 11, 2022; updated Dec. 8, 2023), available at
https://money.usnews.com/investing/term/moral-hazard .
^{452} Such benefits include attracting customers who are willing to pay more for enhanced security, thereby allowing these covered institutions to charge a higher price for their services.
^{453} This is not to say that firms do not have any incentives to invest in customer information safeguards. As discussed below, firms themselves are hurt by incidents resulting in unauthorized access to or use of customer information and therefore have incentives to invest in safeguards even when these incidents remain unknown to their customers. See infra section IV.C.1.
We expect the final amendments may mitigate the inefficiencies described above in several ways. First, by helping facilitate timely and informative notices to customers when their information is compromised, the amendments may mitigate information asymmetries around the compromise of information and improve customers' ability to take appropriate remedial actions. Second, by revealing when such events occur, the amendments may help customers draw inferences about a covered institution's efforts toward protecting customer information, which might help inform their choice of covered institution and reduce the probability of customers inadvertently choosing a firm that is less likely to meet their preferences or needs. ^{454} This, in turn, might provide firms with greater incentives to exert effort toward protecting customer information, ^{455} thereby mitigating the moral hazard problem. And, by imposing a regulatory requirement to develop, implement, and maintain policies and procedures, the final amendments might further enhance firms' cybersecurity preparations and will restrict firms' ability to limit efforts in these areas.
^{454} In the case of transfer agents and funding portals, such effects would usually be mediated through security-issuing firms' choice of transfer agent or funding portal and therefore be less direct. Nonetheless we expect that, all else being equal, firms would prefer to avoid employing the services of transfer agents or funding portals that have been unable to prevent investors' information from being compromised.
^{455} See, e.g., Richard J. Sullivan & Jesse Leigh Maniff, Data Breach Notification Laws, 101 Econ. Rev. 65 (2016) (“Sullivan & Maniff”).
The effectiveness of the final amendments at mitigating these problems will depend on several factors. First, the effectiveness of the amendments will depend on the degree to which breach notification provides customers with sufficient actionable information in a sufficient timeframe to help them mitigate the effects of the compromise of sensitive customer information. Second, it will depend on customers' ability to draw inferences on a covered institution's protection of customer information based on the notifications they receive, or the absence thereof. ^{456} Third, it will also depend on the degree to which the prospect of issuing such notices—and the prospect of the reputational harm, litigation, and regulatory scrutiny that could ensue—helps alleviate underspending on safeguarding customer information. ^{457} These factors themselves depend on the extent to which covered institutions already have in place processes and practices that satisfy the final requirements and therefore on the extent to which the amendments will induce improvements to existing practices relative to the baseline. ^{458}
^{456} Because breaches can happen even at firms with very high customer information safeguards, and because firms with very low levels of safeguards might never be victim of a breach, customers' ability to draw inferences could be limited.
^{457} Although empirical evidence on the effectiveness of notification breach laws (that is, on how such laws help individuals mitigate the effects of a breach and how they prevent such breaches from occurring by influencing firms' levels of safeguards) is quite limited, extant studies suggest that such laws protect consumers from harm. See Sasha Romanosky et al., Do Data Breach Disclosure Laws Reduce Identity Theft?, 30 J. Pol'y Analysis & Mgmt 256 (2011); see also Sullivan & Maniff, supra footnote 455.
^{458} This economic analysis presents evidence suggesting that the inefficiencies described above do exist in this context, and therefore suggesting that covered institutions' existing processes and practices can be improved. See infra footnote 464 and accompanying text for evidence that some notices do not currently contain sufficient information for customers to take appropriate mitigating actions and infra section IV.D.1.b(2) for evidence that such notices are sometimes sent with such delay as to make it difficult for customers to take “timely” mitigating actions; see also supra footnote 449 for evidence that customers would modify the firms with which they do business if they learned that this firm was the victim of a breach, suggesting that such customers do draw inferences on firms' customer information safeguards when learning that breaches occur and modify their behavior as a result; see also infra section IV.C.1 for evidence that some firms are currently underspending on cybersecurity.
Some commenters supported generally the economic rationale in the Proposing Release. ^{459} Some of these commenters expressed that the asymmetric information market failure was present in this context. ^{460} Some commenters stated that this market failure could lead to inefficiencies. ^{461} One commenter stated that firms “either seek to skirt notification requirements altogether or provide vague or confusing notifications,” preventing affected individuals from taking timely actions, and that firms' self-interest could lead them to fail to notify customers affected by a breach. ^{462} Another commenter stated its view that firms have a natural tendency to want to avoid making disclosures that could incur liability or lead to a loss of customers. ^{463} Another commenter stated that beginning in the fourth quarter of 2021, less information started being included in data breach notices and that in 2022, only 34 percent of notices included information about the breaches and their victims. ^{464} This commenter further added that this lack of actionable information in breach notices prevented individuals from effectively judging the risks they faced and from taking the appropriate actions to protect themselves. ^{465} One commenter supported the economic rationale of the Proposing Release, stating that stronger notification requirements could effectively incentivize covered institutions to improve their data security practices in order to avoid the reputational harm associated with distributing breach notices. ^{466}
^{459} See, e.g., Nasdaq Comment Letter; FSI Comment Letter.
^{460} See, e.g., Better Markets Comment Letter (“But companies will not always disclose data breaches to affected individuals voluntarily. They may be concerned about the damage to their reputation and their bottom line from disclosing a breach.”); EPIC Comment Letter (“A company has better visibility than its consumers do into the threats to the privacy and security of consumer data entrusted to that company's custody; and the company's interests are not directly aligned with those of its consumers.”); Nasdaq Comment Letter (“Requiring various financial institutions and market entities to address these cybersecurity risks through policies and procedures, incident response programs, third-party management, notifications and/or public disclosures can promote transparency and consistency. Investors, issuers and other market participants benefit from healthy capital markets that promote trust and transparency.”).
^{461} See, e.g., EPIC Comment Letter; Better Markets Comment Letter.
^{462} See EPIC Comment Letter.
^{463} See NASAA Comment Letter.
^{464} See Better Markets Comment Letter, citing Identity Theft Resource Center, Data Breach Annual Report (Jan 2023), available at
https://www.idtheftcenter.org/wp-content/uploads/2023/01/ITRC_2022-Data-Breach-Report_Final-1.pdf (“IRTC Data Breach Annual Report”).
^{465} See Better Markets Comment Letter.
^{466} See EPIC Comment Letter. This commenter also cited Federal Communications Commission (FCC), Data Breach Reporting Requirements, Proposed Rule, FCC 22-102, 88 FR 3953 (Jan. 23, 2023) (stating that the FCC “anticipate[s] that requiring notification for accidental breaches will encourage telecommunications carriers to adopt stronger data security practices and will help us identify and confront systemic network vulnerabilities”).
Other commenters disagreed with the economic rationale in the Proposing Release and stated that covered institutions' level of customer information safeguards and/or breach notification practices were already adequate, and that existing regulation made the amendments unnecessary. ^{467} We disagree with these commenters that the amendments are unnecessary, even if some covered institutions may already have policies and procedures in place that satisfy the final amendments' requirements. We have discussed, here and in the Proposing Release, the information asymmetries that prevent customers from knowing whether or how they will be notified of a data breach and from choosing firms based on the level of their customer information safeguards. ^{468} Furthermore, in addition to describing existing requirements and guidance available to (and potentially adopted by) covered institutions addressing customer information safeguards and customer notification, we have described (here and in the Proposing Release) a variety of practices and State law requirements that could lead to different notification outcomes depending on where the customer resides. ^{469} In particular, we have described a variety of delays and inconsistencies in notification under existing requirements. ^{470} Hence, the Proposing Release described in detail the existing regulatory framework and analyzed the benefits and costs of the proposed amendments relative to this framework. In addition, as discussed above, some commenters provided additional evidence of deficiencies in existing practices. ^{471} Moreover, in response to commenters, we have supplemented the analysis of the amendments' benefits and costs, describing in greater detail the changes made by the final amendments over the baseline. ^{472} We summarize these changes below. We have also supplemented the analysis of the expected benefits and costs of expanding the scope of the safeguards and disposal rules to include transfer agents. ^{473}
^{467} See ASA Comment Letter (stating that the proposal was not “supported by evidence that brokers are fundamentally failing in their obligations to safeguard investor information and notify government authorities—within applicable Federal and State law—when a significant breach of sensitive information has occurred” and that the Proposing Release did not “provide any discussion about how current broker-dealer cybersecurity and customer notification policies are deficient or in need of a regulatory fix”); ACLI Comment Letter (“The ACLI's members already comply with much of the Proposal's content through State regulations, such as those that require companies to maintain written cybersecurity policies and procedures, respond to cyber incidents, notify authorities and consumers of certain cyber incidents, and dispose of consumer data. However, we are concerned with the Proposal's shortened notification timeframes and expanded scope.”); CAI Comment Letter (stating that “[n]otice currently is given to individuals whose information is reasonably believed to have potentially been affected after the findings of the investigation are determined,” that it “believes this current practice is an appropriate and common-sense approach to notification,” and that “[t]he new notice requirement proposed under Proposed Rule 30(b) would simply add another layer on top of these existing requirements and would likely go entirely unnoticed by consumers”); Computershare Comment Letter (“Computershare believes Proposed Reg S-P is an unnecessary regulation for transfer agents, as they are already subject, either directly or indirectly, to State, Federal or provincial laws designed to protect personal information of securityholders and requiring breach notification.”); STA Comment Letter 2 (stating that the proposed amendments would not “meaningfully increase the safeguarding of shareholder information” and instead “cause ambiguity among competing laws.”).
^{468} See Proposing Release at section III.B.
^{469} See Proposing Release at section III.C; see also infra section IV.C.2.
^{470} See Proposing Release at section III.C.2.a; see also infra section IV.C.2.a.
^{471} See supra footnote 460 and accompanying text.
^{472} See infra section IV.D.
^{473} See infra section IV.D.2.b.
In particular, the variety of practices and State law requirements that could lead to different notification outcomes under existing requirements provides a further rationale for the rule and motivated specific differences in the final amendments relative to State laws. We discuss the effects of these differences in detail below, ^{474} but for example, the required timing of notification in the final amendments is stricter than under many State laws. The analysis in section IV.D.1.b(2) provides evidence that currently, many customers receive notification long after the event. The amendments are designed to help ensure that customers receive notification in a timely manner. In addition, the notification obligation covers a set of customer information that is broader than in many State laws, thereby covering more data breaches. Moreover, the final amendments require certain information to be included in the notice sent to customers. This requirement will help ensure that customers receive relevant information, allowing them to take appropriate mitigating actions in case of a breach. Hence, while the final amendments contain some requirements that are similar to those in some existing State laws, the final requirements are stricter than many State laws and may therefore lead to customers receiving additional, timelier, and more relevant notices than under existing regulations. ^{475} In addition, variations in State law requirements highlight the need for a consistent Federal minimum standard for covered institutions. Such a standard will protect all customers regardless of their State of residence and reduce the potential confusion that could result from customers in one State receiving notice of an incident while customers in another State do not.
^{474} See infra section IV.D.1.
^{475} It is possible that, because of the overlap with State laws, some covered institutions already have policies and procedures in place satisfying the final amendments' requirements. For these institutions and their customers, both the benefits and the costs of the amendments will be limited.
Other commenters stated that the analysis in the Proposing Release underestimated the costs of the amendments. ^{476} Some commenters also stated that the proposed amendments in general would be very costly to implement for smaller covered institutions. ^{477} As discussed more fully below, we expect some of the changes made to the final amendments to result in lower costs relative to the proposal. ^{478} For example, the changes made to the service provider provisions of the amendments (requiring that covered institutions oversee service providers instead of requiring written contracts between covered institutions and their service providers, and requiring that the covered institution's policies and procedures be reasonably designed to ensure service providers take appropriate measures to notify covered institutions of an applicable breach in security within 72 hours instead of 48 hours) may reduce some costs relative to the proposal and facilitate their implementation, especially for smaller covered institutions. ^{479} In addition, in a change from proposal, we are adopting longer compliance periods for all covered institutions, and an even longer compliance period for smaller covered institutions, ^{480} who are less likely to already have policies and procedures broadly consistent with the final amendments.
^{476} See, e.g., IAA Comment Letter 1 (“We urge the Commission to undertake a more expansive, accurate, and quantifiable assessment of the specific and cumulative costs, burdens, and economic effects that would be placed on advisers by the proposed requirements, as well as of the potential unintended consequences for their clients.”).
^{477} See, e.g., ASA Comment Letter; IAA Comment Letter 1.
^{478} See, e.g., infra sections IV.D.1.c and IV.E.
^{479} See supra section II.A.4; infra section IV.D.1.c.
^{480} See supra section II.F.

C. Baseline
The baseline against which the costs, the benefits, and the effects on efficiency, competition, and capital formation of the final amendments are measured consists of current requirements for customer notification and information safeguards, current practice as it relates to customer notification and information safeguards, and the current market structure and regulatory framework. The economic analysis appropriately considers existing regulatory requirements, including recently adopted Commission rules as well as State, Federal, and foreign laws and regulations, as part of the economic baseline against which the costs and benefits of the final amendments are measured. ^{481}
^{481} See, e.g., Nasdaq v. SEC, 34 F.4th 1105, 1111-15 (D.C. Cir. 2022). This approach also follows SEC staff guidance on economic analysis for rulemaking. See SEC Staff, Current Guidance on Economic Analysis in SEC Rulemaking (Mar. 16, 2012), available at https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf (“The economic consequences of proposed rules (potential costs and benefits including effects on efficiency, competition, and capital formation) should be measured against a baseline, which is the best assessment of how the world would look in the absence of the proposed action.”); Id. at 7 (“The baseline includes both the economic attributes of the relevant market and the existing regulatory structure.”). The best assessment of how the world would look in the absence of the proposed or final action typically does not include recently proposed actions, because that would improperly assume the adoption of those proposed actions.
Several commenters requested that the Commission consider interactions between the economic effects of the proposal and other recent Commission proposals. ^{482} The Commission adopted several of the rules mentioned by commenters, namely the Electronic Recordkeeping Adopting Release, ^{483} the Form N-PX Adopting Release, ^{484} the Settlement Cycle Adopting Release, ^{485} the May 2023 SEC Form PF Adopting Release, ^{486} the Public Company Cybersecurity Rules, ^{487} the Money Market Fund Adopting Release, ^{488} the Investment Company Names Adopting Release, ^{489} the Beneficial Ownership Adopting Release, ^{490} the Private Fund Advisers Adopting Release, ^{491} the Securitizations Conflicts Adopting Release, ^{492} and the February 2024 Form PF Adopting Release. ^{493} These adopted rules are part of the baseline against which this economic analysis considers the benefits and costs of the final amendments. In response to commenters, this economic analysis also considers potential economic effects arising from the extent to which there is any overlap between the compliance period for the final amendments and the compliance periods for these other adopted rules. ^{494}
^{482} See, e.g., IAA Comment Letter 2; IAA Comment Letter 1; CAI Comment Letter; Comment Letter of the Securities Industry and Financial Markets Association, et al. (Mar. 31, 2023) (“SIFMA Comment Letter 1”). See also Comment Letter of the Investment Company Institute (Aug. 17, 2023) (“ICI Comment Letter 2”) (stating the Commission should analyze the interconnections in related rules).
^{483} Electronic Recordkeeping Requirements for Broker-Dealers, Security-Based Swap Dealers, and Major Security-Based Swap Participants, Release No. 34-96034 (Oct. 12, 2022) [87 FR 66412 (Nov. 3. 2022)] (“Electronic Recordkeeping Adopting Release”). One commenter stated that the Proposing Release could create concurrent obligations with Rule 17a-4 and Rule 18a-6. See AWS Comment Letter. Rule 17a-4 and Rule 18a-6 were amended in the Electronic Recordkeeping Adopting Release. Those amendments modified requirements regarding the maintenance and presentation of electronic records, the use of third-party recordkeeping services, and prompt production of records. The compliance dates were May 3, 2023, and Nov. 3, 2023. See Electronic Recordkeeping Adopting Release, section II.I.
^{484} Enhanced Reporting of Proxy Votes by Registered Management Investment Companies; Reporting of Executive Compensation Votes by Institutional Investment Managers, Release Nos. 33-11131, 34-96206, IC-34745 (Nov. 2, 2022) [87 FR 78770 (Dec. 22, 2022)] (“Form N-PX Adopting Release”). The Form N-PX amendments enhanced the information funds report publicly about their proxy votes, and apply to most registered management investment companies. The effective date is July 1, 2024. Form N-PX Adopting Release, section II.K.
^{485} Shortening the Securities Transaction Settlement Cycle, Release No. 34-96930 (Feb. 15, 2023) [88 FR 13872 (Mar. 6, 2023)] (“Settlement Cycle Adopting Release”). This rule shortens the standard settlement cycle for most broker-dealer transactions from two business days after the trade date to one business day after the trade date. To facilitate orderly transition to a shorter settlement cycle, the rule requires same-day confirmations, allocations, and affirmations for processing transactions subject to the rule, and requires registered investment advisers to make and keep records of each confirmation received, and of any allocation and each affirmation sent or received, with a date and time stamp for each indicating when it was sent or received. With certain exceptions, the rule has a compliance date of May 28, 2024. Settlement Cycle Adopting Release, sections VII, VII.B.3.
^{486} Form PF; Event Reporting for Large Hedge Fund Advisers and Private Equity Fund Advisers; Requirements for Large Private Equity Fund Adviser Reporting, Investment Company Act Release No. 6297 (May 3, 2023) [88 FR 38146 (June 12, 2023)] (“May 2023 SEC Form PF Adopting Release”). The Form PF amendments adopted in May 2023 require large hedge fund advisers and all private equity fund advisers to file reports upon the occurrence of certain reporting events. The compliance dates are Dec. 11, 2023, for the event reports in Form PF sections 5 and 6, and June 11, 2024, for the remainder of the Form PF amendments in the May 2023 SEC Form PF Adopting Release. See May 2023 SEC Form PF Adopting Release, section II.E.
^{487} Public Company Cybersecurity Rules, supra footnote 14. The amendments require current disclosure about material cybersecurity incidents, and periodic disclosures about a registrant's processes to assess, identify, and manage material cybersecurity risks, management's role in assessing and managing material cybersecurity risks, and the board of directors' oversight of cybersecurity risks. With respect to Item 106 of Regulation S-K and item 16K of Form 20-F, all registrants must provide disclosures beginning with annual reports for fiscal years ending on or after Dec. 15, 2023. With respect to incident disclosure requirements in Item 1.05 of Form 8-K and in Form 6-K, all registrants other than SRCs were required to begin complying on Dec. 18, 2023; SRCs must begin complying with Item 1.05 of Form 8-K on June 15, 2024. With respect to structured data requirements, all registrants must tag disclosures beginning one year after the initial compliance date: specifically, beginning with annual reports for fiscal years ending on or after Dec. 15, 2024, in the case of Item 106 of Regulation S-K and item 16K of Form 20-F, and beginning Dec. 18, 2024, in the case of Item 1.05 of Form 8-K and Form 6-K. Cybersecurity Disclosure Adopting Release, section II.I.
^{488} Money Market Fund Reforms; Form PF Reporting Requirements for Large Liquidity Fund Advisers; Technical Amendments to Form N-CSR and Form N-1, Release No. 33-11211 (July 12, 2023) [88 FR 51404 (Aug. 3, 2023)] (“Money Market Fund Adopting Release”). The amendments are designed to improve the resilience and transparency of money market funds by increasing minimum liquidity requirements to provide a more substantial buffer in the event of rapid redemptions; removing provisions that permitted a money market fund to temporarily suspend redemptions, and removing the regulatory tie between the imposition of liquidity fees and a fund's liquidity level; requiring certain money market funds to implement a liquidity fee framework that will better allocate the costs of providing liquidity to redeeming investors; and enhancing certain reporting requirements. The Money Market Fund Adopting Release has compliance dates of Oct. 2, 2024, for implementing mandatory liquidity fees and of Apr. 2, 2024, for discretionary liquidity fees; a compliance date of Apr. 2, 2024, for minimum liquidity requirements and weighted average maturity calculations; a compliance date of June 11, 2024, for certain form amendments and website reporting requirements; and an effective date of Oct. 2, 2023, for other provisions. Money Market Fund Adopting Release, section II.H.
^{489} Investment Company Names, Release No. 33-11238 (Sept. 20, 2023) [88 FR 70436 (Oct. 11, 2023)], as amended by Investment Company Names; Correction, Release No. 33-11238A (Oct. 24, 2023) [88 FR 73755 (Oct. 27, 2023)] (“Investment Company Names Adopting Release”). The amendments broaden the scope of the requirement for certain funds to adopt a policy to invest at least 80 percent of the value of their assets in accordance with the investment focus that the fund's name suggests; require enhanced prospectus disclosure for terminology used in fund names; impose related notice, recordkeeping, and reporting requirements. The compliance date for the final amendments is Dec. 11, 2025, for larger entities and June 11, 2026, for smaller entities. See Investment Company Names Adopting Release, sections II.H, IV.D.3.
^{490} Modernization of Beneficial Ownership Reporting, Release No. 33-11253 (Oct. 10, 2023) [88 FR 76896 (Nov. 7, 2023)] (“Beneficial Ownership Adopting Release”). Among other things, the amendments generally shorten the filing deadlines for initial and amended beneficial ownership reports filed on Schedules 13D and 13G, and require that Schedule 13D and 13G filings be made using a structured, machine-readable data language. The amendments are effective Feb. 5, 2024. The new filing deadline for Schedule 13G will not be required before Sept. 30, 2024, and the rule's structured data requirements have a one-year implementation period ending Dec. 18, 2024. Beneficial Ownership Adopting Release, section II.G.
^{491} Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews, Release No. IA-6383 (Aug. 23, 2023) [88 FR 63206 (Sept. 14, 2023)] (“Private Fund Advisers Adopting Release”). The Commission adopted five new rules and two rule amendments as part of the reforms. The compliance date for the quarterly statement rule and the audit rule is Mar. 14, 2025, for registered private fund advisers. For the adviser-led secondaries rule, the preferential treatment rule, and the restricted activities rule, the Commission adopted staggered compliance dates that provide for the following compliance periods: for advisers with $1.5 billion or more in private funds assets under management, a 12-month compliance period (ending on Sept. 14, 2024) and for advisers with less than $1.5 billion in private funds assets under management, an 18-month compliance period (ending on Mar. 14, 2025). The amended Advisers Act compliance provision for registered investment advisers had a Nov. 13, 2023, compliance date. See Private Fund Advisers Adopting Release, sections IV, VI.C.1.
^{492} Prohibition Against Conflicts of Interest in Certain Securitizations, Release No. 33-11254 (Nov. 27, 2023) [88 FR 85396 (Dec. 7, 2023)] (“Securitizations Conflicts Adopting Release”). The new rule prohibits an underwriter, placement agent, initial purchaser, or sponsor of an asset-backed security (including a synthetic asset-backed security), or certain affiliates or subsidiaries of any such entity, from engaging in any transaction that would involve or result in certain material conflicts of interest. The compliance date for securitization participants to comply with the prohibition is Jun. 9, 2025. Securitizations Conflicts Adopting Release, section II.I.
^{493} Form PF: Reporting Requirements for All Filers and Large Hedge Fund Advisers, Release No. IA-6546 (Feb. 8, 2024) [89 FR 17984 (Mar. 12, 2024)] (“February 2024 Form PF Adopting Release”). The Form PF amendments are designed to enhance the Financial Stability Oversight Council's ability to monitor systemic risk as well as bolster the SEC's regulatory oversight of private fund advisers and investor protection efforts. The compliance date for the rule is Mar. 12, 2025. February 2024 Form PF Adopting Release, section II.F.
^{494} See infra sections IV.D and IV.E. In addition, commenters indicated there could be overlapping compliance costs between the final amendments and proposals that have not been adopted. See, e.g., IAA Comment Letter 2, Exhibit A; IAA Comment Letter 1; CAI Comment Letter; FSI Comment Letter. Proposed rules that commenters mentioned included Cybersecurity Risk Management for Investment Advisers, Registered Investment Companies, and Business Development Companies, Release No. 33-11028 (Feb. 9, 2022), 87 FR 13524 (Mar. 9, 2022); Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices, Release No. 33-11117 (Oct. 7, 2022) [87 FR 63016] (Oct. 18, 2022)]; Open-End Fund Liquidity Risk Management Programs and Swing Pricing; Form N-PORT Reporting, Release No. 33-11130 (Nov. 2, 2022), [87 FR 77172 (Dec. 16, 2022)]; Safeguarding Advisory Client Assets, Release No. IA-6240 (Feb. 15, 2023), [88 FR 14672 (Mar. 9, 2023)]; and Cybersecurity Risk Management Rule for Broker-Dealers, Clearing Agencies, Major Security-Based Swap Participants, the Municipal Securities Rulemaking Board, National Securities Associations, National Securities Exchanges, Security-Based Swap Data Repositories, Security-Based Swap Dealers, and Transfer Agents, Release No. 34-97142 (Mar. 15, 2023) [88 FR 20212 (Apr. 5, 2023)]. To the extent those proposals are adopted, the baseline in those subsequent rulemakings will reflect the existing regulatory requirements at that time.
The parties directly affected by the final amendments, the “covered institutions,” ^{495} include every broker-dealer (3,476 entities), ^{496} every funding portal (92 entities), ^{497} every investment company (13,766 distinct legal entities), ^{498} every investment adviser (15,565 entities) registered with the Commission, ^{499} and every transfer agent (315 entities) registered with the Commission or another appropriate regulatory agency. ^{500} In addition, the final amendments will affect current and prospective customers of covered institutions as well as certain service providers to covered institutions. ^{501} The final amendments will impact hundreds of millions of customers. For example, as discussed in more detail in subsequent sections, carrying broker-dealers report a total of 233 million customer accounts, ^{502} registered investment advisers report a total of more than 51 million individual clients, ^{503} and transfer agents report around 250 million individual accounts. ^{504}
^{495} See infra section IV.C.3.
^{496} Of these, 303 are dually registered as investment advisers. See infra section IV.C.3.a. These numbers exclude notice-registered broker-dealers, who will be deemed in compliance with the final provision through the substituted compliance provisions of Regulation S-P. See supra section II.B.3. For this release, the number of broker-dealers dually registered as investment advisers was estimated based on FOCUS filings for broker-dealers during the third quarter of 2023, Form BD filings as of Sept. 2023, and Form ADV filings for investment advisers as of Oct. 5, 2023. The Proposing Release cited a figure of 502 as of Dec. 2021. The correct number of broker-dealers dually registered as investment advisers as of Dec. 2021 in the Proposing Release should be 328. This change would not have affected the Commission's assessment of economic effects at Proposal as these assessments were focused primarily on effects at the level of individual covered institutions and their customers.
^{497} See infra section IV.C.3.b.
^{498} See infra section IV.C.3.d, in particular Table 4, for statistics on the different types of investment companies. Many of these distinct legal entities represent different series of a common registrant. Moreover, many of the registrants are themselves part of a larger family of companies (although BDCs and ESCs are not grouped in families, see Form N-2 and Form 40-APP). See infra footnote 660. We estimate there are 313 such families. See infra section IV.C.3.d. For this release, the number of families was estimated by counting unique family names in Form N-CEN filings as of Sept. 30, 2023. The Proposing Release cited a figure of 1,093 using 2021 N-CEN filings. The correct number of distinct fund families using 2021 N-CEN filings in the Proposing Release should be 327. This change would not have affected the Commission's assessment of economic effects at Proposal as these assessments were focused primarily on effects at the level of individual covered institutions and their customers.
^{499} See infra section IV.C.3.c.
^{500} See infra section IV.C.3.e.
^{501} See infra section IV.C.3.f.
^{502} See infra section IV.C.3.a.
^{503} See infra section IV.C.3.c.
^{504} See infra section IV.C.3.e.

1. Safeguarding Customer Information: Risks and Practices
Over the last two decades, the widespread adoption of digitization and the migration toward internet-based products and services has radically changed the manner in which firms interact with customers. This trend has also applied to the financial services industry. ^{505} Alongside this progress, the industry has observed increased exposure to cyberattacks that threaten not only the financial firms themselves, but also their customers. Hence, the trend toward digitization has increasingly turned the problem of safeguarding customer records and information into one of cybersecurity. ^{506}
Cyber threat intelligence surveys find the financial sector to be a highly attacked industry, ^{507} making the problem of cybersecurity particularly acute for financial firms. The customer records and information in their possession can be quite sensitive ( e.g., personal identifying information, bank account numbers, financial transactions) and their compromise could lead to substantial harm. ^{508}
^{505} See Michael Grebe et al., Digital Maturity Is Paying Off, BCG (June 7, 2018), available at https://www.bcg.com/publications/2018/digital-maturity-is-paying-off .
^{506} This is not to say that this is exclusively a problem of cybersecurity. Generally, however, the risks associated with purely physical forms of compromise are of a smaller magnitude, as large-scale compromise using physical means is cumbersome. The largest publicly known incidents of compromised information have appeared to involve electronic access to digital records, as opposed to physical access to records or computer hardware. For a partial list of recent data breaches and their causes. See, e.g., Michael Hill and Dan Swinhoe, The 15 Biggest Data Breaches of the 21st Century, CSO (Nov. 8, 2022), available at https://www.csoonline.com/article/2130877/the-biggest-data-breaches-of-the-21st-century.html (last visited Apr. 9, 2024); Drew Todd, Top 10 Data Breaches of All Time, SecureWorld (Sept. 14, 2022), available at https://www.secureworld.io/industry-news/top-10-data-breaches-of-all-time (last visited Apr. 9, 2024).
^{507} See, e.g., IBM, X-Force Threat Intelligence Index 2022 (Feb. 2022), available at https://www.ibm.com/downloads/cas/ADLMYLAZ .
^{508} See, e.g., David W. Opderbeck, Cybersecurity and Data Breach Harms: Theory and Reality, 82 Md. L. Rev. 1001 (2023) (“A criminal actor can use stolen PII in true identity theft to open new lines of credit in the victim's name, including new credit cards, personal loans, business loans, or mortgages. Criminal actors also employ true identity theft to file for tax refunds, welfare, insurance, or pension benefits in the victim's name.”).
Certain recent changes in the industry, including changes discussed by commenters, have continued the trend toward digitization and the importance of cybersecurity. For example, the shift to remote work has brought new cybersecurity challenges. One commenter stated that 91 percent of data security professionals saw negative risk implications from remote and hybrid work. ^{509} The same commenter cited a report finding that in 2022, the cost of a data breach was on average nearly $1 million higher when remote work was a factor in the breach and more than $1 million higher in organizations with a share of employees working remotely between 80 percent and 100 percent compared with organizations where less than 20 percent of employees worked remotely. ^{510} Remote work arrangements have significantly expanded following the onset of the COVID-19 pandemic in the United States in 2020, ^{511} and a recent study found the financial services industry to be the fifth most flexible industry in terms of work location flexibility. ^{512}
^{509} See Better Markets Comment Letter, citing Hugo Guzman, Remote Work Leading to Big Data-Loss Problems, Law.com (Mar. 7, 2023).
^{510} See Better Markets Comment Letter citing IBM, Cost of a Data Breach Report 2022 (July 2022) (“2022 IBM Cost of Data Breach Report”), available at https://www.ibm.com/downloads/cas/3R8N1DZJ . The 2023 version of the same report does not address remote work specifically.
^{511} Census Press Release, U.S. Census Bureau Releases New 2021 American Community Survey 1-year Estimates for All Geographic Areas With Populations of 65,000 or More (Sept. 15, 2022), available at https://www.census.gov/newsroom/press-releases/2022/people-working-from-home.html#:~:text=SEPT.,by%20the%20U.S.%20Census%20Bureau .
^{512} See The Flex Index, Q3 2023 Flex Report, available at https://www.flex.scoopforwork.com/reports/flex-report-2023-q3 (last visited Apr. 9, 2024).
The financial sector is one of the biggest spenders on cybersecurity measures: a recent survey found that financial firms spent an average of approximately 13.6 percent of their technology budget on cybersecurity in 2023, compared to an overall average across industries of 11.6 percent. ^{513} While spending on cybersecurity measures in the financial services industry is considerable, it may nonetheless be inadequate—even in the estimation of financial firms themselves. According to one recent survey, 58 percent of financial firms self-reported “underspending” on cybersecurity measures. ^{514} In addition, some covered institutions increasingly use third-party vendors to provide a wide range of functions, which may implicate a review of those service providers' cybersecurity controls. ^{515}
^{513} See James Rundle, Cybersecurity Budgets Grow, But at a Slower Pace, Wall St J. (Sept. 29, 2023), available at https://www.wsj.com/articles/cybersecurity-budgets-grow-but-at-a-slower-pace-89ce3d3c . One commenter agreed that total cybersecurity costs are significant. See Better Markets Comment Letter (“While the magnitude of dollar losses is difficult to estimate, it is clear that companies must expend significant resources to prevent breaches, detect breaches that do occur, contain the damage from breaches, prevent future breaches, and in some cases make customers whole.”).
^{514} See IIF/McKinsey Report, supra footnote 450.
^{515} See, e.g., FINRA, Regulatory Notice 21-29: Vendor Management and Outsourcing (Aug. 13, 2021), available at https://www.finra.org/sites/default/files/2021-08/Regulatory-Notice-21-29.pdf (encouraging firms that “use—or are contemplating using—Vendors to review [. . .] obligations and assess whether their supervisory procedures and controls for outsourced activities or functions are sufficient to maintain compliance with applicable rules”). See also infra section IV.C.3.f for a discussion of different types of covered institutions' reliance on service providers.
Before adopting these amendments, the Commission did not require covered institutions to notify customers (or the Commission) in the event of a data breach, and so statistics relating to data breaches that occurred at covered institutions were not readily available. However, data compiled from notifications required under various State laws indicate that in 2022 the number of data breaches reported in the U.S. was 1,802—a 3 percent decrease over 2021, but a 63 percent increase over 2020. ^{516} Of these, 268 (15 percent) were reported by firms in the financial services industry. ^{517} However, the report estimating these statistics states that the 1,802 breaches reported are a minimum estimate and states that in the U.S., the number of breach notices issued per business day in 2022 (7 notices) was much lower than in the European Union (356 notices) in 2021 (the last year for which data is available). ^{518} One commenter cited a report stating that nearly half of U.S. consumers had been affected by data breaches where a firm holding their personal data was hacked, compared to a global average of 33 percent of consumers. ^{519}
^{516} See IRTC Data Breach Annual Report.
^{517} See id.
^{518} See id. See also Better Markets Comment Letter. The report suggests that this disparity may be related to the fact that in the European Union, enforcement officials, together with the organization affected by a breach, make the determination that the breach puts individuals or businesses at risk and therefore requires notification. See also infra section IV.D.1.b(4).
^{519} See EPIC Comment Letter, citing Thales, 2022 Thales Consumer Digital Trust Index (Sept. 2022).
^{520} See IBM, Cost of a Data Breach Report 2023 (July 2023) (“2023 IBM Cost of Data Breach Report”), available at https://www.ibm.com/reports/data-breach?utm_content=SRCWW&p1=Search&p4=43700077723822555&p5=p&&msclkid=45aa555fae8d1f62fb9c3066eddb719a&gclid=45aa555fae8d1f62fb9c3066eddb719a&gclsrc=3p.ds .
The average total cost of a data breach for a U.S. firm in 2023 was estimated to be $9.48 million by one report. ^{520} While the report does not provide estimates for U.S. financial services firms specifically, it estimated that world-wide, the cost of a data breach for financial services firms averaged $5.90 million, and that average costs for U.S. firms were approximately twice the world-wide average. ^{521} Hence, we can estimate that for U.S. financial firms, the cost of a data breach was about $12 million. The bulk of these costs is attributed to detection and escalation (36 percent), lost business (29 percent), and post-breach response (27 percent); customer notification is estimated to account for only a small fraction (8 percent) of these costs. ^{522} For the U.S. financial industry as a whole, this implies an estimate of aggregate notification costs under the baseline of between $200 million and $250 million. ^{523} Because these estimates are based on data breach incidence rates for all firms, and because financial firms are part of one of the most attacked industries, ^{524} the actual aggregate notification costs are likely higher than this estimated range.
^{521} The 2023 IBM Cost of Data Breach Report estimates that the global average cost of a data breach is $4.45 million. One commenter, citing the 2022 IBM Cost of Data Breach Report, stated that the average cost of a data breach in 2022 was $4.35 million, which is a global average. See Better Markets Comment Letter. In the Proposing Release, we also cited the 2022 IBM Cost of Data Breach Report and stated that the cost of a data breach was $9.44 million, which applies to U.S. firms specifically.
^{522} See 2023 IBM Cost of Data Breach Report.
^{523} The $200 million figure is based on 8% (the customer notification portion) of an average cost of $9.48 million multiplied by 268 data breaches. The $250 million figure is based on the same calculation but using $12 million instead of $9.48 million. See supra footnotes 516 and 520 and accompanying text.
^{524} See supra footnotes 507-512 and accompanying text.
Some commenters supported the Proposing Release's assessment that data breaches are an important risk currently faced by covered institutions and their customers. ^{525} One commenter cited an article describing a data breach at a financial institution that had cost that institution more than $150 million. ^{526} Commenters also mentioned additional types of risks. One commenter stated that in addition to the financial costs imposed on firms by data breaches, individuals whose sensitive information is compromised also suffer harms, both financial and psychological, as many become victims of identity theft. ^{527} Another commenter stated that the consequences of these breaches were staggering and that the Commission's proposals to establish minimum standards for incident response and breach notification could help with mitigation. ^{528} The same commenter cited a report by the Government Accountability Office indicating that past victims of identity theft, which can be a consequence of data breaches, have “lost job opportunities, been refused loans, or even been arrested for crimes they did not commit as a result of identity theft.” ^{529}
^{525} See, e.g., Better Markets Comment Letter; Nasdaq Comment Letter.
^{526} See Better Markets Comment Letter, citing Emily Flitter & Karen Weise, Capital One Data Breach Compromises Data of Over 100 Million, N.Y. Times (July 29, 2019), available at https://www.nytimes.com/2019/07/29/business/capital-one-data-breach-hacked.html .
^{527} See Better Markets Comment Letter. Citing the IRTC Data Breach Annual Report, the same commenter also stated that globally, organizational data compromises impacted over 392 million individual victims in 2022.
^{528} See EPIC Comment Letter.
^{529} See EPIC Comment Letter citing U.S. Government Accountability Office, GAO-14-34, Agency Responses to Breaches of Personally Identifiable Information Need to be More Consistent (Dec. 2013), available at http://www.gao.gov/assets/660/659572.pdf .

2. Regulations and Guidelines
Two features of the existing regulatory framework are most relevant to the amendments: existing regulations that require covered institutions to notify customers in the event that their information is compromised; and existing regulations and guidelines that affect covered institutions' practices for safeguarding customers' information. While the relevance of the former is obvious, the latter is potentially more significant: regulations aimed at improving firms' practices for safeguarding customer information reduce the need for data breach notifications in the first place. In this section, we summarize these two aspects of the regulatory framework as well as existing annual notice delivery requirements.

a. State Law Customer Notification Requirements

(1) Scope of Requirements
All 50 States and the District of Columbia impose some form of data breach notification requirement under State law. These laws vary in detail from State to State but have certain common features. State laws trigger data breach notification obligations when some type of “personal information” of a State's resident is either accessed or acquired in an unauthorized manner, subject to various common exceptions. For the vast majority of States (46), a notification obligation is triggered only when there is unauthorized acquisition, while a handful of States (5) require notification whenever there is unauthorized access. ^{530}
^{530} See, e.g., notification requirements in California (Cal. Civ. Code section 1798.82(a)) and Texas (Tex. Bus. & Com. Code section 521.053) triggered by the unauthorized acquisition of certain information, as compared to notification requirements in Florida (Fla. Stat. section 501.171) and New York (N.Y. Gen. Bus. Law section 899-AA) triggered by unauthorized access to personal information. “States” in this discussion includes the 50 U.S. States and the District of Columbia, for a total of 51. All State law citations are to the Sept. 2023 versions of State codes.
Generally, States can be said to adopt either a basic or an enhanced definition of personal information. A typical example of a basic definition specifies personal information as the customer name linked to one or more pieces of nonpublic information such as Social Security number, driver's license number (or other State identification number), or financial account number together with any required credentials to permit access to said account. ^{531} A typical enhanced definition includes additional types of nonpublic information that trigger the notification requirement; examples include: passport number, military identification number, or other unique identification number issued on a government document commonly used to verify the identity of a specific individual; unique biometric data generated from measurements or technical analysis of human body characteristics, such as a fingerprint, retina, or iris image, used to authenticate a specific individual. ^{532} Enhanced definitions also trigger notification requirements when a username or email address in combination with a password or security question and answer that would permit access to an online account is compromised. ^{533} Most States (37) adopt some form of enhanced definition, while a minority (14) adopt a basic definition.
^{531} See, e.g., Kan. Stat. section 50-7a01(g) or Minn. Stat. section 325E.61(e).
^{532} See, e.g., Md. Comm. Code section 14-3501 (defining “personal information” to include credit card numbers, health information, health insurance information, and biometric data such as retina or fingerprint).
^{533} See, e.g., Ariz. Code section 18-551 (defining “personal information” to include an individual's username or email address, in combination with a password or security question and answer, that allows access to an online account).
One commenter stated that all States provided an exception to the notification requirement if the data compromised were encrypted. ^{534} We found that States may include an explicit encryption or redaction exception in their definition of personal information, ^{535} in their definition of breach, ^{536} or in the determination that notification of affected individuals is necessary. ^{537} Multiple States include at least two of these exceptions. States vary, however, in the whether and how they define encryption or redaction. ^{538}
^{534} See SIFMA Comment Letter 2 (“Note that all U.S. State data breach notification laws provide an encryption safe harbor.”); see also Liisa M. Thomas, Thomas on Data Breach: A Practical guide to Handling Data Breach Notifications Worldwide (Feb. 2023), at section 2:45 (“Thomas 2023”).
^{535} See, e.g., Kan. Stat. section 50-7a01(g) (defining “personal information” to include a consumer's first name or first initial and last name linked to any one or more of the specified data elements that relate to the consumer, when the data elements are neither encrypted nor redacted); Wyo. Stat. section 40-12-501 (defining “personal identifying information” to exclude redacted data elements).
^{536} See, e.g., Ariz. Code section 18-551 (defining “breach” to include unauthorized acquisition of and unauthorized access that materially compromises the security or confidentiality of unencrypted and unredacted computerized personal information).
^{537} See, e.g., Minn. Stat. section 325E.61(a) (requiring notification of a breach to any resident whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person).
^{538} We considered a safe harbor from the notification requirements for encrypted information. See infra section IV.F.3.
Most States (43) provide an exception to the notification requirement if, following a breach of security, the entity investigates and determines that there is no reasonable likelihood that the individual whose personal information was breached has experienced or will experience certain harms (“no-harm exception”). ^{539} Twenty of these States do not have a presumption of notification and instead require notification only if, for example, an investigation reveals a risk of harm or misuse. ^{540} Although the types of harms vary by State, they most commonly include: “harm” generally (13), identity theft or other fraud (10), or misuse of personal information (8). Figure 1 plots the frequency of the various types of harms referenced in States' no-harm exceptions.
^{539} See, e.g., Fla. Stat. section 501.171(4)(c) and N.Y. Gen. Bus. Law section 899-AA(2)(a). Eight States, including California and Texas, do not have a no-harm exception and require notification even in the cases where there is no risk of harm.
^{540} See, e.g., N.C. Stat. section 75-61(14) and Utah Code 13-44-202(1).

(2) Timing, Content, and Method of Notification
In general, State laws provide a general principle for timing of notification ( e.g., delivery shall be made “without unreasonable delay,” or “in the most expedient time possible and without unreasonable delay”). ^{541} Some States augment the general principle with a specific deadline ( e.g., notice must be made “in the most expedient time possible and without unreasonable delay, but not later than 30 days after the date of determination that the breach occurred” unless certain exceptions apply). ^{542} All States allow for a delay if it is requested by a law enforcement agency. ^{543} Additionally, some States allow for a delay if necessary to determine the nature and scope of the breach or to restore the reasonable integrity of the information system. ^{544} Figure 2 plots the frequency of different notification deadlines in State laws. For States with specific deadlines, the figure distinguishes between States that allow an exception to determine the nature and scope of the breach or to restore the reasonable integrity of the information system, and those that do not.
^{541} See, e.g., Cal. Civ. Code section 1798.82(a) (disclosure to be made “in the most expedient time possible and without unreasonable delay” but allowing for needs of law enforcement and measures to determine the scope of the breach and restore the system).
^{542} See, e.g., Colo. Rev. Stat. section 6-1-716(2)(a) (notice to be made “in the most expedient time possible and without unreasonable delay, but not later than thirty days after the date of determination that a security breach occurred, consistent with the legitimate needs of law enforcement and consistent with any measures necessary to determine the scope of the breach and to restore the reasonable integrity of the computerized data system”); Fla. Stat. section 501.171(4)(a) (notice to be made “as expeditiously as practicable and without unreasonable delay . . . but no later than 30 days after the determination of a breach” unless delayed at the request of law enforcement or waived pursuant to the State's no-harm exception).
^{543} See, e.g., Ala. Stat. section 8-38-5(c) (“If a federal or State law enforcement agency determines that notice to individuals required under this section would interfere with a criminal investigation or national security, the notice shall be delayed upon the receipt of written request of the law enforcement agency for a period that the law enforcement agency determines is necessary.”); Ark. Code section 4-110-105(c) (“The notification required by this section may be delayed if a law enforcement agency determines that the notification will impede a criminal investigation.”); Conn. Stat. section 36a-701b.(d) (“Any notification required by this section shall be delayed for a reasonable period of time if a law enforcement agency determines that the notification will impede a criminal investigation and such law enforcement agency has made a request that the notification be delayed.”); Md. Comm. Code section 14-3504(d)(1) (notice may be delayed if “a law enforcement agency determines that the notification will impede a criminal investigation or jeopardize homeland or national security”); N.C. Stat. section 75-65(c) (“The notice required by this section shall be delayed if a law enforcement agency informs the business that notification may impede a criminal investigation or jeopardize national or homeland security, provided that such request is made in writing or the business documents such request contemporaneously in writing, including the name of the law enforcement officer making the request and the officer's law enforcement agency engaged in the investigation.”).
^{544} See, e.g., Tex. Bus. & Com. Code section 521.053 (notice to be made “without unreasonable delay and in each case not later than the 60th day after the date on which the person determines that the breach occurred, except as provided by Subsection (d) or as necessary to determine the scope of the breach and restore the reasonable integrity of the data system”).
One commenter stated that, where State laws have a 30-day notice requirement, the 30-day periods generally do not begin to run until a determination has been made that the incident affected residents of that State that will require notice, and that the Commission's proposed 30-day requirement would be triggered much sooner in the process. ^{545} The same commenter also stated that notices are currently sent to individuals whose information is reasonably believed to have potentially been affected after the findings of an investigation are determined. ^{546} To help analyze and respond to these comments, and also to provide additional context for our analysis of the possible effects of the final amendments, ^{547} we conducted supplemental analysis of the frequency of different triggers for the specific deadline requirement in the 20 States that specify such a deadline. The results of this analysis are in Figure 3 and demonstrate variation in triggering events. For example, State laws specify that the notification of customers be made “not later than sixty days from the discovery of the breach,” ^{548} or “no later than 30 days after the determination of a breach or reason to believe a breach occurred.” ^{549} Many of these triggers use words such as “determination” or “confirmation,” which, consistent with the commenter's observation, suggests investigation that might cause the specific deadline to be triggered later than the Commission's proposed or adopted notification trigger, although “discovery of breach”—used in five States—could potentially be earlier. ^{550}
^{545} See CAI Comment Letter (“While the Commission correctly notes in the S-P Proposing Release that some existing State laws also include a 30-day notice requirement, those requirements generally do not begin to run until a determination has been made that the incident affected residents of that State that will require notice.”). In the final amendments, as in the proposal, the beginning of the 30-day outside timeframe is a covered institution “becoming aware” that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. See proposed rule 248.30(b)(4)(iii); final rule 248.30(a)(4)(iii).
^{546} See CAI Comment Letter.
^{547} See infra section IV.D.1.b(2).
^{548} See La. Rev. Stat. section 51:3074.
^{549} See Fla. Stat. section 501.171(4)(a).
^{550} See infra section IV.D.1.b(2).
One commenter stated that most State data breach notification laws did not specify a number of days to report a breach, and that of the States that did have a specific timeframe, many had an exception allowing for compliance with the GLBA in lieu of adherence to their timeframes. ^{551} To help analyze and respond to this comment, and also to provide additional context for our analysis of the possible effects of the final amendments, we conducted supplemental analysis of the overlap between States that have a specific deadline and States that include a GLBA exception. ^{552} We found that of the 20 States that have a specific deadline, 10 do not include a GLBA exception. ^{553}
^{551} See SIFMA Comment Letter 2.
^{552} See infra section IV.D.1.b(1).
^{553} We discuss this exception and the States where it applies in section IV.D.1.b(1).
Additionally, one commenter stated the establishment of a Federal minimum standard for data breach notification would satisfy State notice laws that provide exemptions for firms subject to such a requirement. ^{554} To help analyze and respond to this comment, and also to provide additional context for our analysis of the possible effects of the final amendments, ^{555} we conducted supplemental analysis of this question. We have found that some States excuse entities from individual notification under State law if the entities comply with the notification requirements of a Federal regulator or, in some cases, another State. Some States allow these substitute notifications to replace their own state-specific requirements on notice content and timing, ^{556} while others only allow it if the provisions are at least as protective as State law. ^{557}
^{554} See IAA Comment Letter 1.
^{555} See infra section IV.D.1.b.
^{556} See, e.g., Fla. Stat. section 501.171(4)(g) (“Notice provided pursuant to rules, regulations, procedures, or guidelines established by the covered entity's primary or functional federal regulator is deemed to be in compliance with the notice requirement in this subsection . . . .”); Va. Code. Ann. section 18.2-186.6(H) (“An entity that complies with the notification requirements . . . established by the entity's primary or functional state or federal regulator shall be in compliance with this section.”). According to Thomas 2023, approximately 15 States allow compliance with a primary regulator to replace their own State's required notification in some circumstances; see also ICI Comment Letter 1 (“Today, approximately 13 states provide an exemption or exclusion from the state's breach notice requirements if the entity experiencing the breach has a duty under federal law to provide notice of the breach.”). See also infra section IV.D.1.b(1) on GLBA safe harbor provisions, which are similar but distinct.
^{557} See, e.g., Colo. Rev. Stat. 6-1-716(3)(b) (“In the case of a conflict . . . the law or regulation with the shortest timeframe for notice to the individual controls.”); Iowa Code section 715C.2(7)(b) (exempting in the case of compliance “with a state or federal law that provides greater protection to personal information and at least as thorough disclosure requirements for breach of security or personal information than that provided by this section”).
Some commenters stated that different State laws currently have different requirements as to what content must be included in a notice to customers. ^{558} One of these commenters further stated that, as a result, covered institutions may, when they experience a data breach incident today, send different notification letters to residents of different States for the same incident. ^{559} To help analyze and respond to these comments, and to provide additional context for our analysis of the possible effects of the final amendments, ^{560} we conducted supplemental analysis of the frequency at which different items are currently required by State laws to be included in notices to customers. This analysis, shown in Figure 4, supports commenters' observation that different States have different requirements. While half of the States do not have such requirements, many States (25) provide minimum content to be included in the notices sent to individuals whose information has been affected by a breach. The most common required items include the type of information affected, contact information for consumer reporting agencies, and the date of the breach. Figure 4 plots the frequency of different items required by State laws to be included in the notices.
^{558} See, e.g., IAA Comment Letter 1.
^{559} See ICI Comment Letter 1 (“In discussing breach notices with our members, we understand it is not uncommon for their current breach response programs to include separate notification letters depending upon the state the individual resides in.”). One benefit of the final amendments will be to help ensure that all customers receive a minimum level of information regarding a given breach. See infra section IV.D.1.b(5).
^{560} See infra section IV.D.1.b(5).
States also differ in their requirements regarding the method that must be used to notify affected individuals. ^{561} While all States allow for a written notification, most States impose conditions if the notice is sent electronically. For example, 37 States provide that a notice can be sent electronically only if the notice is consistent with the Electronic Signatures in Global and National Commerce Act. ^{562} Fifteen States have as a condition that a primary method of communication between the entity and the affected residents be by electronic means. ^{563} Five States impose no condition for electronic notices, ^{564} and 2 States only require that the notifying institution have the email address of the affected individuals. ^{565} In addition, 26 States allow for the notice to be made over the phone. ^{566} Of these 26 States, 7 provide that a condition for a telephonic notice is that contact is made directly with the affected individuals. ^{567}
^{561} We conducted this supplemental analysis to help analyze and respond to comments, and also to provide additional context for our analysis of the possible effects of the final amendments. See infra section IV.D.1.b(5).
^{562} 15 U.S.C. 7001, et seq. See, e.g., Cal. Civ. Code section 1798.82(j); Conn. Stat. section 36a-701b.(e); Ga. Code section 10-1-911(4); Tex. Bus. & Com. Code section 521.053(e).
^{563} See. e.g., Colo. Rev. Stat. section 6-1-716(1)(F); Del. Code Tit. 6 section 12B-101(5); Tenn. Code Ann. section 47-18-2107(e).
^{564} See, e.g., Ala. Code section 8-38-5(d); Fla. Stat. section 501.171(4)(d); Va. Code. Ann. section 18.2-186.6(A).
^{565} See Ariz. Code section 18-552(F); Ind. Code 24-4.9-3-4.
^{566} See. e.g., Conn. Stat. section 36a-701b.(e); N.Y. Gen. Bus. Law section 899-AA(5); 73 Pa. Stat. section 2302.
^{567} See, e.g., Ariz. Code section 18-552(F); Mo. Stat. 407.1500 section 2(6); 9 Vt. Stat. Ann. section 2435(b)(6)(A).
All States allow, under some conditions, for substitute notification instead of the required methods of notification discussed above. The most common conditions include a specified large number of individuals to notify and/or a minimum dollar cost to notify the affected individuals. These conditions vary widely across States. ^{568} In most States, a substitute notice consists of all of the following elements: email notification to the affected individuals, a notice on the institution's website, and notification to major statewide media. ^{569} However, other States have fewer requirements. ^{570}
^{568} For example, some States allow for a substitute notice if the number of affected individuals is above 1,000 or 5,000 or if the cost of providing notice is above $5,000 or $10,000, while many States have a threshold of 500,000 affected individuals or a cost threshold of $250,000. See, e.g., Maine Rev. Stat. Tit. 10 section 1347(4); Miss. Code section 75-24-29(6); N.H. Rev. Stat. section 359-C:20(III); Cal. Civ. Code section 1798.82(j); Fla. Stat. section 501.171(4)(f); N.Y. Gen. Bus. Law section 899-AA(5).
^{569} See, e.g., DC Code section 28-3851(2); La. Rev. Stat. section 51:3074(G); N.J. Stat. section 56:8-163(d).; Va. Code. Ann. section 18.2-186.6(A).
^{570} See, e.g., Ala. Code section 8-38-5(e) (“Substitute notice shall include both of the following: 1. A conspicuous notice on the internet website of the covered entity, if the covered entity maintains a website, for a period of 30 days. 2. Notice in print and in broadcast media, including major media in urban and rural areas where the affected individuals reside.”); Fla. Stat. section 501.171(4)(f) (“Such substitute notice shall include the following: 1. A conspicuous notice on the internet website of the covered entity if the covered entity maintains a website; and 2. Notice in print and to broadcast media, including major media in urban and rural areas where the affected individuals reside.”); Tex. Bus. & Com. Code section 521.053(f) (requiring that under certain conditions, “the notice may be given by: (1) electronic mail, if the person has electronic mail addresses for the affected persons; (2) conspicuous posting of the notice on the person's website; or (3) notice published in or broadcast on major statewide media”).

(3) Notification by Service Providers
Some data breach incidents involve service providers. Covered institutions may use service providers to perform certain business activities and functions, such as trading and order management, information technology functions, and cloud computing services. As a result of this outsourcing, service providers may receive, maintain, or process customer information, or be permitted to access it, and therefore a security incident at the service provider could expose information at or belonging to the covered institution. In general, State laws require persons and entities that maintain computerized data for other entities, but do not own or license that data, to notify the data-owning entity in the event of a data breach (so as to allow that entity to notify affected individuals). ^{571} However, several State laws provide that a covered institution may contract with the service provider such that the service provider directly notifies affected individuals of a data breach. ^{572} In addition, some States impose the responsibility of notifying affected individuals on entities that maintain or possess the data even if they do not own or license it. ^{573}
^{571} See, e.g., Cal. Civ. Code section 1798.82(b); DC Code section 28-3852(b); N.Y. Gen. Bus. Law section 899-AA(3); Tex. Bus. & Com. Code section 521.053(c).
^{572} See, e.g., Fla. Stat. section 501.171(6)(b); Ala. Code section 8-38-8. We do not have information on the frequency of such arrangements.
^{573} See, e.g., Ky. Rev. Stat. 365.732(2) (“Any information holder shall disclose any breach of the security of the system, following discovery or notification of the breach in the security of the data, to any resident of Kentucky whose unencrypted personal information was, or is reasonably believed to have been, acquired by an unauthorized person.”); Maine Rev. Stat. Tit. 10 section 1348(1)(B). (“If any other person who maintains computerized data that includes personal information becomes aware of a breach of the security of the system, the person shall conduct in good faith a reasonable and prompt investigation to determine the likelihood that personal information has been or will be misused and shall give notice of a breach of the security of the system following discovery or notification of the security breach to a resident of this State if misuse of the personal information has occurred or if it is reasonably possible that misuse will occur.”). See also Thomas 2023, at section 2:21.
Some commenters opposed the proposed provision that would have required service providers to notify covered institutions of a breach of sensitive customer information within 48 hours. ^{574} A commenter further stated that our analysis of the effects of this requirement was incomplete. ^{575} We conducted supplemental analysis of the notification timeframe required by State laws for entities that do not own or license the compromised data to help analyze and respond to these comments, and to provide additional context for our analysis of the possible effects of the final amendments. ^{576}
^{574} See, e.g., ACLI Comment Letter.
^{575} See Microsoft Comment Letter (“The cost-benefit analyses of the Proposed Rules do not identify why a 48-hour or shorter reporting period is optimal.”). See also supra section II.A.4 for a discussion of the length of notification period.
^{576} See infra section IV.D.1.c.
In general, State laws provide a window for notification of the entity that owns or licenses the data by the entity that maintains the data. ^{577} Ten States provide a specific deadline of either 24 hours (one State), ^{578} 10 days (four States), ^{579} 45 days (four States), ^{580} or 60 days (one State). ^{581} Thirty-eight States provide instead a general principle such as “as soon as practicable” or “without unreasonable delay.” ^{582} In particular, 24 States require the notification to take place immediately after the discovery of the breach or the determination that a breach has occurred. ^{583} Figure 5 plots the frequency of these different provisions across State laws. This variation across State laws in timelines for (1) notification of the entity that owns or licenses the data by the entity that maintains the data and (2) notification of the affected individuals by the entity that owns or licenses the data can result in widely different lengths of time between the discovery of a breach and the time the affected individuals are notified. In addition, variations in these State laws could result in residents of one State receiving notice while residents of another receive no notice for the same data breach incident. ^{584}
^{577} A small number of States do not require such a notification. For example, Rhode Island does not distinguish between entities that own or license the data and those entities that do not, requiring all entities to notify customers directly (R.I. Gen. Laws section 11-49.3-4(a)(1) (“Any municipal agency, State agency, or person that stores, owns, collects, processes, maintains, acquires, uses, or licenses data that includes personal information shall provide notification as set forth in this section of any disclosure of personal information, or any breach of the security of the system, that poses a significant risk of identity theft to any resident of Rhode Island whose personal information was, or is reasonably believed to have been, acquired by an unauthorized person or entity.”). Similarly, South Dakota does not have a provision for persons or businesses that do not own or license computerized personal data (SDCL sections 22-40-19 through 22-40-26).
^{578} See Ga. Code section 10-1-912(b) (“Any person or business that maintains computerized data on behalf of an information broker or data collector that includes personal information of individuals that the person or business does not own shall notify the information broker or data collector of any breach of the security of the system within 24 hours following discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person.”).
^{579} See, e.g., Md. Comm. Code section 14-3504(c) (“Except as provided in subsection (d) of this section, the notification required under paragraph (1) of this subsection shall be given as soon as reasonably practicable, but not later than 10 days after the business discovers or is notified of the breach of the security of a system.”).
^{580} See, e.g., Tenn. Code Ann. section 47-18-2107(c) (“Any information holder that maintains computerized data that includes personal information that the information holder does not own shall notify the owner or licensee of the information of any breach of system security if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person. The disclosure must be made no later than forty-five (45) days from the discovery or notification of the breach of system security, unless a longer period of time is required due to the legitimate needs of law enforcement, as provided in subsection (d).”).
^{581} See La. Rev. Stat. section 51:3074(E) (“The notification required pursuant to Subsections C and D of this Section shall be made in the most expedient time possible and without unreasonable delay but not later than sixty days from the discovery of the breach, consistent with the legitimate needs of law enforcement, as provided in Subsection F of this Section, or any measures necessary to determine the scope of the breach, prevent further disclosures, and restore the reasonable integrity of the data system.”).
^{582} See, e.g., Miss. Code section 75-24-29(4) (“Any person who conducts business in this State that maintains computerized data which includes personal information that the person does not own or license shall notify the owner or licensee of the information of any breach of the security of the data as soon as practicable following its discovery, if the personal information was, or is reasonably believed to have been, acquired by an unauthorized person for fraudulent purposes.”); Va. Code. Ann. section 18.2-186.6(D) (“An individual or entity that maintains computerized data that includes personal information that the individual or entity does not own or license shall notify the owner or licensee of the information of any breach of the security of the system without unreasonable delay following discovery of the breach of the security of the system”).
^{583} See, e.g., Ark. Code section 4-110-105(b), N.C. Stat. section 75-65(b), and Utah Code 13-44-202(3). For many of these States, this immediate notification can be delayed if the delay is requested by a law enforcement agency.
^{584} See supra footnote 578 on South Dakota. In addition, in some States, notification from the service provider to the information owner is required only in the case of fraud or misuse. See, e.g., Miss. Code section 75-24-29(4) (requiring notification if the information was or is reasonably believed to have been acquired by an unauthorized person for fraudulent purposes); Colo. Rev. Stat. section 6-1-716(2)(b) (requiring notification if misuse of personal information about a Colorado resident occurred or is likely to occur).
Some of the service providers that will be affected by the final amendments are covered institutions themselves. ^{585} Also, some entities that are covered institutions but not service providers under the final amendments could, under State law, be entities that maintain but do not own or license that data, meaning they may have an obligation under State law to notify the data owner. ^{586} In particular, commenters stated that transfer agents were generally considered service providers of the securities issuers under State laws. ^{587} State laws typically require transfer agents to notify the securities issuers in case of security breach, which in turn must notify the affected customers. One commenter stated that transfer agents were, in addition, often required by contract to notify their securities issuer clients in case of data breach. ^{588} Another commenter stated that it was not uncommon for covered institutions to require, by contract or agreement, that their service providers, including transfer agents, notify them in case of security breach. ^{589} Hence, we expect that all or almost all covered institutions and their service providers are already complying with one or more notification requirements, pursuant to either State law or contract. ^{590}
^{585} See supra section II.A.3.a.
^{586} This could be the case, for example, of transfer agents providing services only to publicly traded companies that are not covered institutions.
^{587} See, e.g., Computershare Comment Letter (“It is also contrary to privacy laws that deem the issuer to be the `controller' or `business' with respect to securityholders and their data and deem the transfer agent based on its role to be the `processor' or `service provider.' ”).
^{588} See STA Comment Letter 2.
^{589} See ICI Comment Letter 1.
^{590} Even if a State does not have specific requirements for entities that do not own or license computerized personal or protected information (such as South Dakota, see supra footnote 578), it is unlikely, by the nature of the transfer agent business, that a transfer agent would have access to customer information of individuals residing in this State only.

b. Customer Information Safeguards
Regulation S-P, prior to the adoption of the amendments, required all covered institutions to adopt written policies and procedures reasonably designed to: “(i) insure [sic] the security and confidentiality of customer records and information; (ii) protect against any anticipated threats or hazards to the security or integrity of customer records and information; and (iii) protect against unauthorized access to or use of customer records and information that could result in substantial harm or inconvenience to any customer.” ^{591} In addition, Regulation S-P established limitations on how covered institutions may disclose nonpublic personal information about a consumer to nonaffiliated third parties. ^{592} It also established limitations on the further disclosure of nonpublic personal information received by a covered institution from a nonaffiliated financial institution, as well as limitations on the further disclosure of nonpublic personal information disclosed from a covered institution to a nonaffiliated third party. ^{593} Before this adoption, Regulation S-P did not include specific provisions for how covered institutions were to satisfy their obligations to safeguard customer records and information when utilizing service providers.
^{591} 17 CFR 248.30. See also Compliance Programs of Investment Companies and Investment Advisers, Investment Advisers Act Release No. 2204 (Dec. 17, 2003) [68 FR 74714 (Dec. 24, 2003)], at n.22 (“Compliance Program Release”) (stating expectation that policies and procedures would address safeguards for the privacy protection of client records and information and noting the applicability of Regulation S-P); see also supra section II.B.2 explaining that prior to these final amendments, the safeguards rule did not apply to any transfer agents, and the disposal rule applied only to transfer agents registered with the Commission.
^{592} See 17 CFR 248.10.
^{593} See 17 CFR 248.11.
Covered institutions that hold transactional accounts for consumers may also be subject to Regulation S-ID. ^{594} Such entities must develop and implement a written identity theft program that includes policies and procedures to identify relevant types of identity theft red flags, detect the occurrence of those red flags, and respond appropriately to the detected red flags. ^{595}
^{594} Regulation S-ID applies to “financial institutions” or “creditors” that offer or maintain “covered accounts.” Entities that are likely to qualify as financial institutions or creditors and maintain covered accounts include most registered brokers, dealers, funding portals, investment companies, and some registered investment advisers. See 17 CFR 248.201; see also Identity Theft Red Flag Rules, Investment Advisers Act Release No. 3582 (Apr. 10, 2013) [78 FR 23637 (Apr. 19, 2013)] (“Identity Theft Release”); see also 17 CFR 227.403(b).
^{595} In a 2017 Risk Alert, the SEC Office of Compliance Inspections and Examinations (now called the Division of Examinations) noted that, based on observations from examinations of 75 registrants, nearly all examined broker-dealers and most of the examined advisers had specific cybersecurity and Regulation S-ID policies and procedures. See EXAMS Risk Report, Observations from Cybersecurity Examinations (Aug. 7, 2017), available at https://www.sec.gov/files/observations-from-cybersecurity-examinations.pdf ; see also Identity Theft Release. In addition, affected entities must also periodically update their identity theft programs. See 17 CFR 248.201. Other rules also require updates to policies and procedures at regular intervals: see, e.g., Rule 38a-1 under the Investment Company Act; FINRA Rule 3120 (Supervisory Control System); and FINRA Rule 3130 (Annual Certification of Compliance and Supervisory Processes).
In addition, broker-dealers that operate alternative trading systems exceeding specified volume thresholds are SCI entities subject to Regulation SCI and required, among other things, to have certain policies and procedures reasonably designed to ensure that their market systems have adequate levels of capacity, integrity, resiliency, availability, and security and take appropriate corrective action when “SCI events” occur. ^{596} SCI entities are required to disseminate information to their members or participants about certain types of SCI events. ^{597} Upon the SCI entity having a reasonable basis to conclude that a certain type of SCI event (such as a “systems intrusion” that is not de minimis) has occurred, it is generally required to promptly disseminate information about the SCI event to those members and participants that the SCI entity has reasonably estimated may have been affected. If such “SCI event” is “major,” the information disseminated must be to all of the entity's members or participants. ^{598} When required, the notification must include a summary description of the systems intrusion, including a description of the corrective action taken by the SCI entity and when the systems intrusion has been or is expected to be resolved, unless the SCI entity determines that dissemination of such information would likely compromise the security of the SCI entity's SCI systems or indirect SCI systems, or an investigation of the systems intrusion, and documents the reasons for such determination. ^{599} Therefore, information about an “SCI event” caused by a cybersecurity incident may be required to be disseminated to some or all an SCI entity's members or participants pursuant to Regulation SCI.
^{596} Regulation SCI is codified at 17 CFR 242.1000 through 1007.
^{597} 17 CFR 242.1002(c).
^{598} 17 CFR 242.1002(c)(3).
^{599} 17 CFR 242.1002(c).
The safeguards rule of Regulation S-P did not, before this adoption, apply to transfer agents. In addition, the disposal rule did not apply to transfer agents registered with a regulatory agency other than the Commission. ^{600} Thus, for these institutions, the final amendments create new requirements to adopt written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information and to take reasonable measures to protect against unauthorized access to or use of consumer information and customer information in connection with its disposal. ^{601} Some transfer agents registered with a regulatory agency other than the Commission may already be subject to some of the Federal regulation described below. In addition, many States impose requirements regarding the safeguarding and the disposal of customer information. ^{602} Hence, many transfer agents are likely to already have policies and procedures in the areas covered by these new requirements.
^{600} See supra section II.B.2.
^{601} See final rule 240.30(a)(1) and (b).
^{602} Twenty States have customer information safeguard requirements, and 30 States have customer information disposal requirements. See, e.g., Cal. Civ. Code section 1798.81.5 (“A business that owns, licenses, or maintains personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.”); Del. Code Tit. 6 section 12B-100 (“Any person who conducts business in this State and owns, licenses, or maintains personal information shall implement and maintain reasonable procedures and practices to prevent the unauthorized acquisition, use, modification, disclosure, or destruction of personal information collected or maintained in the regular course of business.”); Fla. Stat. section 501.171(2) (“Each covered entity, governmental entity, or third-party agent shall take reasonable measures to protect and secure data in electronic form containing personal information.”). See also, e.g., Cal. Civ. Code section 1798.81 (“A business shall take all reasonable steps to dispose, or arrange for the disposal, of customer records within its custody or control containing personal information when the records are no longer to be retained by the business by (a) shredding, (b) erasing, or (c) otherwise modifying the personal information in those records to make it unreadable or undecipherable through any means.”); La. Rev. Stat. section 51:3074(B) (“Any person that conducts business in the state or that owns or licenses computerized data that includes personal information, or any agency that owns or licenses computerized data that includes personal information shall take all reasonable steps to destroy or arrange for the destruction of the records within its custody or control containing personal information that is no longer to be retained by the person or business by shredding, erasing, or otherwise modifying the personal information in the records to make it unreadable or undecipherable through any means.”); N.J. Stat. section 56:8-162 (“A business or public entity shall destroy, or arrange for the destruction of, a customer's records within its custody or control containing personal information, which is no longer to be retained by the business or public entity, by shredding, erasing, or otherwise modifying the personal information in those records to make it unreadable, undecipherable or nonreconstructable through generally available means.”).
Some covered institutions may also be subject to other regulators' rules and guidelines implicating customer information safeguards. Transfer agents supervised by one of the Banking Agencies may be subject to the Banking Agencies' Incident Response Guidance and to the Banking Agencies' Safeguards Guidance, for example. ^{603} The Banking Agencies' Incident Response Guidance requires covered financial institutions to develop a response program covering assessment, notification to relevant regulators and law enforcement, incident containment, and customer notice. ^{604} These guidelines require customer notification if a financial institution determines that misuse of sensitive customer information “has occurred or is reasonably possible.” ^{605} They also require notices to occur “as soon as possible,” but permit delays if “an appropriate law enforcement agency determines that notification will interfere with a criminal investigation and provides the institution with a written request for the delay.” ^{606} Under the guidelines, “sensitive customer information” means “a customer's name, address, or telephone number, in conjunction with the customer's Social Security number, driver's license number, account number, credit or debit card number, or a personal identification number or password that would permit access to the customer's account.” ^{607} In addition, “any combination of components of customer information that would allow someone to log onto or access the customer's account, such as user name and password or password and account number” is also considered sensitive customer information under the guidelines. ^{608} The Banking Agencies' Safeguards Guidance directs every financial institution covered by the guidelines to require its service providers by contract to implement appropriate measures designed to protect against unauthorized access to or use of customer information that could result in substantial harm or inconvenience to any customer. ^{609} In addition, the Banking Agencies' Incident Response Guidance directs that an institution's contract with its service provider should require the service provider to take appropriate actions to address incidents of unauthorized access to the financial institution's customer information, including notification to the institution as soon as possible of any such incident, to enable the institution to expeditiously implement its response program. ^{610}
^{603} See Banking Agencies' Incident Response Guidance and Banking Agencies' Safeguards Guidance; see also Computershare Comment Letter (“Many registered transfer agents like Computershare US and Computershare Canada entities are banks or trust companies, and therefore already subject to state, federal, or provincial banking laws, rules, regulations and inter-agency guidelines.” The commenter also refers to “Title V, Subtitle A, of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801-6809; 12 CFR 30, Appendix B to Part 30—Interagency Guidelines Establishing Information Security Standards; and New York State Department of Financial Services Cybersecurity Regulation, 23 NYCRR Part 500.”).
^{604} See Banking Agencies' Incident Response Guidance at Supplement A, section II.A.
^{605} See id., at Supplement A, section III.A.
^{606} See id., at Supplement A, section III.A.
^{607} See id., at Supplement A, section III.A.1.
^{608} See id., at Supplement A, section III.A.1.
^{609} See id., at Supplement A, section I.C.
^{610} See id., at Supplement A, section II.
The Banking Agencies' Safeguards Guidance requires certain financial institutions to implement a comprehensive written information security program that includes administrative, technical, and physical safeguards appropriate to the size and complexity of the entity and the nature and scope of its activities. ^{611} This guidance requires that the information security program be designed to (1) ensure the security and confidentiality of customer information; (2) protect against any anticipated threats or hazards to the security or integrity of such information; (3) protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer; and (4) ensure the proper disposal of customer information and consumer information. ^{612}
^{611} See Banking Agencies' Safeguards Guidance, at section II.A.
^{612} See id., at section II.B.
Private funds may be subject to the FTC's recently amended FTC Safeguards Rule, which contains data security requirements to protect customer financial information. ^{613} The FTC Safeguards Rule generally requires financial institutions to develop, implement, and maintain a comprehensive information security program, ^{614} defined as the administrative, technical, and physical safeguards the financial institution uses to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle customer information. ^{615} The rule also requires that the comprehensive information security program contain various elements, including an incident response plan. ^{616} In addition, it requires financial institutions to take reasonable steps to select and retain service providers capable of maintaining appropriate safeguards for customer information and to require those service providers by contract to implement and maintain such safeguards. ^{617} Since the date of our proposal, the FTC Safeguards Rule has been updated to require financial institutions to notify the FTC as soon as possible, and no later than 30 days after discovery, of a security breach involving the unencrypted information of at least 500 consumers. ^{618} Although the FTC Safeguards Rule does not contain a customer notification requirement, the FTC indicated that it “intends to enter notification event reports into a publicly available database” unless a law enforcement official requests delay. ^{619}
^{613} The FTC Safeguards Rule applies to financial institutions of certain types “that are not otherwise subject to the enforcement authority of another regulator under section 505 of the Gramm-Leach-Bliley Act, 15 U.S.C. 6805.” See 16 CFR 314.1(b). Private funds that are able to rely on section 3(c)(1) or 3(c)(7) of the Investment Company Act are not subject to Regulation S-P but they may be subject to the FTC Safeguards Rule. See supra footnote 2. Investment advisers registered with the Commission, including those that are advisers to private funds, are covered institutions for the purposes of the final amendments.
^{614} See 16 CFR 314.3(a).
^{615} See 16 CFR 314.2(i).
^{616} See 16 CFR 314.4(h).
^{617} See 16 CFR 314.4(f). The FTC Safeguards Rule does not contain a requirement that financial institutions require their service providers to notify them in case of a breach resulting in customer information being compromised.
^{618} The amendments are effective May 13, 2024. See Standards for Safeguarding Customer Information, 88 FR 77499 (Nov. 13, 2023); see also FTC Press Release, FTC Amends Safeguards Rule to Require Non-Banking Financial Institutions to Report Data Security Breaches (Oct. 27, 2023), available at
https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-amends-safeguards-rule-require-non-banking-financial-institutions-report-data-security-breaches .
^{619} 88 FR at 77506. See also 16 CFR 315.4(j)(vi) (effective May 13, 2024), describing the conditions for a delay in notifying the public of the breach, if requested by law enforcement.
In addition, many entities covered by this rule may be subject to other, more general information protection requirements. ^{620} In particular, companies operating in foreign jurisdictions may need to comply with information protection requirements in their foreign markets. For example, the GDPR requires entities that process the personal data of EU citizens or residents to, among other things, do so in a manner that ensures appropriate security, integrity, and confidentiality. ^{621} Other recent regulations in foreign jurisdictions may subject covered institutions to further rules intended to address cybersecurity risk management by financial institutions and some of their service providers. ^{622} Hence, we expect that some of the entities covered by the final amendments, or their service providers, already have customer information safeguards in place because of other information protection regimes.
^{620} See supra Section I (discussing other requirements); footnotes 245, 257 (examples of other regimes); see also Microsoft Comment Letter.
^{621} GDPR, supra footnote 245, at Art. 5(1)(f); see also What is GDPR, the EU's New Data Protection Law?, available at https://gdpr.eu/what-is-gdpr/ (last visited Apr. 8, 2024). The GDPR places data protection obligations on organizations that process the personal data of EU citizens and residents. Among these are provisions requiring notification in the case of a breach: Art. 34(1), for example, requires a personal data breach to be “communicated to the data subject without undue delay” when the breach is likely to result in a high risk to the rights and freedoms of natural persons, unless certain exceptions (including an encryption exception) apply.
^{622} See, e.g., Regulation (EU) 2022/2554 of the European Parliament and of the Council of 14 December 2022 on Digital Operational Resilience for the Financial Sector and Amending Regulations, Official J. of the Euro. Union (2022), available at https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32022R2554 (“DORA”).
A variety of guidance is available to institutions seeking to address information security risk, particularly through the development of policies and procedures. These include NIST and CISA voluntary standards, both of which include assessment, containment, and notification elements similar to those included in these amendments. ^{623} We do not have extensive data spanning all types of covered institutions on their use of these or similar guidelines or on their development of written policies and procedures to address incident response, and no commenter suggested such data. However, past Commission examination sweeps of broker-dealers and investment advisers suggest that such practices are widespread. ^{624} Thus, we expect that institutions seeking to develop written policies and procedures likely would have encountered these and similar standards and may have included the critical elements of assessment and containment, as well as notification.
^{623} See NIST Special Publication 800-61, Revision 2 (Aug. 2012) (“NIST Computer Security Incident Handling Guide”), available at https://csrc.nist.gov/publications/detail/sp/800-61/rev-2/final and CISA, Cybersecurity Incident & Vulnerability Response Playbooks (Nov. 2021) (“CISA Incident Response Playbook”), available at
https://www.cisa.gov/sites/default/files/publications/Federal_Government_Cybersecurity_Incident_and_Vulnerability_Response_Playbooks_508C.pdf .
^{624} See OCIE, SEC, Cybersecurity Examination Sweep Summary (Feb. 3, 2015), available at https://www.sec.gov/about/offices/ocie/cybersecurity-examination-sweep-summary.pdf (Written policies and procedures, for both the examined broker-dealers (82%) and the examined advisers (51%), discuss mitigating the effects of a cybersecurity incident and/or outline the plan to recover from such an incident. Similarly, most of the examined broker-dealers (88%) and many of the examined advisers (53%) reference published cybersecurity risk management standards.).

c. Annual Notice Delivery Requirement
Under the baseline, ^{625} a broker-dealer, funding portal, investment company, or registered investment adviser must generally provide an initial privacy notice to its customers not later than when the institution establishes the customer relationship and annually after that for as long as the customer relationship continues. ^{626} If an institution chooses to share nonpublic personal information with a nonaffiliated third party other than as disclosed in an initial privacy notice, the institution must generally send a revised privacy notice to its customers. ^{627}
^{625} For the purposes of the economic analysis, the baseline does not include the exception to the annual notice delivery requirement provided by the FAST Act. This statutory exception was self-effectuating and became effective on Dec. 4, 2015. See FAST Act, Public Law 114-94, section 75001, adding section 503(f) to the GLBA, codified at 15 U.S.C. 6803(f).
^{626} 17 CFR 248.4 and 248.5.
^{627} 17 CFR 248.8. Regulation S-P provides certain exceptions to the requirement for a revised privacy notice, including if the institution is sharing as permitted under rules 248.13, 248.14, and 248.15 or with a new nonaffiliated third party that was adequately disclosed in the prior privacy notice.
The types of information required to be included in the initial, annual, and revised privacy notices are identical. Each privacy notice must describe the categories of information the institution shares and the categories of affiliates and non-affiliates with which it shares nonpublic personal information. ^{628} The privacy notices also must describe the type of information the institution collects, how it protects the confidentiality and security of nonpublic personal information, a description of any opt out right, and certain disclosures the institution makes under the FCRA. ^{629}
^{628} See 17 CFR 248.6(a)(2) through (5) and (9).
^{629} See 17 CFR 248.6(a)(1) (information collection); 248.6(a)(8) (protecting nonpublic personal information), 248.6(a)(6) (opt out rights); 248.6(a)(7) (disclosures the institution makes under section 603(d)(2)(A)(iii) of the FCRA (15 U.S.C. 1681a(d)(2)(A)(iii)), notices regarding the ability to opt out of disclosures of information among affiliates).

3. Market Structure
The final amendments will affect five categories of covered institutions: broker-dealers other than notice-registered broker-dealers, funding portals, registered investment advisers, investment companies, and transfer agents registered with the Commission or another appropriate regulatory agency. These institutions compete in several distinct markets and offer a wide range of services, including effecting customers' securities transactions, providing liquidity, pooling investments, transferring ownership in securities, advising on financial matters, managing portfolios, and consulting to pension funds. Many of the larger covered institutions belong to more than one category ( e.g., a dually registered broker-dealer/investment adviser), and thus operate in multiple markets. In the rest of this section, we first outline the market for each class of covered institution and then consider service providers.

a. Broker-Dealers
Broker-dealers include both brokers (persons engaged in the business of effecting transactions in securities for the account of others), ^{630} as well as dealers (persons engaged in the business of buying and selling securities for their own accounts). ^{631} Most brokers and dealers maintain customer relationships, and are thus likely to come into the possession of sensitive customer information. ^{632} In the market for broker-dealer services, a relatively small set of large- and medium-sized broker-dealers dominate while thousands of smaller broker-dealers compete in niche or regional segments of the market. ^{633} Broker-dealers provide a variety of services related to the securities business, including (1) managing orders for customers and routing them to various trading venues; (2) providing advice to customers that is in connection with and reasonably related to their primary business of effecting securities transactions; (3) holding customers' funds and securities; (4) handling clearance and settlement of trades; (5) intermediating between customers and carrying/clearing brokers; (6) dealing in corporate debt and equities, government bonds, and municipal bonds, among other securities; (7) privately placing securities; and (8) effecting transactions in mutual funds that involve transferring funds directly to the issuer. Some broker-dealers may specialize in just one narrowly defined service, while others may provide a wide variety of services.
^{630} See 15 U.S.C. 78c(a)(4).
^{631} See 15 U.S.C. 78c(a)(5).
^{632} Such information would include the customers' names, tax numbers, telephone numbers, broker, brokerage account numbers, etc.
^{633} See Regulation Best Interest: The Broker-Dealer Standard of Conduct, Release No. 34-86031 (June 5, 2019) [84 FR 33318 (July 12, 2019)], at 33406.
Based on an analysis of FOCUS filings and Form BD filings, there were 3,476 registered broker-dealers during the third quarter of 2023. ^{634} Of these, 303 were dually registered as investment advisers. ^{635} There were over 233 million customer accounts reported by carrying brokers. ^{636} However, the majority of broker-dealers are not “carrying broker-dealers” and therefore do not report the numbers of customer accounts. ^{637} Therefore, we expect that this figure of 233 million understates the total number of customer accounts because many of the accounts at carrying broker-dealers have corresponding accounts with non-carrying brokers. Both carrying and non-carrying broker-dealers potentially possess sensitive customer information for the accounts that they maintain. ^{638} Because non-carrying broker-dealers do not report on the numbers of customer accounts, it is not possible to ascertain with any degree of confidence the distribution of customer accounts across the broader broker-dealer population.
^{634} The numbers in this section exclude notice-registered broker-dealers. See supra section II.B.3.
^{635} See supra footnote 496.
^{636} FOCUS filings and Form X-17A-5 Schedule I, Item I8080. For this release, the number of customer accounts reported by carrying brokers was estimated based on FOCUS filings during the third quarter of 2023 and Form X-17A-5 Schedule I, Item I8080 for 2022. The Proposing Release cited a figure of 72 million as of July 1, 2022. The correct number of customer accounts reported by carrying brokers as of July 1, 2022, in the Proposing Release should be 220 million. This change would not have affected the Commission's assessment of economic effects at Proposal as these assessments were focused primarily on effects at the level of individual covered institutions and their customers.
^{637} See General Instructions to Form CUSTODY (as of Sept. 30, 2022).
^{638} This information includes name, address, age, and tax identification or Social Security number. See FINRA Rule 4512.

b. Funding Portals
Funding portals act as intermediaries in facilitating securities-based crowdfunding transactions that are subject to Regulation Crowdfunding. ^{639} Securities-based crowdfunding involves using the internet to raise capital through small individual contributions from a large number of people. The crowdfunding transaction must be conducted through an intermediary registered with the Commission, but a statutory exemption allows that intermediary to forgo registration as a broker-dealer. Therefore some, but not all, crowdfunding intermediaries are registered broker-dealers while others are funding portals.
^{639} See 17 CFR part 227.
Funding portals are registered with the Commission and are members of FINRA. ^{640} They must provide investors with educational materials, take measures to reduce the risk of fraud, make information available about the issuer and the offering, and provide communication channels to permit discussions about offerings on the funding portal's platform, among other related services. ^{641} In facilitating crowdfunding transactions, funding portals may come into possession of investors' sensitive customer information, as investors are required to open an account with the funding portal before the funding portal may accept an investment commitment from them. ^{642} Funding portals may have possession of sensitive customer information but, unlike broker-dealers, funding portals are statutorily prohibited from holding, managing, possessing, or handling investor funds or securities. ^{643} These funding portals are required to direct investors to transmit money or other consideration for the securities directly to a qualified third party that has agreed in writing to hold the funds for the benefit of investors and the issuer and to promptly transmit or return the funds to the person entitled to the funds. ^{644}
^{640} See Regulation Crowdfunding, Release No. 33-9974, (Oct. 30, 2015) [80 FR 71388 (Nov. 16, 2015)] (“Regulation Crowdfunding Adopting Release”). An entity raising funds through securities-based crowdfunding typically seeks small individual contributions from a large number of people. Individuals interested in the crowdfunding campaign—members of the “crowd”—may share information about the project, cause, idea or business with each other and use the information to decide whether to fund the campaign based on the collective “wisdom of the crowd.” The JOBS Act established a regulatory structure for startups and small businesses to raise capital through securities offerings using the internet through crowdfunding. See id. at section I.A. Securities Act section 4(a)(6) provides an exemption from registration for certain crowdfunding transactions. 15 U.S.C. 77d(a)(6). A company issuing securities in reliance on rules established by the Regulation Crowdfunding Adopting Release (17 CFR part 227, “Regulation Crowdfunding”) is permitted to raise a maximum of $5 million in a twelve-month period and is required to conduct the transaction exclusively through an intermediary registered with the Commission, either a broker-dealer or a funding portal. See 17 CFR 227.100(a).
^{641} See Regulation Crowdfunding Adopting Release at section II.
^{642} See 17 CFR 227.302(a)(1). Regulation Crowdfunding Rule 302 does not prescribe specific information that a funding portal must collect as part of opening an account.
^{643} See 15 U.S.C. 78c(a)(80)(D).
^{644} See 17 CFR 227.303(e)(2), which defines a “qualified third party” as (i) a registered broker or dealer that carries customer or broker or dealer accounts and holds funds or securities for those persons or (ii) a bank or credit union (where such credit union is insured by National Credit Union Administration) that has agreed in writing either to hold the funds in escrow for the persons who have the beneficial interests therein and to transmit or return such funds directly to the persons entitled thereto when so directed by the funding portal as described in paragraph (e)(3) of the rule, or to maintain a bank or credit union account (or accounts) for the exclusive benefit of investors and the issuer.
As of December 31, 2023, there were 92 registered funding portals that were members of FINRA (excluding funding portals that had withdrawn their registration and FINRA membership). ^{645} The crowdfunding intermediary market is highly concentrated. ^{646} For example, based on staff analysis from May 16, 2016 (inception of Regulation Crowdfunding) through December 31, 2023, five intermediaries accounted for 70 percent of all initiated offerings, including one funding portal accounting for 29 percent of all initiated offerings. ^{647}
^{645} See FINRA, “Funding Portals We Regulate,” at https://www.finra.org/about/funding-portals-we-regulate .
^{646} The crowdfunding intermediary market includes all funding portals and some registered broker-dealers who may also serve as intermediaries of Regulation Crowdfunding transactions. See 17 CFR 227.300(a).
^{647} Based on staff analysis of EDGAR filings under Regulation Crowdfunding as of December 31, 2023. This includes all initiated offerings facilitated by either funding portals or registered broker-dealers.

c. Investment Advisers
Registered investment advisers provide a variety of services to their clients, including financial planning advice, portfolio management, pension consulting, selecting other advisers, publication of periodicals and newsletters, security rating and pricing, market timing, and conducting educational seminars. ^{648} Although advisers engaged in any of these activities are likely to possess sensitive customer information, the degree of sensitivity will vary widely across advisers. Some advisers may only hold the customer's address, payment details, and the customer's overall financial condition, while others may hold account numbers, tax identification numbers, access credentials to brokerage accounts, and other highly sensitive information.
^{648} See Form ADV.
Based on Form ADV filings received up to October 5, 2023, there are 15,565 investment advisers registered with the Commission with a total of more than 51 million individual clients and $114 trillion in assets under management. ^{649} Practically all (97 percent) of these advisers reported providing portfolio management services to their clients. ^{650} Over half (57 percent) reported having custody of clients' cash or securities either directly or through a related person, ^{651} with client funds in custody totaling $43 trillion. ^{652}
^{649} Form ADV, Items 5D(a-b) (as of Oct. 5, 2023). Broadly, regulatory assets under management capture the current value of assets in securities portfolios for which the adviser provides continuous and regular supervisory or management services. See Form ADV, Part 1A Instruction 5.b.
^{650} Form ADV, Items 5G(2-5) (as of Oct. 5, 2023).
^{651} Here, “custody” means “holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them.” An adviser also has “custody” if “a related person holds, directly or indirectly, client funds or securities, or has any authority to obtain possession of them, in connection with advisory services [the adviser] provide[s] to clients.” See 17 CFR 275.206(4)-2(d)(2).
^{652} Form ADV, Items 9A and 9B (as of Oct. 5, 2023).
Figure 6 plots the cumulative distribution of the number of individual clients handled by investment advisers registered with the Commission. The distribution is highly skewed: 13 advisers each reported having more than one million clients while 95 percent of advisers reported having fewer than 2,000 clients. Many such advisers are quite small, with half reporting fewer than 62 clients. ^{653}
^{653} Form ADV, Items 5D(a) and (b) (as of Oct. 5, 2023).
Similarly, most investment advisers registered with the Commission are limited geographically. These advisers must generally make a “notice filing” with a State in which they have a place of business or six or more clients. ^{654} Figure 7 plots the frequency distribution of the number of such filings. Based on notice filings, 57 percent of investment advisers registered with the Commission operated in fewer than four States, and 37 percent operated in only one State. ^{655}
^{654} See General Instructions to Form ADV (as of Oct. 5, 2023).
^{655} Form ADV, Item 2.C (as of Oct. 5, 2023). This includes 1,887 advisers who do not make any notice filings.

d. Investment Companies
Investment companies are companies that issue securities and are primarily engaged in the business of investing in securities. Investment companies invest money they receive from investors on a collective basis, and each investor shares in the profits and losses in proportion to that investor's interest in the investment company. Investment companies subject to the final amendments include registered open-end and closed-end funds, business development companies (“BDCs”), Unit Investment Trusts (“UITs”), employee securities' companies (“ESCs”), and management company separate accounts (“MCSAs”). Because they are not operating companies, investment companies do not have “customers” as such, and thus are unlikely to possess significant amounts of nonpublic “customer” information in the conventional sense. They may, however, have access to nonpublic information about their investors. ^{656}
^{656} The definition of “customer information” in the final amendments includes information about investment companies' investors. See final rule §§ 248.30(d)(5)(i) and 248.3(t).
Table 4 summarizes the investment company universe that will be subject to the final amendments. In total, as of September 30, 2023, there were 13,766 investment companies, including 12,183 open-end management investment companies, 682 closed-end managed investment companies, 702 UITs, ^{657} 141 BDCs, ^{658} approximately 43 ESCs, and 15 MCSAs. Many of the investment companies that will be subject to the final amendments are part of a “family” of investment companies. ^{659} Such families often share infrastructure for operations ( e.g., accounting, auditing, custody, legal), and potentially marketing and distribution. We expect that many of the compliance costs and other economic costs discussed in the following sections will likely be borne at the family level. ^{660} We estimate that there were up to 1,131 distinct operational entities (families and unaffiliated investment companies) in the investment company universe. ^{661}
^{657} For this release, the number of UITs includes N-4, N-6, N-8B-2, and S-6 filers as of Sept. 30, 2023. The Proposing Release cited a figure of 662 UITs using 2021 N-CEN filings. The correct number of UITs using 2021 N-CEN filings in the Proposing Release should be 703. This change would not have affected the Commission's assessment of economic effects at Proposal as these assessments were focused primarily on effects at the level of individual covered institutions and their customers.
^{658} For this release, the number of BDCs was estimated using London Stock Exchange Group (“LSEG”) BDC Collateral data as of Sept. 2023.
^{659} As used here, “family” refers to a set of funds reporting the same family investment company name (Form N-CEN Item B.5) or filing under the same registrant name (Form N-CEN Item B.1.A).
^{660} For example, each investment company in a family is likely to share common policies and procedures.
^{661} For this release, the number of unaffiliated entities was estimated using N-CEN filings as of Sept. 30, 2023. The Proposing Release cited a figure of 476 using 2021 N-CEN filings. The correct number of the unaffiliated entities using 2021 N-CEN filings in the Proposing Release should be 609. This change would not have affected the Commission's assessment of economic effects at Proposal as these assessments were focused primarily on effects at the level of individual covered institutions and their customers.

e. Transfer Agents
Transfer agents maintain records of security ownership and are responsible for processing changes of ownership (“transfers”), communicating information from the firm to its security-holders ( e.g., sending annual reports), replacing lost stock certificates, etc. However, in practice, most securities registered in the U.S. are held in “street name,” where the ultimate ownership information is not maintained by the transfer agent but rather in a hierarchal ledger. In this structure, securities owned by individuals are not registered in the name of the individual with the transfer agent. Rather, the individual's broker maintains the records of the individual's ownership claim on securities. Brokers, in turn, have claims on securities held by a single nominee owner who maintains records of the claims of the various brokers. ^{662} In such cases, the transfer agent is not aware of the ultimate owner of the securities and therefore does not hold sensitive information belonging to those owners, as only the broker holds this information.
^{662} In the U.S., this owner is generally Cede & Co., a partnership organized by the Depository Trust & Clearing Corporation.
Despite the prevalence of securities held in street name, a large number of individuals nonetheless hold securities directly through a transfer agent. Securities held directly may be held either in the form of a physical stock certificate or in book-entry form through the Direct Registration System (“DRS”). In either case, the transfer agent would need to maintain sensitive information about the individuals who own the securities. For example, to handle a request for replacement certificate, the transfer agent would need to confirm the identity of the individual making such a request and to maintain a record of such confirmation. Similarly, to effect DRS transfers, a transfer agent would need to provide a customer's identification information in the message to the DRS.
In 2023, there were 251 transfer agents registered with the Commission, with an additional 64 registered with the Banking Agencies. ^{663} As discussed above, ^{664} differences in the baseline regulation of these transfer agents affect their current notification obligations. ^{665} Among the 315 transfer agents, 132 are considered small entities. ^{666} By registration, 100 of these small transfer agents are registered with the Commission and 32 are registered with the Banking Agencies. ^{667}
^{663} Form TA-1 (as of Sept. 30, 2023).
^{664} See supra footnotes 601 and 604 and accompanying text.
^{665} See infra sections IV.D.2.b and IV.E (discussing benefits and costs, and competitive effects, relative to the baseline).
^{666} See infra section VI.C. Estimate based on the number of transfer agents that reported a value of fewer than 1,000 for items 4(a) and 5(a) on Form TA-2 collected by the Commission as of Sept. 30, 2023.
^{667} Id.
On average, each transfer agent reported around 1 million individual accounts, with the largest reporting 61 million. ^{668} Figure 8 plots the cumulative distribution of the number of individual accounts reported by registered transfer agents. Approximately one third of registered transfer agents reported no individual accounts, ^{669} and 58 percent reported fewer than ten thousand individual accounts. ^{670}
^{668} Form TA-2 Items 5(a) (as of Sept. 30, 2023). This analysis is limited to the 265 transfer agents that filed form TA-2. For the 205 transfer agents registered with the Commission that filed form TA-2, the average number of individual accounts is 1.2 million; for the 60 transfer agents registered with the Banking Agencies that filed form TA-2, the average number of individual accounts is 69 thousand.
^{669} Some registered transfer agents outsource many functions—including tracking the ownership of securities in individual accounts—to other transfer agents (“service companies”). See Form TA-1 Item 6 (as of June 20, 2022).
^{670} Form TA-2, Items 5(a) (as of Sept. 30, 2023).

f. Service Providers
The final amendments require that a covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers. These policies and procedures must be reasonably designed to ensure service providers take appropriate measures to protect against unauthorized access to or use of customer information and to notify covered institutions of an applicable breach in security. ^{671} These requirements on a covered institution will affect a service provider that “receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to [the] covered institution.” ^{672}
^{671} See final rule 248.30(a)(5).
^{672} Final rule 248.30(d)(10).
Covered institutions' relationships with a wide range of service providers will be affected. Specialized service providers with offerings geared toward outsourcing of covered institutions' core functions will generally fall under the requirements. Those offering customer relationship management, customer billing, portfolio management, customer portals ( e.g., customer trading platforms), customer acquisition, tax document preparation, proxy voting, and regulatory compliance ( e.g., AML/KYC) will likely fall under the requirements. Some of these specialized service providers will be themselves covered institutions. ^{673} In addition, various less-specialized service providers might potentially fall under the requirements. Service providers offering Software-as-a-Service (SaaS) solutions for email, file storage, and similar general-purpose services might potentially be in a position to receive, maintain, or process customer information. Similarly, providers of Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS), as well as those offering more “traditional” consulting services ( e.g., IT contractors) will in many cases be “otherwise [ ] permitted access to customer information” and might fall under the provisions.
^{673} For example, many investment companies rely on third-party investment advisers and transfer agents.
In the Proposing Release, we stated that the financial services industry is increasingly relying on service providers through various forms of outsourcing. ^{674} We also stated that we were unable to quantify or characterize in much detail the structure of the relevant service provider markets due to data limitations. ^{675} One commenter stated that this resulted in an analysis that fails to meaningfully address the associated costs. ^{676} While this commenter did not identify any additional data sources, in response we have conducted a further review of industry literature. ^{677} While we continue to find certain data limitations, we also have identified certain additional informative data points on covered institutions' reliance on service providers. ^{678} A recent notice issued by FINRA states that FINRA's members, which include broker-dealers, “are increasingly using third-party vendors to perform a wide range of core business and regulatory oversight functions,” a trend that has accelerated with the COVID-19 pandemic. ^{679} One report describes the results of a 2022 survey of 248 advisers and independent broker-dealers. ^{680} The survey found that 32 percent of the registered investment advisers and 50 percent of the independent broker-dealers that responded to the survey reported outsourcing investment management functions, and that while these proportions had not changed significantly in the past decade, half of the respondents who do outsource some of these functions reported an increase in their use of service providers. In addition, a different recent report finds that 33 percent of asset managers surveyed outsource their entire back-office function and 20 percent outsource their entire middle-office function. ^{681} By the nature of their business models, most of the operations of investment companies are carried out by service providers. ^{682} Finally, many transfer agents outsource many functions. ^{683} Hence, all types of covered institutions affected by the final amendments commonly retain service providers to some extent.
^{674} See Proposing Release at section III.C.3.e; see also Bank for International Settlements, Outsourcing in Financial Services (Feb. 15, 2005), available at
https://www.bis.org/publ/joint12.htm .
^{675} See Proposing Release at section III.C.3.e.
^{676} See IAA Comment Letter 1.
^{677} In addition, in response to this commenter, we have added further details on the current regulatory framework, in particular with respect to the obligations of covered institutions regarding their service providers and the notification obligations of service providers. See supra section IV.C.2. Also, we have supplemented the analysis of the benefits and costs of the final amendments' service provider requirements. See infra section IV.D.1.c. The supplemental review described here is designed to help us analyze and respond to commenters, and also to provide additional context for this analysis.
^{678} Potential service providers include a wide range of firms fulfilling a variety of functions. The internal organization of covered institutions, including their reliance on service providers, is not generally publicly observable. Although certain regulatory filings shed a limited light on the use of third-party service providers ( e.g., transfer agents' reliance on third parties for certain functions and investment advisers' reliance on third parties for recordkeeping), we are unaware of any data sources that provide detail on the reliance of covered institutions on service providers.
^{679} See FINRA, Regulatory Notice 21-29, supra footnote 515.
^{680} See FlexShares, The Race to Scalability 2022 (July 2022).
^{681} See Cerulli Associates, Asset Managers Turn to Outsourcing Providers for Operating Model Sustainability (Nov. 22, 2022), available at
https://www.cerulli.com/press-releases/asset-managers-turn-to-outsourcing-providers-for-operating-model-sustainability (“Cerulli Report”).
^{682} See Investment Company Institute, How US-Registered Investment Companies Operate and the Core Principles Underlying Their Regulation (May 2022), available at https://www.ici.org/system/files/2023-06/us-reg-funds-principles.pdf .
^{683} See supra footnote 670. See also Interagency Guidance on Third-Party Relationships: Risk Management, 88 FR 37920, 37937 (June 9, 2023), which may cover some transfer agents registered with a regulatory agency other than the Commission.

D. Benefits and Costs of the Final Rule Amendments
The final amendments can be divided into four main components. First, they create a requirement for covered institutions to adopt policies and procedures for the protection of customer information. The policies and procedures must include an incident response program to address unauthorized access to or use of customer information, including by providing notification to individuals affected by an incident during which their sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. The response program must also include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight of service providers, including to ensure service providers take appropriate measures to protect against unauthorized access to or use of customer information. Second, the amendments define the information covered by the safeguards rule and the disposal rule, ^{684} and extend the application of the safeguards rule to transfer agents. Third, the amendments require covered institutions (other than funding portals) to maintain and retain records documenting compliance with the amended rules. ^{685} Fourth, they incorporate into regulation an existing statutory exemption for annual privacy notices. Below we discuss the benefits and the costs of each component in turn.
^{684} See final rule 248.30(a)(1), 248.30(b), 248.30(d)(1), and 248.30(d)(5).
^{685} As discussed above, funding portals are not subject to the recordkeeping obligations found under Rule 17a-4. Funding portals are instead obligated, pursuant to Rule 404 of Regulation Crowdfunding, to make and preserve all records required to demonstrate their compliance with Regulation S-P for five years, the first two years in an easily accessible place. See supra footnote 385; see also 17 CFR 227.404(a)(5).
Some commenters criticized, generally, the discussion of benefits and costs in the Proposing Release. One commenter stated that the Commission should “undertake a more expansive, accurate, and quantifiable assessment of the specific and cumulative costs, burdens, and economic effects that would be placed on investment advisers by the proposed requirements, as well as of the potential unintended consequences for their clients.” ^{686} Another commenter stated a need for more in-depth analysis of how the proposed amendments might impact transfer agents, their customers (issuers of securities), and securityholders. ^{687} Other commenters did not directly disagree with the analysis in the Proposing Release, but stated that the proposed amendments would place a high overall burden on covered institutions, including smaller institutions. ^{688}
^{686} See IAA Comment Letter 1.
^{687} See STA Comment Letter 2.
^{688} See, e.g., SIFMA Comment Letter 2; ASA Comment Letter.
In response to these commenters, we have supplemented the analysis of the benefits and the costs of the final amendments regarding the timing requirement for notification of customers affected by a breach, including by providing more details on how the requirements differ from the baseline; ^{689} different elements required to be included in a notice to affected individuals; ^{690} different requirements relating to service providers; ^{691} and the extension of the rule's scope to include all transfer agents. ^{692} As discussed below, we have also made changes to the final amendments that will reduce compliance costs for all covered institutions, including those that are smaller in size. ^{693}
^{689} See infra section IV.D.1.b(2); see also supra section IV.C.2.a(2).
^{690} See infra section IV.D.1.b(5); see also supra section IV.C.2.a(2).
^{691} See infra section IV.D.1.c; see also supra sections IV.C.2.a(3) and IV.C.3.f.
^{692} See infra section IV.D.1.b; see also supra section IV.C.2.a(3).
^{693} See infra footnote 1058 and accompanying text.
Several commenters stated that the Commission should consider the cumulative costs of implementing the proposed amendments and other recent Commission rules and proposed rules. ^{694} Specifically, one commenter stated that “there can be no doubt that the costs of compliance—direct and indirect—rise with each regulation and directly impact the ability of [covered institutions] to invest in other aspects of their businesses” and that the Commission should “consider the cumulative effects that” the final amendments and other adopted rules will have on covered institutions' “operational limitations and, more importantly, resource constraints, in determining the compliance dates.” ^{695} That commenter and others mentioned proposals which culminated in several adopted rules. ^{696}
^{694} See supra footnote 482.
^{695} See IAA Comment letter 2.
^{696} See supra footnotes 483-493.
Consistent with its long-standing practice, the Commission's economic analysis in each adopting release considers the incremental benefits and costs for the specific rule—that is, the benefits and costs stemming from that rule compared to the baseline. The Commission acknowledges the possibility that complying with more than one rule may entail costs that could exceed the costs if the rules were to be complied with separately. Four of the rules identified by commenters have compliance dates that occur before the effective date of the final amendments, ^{697} such that there is no overlap in compliance periods. The compliance periods for the other rules overlap in part, but the compliance dates adopted by the Commission in recent rules are generally spread out over an approximately three-year period from 2023 to 2026, ^{698} which could limit the number of implementation activities occurring simultaneously. Where overlap in compliance periods exists, the Commission acknowledges that there may be additional costs on those covered institutions subject to one or more other rules as well as implications of those costs, such as impacts on entities' ability to invest in other aspects of their businesses. ^{699}
^{697} The compliance dates for the Electronic Recordkeeping Adopting Release occurred in 2023, and the compliance date for the Settlement Cycle Adopting Release is May 28, 2024. The compliance dates for the May 2023 SEC Form PF Adopting Release and the Form N-PX Adopting Release are June 11, 2024, and July 1, 2024, respectively.
^{698} See supra section IV.C. In addition, we adopted longer compliance periods for all covered institutions relative to the proposal, and an even longer compliance period for smaller covered institutions. See supra section II.F.
^{699} See, e.g., IAA Comment letter 2 (describing the types of implementation activities, such as updating internal controls, and training).
Covered institutions subject to the final amendments in this rulemaking may be subject to one or more of the other adopted rules commenters named depending on whether those institutions' activities fall within the scope of the other rules. Specifically, the rules and amendments in the February 2024 Form PF Adopting Release, and those rules and amendments in the Private Fund Advisers Adopting Release for which the compliance dates have not already passed, apply to advisers to private funds: as private fund advisers are a subset of the covered institutions affected by the amendments, only a subset of covered institutions face compliance costs associated with these recent rules and amendments. ^{700} The Public Company Cybersecurity Rules apply only to public companies, not all covered institutions. ^{701} The amendments adopted in the Money Market Fund Adopting Release place a compliance burden on money market funds and certain liquidity fund advisers registered with the Commission, which are also a subset of covered institutions. ^{702} The Investment Company Names Adopting Release amended requirements for those registered investment companies and BDCs with names with terms suggesting that the fund has particular characteristics, which are a subset of the funds affected by the final amendments. ^{703} The Beneficial Ownership Adopting Release amended disclosure requirements that apply only to persons who beneficially own more than five percent of a covered class of equity securities. ^{704} The rule adopted in the Securitization Conflicts Adopting Release affects only certain entities (and their affiliates and subsidiaries) that participate in securitization transactions. ^{705} We acknowledge that covered institutions subject to multiple rules may still experience increased costs associated with implementing multiple rules at once as well as implications of those costs, such as impacts on those institutions' ability to invest in other aspects of their businesses.
^{700} See Private Fund Advisers Adopting Release, at section VI.C.1; February 2024 Form PF Adopting Release, at section IV.B.2.
^{701} See Public Company Cybersecurity Rules, at section IV.B.2. One commenter also suggested the Commission should consider the relationship between reporting obligations in the proposed amendments and the Public Company Cybersecurity Rules. See ASA Comment Letter. We modified the final amendments, relative to the proposal, to align with the Public Company Cybersecurity Rules with regard to disclosure delays for national security or public safety reasons. See supra section II.A.(d)(2).
^{702} See Money Market Fund Adopting Release, at section IV.B.
^{703} See Investment Company Names Adopting Release, at section IV.C.
^{704} See Beneficial Ownership Adopting Release, at section IV.B.3.
^{705} See Securitization Conflicts Adopting Release, at section IV.B.2.

1. Written Policies and Procedures
In this section, we discuss the effects of written policies and procedures requirements in the final amendments, focusing on those relating to the incident response program required under the final amendments. Specifically, while the final amendments require covered institutions to develop, implement, and maintain written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information, ^{706} general written policies and procedures to protect customer information are already part of the baseline. ^{707} The primary new requirements pertain to written policies and procedures that must include an incident response program to address unauthorized access to or use of customer information.
^{706} See final rule 248.30(a)(1).
^{707} Prior to this adoption, Regulation S-P already required covered institutions to adopt policies and procedures reasonably designed to protect customer information. See supra section IV.C.2.b. Transfer agents were not previously covered by the safeguards rule and were not, before this adoption, required by the Commission to have such written policies and procedures in place. We analyze the benefits and costs that are specific to transfer agents in section IV.D.2.b.
We expect that requiring written policies and procedures for the response program will improve the effectiveness of response programs in multiple ways, which will benefit covered institutions and their customers. Written policies and procedures are a practical prerequisite for organizations to implement standard operating procedures and have been recognized as effective at improving outcomes in critical environments. ^{708} We expect that this will also be the case for response programs for data breach incidents. Written policies and procedures can help ensure that the covered institution's personnel know what corrective actions to take and when in the event of a data breach. Written policies and procedures can also help ensure that the incident is handled in an optimal manner. Moreover, establishing incident response procedures ex ante can facilitate discussion among the covered institution's staff and expose flaws in the incident response procedures before they are used in a real response. This may also lead to covered institutions improving their customer information safeguards, which could reduce the likelihood of unauthorized access to or use of customer information in the first place. ^{709}
^{708} Other Commission regulations, such as the Investment Company Act and Investment Advisers Act compliance rules, require policies and procedures. 17 CFR 270.38a-1(a)(1), 275.206(4)-7(a). The utility of written policies and procedures is recognized outside the financial sector as well; for example, standardized written procedures have been increasingly embraced in the field of medicine. See, e.g., Robert L. Helmreich, Error Management as Organizational Strategy, In Proceedings of the IATA Human Factors Seminar, Vol. 1., Citeseer (1998); see also Joseph Alex, Chaparro Keebler, Elizabeth Lazzara & Anastasia Diamond, Checklists: A Review of Their Origins, Benefits, and Current Uses as a Cognitive Aid in Medicine, Ergonomics in Design, 2019 Q. Hum. Fac. App. 27 (2019). We are not aware of any studies that assess the efficacy of written policies and procedures specifically in the context of financial regulation, and no commenter provided such sources.
^{709} See infra s ection IV.D.1.b(3) for examples of how covered institutions could enhance their customer information safeguards.
We do not anticipate that the final requirement for written policies and procedures will result in substantial new benefits from its application to large covered institutions, those with a national presence, or those already subject to comparable Federal regulations. As stated above, ^{710} all States and the District of Columbia generally require businesses to notify their customers when certain customer information is compromised. States do not typically require the adoption of written policies and procedures for the handling of such incidents. ^{711} However, despite the lack of explicit statutory requirements, covered institutions—especially those with a national presence—may have developed and implemented written policies and procedures for a response program that incorporates various standard elements, including for assessment, containment, and notification. ^{712} Given the numerous and distinct State data breach laws, it would be difficult for larger covered institutions operating in multiple States to comply effectively with existing State laws without having some written policies and procedures in place. As such covered institutions are generally larger, they are more likely to have compliance staff dedicated to designing and implementing regulatory policies and procedures, which could include policies and procedures regarding incident response. Moreover, to the extent that covered institutions that have already developed written policies and procedures for incident response have based such policies and procedures on common cyber incident response frameworks ( e.g., NIST Computer Security Incident Handling Guide, CISA Cybersecurity Incident Response Playbook), ^{713} generally accepted industry best practices, or other applicable regulatory guidelines, ^{714} these large covered institutions' written policies and procedures are likely to include the elements of assessment, containment, and notification, and to be substantially consistent with the requirements of the final amendments. Thus, we do not anticipate that the final requirement for written policies and procedures will result in substantial new benefits from its application to these institutions.
^{710} See supra section IV.C.2.
^{711} Some States do, however, require businesses to have procedures to protect personal information. See, e.g., Cal. Civil Code section 1798.81.5 and N.Y. Gen. Bus. Law. section 899-BB.
^{712} Various industry guidebooks, frameworks, and government recommendations share many common elements, including the ones included in the final amendments. See, e.g., NIST Computer Security Incident Handling Guide and CISA Incident Response Playbook.
^{713} See supra footnote 625.
^{714} For example, the Banking Agencies' Incident Response Guidance states that covered institutions that are subsidiaries of U.S. bank holdings companies should develop response programs that include assessment, containment, and notification elements. See supra discussion of Banking Agencies' Incident Response Guidance in text accompanying footnote 605.
For the same reasons, this requirement is unlikely to impose significant new costs for these institutions. As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures to comply with the final amendments will be, on average, $15,445 per year per covered institution. ^{715} Here, we expect the main costs associated with the final requirement to be the costs of reviewing, and possibly updating, existing policies and procedures to ensure that they satisfy the new requirements. Hence, we expect these reviews and updates will result in these covered institutions incurring direct compliance costs generally smaller than the costs of developing and implementing new policies and procedures. If covered institutions respond to this requirement by improving their customer information safeguards beyond what is required by the final amendments, they will incur additional costs. ^{716} We expect that the costs incurred by these covered institutions as a result of this requirement will ultimately be passed on to customers of these institutions. ^{717}
^{715} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per covered institution. See infra section V. We expect that for some institutions, the actual costs might be lower than these estimates. For example, there may be some portability between funds belonging to the same family of investment companies, which could mitigate costs per investment company. See supra section IV.C.3.d. We estimate that these costs will be higher for transfer agents because transfer agents were not, before this adoption, covered by the safeguards rule. In addition, transfer agents registered with a regulatory agency other than the Commission were not, before this adoption, covered by the disposal rule. See infra footnote 1003 and accompanying text.
^{716} Because covered institutions could decide to enhance their customer information safeguards in many different ways, we are unable to quantify expected costs resulting from such enhancements. See infra section IV.D.1.b(3) for examples of how covered institutions could enhance their customer information safeguards as a result of the final amendments.
^{717} Costs incurred by larger covered institutions as a result of the final amendments will generally be passed on to their customers in the form of higher fees. However, smaller covered institutions—which are likely to face higher costs relative to their size—may not be able to do so. See infra section IV.E.
We expect that the final written policies and procedures requirements will have more substantial benefits and costs for smaller covered institutions without a national presence, such as small registered investment advisers and broker-dealers who cater to a clientele based on geography, as compared to larger covered institutions. Before this adoption, some of these covered institutions may have had lower incentives to develop and implement written policies and procedures for a response program and may therefore have been less likely to have such policies and procedures in place for several reasons. First, the incentives to develop and implement policies and procedures for a response program may vary for covered institutions of different sizes. Some smaller covered institutions may already prioritize response programs, for example because the firm views reputational costs of a cybersecurity breach or other type of unauthorized access to or use of customer information as posing the potential for serious harm to the firm. However, for other smaller covered institutions, the firm and its managers may view response programs as lower priority because, for example, the potential reputational cost of an unauthorized access to or use of customer information may be relatively smaller than it would be for a larger firm. This would be the case to the extent that the firm and its managers perceive that the firm has a lower franchise value (the present value of the future profits that a firm is expected to earn as a going concern) and lower brand equity (the value of potential customers' perceptions of the firm). Thus, the costs of potential reputational harm may be perceived to be lower than at larger firms. Moreover, the cost of developing and implementing written policies and procedures for a response program is proportionately large compared to larger covered institutions since it involves fixed costs.
Second, some covered institutions could potentially have, before this adoption, complied effectively with the relevant State data breach notification laws without adopting written policies and procedures to deal with customer notification: they may only have needed to consider—on an ad hoc basis—the notification requirements of the small number of States in which their customers reside. ^{718} Hence, for such covered institutions, the cost of developing policies and procedures will be relatively larger, but the benefits for the customers of these institutions will also be larger.
^{718} As discussed above, many registered investment advisers have clients in only a few States. See supra section IV.C.3.c.
We expect that for such covered institutions, the final amendments will likely impose additional compliance costs related to written policies and procedures for safeguarding customer information. ^{719} Certain costs associated with developing and implementing policies and procedures to comply with the final amendments are estimated to be $15,445 generally per year per covered institution, but may vary depending on the size of the institution and the current state of their existing policies and procedures. ^{720} Furthermore, as for larger covered institutions, if these covered institutions respond to this requirement by improving their customer information safeguards beyond what is required by the final amendments, they will incur additional costs. While these smaller covered institutions might potentially pass some of the costs resulting from the final amendments on to customers in the form of higher fees, their ability to do so may be limited due to the presence of larger competitors with more customers across which to spread costs. ^{721} In addition, covered institutions that improve their customer notification procedures in response to the final amendments might suffer reputational costs resulting from the additional notifications. ^{722}
^{719} The existing policies and procedures were already required under Regulation S-P before this adoption; see 17 CFR 248.30. The final amendments may also generate additional costs to covered institutions who decide to improve their customer information safeguards to avoid the potential reputational harm associated with the customer notification requirements. However, one commenter stated that the FTC has often noted that reasonable security measures are a relatively low cost. See EPIC Comment Letter. Such improvements in customer information safeguards would also provide potential benefits to customers in addition to reducing the risk of reputational harm for the covered institutions.
^{720} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per covered institution. See infra section V. We expect that for some institutions, the actual costs might be lower than these estimates. For example, there may be some portability between funds belonging to the same family, which could mitigate costs. See supra section IV.C.3.d.
^{721} See supra section IV.C.3. Developing and implementing written policies and procedures for a response program involves fixed costs. Larger institutions can spread these costs over a larger number of customers, resulting in a smaller increase in the price that each customer pays. Smaller institutions must spread these costs over a smaller number of customers, resulting in a larger price increase per customer. This could result in smaller institutions losing more customers as a result of the increase in price. Hence, smaller institutions could decide to absorb more of the costs compared to large institutions in order to avoid losing customers.
^{722} See supra section IV.B; see also infra section IV.D.1.b.
Some commenters stated that many covered institutions already had policies and procedures in place. ^{723} These commenters also stated that these policies and procedures would need to be reviewed and updated to comply with the amendments, but to different extents. On the one hand, one commenter stated that its members already complied with much of the proposal's content through State regulations, such as the requirements that companies maintain written cybersecurity policies and procedures, respond to cyber incidents, notify authorities and consumers of certain cyber incidents, and dispose of consumer data. ^{724} A second commenter stated that the customer notification requirements would need to be incorporated into existing policies and procedures. ^{725} These commenters' perspectives are consistent with our view that the final rules will impose a fairly limited burden for covered institutions bringing existing policies and procedures into compliance with the new requirements. On the other hand, a different commenter stated that written incident response program policies and procedures and recordkeeping requirements would need to be created and implemented, ^{726} indicating higher potential burden. Hence, we continue to expect that the policies and procedures requirements will potentially have different effects on different covered institutions. ^{727} In a change from the proposal and after considering commenters' concerns, we are now adopting a longer compliance period for all covered institutions relative to the proposal, and an even longer compliance period of 24 months for smaller covered institutions, which are less likely to already have policies and procedures broadly consistent with the final amendments. ^{728}
^{723} See, e.g., IAA Comment Letter 1; SIFMA Comment Letter 2.
^{724} See ACLI Comment Letter.
^{725} See SIFMA Comment Letter 2.
^{726} See IAA Comment Letter 1.
^{727} For example, some covered institutions, such as transfer agents, may not have existing notification procedures since they may not have been required, under State law, to notify customers in case of a breach. See supra section IV.C.2.a(3); infra section IV.D.2.b.
^{728} The compliance period for larger institutions under the final amendments is 18 months from the date of publication in the Federal Register . The proposed compliance period for all covered institutions was 12 months from the effective date of the final amendments. See supra section II.F.
Two commenters discussed how the proposed amendments would affect an entity that is dually registered as an investment adviser and broker-dealer. One commenter stated that it appreciated the approach of the proposal, which applies uniformly to the two types of covered institutions and would allow for streamlining of processes. ^{729} Another commenter stated that bringing both sides of the entity into compliance with the proposed amendments would impose a significant burden and require a dual registrant to modify both sides of the entity' compliance frameworks. ^{730} We do not expect a significant burden, because we expect that these institutions could generally implement a single set of procedures to comply with many of the provisions of the final amendments, which would limit these additional burdens. ^{731} To the extent entities registered as more than one category of covered institution arrange their business such that there are separate policies and procedures for each category, those entities may encounter additional cost burden when complying with the final amendments. For example, an entity that creates two different incident response programs for its advisory and broker-dealer operations could bear as much as twice the cost burden as the same entity would bear when creating one incident response program, ^{732} although there may be efficiencies to the extent that development of one program informs the other. The final amendments, however, do not prevent that entity from using the same incident response program across its categories of covered institutions.
^{729} See FSI Comment Letter.
^{730} See Cambridge Comment Letter.
^{731} For example, we expect that these institutions will be able to implement a single set of procedures to satisfy the customer notification requirements.
^{732} For example, annual average costs of $30,890 associated with preparation of written policies and procedures instead of annual average costs of $15,445. See, e.g., infra footnote 856 and accompanying text.
In the remainder of this section, we first consider the benefits and costs associated with requiring covered institutions to have a response program generally. We then analyze the benefits and the costs of the notification requirements vis-à-vis the notification requirements already in force under the various existing State laws. We conclude this section with an analysis of the benefits and costs of the response program's service provider provisions.

a. Response Program
The final amendments require covered institutions' written policies and procedures to include a response program “reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures.” ^{733} The response program must address incident assessment, containment, as well as customer notification and oversight of service providers. ^{734}
^{733} Final rule 248.30(a)(3).
^{734} See final rule 248.30(a)(3).
The question of how best to structure the response to an incident resulting in unauthorized access to or use of customer information has received considerable attention from firms, IT consultancies, government agencies, standards bodies, and industry groups, resulting in numerous reports with recommendations and summaries of best practices. ^{735} While the emphasis of these reports varies, certain key components are common across many incident response programs. For example, NIST's Computer Security Incident Handling Guide identifies four main phases to cyber incident handling: (1) preparation; (2) detection and analysis; (3) containment, eradication, and recovery; and (4) post-incident activity. ^{736} The assessment, containment, and notification prongs of the final policies and procedures requirements correspond to the latter three phases of the NIST recommendations. Similar analogues are found in other reports, recommendations, and other regulators' guidelines. ^{737} Thus, the required procedures of the incident response program are substantially consistent with industry best practices and these other regulatory documents that seek to develop effective policies and procedures in this area.
^{735} See supra section IV.C.1.
^{736} See NIST Computer Security Incident Handling Guide.
^{737} See supra text accompanying footnote 604.
While some commenters suggested that some specific provisions of the amendments be better aligned with existing regulation, ^{738} other commenters stated that the Commission's proposal would generally align the amendments with other regulatory frameworks such as the Banking Agencies' Incident Response Guidance. ^{739} One of these commenters stated that consistency across regulatory requirements facilitates firms' operations, provides for efficiencies in their operations, and better serves customers. ^{740} In the final amendments, we have revised some requirements from the proposal to better align them with existing regulatory framework. For example, one commenter stated that a 72-hour deadline would improve alignment with other existing requirements and that this would significantly reduce complexity and compliance burdens for covered institutions and their service providers. ^{741} Consistent with other regulatory frameworks, ^{742} the final amendments require that covered institutions ensure that their service providers take appropriate measures to provide notification to the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred. ^{743}
^{738} See SIFMA Comment Letter 2; Computershare Comment Letter.
^{739} See, e.g., ICI Comment Letter 1; Nasdaq Comment Letter.
^{740} See ICI Comment Letter 1.
^{741} See Microsoft Comment Letter; see also supra footnote 245 and accompanying text.
^{742} See supra footnote 257 and accompanying text.
^{743} The proposed amendments instead had a requirement of 48 hours. See Proposing Release at section II.A.3.
Similar to the written policies and procedures requirement, we expect the benefits and the costs of the response program requirements to vary across covered institutions. In general, costs will be larger for entities that do not have any related incident response programs or related policies and procedures. For those entities, costs may include needing to familiarize themselves with the new requirements, initial set-up costs for new systems to monitor when customers need to be notified, new notification systems, and development and implementation of new policies and procedures associated with response programs. Therefore, on the one hand, the effects of the requirements are likely to be small for covered institutions with a national presence who are likely to already have such programs in place. ^{744} For such institutions, we expect direct compliance costs to be largely limited to reviews and, if needed, updates of existing policies and procedures. ^{745} On the other hand, we expect greater benefits and costs for smaller, more geographically limited covered institutions since they are less likely to have an existing incident response program. The benefits ensuing from these institutions incorporating incident response programs to their written policies and procedures can be expected to arise from improved efficacy in notifying affected customers and—more generally—from improvements in the manner in which such incidents are handled. The response program requirements might potentially provide substantial benefit in a specific incident, for example in the case of a data breach at an institution that does not currently have an incident response program and is unprepared to promptly respond in keeping with law and best practice. Such an institution will also bear the full costs associated with adopting and implementing procedures complying with the final amendments. ^{746}
^{744} In addition, as discussed above, private funds may be subject to the FTC Safeguards Rule, which requires an incident response plan. See supra footnotes 614 and 617 and accompanying text. Hence, we expect that private funds advisers that are registered with the Commission may already have an incident response plan in place.
^{745} We expect these reviews and updates will result in entities incurring costs generally smaller than the costs of adopting and implementing new procedures. See supra section IV.D.1.
^{746} See supra footnote 721 and accompanying text for a discussion of certain quantified costs associated with developing and implementing policies and procedures. See also infra section V.
In addition to helping ensure that customers are notified when their data are breached, ^{747} having reasonably designed strategies for incident assessment and containment ex ante might reduce the frequency and scale of breaches through more effective intervention and improved managerial awareness, providing further indirect benefits. Any such improvements to covered institutions' processes will benefit their customers ( e.g., by reducing harms to customers resulting from data breaches), as well as the covered institutions themselves ( e.g., by reducing the expected costs of handling data breaches), representing further indirect benefits of the rule.
^{747} The benefits and costs specific to the notification requirements are analyzed in detail in section IV.D.1.b below.
We lack data on efficacy of incident assessment, incident containment, or customer notification that would allow us to quantify the economic benefits of the final requirements, and no commenter suggested such data. Similarly, we lack data, and no commenter suggested such data, that would allow us to quantify the indirect economic costs, such as reputational cost of any potential increase in the frequency of customer notification or the indirect costs of customer information protection improvements that may be undertaken to avoid such reputational costs. In the aggregate, however, considering the amendments in the context of the baseline, these benefits and costs are likely to be limited. As we have discussed above, ^{748} all States have previously enacted data breach notification laws with substantially similar aims and, therefore, we think it likely that many institutions have response programs to support compliance with these laws. In addition, we anticipate that larger covered institutions with a national presence—which account for the bulk of covered institutions' customers—have already developed written incident response programs consistent with the proposed requirements in most respects. ^{749} Thus, the benefits and costs of requiring written incident response programs will be the most significant for smaller covered institutions without a national presence—institutions whose policies affect relatively few customers.
^{748} See supra section IV.C.2.a.
^{749} See supra footnote 713 and accompanying text.
In support of the proposed response program requirement, some commenters stated that response programs had benefits beyond the notification of affected individuals. One commenter stated that effective cybersecurity practices and system safeguards, including incident response and notification, were critical for the financial markets and services industry and the regulators tasked with oversight of this sector. ^{750} Another commenter stated that the costs associated with the incident response programs and more robust notification regime served an important forcing function for entities that might otherwise not adequately invest in safeguards on the front end. ^{751} This commenter also cited a report stating that having an incident plan is one of the steps organizations can take to protect their data. ^{752} In addition, in support of the Proposing Release, commenters cited sources offering additional context and evidence of the benefits of incident response programs. A report cited by a commenter states that businesses with an incident response team that tested their incident response plan saw an average of $2.66 million lower breach costs compared to organizations without an incident response team and that did not test their incident response plan. ^{753} A more recent version of the same report states that businesses which both had an incident response team and tested their incident response plan took 54 fewer days to identify and contain a data breach, compared to businesses that did not have a response team nor test their incident response plan (252 days as compared to 306 days). ^{754} This information generally supports our view that incident response programs will have benefits for both covered institutions and their customers. However, because the amendments' requirements differ from those analyzed in these reports, we are unable to use these estimates to precisely quantify the benefits of the amendments in terms of prevention of and response to data breach incidents involving customer information. Nevertheless, to the extent that different reasonably designed incident response programs yield benefits of similar magnitudes, the final amendments will have benefits of similar magnitude for the covered institutions that do not currently have an incident response program in place, with associated benefits for the customers of these institutions.
^{750} See Google Comment Letter.
^{751} See EPIC Comment Letter. Potential reputational costs, and the associated potential loss of customers, that could result from customer notification will incentivize covered institutions to spend more on information safeguards. However, additional costs associated with the required response program are unlikely to provide such incentives. Once informed, the customers will have the possibility to stop doing business with covered institutions they wish to avoid.
^{752} See EPIC Comment Letter, citing Internet Society's Online Trust Alliance, 2018 Cyber Incident & Breach Trends Report (July 9, 2019), available at
https://www.internetsociety.org/wp-content/uploads/2019/07/OTA-Incident-Breach-Trends-Report_2019.pdf .
^{753} See Better Markets Comment Letter. The commenter cited the 2022 IBM Cost of Data Breach Report which finds that the cost of a data breach for organizations without an incident response team and that did not test their incident response plan was $5.92 million, while the costs for organizations with an incident response team that tested its incident response plan was $3.26 million. Equivalent numbers are not available in the 2023 version of the report.
^{754} See 2023 IBM Cost of Data Breach Report.

b. Notification Requirements
The final requirements provide for a Federal minimum standard for data breach notification, applicable to the sensitive customer information of all customers of covered institutions (including customers of other financial institutions whose information has been provided to a covered institution), ^{755} regardless of their state of residence. The information value of a data breach notification standard is a function of its various provisions and how these provisions interact to provide customers with thorough, timely, and accurate information about how and when their information has been compromised. Customers receiving notices that are more thorough, timely, and accurate have a better chance of taking effective remedial actions, such as placing holds on credit reports, changing passwords, and monitoring account activity. ^{756} These customers will also be better able to make informed decisions about whether to continue to do business with institutions that have been unable to prevent their information from being compromised. Similarly, non-customers who learn of a data breach, for example from individuals notified as a result of the final amendments, might use this information to evaluate their potential use of a covered institution.
^{755} See final rule 248.30(d)(5)(i).
^{756} Commenters agreed that a breach notification allows customers to take mitigating actions limiting the negative effects of a breach. See, e.g., EPIC Comment Letter. One commenter also stated that the value of any required disclosure depended largely on the extent to which it conveyed clear, comprehensible, and usable information. See Better Markets Comment Letter.
As discussed above, all 50 States and the District of Columbia already have data breach notification laws that apply, in varying ways, to compromises of their residents' information. ^{757} Thus, the benefits of the adopted Federal minimum standard for notification of customers (vis-à-vis the baseline) will vary depending on each customer's State of residence, with the greatest benefits accruing to customers that reside in States with the least informative customer notification requirements. ^{758}
^{757} See supra section IV.C.2.a. In addition, some covered institutions may be required to share information with certain individuals about certain events under other Federal regulations such as Regulation SCI or the Banking Agencies' Incident Response Guidance. See supra section IV.C.2.b.
^{758} In some cases, large benefits could also accrue to customers that reside in States with broader and more informative breach notification laws if they reside in States where such laws are not applicable to entities in compliance with the GLBA. See infra section IV.D.1.b(1).
Unfortunately, with the data available, it is not practicable to decompose the marginal contributions of the various State law provisions to the overall “strength” of State data breach laws. Consequently, it is not possible for us to quantify on a state-by-state basis the benefits of the adopted Federal minimum standard to customers residing in the various States. In considering the benefits of the final notification requirement, we limit consideration to the “strength” of individual provisions of the final amendments vis-à-vis the corresponding provisions under State laws and consider the number of customers that might potentially benefit from each.
Similarly—albeit to a somewhat lesser extent—the costs to covered institutions will also vary depending on the geographical distribution of each covered institution's customers. Generally, the costs associated with the final amendments will be greater for covered institutions whose customers reside in States with less informative customer notification laws than for those whose customers reside in States with broader and more informative notification laws. In particular, smaller covered institutions whose customers are concentrated in States where State data breach laws result in less informative customer notification are likely to face higher costs since they may have to issue additional notices to comply with the amendments. The costs associated with notice issuance comprise both administrative costs and reputational costs. Certain costs arising from notice issuance are covered in the Paperwork Reduction Act analysis in section V and are estimated to be on average $5,178 per year per covered institution. ^{759} We lack data, and no commenter suggested such data, that would allow us to quantify the reputational cost resulting from any potential increase in the frequency of customer notification or the indirect costs of customer information protection improvements that may be undertaken by covered institutions to avoid such reputational costs.
^{759} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $3,862 per year per covered institution. See infra section V.
Although some commenters stated that a Federal notification requirement was not needed given existing State law requirements, ^{760} other commenters supported this proposed provision. ^{761} One commenter stated that a significant advantage would be that in several States, it would relieve covered institutions from having to issue state-specific breach notices under State law. ^{762} Another commenter further stated that a Federal breach notification requirement “would satisfy State notice laws that provide exemptions for firms subject to such a requirement, which will help to a degree to reduce the confusion and notification burdens arising from the patchwork of State data breach notification requirements.” ^{763} Another commenter stated that the benefits of a Federal minimum standard would outweigh the burden of the new notification requirements. ^{764}
^{760} See, e.g., CAI Comment Letter (stating that the proposed amendments' requirements “would simply add another layer on top of these existing requirements and would likely go entirely unnoticed by consumers, while complicating compliance efforts for covered institutions and raising additional compliance and legal risk”). We disagree with these commenters and discuss in detail in the subsections below the benefits of different provisions of the notification requirements over the baseline.
^{761} See, e.g., ICI Comment Letter 1; IAA Comment Letter 1.
^{762} See ICI Comment Letter 1.
^{763} See IAA Comment Letter 1; see also supra footnote 557 and accompanying text. Another commenter stated that the proposed notification requirements would not replace State law requirements and that covered institutions would continue to have to comply beyond the Federal minimum standard for at least 20 States. See FSI Comment Letter.
^{764} See FSI Comment Letter.
In the rest of this section, we consider key provisions of the final notification requirements, their potential benefits to customers (vis-à-vis existing State notification laws), and their costs.

(1) GLBA Safe Harbors
A number of State data breach laws provide exceptions to notification for entities subject to and in compliance with the GLBA. These “GLBA Safe Harbors” may result in customers not receiving any data breach notification from registered investment advisers, broker-dealers, funding portals, investment companies, or transfer agents. The final amendments will help ensure customers receive notice of breach in cases where they may not currently because notice is not required under State law.
Based on an analysis of State laws, we found that 19 States provide a GLBA Safe Harbor. ^{765} Together, these States account for 24 percent of the U.S. population, or approximately 17 million potential customers who may benefit from this provision. ^{766} While we do not have data on the exact geographical distribution of customers across all covered institutions, we are able to identify registered investment advisers whose customers reside exclusively in GLBA Safe Harbor States. ^{767} We estimate that there are 679 such advisers, representing 4.4 percent of the registered adviser population, and that these advisers represent in total more than 97,000 clients. ^{768} We expect that a similar percentage of broker-dealers would be found to be operating exclusively in GLBA Safe Harbor States.
^{765} States with exceptions that specifically mention the GLBA include Arizona, Connecticut, the District of Columbia, Delaware, Iowa, Kentucky, Maryland, Minnesota, Missouri, Nevada, New Mexico, Oregon, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Virginia, and Wisconsin. Additional States have exceptions for compliance with a primary Federal regulator, as discussed supra.
^{766} Estimates of the numbers of potential customers are based on State population adjusted by the percentage of households reporting direct stock ownership (21%). See U.S. Census Bureau, Apportionment Report (2020), available at
https://www2.census.gov/programs-surveys/decennial/2020/data/apportionment/apportionment-2020-table01.xlsx (last visited Apr. 12, 2024); see also Federal Reserve Board, Survey of Consumer Finances (2022), available at
https://www.federalreserve.gov/econres/scfindex.htm (last visited Apr. 9, 2024).
^{767} Based on Form ADV, Item 2.C as of Oct. 5, 2023; see also supra footnote 655.
^{768} Based on Form ADV, Item 5.D as of Oct. 5, 2023; see also supra footnote 650.
Changing the effect of the GLBA Safe Harbors is not likely to impose significant direct compliance costs on most covered institutions. For the reasons outlined above, many covered institutions have customers residing in States without a GLBA Safe Harbor and we therefore expect them to have existing procedures for notifying customers under State law. Additionally, some jurisdictions require notification policies or actual notification as condition of the safe harbor. ^{769} However, covered institutions whose customer base is limited to GLBA Safe Harbor States may not have implemented any procedures to notify customers in the event of a data breach. These covered institutions may face higher costs than entities with some notification procedures already in place, but the customers of these institutions will benefit the most from the final amendments by receiving notice they may not have otherwise received.
^{769} See, e.g., D.C. Code section 28-3852(g).
One commenter agreed that some State laws provided exemptions from their notice requirements under the GLBA but disagreed that this implied benefits for the amendments, stating that the proposed amendments would not preempt State notification requirements and would instead add another variation on existing requirements to be accounted for by covered institutions, with limited real benefits to affected individuals. ^{770} The final amendments will create new and to various extents different notification requirements for covered institutions with customers residing in States without GLBA exemptions. However, we disagree with this commenter's assertion that benefits to affected individuals will be limited. As discussed above, State laws vary in detail from State to State. ^{771} We discuss below how the final amendments will impose a Federal minimum standard for customer notification and how we expect this standard to benefit customers.
^{770} See CAI Comment Letter (“Although some state laws do provide exemptions from their state specific notice requirements where a notice is provided consistent with requirements under the Gramm-Leach Bliley Act (GLBA), most do not. This proposed new requirement would not serve to preempt those generally applicable state notice requirements, and would not establish a new singular standard. It would just be another variation on existing requirements to be accounted for, with limited real benefit to affected individuals.”).
^{771} See supra section IV.C.2.a.

(2) Accelerated Timing of Customer Notification
The final amendments require covered institutions to provide notice to customers in the event of some data breaches as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. ^{772} As discussed in section IV.C.2.a, existing State laws vary in terms of notification timing. Most States (31) do not include a specific deadline for notifying customers, but rather require that the notice be given in an expedient manner and/or that it be provided without unreasonable delay. These States account for 60 percent of the U.S. population, with approximately 42 million potential customers residing in these States. ^{773} Four States have a 30-day deadline; we estimate that close to 8 million potential customers reside in these States. The remaining 16 States provide for longer notification deadlines. For the estimated 20 million potential customers residing in these 16 States, the final amendments' 30-day outside timeframe might tighten the notification timeframes. ^{774} In addition, the 30-day outside timeframe is likely to tighten notification timeframes for the approximately 42 million potential customers residing in States with no specific deadline.
^{772} See final rule 248.30(a)(4)(iii).
^{773} See supra Figure 2; see also supra footnote 767.
^{774} State deadlines are either 30, 45, or 60 days, but differ in terms of triggers of those deadlines; see supra Figure 3.
Even though the timing language in State laws without specific deadlines generally suggests that notices must be prompt, we have evidence that the notices are frequently sent significantly later than 30 days after the affected institution learns of the breach. The Proposing Release references data from California and Washington, which we explain in more detail below. California requires that such notice be given “in the most expedient time possible and without unreasonable delay.” ^{775} Nevertheless, data from the California Office of the Attorney General, regarding notices sent to more than 500 California residents for any one incident, indicate that for the notices for which these data are available, the average time from discovery to notification was 144 days in 2022, and 91 percent of these notices were sent later than 30 days after the discovery of the breach. ^{776} Hence, we expect that the aggregate effects of a 30-day notification outside timeframe might be significant for the 42 million potential customers residing in States with no specific deadline. ^{777}
^{775} See Cal. Civil Code section 1798.82.
^{776} This analysis was performed using data from the State of California Department of Justice, Office of the Attorney General, Search Data Security Breaches (2023), available at
https://oag.ca.gov/privacy/databreach/list (last visited Apr. 8, 2024). California law requires that a sample copy of a breach notice sent to more than 500 California residents be provided to the California Attorney General. Four-hundred fifty-six such notices were reported in the year of 2022. Of those notices, 164 (36%) included both the date of the discovery of the breach and the date the notice was sent to affected individuals. For those 164 notices, the average number of days between discovery and notice was 144 and the median number of days was 107. One hundred fifty of these notices (91%) were sent more than 30 days after discovery. The minimum number of days was 0 and the maximum was 538. The Proposing Release cited an average number of days between discovery and notice of 197 (for calendar year 2021). The correct number should be 97. This change would not have affected the Commission's assessment, in the Proposing Release, that there would be substantial economic benefits from a new notification deadline in an amended Regulation S-P, as both estimates are substantially larger than 30 days.
^{777} The final amendments' 30-day notification timeframe starts when a covered institution becomes aware that unauthorized access to or use of customer information has occurred or is likely to have occurred. See final rule 248.30(a)(4)(iii). The analysis performed here relies instead on an entity's description of when it discovered or became aware of a breach, which could refer to a different point in time.
In addition, because the final amendments will not provide for broad exceptions to the 30-day notification requirement, ^{778} in many cases the amendments will tighten notification timeframes even for the 8 million potential customers residing in States with a 30-day deadline. For example, in Washington, the State law requires that the notice be given “without unreasonable delay, and no more than thirty calendar days after the breach was discovered.” ^{779} However, the law also allows for a delay “at the request of law enforcement” or “due to any measures necessary to determine the scope of the breach and restore the reasonable integrity of the data system.” ^{780} Data from the Washington Attorney General's Office indicate that for the notices for which these data are available, the average time from discovery to notification was 137 days in 2022 and the median time was 93 days. ^{781} Eighty-seven percent of these notices were sent later than 30 days after the discovery of the breach, presumably as a result of these exceptions. ^{782} Hence, we expect that the timing requirements of the final amendments will result in many notices being sent earlier even in some States with a 30-day deadline.
^{778} See supra footnote 544 and accompanying text.
^{779} See RCW 19.255.010(8).
^{780} See RCW 19.255.010(8).
^{781} This analysis was performed using data from the Washington State Office of the Attorney General, Data Breach Notifications, available at
https://www.atg.wa.gov/data-breach-notifications (last visited Apr. 8, 2024). Washington law requires that any business, individual, or public agency that is required to issue a security breach notification to more than 500 Washington residents as a result of a single security breach shall electronically submit a single sample copy of that security breach notification. One hundred and eighty-five such notices were reported in the year 2022. For 121 (65%) of those notices, data is available for both the date of the discovery of the breach and the date the notice was sent to affected individuals. For those 121 notices, the average number of days between discovery and notice was 137 and the median number of days was 93. One hundred four notices (87%) were sent more than 30 days after discovery. The minimum number of days was 4 and the maximum was 651.
^{782} These numbers should be interpreted with care, since what different firms describe as the time at which they “discover” a breach could vary. See also supra footnote 778.
Tighter notification deadlines should increase customers' ability to take effective measures to counter threats resulting from their sensitive information being compromised. Such measures may include placing holds on credit reports or engaging in more active monitoring of account and credit report activity.
In practice, however, when it takes a long time to discover a data breach, a relatively short delay between discovery and customer notification may have little impact on customers' ability to take effective countermeasures. ^{783} Based on the data from the California Office of the Attorney General, the average number of days between the start of a breach and its discovery was 46 days in 2022, with a median of 7 days and a standard deviation of 126 days. ^{784} In addition, data from the Washington Attorney General's Office show that in 2022, there were on average 94 days between the time a breach occurred and its discovery, with a median of 10 days and a standard deviation of 319 days. ^{785}
This suggests that time to discovery is likely to prevent issuance of timely customer notices in many but not all cases. As plotted in Figure 9, while some firms take many months—even years—to discover a data breach, others do so in a matter of days: 66 percent of firms were able to detect a breach within 2 weeks and 77 percent were able to do so within 30 days. ^{786} Thus, while the adopted 30-day notification outside timeframe may not always substantially improve the timeliness of customer notices, in many cases it may improve timeliness.
^{783} In other words, the utility of a notice is likely to exhibit decay. For example, if a breach is discovered immediately, the utility of receiving a notification within 1 day is considerably greater than the utility of receiving a notification in 30 days. However, if a breach is discovered only after 200 days, the difference in expected utility from receiving a notification on day 201 versus day 231 is smaller: with each passing day some opportunities to prevent the compromised information from being exploited are lost ( e.g., unauthorized wire transfer), with each passing day opportunities to discover the compromise grow ( e.g., noticing an unauthorized transaction), and with each passing day the compromised information becomes less valuable ( e.g., passwords, account numbers, addresses, etc., generally change over time).
^{784} See supra footnote 777 describing the methodology. Many breaches, for example in the case of ransomware attacks or compromises of physical equipment, are discovered on the day that they happen or shortly thereafter.
^{785} See supra footnote 782 describing the methodology. A few factors could influence the estimated length of time between a breach and its discovery by the notifying entity. First, the two States discussed here (California and Washington) require firms to report the date on which the breach started. In instances where firms do not know this information, they could report the discovery date instead. This would result in an underestimate of the time between when a breach occurs and its discovery. Second, as discussed above, different firms could interpret the meaning of discovery differently. See supra footnote 783. Third, the discovery date used for this estimate is the date on which the notifying entity discovers the breach. If the breach happened at a service provider, it is possible that the service provider discovered the breach earlier and notified its client later. Hence, the numbers reported here likely overestimate the amount of time the affected entity took to discover the breach when the breach affected an entity different from the notifying entity. For comparison, according to IBM, in 2023 it took an average of 207 days to identify a data breach. See 2023 IBM Cost of Data Breach Report.
^{786} Based on data from the State of California Department of Justice, Office of the Attorney General. See supra footnote 777; footnote 785 and accompanying text. The equivalent numbers for Washington are 56% and 73%, based on data from the Washington State Office of the Attorney General. See supra footnote 782; footnote 786 and accompanying text.
While we do not expect that the 30-day outside timeframe for customer notification will impose significant direct costs relative to a longer timeframe (or relative to having no fixed timeframe), the shorter outside timeframe might potentially lead to indirect costs arising from notification potentially interfering with incident containment efforts. Based on data from the Washington Attorney General's Office for the fiscal year of 2022, “containment” of data breaches generally occurs quickly—7.6 days on average. ^{787} However, according to IBM's study for 2022, it takes an average of 70 days to “contain” a data breach. ^{788} The discrepancy suggests that there exists some ambiguity in the interpretation of “containment,” raising the possibility that the 30-day notification outside timeframe might require customer notification to occur before some aspects of incident containment have been completed and potentially interfering with efforts to do so. ^{789}
^{787} In the data provided by the Washington Attorney General, “containment” (data field DaysToContainBreach ) is defined as “the total number of days it takes a notifying entity to end the exposure of consumer data, after discovering the breach.” See supra footnote 782.
^{788} In the IBM study, “containment” refers to “the time it takes for an organization to resolve a situation once it has been detected and ultimately restore service.” See 2022 IBM Cost of Data Breach Report. We use the 2022 average here (70 days) to align with the date of the Washington and California State data, but note that IBM reports for 2021 and 2023 reported averages of 75 and 73 days, respectively. See Proposing Release at n.466; 2023 IBM Cost of Data Breach Report. Some of the discrepancy may be due to variation in how entities report the date at which the breach started in the data for Washington; see supra footnote 786.
^{789} For example, the notice may prompt the attacker to accelerate efforts to obtain or use sensitive information before the vulnerability can be completely contained.
Some commenters opposed the proposed timeframe for customer notifications. ^{790} One commenter stated that the proposed outside timeframe of 30 days after becoming aware of a breach was insufficient time to provide a meaningful notification to impacted individuals, particularly in complex cases. ^{791} Another commenter stated that the proposed 30-day outside timeframe was “unjustified and arbitrary” and that it was “likely to be insufficient for proper investigation and notification.” ^{792} Another commenter stated that the proposed timing requirement was overly rigid and did not account for the wide variety and complexity of cybersecurity incidents, and that 30 days after becoming aware of a possible incident was not enough time to accomplish the many steps required to be able to issue notifications to affected individuals. ^{793} This commenter detailed these steps as “needing to respond to and remediate the security incident directly, conduct a forensic investigation to determine what information may have been affected, analyze the affected data to determine what sensitive customer information is contained in affected data, extract or obtain the information needed to make notification to affected users, hire vendors and arrange identity protection services for affected individuals, and actually send the notifications.” ^{794} These commenters, as well as other commenters, suggested longer or less specific timeframes. ^{795}
^{790} See, e.g., ACLI Comment Letter; IAA Comment Letter 1.
^{791} See ACLI Comment Letter. See also Cambridge Comment Letter; IAA Comment Letter 1.
^{792} See Federated Comment Letter.
^{793} See CAI Comment Letter.
^{794} See CAI Comment Letter.
^{795} See, e.g., FSI Comment Letter (“We recommend that the notification requirement under Reg S-P be revised from `as soon as practicable, but not later than 30-days' to `as soon as practicable, but not later than 60-days' after a firm becomes aware that unauthorized access to or use of customer information has occurred or is reasonably likely to occur.”); Cambridge Comment Letter (“A period of, for example, 60 days would be more realistic, while achieving the Proposals' same goals.”); IAA Comment Letter 1 (“We recommend a 45-day rather than a 30-day notification requirement to provide a more reasonable amount of time for advisers to perform investigation and risk assessments, collect the information necessary to include in client notices, and provide notices in complex cases.”).
A different commenter instead stated that the final required timeframe should not be longer than 30 days, citing an article stating that “an analysis of the current State data breach notification laws shows that requiring notification within thirty days of a breach to affected consumers would be appropriate.” ^{796} This article further adds that a “thirty-day time limit will give an organization ample time to conduct a full investigation” and “ensure that consumers are notified of a breach in a timely manner so they can take the proper steps to mitigate any losses and protect their personal information from further exposure to cybercriminals through credit freezes, credit monitoring, and the like.” The same commenter suggested that the deadline be shortened to 14 days after becoming aware of an incident. ^{797}
^{796} See Better Markets Comment Letter, citing Gregory S. Gaglione Jr., The Equifax Data Breach: An Opportunity to Improve Consumer Protection and Cybersecurity Efforts in America, 67 Buff. L. Rev. 1133 (2019).
^{797} See Better Markets Comment Letter.
After considering these comments, we are adopting the notification timeframe as proposed. Under the final amendments, covered institutions will be required to provide notice to affected customers as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred. Commenters stated that this notification timeframe may result in customers receiving notices that are less accurate or receiving some notices that are unnecessary. The final amendments' notification timeframe may, in some cases, result in customers receiving less informative notices than they would have received under a longer notification timeframe, since covered institutions will have less time to understand the incident before sending the notice. This 30-day timeframe may also result in instances where a notification will be sent but, had the covered institution been able to fully investigate the breach in the prescribed timeframe, the covered institution would have been able to determine that notification was not required. ^{798} If unnecessary notifications are sent, as commenters suggest could occur, these instances may result in customers taking unnecessary mitigating actions, and the costs of these actions will be a cost of the final amendments. ^{799} These instances will also result in additional costs associated with customer notification, such as administrative costs related to preparing and distributing notices and potential reputational costs (including indirect costs of customer information protection improvements that may be undertaken to avoid such reputational costs) for covered institutions; we have accounted for these additional costs associated with notification in our estimates of some of the costs arising from notice issuance. ^{800} However, the 30-day notification timeframe preserves the benefits of the proposed, relatively short notification timeframe and allows customers to take rapid and effective mitigating actions. ^{801}
^{798} Longer investigations are likely to correlate with more complicated incidents and are less likely to result in a determination that notice is not required. We therefore do not expect that a longer notification outside timeframe would have led to significantly fewer required notices.
^{799} See infra section IV.D.1.b(4) for a discussion of the effect of unnecessary notification.
^{800} Certain costs arising from notice issuance are covered in the Paperwork Reduction Act analysis in section V and are estimated to be on average $5,178 per year per covered institution. This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $3,862 per year per covered institution. See infra section V. We have increased these estimates from the proposal in response to commenters. See infra section V.
^{801} We have further reviewed, in response to commenters, evidence that customers prefer an early notification. A survey of U.S. individuals found that notifying customers immediately was one of main steps the respondents would recommend to firms after a data breach, providing evidence that extending the timeframe is likely to therefore reduce the benefits of the notification requirement. See Lillian Ablon et al., Consumer Attitudes Toward Data Breach Notifications and Loss of Personal Information, RAND Corporation (2016), available at
https://www.rand.org/pubs/research_reports/RR1187.html . Customers who receive notices faster are better able to take appropriate mitigating actions.
In some circumstances, requiring customers to be notified within 30 days may hinder law enforcement investigation of an incident by potentially making an attacker aware of the attack's detection. ^{802} It could also make other threat actors aware of vulnerabilities in a covered institution's systems, which they could then try to exploit. The final amendments allow a covered institution to delay notification of customers if the Attorney General determines that the notice required poses a substantial risk to national security or public safety and notifies the Commission of such determination in writing. ^{803} The main benefit of this delay is to decrease the likelihood of the potential situations described above where law enforcement is hindered. The delay might, in some cases, lead to a better protection of national security and public safety. Another benefit of the delay is that it might give covered institutions more time to assess the scope of the incident and gather the information to be included in the notice to customers in particularly complex cases. However, the delay provisions might also, in some cases, result in customers being notified later, which would decrease the benefits of such notification, as described above. ^{804} Where investigations do not rise to the level of meeting the prescribed conditions for delayed notification, customer notification could alert attackers that their intrusion has been detected and could potentially impact law enforcement's investigation.
^{802} The attacker could then work to remove evidence on the covered institution's systems, thereby making the identity of the attacker harder to uncover by law enforcement.
^{803} See final rule 248.30(a)(4)(iii).
^{804} See supra text following footnote 783.
Because we do not have data on the frequency with which an investigation will rise to the level of meeting the final amendments' conditions for delayed notification, and because we do not have data on the scope of the effect on national security or public safety of breaches being revealed to the attackers, nor did commenters identify such data, we are unable to precisely estimate the costs and benefits of this provision. However, we expect that such events will be relatively rare. ^{805}
^{805} See SIFMA comment letter 2 (“The Commission should be aware that under present practice and experience, the number of cases where delay is requested or mandated by other government entities, or court orders, is quite limited—so the SEC need not assume or fear that notification delays would become routine or be otherwise abused.”). In addition, the State of California requires that, if a notice sent to individuals affected by a breach was delayed at the request of law enforcement agency, the notice mention such delay. See Cal. Civil Code section 1798.82. Of the 456 notices reported in 2022, only 4 indicated that they were delayed at the request of law enforcement. See supra footnote 777 for a description of these data. Because the final amendments' conditions for a notification delay are stricter than those under California law, we expect that the frequency at which covered institutions will delay notifications for national security and public safety reasons will be even lower.

(3) Broader Scope of Information Triggering Notification
In the final amendments, “sensitive customer information” is defined more broadly than in most State laws, yielding a customer notification trigger that is broader in scope than the various State law notification triggers included under the baseline. ^{806} The broader scope of information triggering the notice requirements will cover more data breaches impacting customers than the notice requirements under the baseline. This broader scope might benefit customers who will be made aware of more cases where their information has been compromised. At the same time, the broader scope might lead to false alarms—cases where the “sensitive customer information” divulged does not ultimately harm the customer. Such false alarms might be problematic if they reduce customers' responsiveness to data breach notices. In addition, the scope will also likely imply additional costs for covered institutions, which may need to adapt their processes for safeguarding information to encompass a broader range of customer information and may need to issue additional notices. ^{807}
^{806} See final rule 248.30(d)(9) and supra section IV.C.2.a(1).
^{807} Estimates of certain costs related to notice issuance are discussed in section V.
In the final amendments, “sensitive customer information” is defined as “any component of customer information alone or in conjunction with any other information, the compromise of which could create a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.” ^{808} The definition's basis in “any component of customer information” creates a broader scope than under State notification laws. In addition to identification numbers, PINs, and passwords, many other pieces of nonpublic information have the potential to satisfy this standard. For example, many financial institutions have processes for establishing identity that require the user to provide a number of pieces of information that—on their own—are not especially sensitive ( e.g., mother's maiden name, name of a first pet, make and model of first car), but which—together—could allow access to a customer's account. The compromise of some subset of such information will thus potentially require a covered institution to notify customers under the final amendments.
^{808} Final rule 248.30(d)(9).
The definitions of information triggering notice requirements under State laws are generally much more circumscribed and can be said to fall into one of two types: basic and enhanced. Basic definitions are used by 14 States, which account for 21 percent of the U.S. population. ^{809} In these States, only the compromise of a customer's name together with one or more enumerated pieces of information triggers the notice requirement. Typically, the enumerated information is limited to Social Security number, a driver's license number, or a financial account number combined with an access code. For the estimated 15 million potential customers residing in these States, ^{810} a covered institution's compromise of the customer's account login and password would not necessarily result in a notice, nor would a compromise of his credit card number and PIN. ^{811} Such compromises could nonetheless lead to substantial harm or inconvenience. Thus, the final amendments will significantly enhance the notification requirements applicable to these customers.
^{809} See supra section IV.C.2.a(1).
^{810} See supra footnote 767.
^{811} See supra text accompanying footnote 532.
States adopting enhanced definitions for information triggering notice requirements extend the basic definition to include username/password and username/security question combinations. ^{812} These definitions may also include additional enumerated items whose compromise (when linked with the customer's name) can trigger the notice requirement ( e.g., biometric data, tax identification number, and passport number). ^{813} For the estimated 55 million potential customers residing in the States with enhanced definitions, ^{814} the benefits from the final amendments will be somewhat more limited. However, even for these customers, the amendments will tighten the effective notification requirement. There are many pieces of information not covered by the enhanced definitions whose compromise might potentially lead to substantial harm or inconvenience. For example, under California law, the compromise of information such as a customer's email address in combination with a security question and answer would only trigger the notice requirement if that information would—in itself—permit access to an online account. Under many such State laws, the compromise of information such as a customer's name, combined with his or her transaction history, account balance, or other information not specifically enumerated would not necessarily trigger the notice requirement.
^{812} See supra section IV.C.2.a(1).
^{813} See id.
^{814} See supra footnote 767.
The broader scope of information triggering a notice requirement under the final amendments will benefit customers. As discussed above, many pieces of information not covered under State data breach laws could, when compromised, cause substantial harm or inconvenience. Under the amendments, data breaches involving such information might require customer notification in cases where State law does not, and thus potentially increase customers' ability to take actions to mitigate the effects of such breaches. At the same time, there is some risk that the broader minimum standard will lead to notifications resulting from data compromises that—while troubling—are ultimately less likely to cause substantial harm or inconvenience. ^{815} A large number of such unnecessary notices might undermine the effectiveness of the notice regime. ^{816}
^{815} This may be the case even though the amendments include an exception from notification when the covered institution determines, after investigation, that the sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. For example, the covered institution could decide to forgo investigations and always notify, or it could investigate but not reach a conclusion that satisfied the terms of the exception.
^{816} See infra section IV.D.1.b(4) for a discussion of the effects of notification specifically.
The broader minimum standard for notification is likely to result in higher costs for covered institutions. There will be increased administrative costs related to preparing and distributing notices for covered institutions who will send out additional notices as a result of the scope of information triggering a notice requirement under the final amendments. As discussed below, we estimate that certain costs associated with the preparation and distribution of notices will be, on average, $5,178 per year per covered institution. ^{817}
^{817} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $3,862 per year per covered institution. See infra section V.
In addition, it is possible that covered institutions have developed processes and systems designed to provide enhanced information safeguards for the specific types of information enumerated in the various State laws. For example, it is likely that IT systems deployed by financial institutions only retain information such as passwords or answers to security questions in hashed form, reducing the potential for such information to be compromised. Similarly, it is likely that such systems limit access to information such as Social Security numbers to a limited set of employees. It may be costly for covered institutions to upgrade these systems to expand the scope of enhanced information safeguards. ^{818} In some cases, it may be impractical to expand the scope of such systems. For example, while it may be feasible for covered institutions to strictly limit access to Social Security numbers, passwords, or answers to secret questions, it may not be feasible to apply such limits to account numbers, transaction histories, account balances, related accounts, or other potentially sensitive customer information. In these cases, the adopted minimum standard might not have a significant prophylactic effect and might lead to an increase in reputation and litigation costs for covered institutions resulting from more frequent breach notifications.
^{818} We lack data, and no commenter suggested such data, that would allow us to quantify the indirect costs resulting from any potential upgrade to customer information safeguards that covered institutions could choose to implement as a result of the final amendments in order to avoid potential reputational costs associated with customer notification following a breach.
Furthermore, because the definition of sensitive customer information is based on a determination that the compromise of this information could create a “reasonably likely risk of substantial harm or inconvenience to an individual identified with the information,” ^{819} it could increase costs related to incident evaluation, outside legal services, and litigation risk. While we lack data, and no commenter suggested such data, that would allow us to quantify all of these costs, we discuss below certain costs associated with developing and implementing policies and procedures to comply with the final amendments, including costs for internal and external counsel. ^{820} This subjectivity could reduce consistency in the propensity of covered institutions to provide notice to customers, reducing the utility of such notices in customers' inferences about covered institutions' safeguarding efforts.
^{819} Final rule 248.30(d)(9). See supra section II.A.3.c; infra section IV.D.1.b(4).
^{820} See infra section V.
Some commenters opposed the proposed amendments' definition of sensitive customer information, suggesting either a better alignment with existing regulation, ^{821} or that the final amendments specify a list of customer information included in the definition. ^{822} Covered institutions will have to devote some resources determining what specific pieces of information are included in the scope of the final notification requirements. However, different types of covered institutions may keep different types of customer information, the information collected by covered institutions might change in the future, and the type of information that could create a reasonably likely risk of substantial harm or inconvenience to an individual might also change in the future. Thus, having a wide and general range of sensitive customer information trigger the amendments' notice requirement will provide benefits to the affected customers, who may not receive a notice under the baseline. In addition, as discussed above, existing regulations adopt widely different definitions of customer information triggering a breach notification, making alignment difficult. ^{823}
^{821} See Computershare Comment Letter; ICI Comment Letter 1; SIFMA Comment Letter 2.
^{822} See CAI Comment Letter; SIFMA Comment Letter 2.
^{823} See supra section IV.C.2.a(1).

(4) Notification Trigger
The final amendments include a requirement for a covered institution to provide notice to individuals whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization, unless, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, the covered institution has determined that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. ^{824} As discussed above, the final amendments reflect a presumption of notification: a covered institution must provide a notice unless it determines notification is not required following a reasonable investigation. ^{825} Moreover, if the covered institution is unable to determine which customers are affected by a data breach, a notice to all potentially affected customers is required. ^{826} The resulting presumptions of notification are important because although it is usually possible to determine what information could have been compromised in a data breach, it is often not possible to determine what information was compromised or to estimate the potential for such information to be used in a way that is likely to cause harm. ^{827} Because of this, it may not be feasible to establish the likelihood of sensitive customer information being used in a manner that would result in substantial harm or inconvenience or of sensitive customer information pertaining to a specific individual being accessed or used without authorization. Consequently, in the absence of the presumptions of notification, it may be possible for covered institutions to avoid notifying customers in cases where it is unclear what information was compromised or whether sensitive customer information was or is reasonably likely to be used in a manner that would result in substantial harm or inconvenience.
^{824} See final rule 248.30(a)(4)(i).
^{825} See supra section II.A.3. A covered institution's determination that there is no risk of harm or inconvenience may also take into consideration whether the compromised data was encrypted. See supra section II.A.3.b. We expect that this could mitigate the risk of unnecessary notification. We considered a safe harbor from the definition of sensitive customer information for encrypted information. See infra section IV.F.3.
^{826} See final rule 248.30(a)(4)(ii); see also supra section II.A.3.a.
^{827} Many covered institutions, especially smaller investment advisers and broker-dealers, are unlikely to have elaborate software for logging and auditing data access. For such entities, it may be impossible to determine what specific information was exfiltrated during a data breach.
Currently, 20 States' notification laws do not include a presumption of notification. ^{828} We do not have data with which to estimate reliably the effect of these presumptions on the propensity of covered institutions to issue customer notifications, and no commenter suggested such data. However, we expect that for the estimated 20 million potential customers residing in the 20 States without a presumption of notification, ^{829} some notifications that will be required under the final amendments would not occur under the baseline. Thus, we anticipate that the final amendments will improve these customers' ability to take actions to mitigate the effects of data breaches. In addition, the final amendments' presumptions for notification rest on a concept of “substantial harm or inconvenience” that is likely to be wider than the equivalent concept of “harm” used in some State laws. ^{830} Hence, we also expect that the presumptions of notification will have potential benefits even for the customers residing in some of the States with a presumption of notification.
^{828} See supra section IV.C.2.a(1).
^{829} See id.; see also supra footnote 767.
^{830} See supra section II.A.3.c for a discussion of the concept of “substantial harm or inconvenience.” Some states use a narrower definition of harm, for example including only fraud or financial harm. See supra section IV.C.2.a(1); see also Fla. Stat. section 501.171(4)(c) and Iowa Code section 715C.2(6) for examples of States with a presumption for notification but a narrower concept of harm.
The increased sensitivity of the notification trigger resulting from the presumptions of notification will result in additional costs for covered institutions, who will bear higher reputational costs (including indirect costs of customer information protection improvements that may be undertaken to avoid such reputational costs) as well as some additional direct compliance costs ( e.g., mailing notices, responding to customer questions, etc.) due to more breaches requiring customer notification. While we are unable to quantify all of these additional costs, ^{831} we estimate that certain costs associated with the preparation and distribution of notices will be, on average, $5,178 per year per covered institution. ^{832}
^{831} As stated above, we do not have data with which to estimate reliably the effect of these presumptions on the propensity of covered institutions to issue customer notifications, and no commenter suggested such data. In addition, as stated above, we lack data, and no commenter suggested such data, that would allow us to quantify the indirect economic costs, such as reputational cost of any potential increase in the frequency of customer notification. See supra section IV.D.1.a.
^{832} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $3,862 per year per covered institution. See infra section V.
Some commenters disagreed with the proposed requirement that if a covered institution were unable to determine which customers were affected by a data breach, it would have had to notify all individuals whose sensitive customer information resided in the customer information system that was, or was reasonably likely to have been, accessed or used without authorization. ^{833} One commenter stated that this would result in significant over-notification of individuals, and that this would unnecessarily disturb and frighten individuals who likely were not affected. ^{834} The commenter also stated that the proposed requirements would significantly increase costs and litigation risk for covered institutions and possibly their service providers and other financial institutions whose information resides on the system. ^{835} Another commenter stated that this proposed provision would create reputational risks for transfer agents and that it believed resources would be better spent investigating the incident and determining the impacted securityholders. ^{836} Another commenter stated that this proposed requirement would be unnecessarily burdensome for covered institutions and that it could have negative consequences for clients, noting that there would be a risk that too much information could be overwhelming and lead to desensitization. ^{837}
^{833} See, e.g., CAI Comment Letter; IAA Comment Letter 1.
^{834} See CAI Comment Letter.
^{835} See CAI Comment Letter.
^{836} See Computershare Comment Letter.
^{837} See IAA Comment Letter 1.
Another commenter disagreed with the proposed requirement that a covered institution would have had to notify customers whose information was compromised unless the covered institution could determine that the event would not result in a risk of substantial harm or inconvenience for these individuals, suggesting instead that the standard be harmonized further with the Banking Agencies' Incident Response Guidance and with many State laws so as to require notification only if the covered institution affirmatively could find risk of harm. ^{838} This commenter stated that the proposed presumption of notification could lead to excessive and unnecessary notifications to consumers where a low likelihood of harm were present, which could result in consumers spending time and effort needlessly monitoring accounts or taking actions such as instituting a credit freeze, and simultaneously desensitize consumers to a notification for an actual breach where significant harm could result. ^{839}
^{838} See SIFMA Comment Letter 2.
^{839} See SIFMA Comment Letter 2.
After considering these comments, we have determined that the presumptions of notification should be included in the final amendments. On the one hand, we acknowledge, as commenters stated, ^{840} that unnecessary notifications could occur and negatively affect covered institutions and their customers as a result of these presumptions. Unnecessary notifications will result in costs for covered institutions, including the costs associated with notification such as administrative costs related to preparing and distributing notices as well as reputational costs, litigation risk, or diversion of resources identified by commenters. ^{841} More broadly, as stated by commenters, ^{842} unnecessary notification could reduce customers' responsiveness to data breach notices, for example by decreasing customers' ability to discern which notices require action. Unnecessary notification could also desensitize customers to notices, thereby leading to a decrease in the reputational costs of notification. This could decrease covered institutions' incentives to invest in customer information safeguards in order to avoid such reputational costs. ^{843} However, the risks of unnecessary notification reducing the benefits of the rule are mitigated by the fact that notification is not required in cases where the covered institution can determine, after a reasonable investigation, that there is no risk of substantial harm or inconvenience for the customers whose information has been compromised. In addition, in a change from the proposal, the final amendments explicitly provide that a covered institution need not provide notice to an individual whose sensitive customer information resides in the customer information system that was, or was reasonably likely to have been, accessed or used without authorization if the covered institution reasonably determines that this individual's sensitive customer information was not accessed or used without authorization. ^{844}
^{840} See supra footnotes 834-840 and accompanying text.
^{841} Id.
^{842} See IAA Comment Letter 1; SIFMA Comment Letter 2.
^{843} Estimates of certain costs related to notice issuance are discussed above. See supra footnote 833 and accompanying text.
^{844} See final rule 248.30(a)(4)(ii).
On the other hand, adopting these presumptions of notification will allow potentially affected customers to take appropriate mitigating actions. In support of the proposed presumption of notification, another commenter stated that any risk that a presumption to notify individuals could lead to a volume of notices that would inure affected individuals to the notices and result in their not taking proactive action would be outweighed by the risk that individuals would not be notified at all and would not have the opportunity to decide for themselves whether to take action. ^{845} To support this statement, this commenter referenced a study stating that requiring a determination of misuse to trigger disclosure permits additional discretion to the breached entity which, coupled with the existence of a disclosure disincentive, ^{846} might bias an institution's investigation of a data leak and might lead to a conclusion that consumer notification was not required. ^{847} We agree with this commenter. In addition, as discussed above, allowing covered institutions to conduct a full investigation before determining whether customers need to be notified could significantly reduce the benefits of such notification, and thus of the final amendments, by delaying the notice. ^{848}
^{845} See Better Markets Comment Letter.
^{846} See supra section IV.B.
^{847} See Better Markets Comment Letter, citing Paul M. Schwartz and Edward J. Janger, Notification of Data Security Breaches, 105 Mich. L. Rev. 913, 939 (2007). In addition, a report cited by the same commenter discusses the frequency of notification and how it relates to specific notification trigger. The report links higher frequency of notification to a requirement that a government official participate in the determination that a data breach creates risk for the affected parties, and therefore that notification is required. See IRTC Data Breach Annual Report; see also supra footnote 518 and accompanying text.
^{848} See supra section II.A.3.a; see also supra section IV.D.1.b(2) for a discussion of the benefits of timely notification.

(5) Content and Method of Notice
The proposed amendments included a list of information that would have had to be included in a customer notice. ^{849} Many of these content requirements remain in the final amendments. ^{850} While some commenters agreed generally with the proposed notice content requirements, ^{851} other commenters disagreed with the proposed inclusion of some elements and stated that our analysis of these requirements in the Proposing Release was insufficient. ^{852} In response to these commenters, we conducted supplemental analysis of the frequency at which different items are required in existing State laws, and are including a supplemental analysis of the costs and benefits of each of the required elements vis-à-vis this baseline. ^{853}
^{849} See proposed rule 248.30(b)(4)(iv).
^{850} See final rule 248.30(a)(4)(iv).
^{851} See, e.g., Better Markets Comment Letter.
^{852} See, e.g., CAI Comment Letter.
^{853} See supra section IV.C.2.a(2).
The main benefit of requiring specific content to be included in the notice is to help ensure that customers residing in different States receive similar information when their information is compromised in the same breach. Because State law requirements differ in terms of required content, covered institutions may send different notices to different individuals. ^{854} The final amendments will help ensure that all customers receive a minimum of information regarding a given breach affecting their information and are therefore equally able to take appropriate mitigating actions.
^{854} See ICI Comment Letter 1 (“In discussing breach notices with our members, we understand it is not uncommon for their current breach response programs to include separate notification letters depending upon the state the individual resides in.”).
The final amendments provide that the notice must include a description of the incident, including the information that was breached and the approximate date at which it occurred, as well as contact information where customers can inquire about the incident. In addition, the notice must include information on recommended actions affected customers can take. We expect that these required items will help customers take appropriate mitigating action to protect themselves from further effect of the breach. Including these elements might require some covered institutions to modify their existing processes for notification, which will incur some costs. ^{855} We expect that these costs will be passed on to customers.
^{855} These costs are included in the policies and procedures costs discussed in section IV.D.1 above. As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures to comply with the final amendments will be, on average, $15,445 per year per covered institution. This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per covered institution. See infra section V.
The first required item is a general description of the incident and the type of sensitive customer information that was or is reasonably believed to have been accessed or used without authorization. ^{856} We received no comment on this specific requirement. Obtaining this information is crucial for customers as it will allow them to assess the level of risk and to take appropriate mitigating actions. This will also allow them to avoid spending time and resources on mitigating actions related to information that was not affected by the breach. We expect that most covered institutions who already have notification processes already include this information, since 22 States require that the notice describe the type of information affected by the breach and 13 States require a description of the incident to be included. ^{857} As a result, we expect that the benefits will be the greatest for customers of institutions who do not operate nationally and operate only in States without such requirements. We estimate that there are approximately 51 million potential customers residing in the 38 States that do not require a description of the incident, and 35 million potential customers residing in the 29 States that do not require the type of customer information compromised to be included in the notice. ^{858} We expect the costs to be the highest for the covered institutions operating only in those States.
^{856} See final rule 248.30(a)(4)(iv)(A).
^{857} See supra section IV.C.2.a(2).
^{858} See supra footnote 767.
The second item required by the final amendments is the date of the incident, the estimated date of the incident, or the date range within which the incident occurred, if the information is reasonably possible to determine at the time the notice is provided. ^{859} One commenter disagreed with this proposed requirement, stating that it would imply that covered institutions subject to both Regulation S-P and the Banking Agencies' Incident Response Guidance would have to revise their long-standing breach notices to add the information. ^{860} This commenter also stated that the Proposing Release did not detail a basis for this inclusion. Including the date of the breach, even if it is the approximate date, will provide useful information to the affected customers and help them make better decisions about the mitigating actions to take. In particular, customers could review their account statements back to the date where the breach happened. ^{861} An additional benefit of this inclusion will be to provide information to customers about how effectively a covered institution was able to detect and assess a breach. This will help reduce the information asymmetry about a covered institution's customer information safeguards and help customers be better informed when deciding which covered institutions to retain for their financial services needs.
^{859} See final rule 248.30(a)(4)(iv)(B).
^{860} See ICI Comment Letter 1.
^{861} See supra footnote 210 and accompanying text.
There are 13 States requiring the notice to include an approximate date (or date range) for the breach, and 38 States without such a requirement. ^{862} These 38 States account for 70 percent of the U.S. population and 49 million estimated potential customers. ^{863} For these customers, the final amendments might result in their receiving information they would not have otherwise received. Because 13 States already require that the notice include an approximate date, we expect that the costs will be minimal for the covered institutions that operate nationally. For the covered institutions that do not operate nationally, the final amendments might require them to adapt their procedures to include additional information in the notices to customers.
^{862} See supra section IV.C.2.a(2).
^{863} See supra footnote 767.
The third item required by the final amendments is “contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including the following: a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance.” ^{864} One commenter disagreed with this proposed requirement, stating that it was unclear what purpose or benefit this requirement would have for the affected individuals and adding that it would place significant burdens on the internal operations of the covered institution. ^{865} Another commenter also disagreed with this proposed requirement, stating that covered institutions should have flexibility in determining the contact information to provide, based on how they normally interact with their customers, and suggesting that the final amendments only require one of the listed contact methods. ^{866} The requirement to include multiple contact methods provides valuable options for affected customers, who may have differing preferences and aptitudes in their use of contact methods. ^{867} We do not expect that this requirement will overly burden covered institutions, even for those institutions that will need to adapt their processes to the new requirements. ^{868} In addition, nothing in this requirement prevents a covered institution from providing additional contact methods.
^{864} Final rule 248.30(a)(4)(iv)(C).
^{865} See CAI Comment Letter.
^{866} See SIFMA Comment Letter 2.
^{867} In addition, the final amendments will not preclude a covered institution from providing the contact information of a third-party service provider. See supra footnote 211.
^{868} Ten States require the notice to include a phone number as contact information while two States require the notice to include a physical address. See supra section IV.C.2.a(2).
The final amendments also require the notice to include a recommendation that the customer review account statements and immediately report suspicious activity to the covered institution (if the individual has an account with the covered institution); an explanation of what a fraud alert is and how an individual may place one; a recommendation that the individual periodically obtain credit reports; an explanation of how the individual may obtain a credit report free of charge; and information about the availability of online guidance from the FTC and usa.gov regarding steps an individual can take to protect against identity theft, a statement encouraging the individual to report any incidents of identity theft to the FTC, and the FTC's website address. ^{869} One commenter supported these proposed requirements, stating that the proposed notice requirements avoided common problems with the content of many data breach notifications, such as confusing language, a lack of details, and insufficient attention to the practical steps customers should take in response. ^{870} We expect that these additional elements will provide useful information to affected customers regarding potential mitigating actions to take and help ensure that these customers are able to react appropriately to the notice. We expect that while these requirements will impose costs on covered institutions whose notification process does not already include these elements, ^{871} these costs will be limited and passed on to the customers. ^{872} We received no comments opposing these requirements.
^{869} See final rule 248.30(a)(4)(iv)(D) through (H).
^{870} See Better Markets Comment Letter.
^{871} Because some States require some of these elements to be included in the notification to affected individuals, we expect that many covered institutions already have procedures similar to those required by the final amendments. See supra section IV.C.2.a(2).
^{872} As discussed above, these costs will represent only a fraction of the policies and procedures costs discussed in section IV.D.1 above. See supra footnote 856 and accompanying text.
The proposed amendments included a provision that would have required the notice to include a description of what has been done by the covered institution to protect the sensitive customer information from further unauthorized access or use. One commenter disagreed with this proposed requirement, stating that it “would be extremely useful to threat actors and not particularly useful to clients.” ^{873} After considering this comment, we have decided to exclude this provision from the final amendments. ^{874} In addition to reducing the perceived risk of providing a roadmap for threat actors, we expect that this change will accelerate the process of preparing the notice, thereby reducing the associated costs.
^{873} See IAA Comment Letter 1.
^{874} See supra section II.A.3.e.
The final amendments require that notice must be transmitted by a means designed to ensure that each affected individual can reasonably be expected to receive actual notice in writing. ^{875} Some commenters discussed the alignment between the requirements of the final amendments and those of existing regulation affecting covered institutions. In particular, one commenter stated that a Federal notification requirement would complicate compliance efforts for covered institutions already complying with similar State laws. ^{876} On the other hand, another commenter stated that the proposed amendments' alignment with existing requirements would allow covered institutions to leverage existing programs. ^{877} We analyze here the expected benefits and costs of this provision of the final amendments vis-à-vis the baseline. ^{878}
^{875} See final rule 248.30(a)(4)(i). Under the final amendments, the notice can be sent electronically. See supra footnote 200 and accompanying text.
^{876} See CAI Comment Letter.
^{877} See FSI Comment Letter.
^{878} See supra section IV.C.2.a(2).
We expect that the main benefit of this provision will be to help ensure that customers whose sensitive personal information has been breached receive the required information. We expect that the costs of this provision will be limited for most covered institutions since most States require similar methods of notification. ^{879} Hence, we expect that most covered institutions will not have to significantly modify their procedures and processes for notice issuance in order to satisfy this provision of the final amendments.
^{879} See id.
However, we do expect some benefits in some instances. First, 26 States allow a notice to be made over the telephone. ^{880} While 7 of these States require direct contact with the affected individuals when the notice is given using this method, 19 do not have such requirements. ^{881} We expect that for the 21 million potential customers residing in the 19 States allowing for telephonic notices but without such requirements, ^{882} receiving a written notice may result in clearer information and in a higher likelihood of taking appropriate mitigating actions.
^{880} See id.
^{881} See supra footnote 568 and accompanying text.
^{882} See supra footnote 767.
Second, many States allow for electronic notifications. While most of these States require that this be done only under certain conditions that are similar to the final amendments' conditions, some States have conditions that are significantly looser. The final amendments provide that the notice can be provided through electronic means to customers who have agreed to receive information electronically. ^{883} In contrast, five States allow electronic notification without restriction, and two States require only that the institution has an email address for the affected individuals. ^{884} We expect that for the 11 million potential customers residing in these seven States ^{885} —that allow electronic notification even to customers who have not explicitly agreed to receiving electronic notification—the final amendments will help ensure that they receive a notice in a format that they are expecting. ^{886}
^{883} See supra footnote 200 and accompanying text.
^{884} See supra footnotes 565 and 566 and accompanying text.
^{885} See supra footnote 767.
^{886} We acknowledge that the final amendments may result in some customers receiving a notice in a format that they do not prefer. For example, customers could agree to an electronic notice but still receive a notice by mail, which they may be less likely to see or respond to.
Third, all States allow for a substitute notice under certain conditions. ^{887} Substitute notification requirements vary across States but must generally include an email notification to affected individuals, a notice on the entity's website, and notification to major statewide media. ^{888} The final amendments do not provide for such substitute notice and instead have the same notice requirements in all cases. We expect that the final amendments will strengthen the benefits of notification by helping ensure that affected individuals are made aware of the relevant information regarding a breach of their sensitive information. Examples of customers who would benefit include customers who: interact infrequently with the covered institution, thereby not visiting the institution's website regularly; who do not consume local or State news sources; or who may be wary or skeptical of receiving such information by email if they have not given their prior informed consent (for example, customers who are used to receiving communications from the covered institution by mail only or who interact with the covered institution very rarely). In other States, the requirements for substitute notice include fewer elements. ^{889} We expect that for the customers residing in these States, the final amendments will help ensure that they are made aware of the breach and provided an appropriate notice.
^{887} These conditions often include a certain minimum number of affected individuals to notify and a minimum dollar cost to notify these individuals. See supra footnote 569 and accompanying text.
^{888} See supra section IV.C.2.a(2).
^{889} See supra footnote 571 and accompanying text.
The final amendments require written notification, which may be provided electronically if certain conditions are met, such as if the customer has agreed to receive information electronically. ^{890} Not all State notification provisions include similar consent conditions for electronic communication. ^{891} Therefore, the final amendments may result in additional compliance costs in the instances where, prior to the final amendments, the covered institutions would have sent email notices or used substitute notification, but will instead have to obtain customer consent for electronic notification or else send individual notices by mail because their methods of electronic delivery are not consistent with existing Commission guidance on electronic delivery, for example if they have not obtained customer consent to receive electronic communications. ^{892} However, given the variety of State law conditions and requirements, we expect that most notices being sent already satisfy many of these provisions and we therefore expect that these provisions will result in limited additional costs. ^{893}
^{890} See supra section II.A.3.e. and footnote 200.
^{891} See supra footnote 885 and accompanying text.
^{892} Id. Because some States have conditions for sending an electronic notice that are different from those under the final amendments, we expect that there might be some cases where a covered institution will be required to send a notice by mail when it could have sent an electronic notice under State law. See supra footnotes 884 through 888 and accompanying text.
^{893} An analysis of the notices sent to residents of California and Washington suggests that notices are frequently sent by postal mail. Both States allow for electronic notification if the notice is consistent with the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7001). Nevertheless, we have found that in California, at least 90% of the notices appear to be sent by mail. The equivalent number is 89% for Washington. We identified the notices sent by mail (as opposed to those sent by email or satisfying other substitute notice requirements) as those including a redacted or mock recipient address, an address for a return mail processing center, or an explicit mention such as “Via First-Class Mail.” It is possible that notices containing none of these elements are sent by mail, and therefore we expect that the true percentages are likely to be higher than those reported here. See supra footnotes 777 and 782 and accompanying text for details on the notice data used for this analysis.

c. Service Provider Provisions
The final amendments require that a covered institution's incident response program include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers. Specifically, these written policies and procedures must be reasonably designed to ensure the service providers take appropriate measures to protect against unauthorized access to or use of customer information and provide notification to the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred resulting in unauthorized access to a customer information system. Upon receipt of such notification, a covered institution must initiate its incident response program. ^{894} In the final amendments, “service provider” is defined as “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.” ^{895} Thus, the requirements might affect arrangements with a broad range of entities, including potentially email providers, customer relationship management systems, cloud applications, and other technology vendors.
^{894} See final rule 248.30(a)(5)(i).
^{895} Final rule 248.30(d)(10).
As modern business processes increasingly rely on service providers, ^{896} ensuring consistency in regulatory requirements increasingly requires consideration of the functions performed by service providers and how these functions interact with the regulatory regime. ^{897} Ignoring such aspects could incentivize covered institutions to attempt to outsource functions to service providers to avoid the requirements that would apply if the functions were performed in-house. Thus, the service provider requirements will strengthen the benefits of the final amendments by helping ensure that they have similar effects regardless of how a covered institution chooses to implement its business processes ( i.e., whether those processes are implemented in-house or outsourced).
^{896} See supra section IV.C.3.f
^{897} See supra section IV.C.2.a(3).
Commenters supported the proposal's objective to safeguard customer information in the case where this information rests with service providers. ^{898} One commenter stated that third-party service providers were specifically a favored attack vector, adding that the Commission's attention to this risk was well-directed. ^{899} Another commenter stated that it did not disagree that service providers should protect sensitive customer information and be required to provide timely notification of a breach to the covered institution. ^{900} Another commenter stated that service providers that have access to customer information should be contractually required to take appropriate risk-based measures and diligence designed to protect against unauthorized access to or use of customer information, including notification of a covered institution in the event of certain types of breaches in security. ^{901} Another commenter recognized and supported the importance of covered institutions having appropriate policies and procedures to manage the cybersecurity and privacy risks posed by service providers that process their customer information. ^{902}
^{898} See, e.g., EPIC Comment Letter; SIFMA Comment Letter 2.
^{899} See EPIC Comment Letter.
^{900} See IAA Comment Letter 1.
^{901} See SIFMA Comment Letter 2.
^{902} See CAI Comment Letter.
Some commenters criticized the analysis of the proposed service provider provisions. ^{903} One commenter stated, referring to the proposed service provider written agreement obligation, that the Commission had failed to address the costs in any meaningful way and was thus dismissive of them. ^{904} Another commenter stated that the Proposing Release included no discussion or estimate of the costs that renegotiating contracts with service providers or hiring new service providers would impose on brokers. ^{905} In addition, some commenters disagreed with our analysis of specific parts of the requirements, stating that the analysis in the Proposing Release did not identify why a 48-hour reporting period was optimal, ^{906} or stating that the breadth of the definition of service providers was disproportionate to the benefits and risks presented. ^{907} In response to these commenters, we have modified this aspect of the amendments, as discussed in greater detail above. ^{908} These modifications mitigate, but may not eliminate entirely, commenters' concerns regarding the costs associated with the service provider provisions of the proposed amendments. We also have supplemented the economic analysis of the service provider provisions in response to comments as follows. First, we have supplemented the analysis of the potential costs to covered institutions. This includes an analysis of the indirect effects of the final amendments on covered institutions' service providers, and how these effects may affect covered institutions and their customers, ^{909} for example where costs to service providers are passed on to covered institutions, and ultimately to covered institutions' customers, ^{910} or have negative competitive effects that impact covered institutions. ^{911} Second, we are providing supplemental analysis specifically on the timeline requirement and the definition of service providers. ^{912}
^{903} See, e.g., IAA Comment Letter 1; ASA Comment Letter.
^{904} See IAA Comment Letter 1.
^{905} See ASA Comment Letter. In the Proposing Release, we requested data that could help us quantify the costs and benefits that we were unable to quantify. We did not receive data or estimates from commenters that could help us quantify the costs of renegotiating contracts or hiring new service providers. See Proposing Release at section III.G, question 110.
^{906} See Microsoft Comment Letter.
^{907} See IAA Comment Letter 1 (“We believe the proposed definition of Service Provider is unrealistically and unnecessarily broad, reaching service providers where there are little or no marginal benefits to their inclusion and the costs (time, money, personnel, etc.) to advisers would be substantial.”).
^{908} See supra section II.A.4.
^{909} See infra footnotes 928-936 and accompanying text.
^{910} See infra text accompanying footnote 933.
^{911} See infra section IV.E.
^{912} Additional context for this analysis is provided in section IV.C.3.f.
The costs to covered institutions of implementing the final amendments will be influenced by the potential burdens on service providers that may result from the amendments. If implementing procedures that satisfy covered institutions' requirements were costless for them, service providers would be likely to agree to implement the requirements without much negotiation and the costs to covered institutions would be minimal. If, instead, such procedures were costly to implement for service providers, more negotiation would be required, which would be costlier for all parties involved. In addition, in this case, the service providers might increase the price of their services, further increasing the costs for covered institutions. ^{913} We discuss further below the expected indirect effects of the final amendments on service providers and how these effects may affect covered institutions. ^{914}
^{913} Because we are not aware of any data, and no commenter suggested any data, that could be used to estimate how much service providers will pass through increased costs to covered institutions, we are unable to quantify the magnitude of the potential increased costs for covered institutions.
^{914} See infra text accompanying footnote 927.
However, even if, as in the scenario described above, the cost per service provider turns out to be minimal for covered institutions, the total cost might still become significant for covered institutions that have a large number of service providers. Even in this case, covered institutions will need to devote time and resources to verify that they satisfy the final requirements with respect to each of their service providers. In addition, covered institutions will need to devote time and resources to oversee their service providers throughout their relationship with these service providers. ^{915} We are unable to quantify these costs, as the range would be too wide to be informative and commenters did not provide any data that would yield an estimation of such a range. The range of costs for covered institutions is likely to be wide given the varied nature of the uses of service providers by financial institutions. For instance, the cost for covered institutions that do not rely on service providers is likely to be minimal. However, for those covered institutions that have more complex arrangements with service providers, the cost would be significantly higher. The cost depends on a large number of factors that vary across covered institutions. ^{916} For example, the cost would depend on the number of service providers used, the extent to which service providers are used for multiple functions, each service provider's access to relevant customer information, as well as the staffing needs of the covered institutions.
^{915} See supra section II.A.4. For PRA purposes, we have identified certain types of staff who we anticipate would be involved in implementing the rules. See infra section V.B. It is possible that those staff members may also be involved in oversight of service providers.
^{916} In a proposing release pertaining to service providers, the Commission anticipated a range of compliance costs associated with required oversight of service providers by registered investment advisers. For example, in the proposing release, the Commission estimated a range of $44,106.67-$132,320 in ongoing annual costs per adviser associated with the proposed due diligence requirements (and further costs associated with proposed monitoring requirements and other aspects of the proposed rule). We do not believe those ranges of cost estimates are determinative in the context of the final amendments here. In particular, the scope of the final amendments differs substantially from the scope of that proposal. Those cost estimates pertained to a service provider's performance of outsourced functions that meet two elements: (1) those necessary for the adviser to provide its investment advisory services in compliance with the Federal securities laws; and (2) those that, if not performed or performed negligently, would be reasonably likely to cause a material negative impact on the adviser's ability to provide investment advisory services. By contrast, the final amendments here pertain to the protection of customer information in the case of all outsourced functions to all service providers. See Outsourcing by Investment Advisers, Release No. 6176 (Oct. 26, 2022) [87 FR 68816, 68821 (Nov. 16, 2022)].
The definition of service provider in the final amendments will affect the costs to covered institutions by determining the number of service providers for which covered institutions will have to perform these tasks. The final amendments adopt a definition of service provider to mean “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.” ^{917} Many commenters opposed the proposed definition of service provider. ^{918} These commenters suggested narrower definitions which would exclude a covered institution's affiliates. ^{919} In addition, one commenter stated that the proposed definition was unrealistically and unnecessarily broad, reaching service providers where there would be few or no marginal benefits to their inclusion and the costs (time, money, personnel, etc.) to covered institutions would be substantial. ^{920} This commenter suggested that the definition of service provider be limited to persons or entities with permitted access to sensitive customer information only. ^{921}
^{917} Final rule 248.30(d)(10).
^{918} See, e.g., IAA Comment Letter 1; Schulte Comment Letter. The definition of service provider in the final amendments is identical to the definition that was in the proposal. See supra section II.A.4.
^{919} See IAA Comment Letter 1 (stating that “the IAA believes that it is neither appropriate nor necessary to treat affiliates that provide services to an affiliated firm through a shared services or similar model as Service Providers”); Schulte Comment Letter (“We believe that the proposed definition of `service provider' should exclude a Covered Institution's affiliates.”); SIFMA Comment Letter 2 (“The associations also recommend that the Commission exclude affiliates of covered institutions from the definition of service providers, as affiliates are part of the same enterprise information/cybersecurity oversight as the covered institutions.”); CAI Comment Letter (“The Committee requests that proposed Rule 30(e)(10) be revised to specifically exclude affiliates and other entities under common control with the covered institution.”).
^{920} See IAA Comment Letter 1.
^{921} See IAA Comment Letter 1. This commenter also requested, if the proposed written contract requirement were to be kept in the final amendments, that it apply only to those service providers that have physical or virtual access to a covered institution's customer information system.
We acknowledge that fulfilling the requirements for each of their service providers will impose costs on the covered institutions. However, the potential benefits are also large given the increasing reliance of covered institutions on service providers. ^{922} Individual customers have no control over a covered institution's decisions to perform activities in-house or to outsource them. As such, these customers have little control over who has access to their information. A broad definition of service providers will contribute to safeguard customers' information and will help ensure that customers are notified in the event their sensitive information is compromised, no matter where this information resides. Furthermore, the modifications in the final amendments to require covered institutions to establish, maintain, and enforce written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers, instead of requiring written contracts as was proposed, ^{923} will alleviate the commenters' concerns over the potential inclusion of affiliates. Since affiliates are likely to have policies and procedures similar to those of covered institutions, ^{924} we expect that both the benefits and the costs of implementing this provision of the requirements will be minimal.
^{922} See supra section IV.C.3.f.
^{923} See proposed rule 248.30(b)(5)(i).
^{924} See IAA Comment Letter 1 (“Many advisers are structured in a manner that makes it administratively beneficial for them to obtain services from affiliates. These services often are provided by affiliates in a manner established by the organization's policies without the need for formal contracts because the affiliates are typically subject to company-wide policies and standards relating to safeguarding PII. Moreover, the information security policies of affiliates are typically subject to oversight by an organizational component that monitors compliance.”) and Schulte Comment Letter (“We note that affiliates are typically included within the scope of a Covered Institution's cybersecurity policies and procedures and would also be covered by an applicable incident response plan.”).
The indirect effects of the final amendments on service providers might also affect the costs borne by covered institutions and, ultimately, their customers. In particular, these indirect effects may generate costs to service providers, which may be passed on (at least partly) to covered institutions and ultimately to covered institutions' customers, ^{925} or may result in negative competitive effects on service provider industries that then impact the services offered to covered institutions and their customers. ^{926} The potential indirect effects on service providers that will result from the final amendments can be divided into three parts. ^{927} First, entities that meet the definition of service providers will likely take appropriate measures to protect against unauthorized access to or use of customer information to facilitate covered institutions' compliance with the final amendments. We expect that many service providers already take such measures. ^{928} Hence, we expect that the number of service providers who will modify their business processes for this specific requirement is limited. Such modifications will benefit not only the customers whose information is being better protected and the covered institutions relying on the service providers, but also the service providers themselves, to the extent that the modifications decrease the likelihood of unauthorized access to their customer information systems which could affect their operations or reputation.
^{925} See infra text accompanying footnote 933.
^{926} See infra section IV.E.
^{927} We are unable to quantify the indirect costs associated with these indirect effects that would be incurred by service providers as a result of the final amendments, as the cost range would be too wide to be informative. The uncertainty around these costs is due to a number of factors, including variation in complexity of service provider functions provided to covered institutions, the degree of market concentration across service provider markets (and hence the number of covered institutions a service provider may need to work with to comply with the rule), and variation in current service provider practices. The costs to any single service provider of meeting the burden for any single function for any single covered institution may therefore have substantial variance. For example, in certain cases a few service providers may perform the same function for many covered institutions and hence benefit from economies of scale. By contrast, service providers in less concentrated industries would potentially face higher costs.
^{928} For example, many States impose some form of requirements regarding the safeguard and the disposal of customer information. See supra footnote 603. In addition, the FTC Safeguards Rule requires financial institutions to take reasonable steps to select and retain service providers capable of maintaining appropriate safeguards for customer information and to require those service providers by contract to implement and maintain such safeguards. See supra footnote 618 and accompanying text. Hence, we expect that the service providers of private funds subject to the FTC Safeguards Rule already have customer information safeguards in place. This could lower the costs of the service provider provisions of the final amendments for the private funds advisers that are registered with the Commission and that are therefore covered institutions. See supra footnote 614 and accompanying text. Furthermore, service providers that are subject to other regimes such as the GDPR or DORA may already have appropriate safeguards in place.
Second, covered institutions' policies and procedures will need to be reasonably designed to ensure that service providers take appropriate measures to provide notification of unauthorized access to a customer information system to the covered institutions as soon as possible, but no later than 72 hours after becoming aware that the breach has occurred. This provision might also result in a number of service providers adapting their businesses processes. However, considering that 24 States require entities that maintain but do not own or license customer information data to notify the entity that owns or licenses such data “immediately” in case of a breach of security, we expect that many service providers already have processes in place to ensure that such notification is made. ^{929} For the service providers who do not already have such processes in place, this approach will create benefits for the customers who will be informed in a timely manner in the event their sensitive information is compromised.
^{929} In addition, other existing regulations have 72-hour reporting or notification deadlines. See supra footnote 257 and accompanying text; see also supra footnote 245.
Third, because the final amendments require covered institutions to establish, maintain, and enforce written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers who have access to their customers' information, these service providers will face requests for information from covered institutions or otherwise participate in the covered institutions' oversight activities. This will impose costs on service providers, but it will also strengthen the benefits of the amendments by helping ensure that customer information is appropriately protected even when it is residing in service providers' systems.
For service providers that provide specialized services aimed at covered institutions, the final amendments may create market pressure to enhance service offerings that facilitate covered institutions' compliance with the requirements. ^{930} Such enhancement will entail costs for specialized service providers, including the actual cost of adapting business processes, as discussed above, to accommodate the requirements. ^{931} That said, we do not expect that these costs will represent an undue burden as both the specialized service providers and the covered institutions are operating in a highly regulated industry and might be accustomed to adapting their business processes to meet regulatory requirements. Moreover, more specialized service providers may be likely to have particularly sensitive or valuable information about the customers of covered institutions, and therefore the investor protection benefits in those cases may be substantial. With respect to service providers providing services aimed at a broad range of institutions, such as those providing email or customer-relationship management services, covered institutions are likely to represent a small fraction of their customer base. These service providers may be unwilling to adapt their business processes to the regulatory requirements of a small subset of their customers if they do not already have such processes in place.
^{930} A service provider involved in any business-critical function likely “receives, maintains, processes, or otherwise is permitted access to customer information.” See final rule 248.30(d)(10).
^{931} We have no data on the number of specialized service providers used by covered institutions and on the frequency with which these service providers already adapt their business processes to regulatory changes, and no commenter suggested such data.
For the service providers that already have in place processes satisfying the covered institutions' requirements, we expect that the costs to both the service providers and the covered institutions will be minimal and will mostly result from covered institutions' oversight duties. If service providers modify their business processes to facilitate covered institutions' compliance with the final amendments' requirements, we anticipate they likely will pass costs on to covered institutions, and ultimately covered institutions may pass these costs on to customers. ^{932} We also expect that there might be a fraction of service providers who will be unwilling to take the steps necessary to facilitate covered institutions' compliance with the final amendments. In such cases, the covered institutions will need to either switch service providers and bear the associated switching costs or perform the functions in-house and establish the appropriate processes as a result. ^{933} We expect that these costs will be particularly acute for smaller covered institutions which lack bargaining power with large service providers, and that these costs might be passed on to customers. ^{934} However, the amendments will create benefits arising from enhanced efficacy of the regulation. ^{935}
^{932} See supra footnote 718.
^{933} Such switching costs could include the time and other resources necessary to find an alternative service provider, conduct appropriate due diligence, and negotiate prices and services provided. Performing the functions in-house may also be more costly than outsourcing them for covered institutions. A recent report finds that 73% of surveyed asset managers cite cost considerations when deploying outsourcing solutions. See Cerulli Report. The competitive effects associated with the cases where service providers choose to stop providing services to covered institutions as a result of the final amendments are discussed below. See infra section IV.E.
^{934} We expect that smaller covered institutions may be less able to pass these costs to customers. See supra footnote 718.
^{935} From the perspective of current or potential customers, the implications of customer information safeguard failures are similar whether the failure occurs at a covered institution or at one of its service providers.
The proposal included a requirement that a covered institution's response program must include written policies and procedures requiring the institution, pursuant to a written contract between the covered institution and its service providers, to require that service providers take appropriate measures that are designed to protect against unauthorized access to or use of customer information. ^{936} While one commenter supported this proposed requirement, ^{937} other commenters suggested that the final amendments not require written contracts with service providers, ^{938} stating that doing so would impose significant costs on covered institutions. ^{939} After considering these comments, we are requiring that covered institutions establish, maintain, and enforce written policies and procedures to require oversight of service providers instead of requiring written contracts. ^{940} This change, while enhancing the policies and procedures obligations, will provide covered institutions with greater flexibility in achieving compliance with the requirements, which could reduce compliance costs without significantly reducing the benefits of the final amendments. ^{941} Providing this flexibility will also help address commenters' concerns that requiring a written contractual agreement could harm covered institutions, particularly those that are relatively small and may not have sufficient negotiating power or leverage to demand specific contractual provisions from a larger third-party service provider. ^{942} However, in a scenario where a covered institution has an existing contract with a service provider that is renegotiated as a result of the final amendments, the covered institution may incur additional costs. ^{943} In addition, in a scenario where a service provider would have agreed to a written contract under the proposed amendments but will not under the final amendments, a covered institution may have to exert greater efforts to oversee this service provider than would have been necessary had it signed a written contract with this service provider. ^{944}
^{936} See proposed rule 248.30(b)(5)(i).
^{937} See ICI Comment Letter 1.
^{938} See, e.g., SIFMA Comment Letter 2; IAA Comment Letter 1.
^{939} See, e.g., SIFMA Comment Letter 2 (“Requiring each service provider to revise its contract with a covered institution within 12 months of the Proposal's finalization would add an unnecessary burden to both covered institutions and service providers, as well as a potential significant cost.”); IAA Comment Letter 1 (“Even if Service Providers agreed to enter into written agreements with advisers as proposed, advisers and Service Providers would both likely incur significant negotiation and implementation costs, which we do not believe are justified, especially when an alternative and less burdensome approach is available.”); STA Comment Letter 2 (stating that “transfer agents, because of their relatively small size, simply do not have the negotiating power to demand contractual terms requiring third party service providers to maintain certain policies and procedures, or to demand permission to perform due diligence on a service provider's systems, policies, and procedures.”).
^{940} See supra section II.A.4 and final rule 248.30(a)(5).
^{941} See supra section II.A.4; see also, e.g., AWS Comment Letter.
^{942} See, e.g., IAA Comment Letter 1.
^{943} It is difficult for us to quantify these costs, as we have no data on the provisions of existing contracts between covered institutions and their service providers relating to customer information safeguards, and no commenter suggested such data. Such costs are likely to be contract specific, as they will depend on the degree to which each existing contract may be revised as a result of the final amendments. Many such contracts may not be revised at all, while others may undergo more revisions. Moreover, in many cases, even where a contract could be revised as a means of complying with the final requirements, the covered institution may pursue compliance by other means.
^{944} There are a variety of ways in which covered institutions will be able to satisfy the oversight requirement. See supra section II.A.4.
We also proposed that the measures taken by service providers include notification to the covered institution as soon as possible, but no later than 48 hours after becoming aware of a breach in security resulting in unauthorized access to a customer information system maintained by the service provider. ^{945} While one commenter supported this proposed requirement, ^{946} other commenters stated that a longer deadline would be preferable. ^{947} One commenter also suggested a change from “becoming aware” to “determining” that a breach has occurred in order to minimize pressure to report on service providers while an investigation is being conducted. ^{948}
^{945} See proposed rule 248.30(b)(5)(i).
^{946} See ICI Comment Letter 1 (“We concur with the Commission requiring service providers to notify a covered institution notice within 48 hours of a breach impacting the covered institution or its affected individuals.”).
^{947} See, e.g., Microsoft Comment Letter (“Specifically, where the SEC determines that a cybersecurity incident reporting requirement is appropriate, the applicable rule should provide that the entity with the notification responsibility shall provide the required notice to the recipient as soon as possible but no later than 72 hours. The reporting deadline should begin to run once the entity with notification responsibilities has a reasonable basis to conclude that a notifiable incident has occurred or is occurring.”); ACLI Comment Letter (“In the early days of containment and remediation it is often difficult to determine exactly what data has been compromised, making the 48-hour timeframe overly short and burdensome.”).
^{948} See Google Comment Letter.
After considering these comments, we have changed this provision. The final amendments require covered institutions to ensure that their service providers notify them of a breach as soon as possible, but no later than 72 hours after becoming aware that an applicable breach has occurred. ^{949} We expect that the change to 72 hours will reduce the cost to service providers not only because it will give them more time to assess an incident before notifying the covered institution, but also because it aligns with existing regulation. ^{950} Hence, we expect that this change will decrease compliance costs for covered institutions by making service providers more likely to agree to the requirements, which will decrease negotiation and switching costs for covered institutions. ^{951} We also expect that this will alleviate some of the commenters' concerns about having insufficient negotiating power to negotiate specific with service providers. ^{952} While this change may result in a longer period of time before customers receive notification of a breach, thereby decreasing the benefits of such notification, ^{953} it might also reduce the number of unnecessary notifications to covered institutions and, in turn, to customers. ^{954}
^{949} See final rule 248.30(a)(5)(i).
^{950} See supra footnote 257 and accompanying text.
^{951} Alignment with existing regulation makes it more likely that service providers already have policies and procedures in place to comply with this requirement.
^{952} See, e.g., STA Comment Letter 2.
^{953} See supra section IV.D.1.b(2) for a discussion of the benefits of a timely notice to customers.
^{954} See Microsoft Comment Letter (“Premature reporting according to a 48-hour or shorter deadline, in our experience, increases the likelihood of reporting inaccurate or incomplete information, which is of little-to-no value and tends to create confusion and uncertainty.”). See also supra section IV.D.1.b(4) for a discussion of the effects of unnecessary notification. We expect that the change made to the notification timing requirements for service providers will mitigate these effects.
The final amendments provide, as proposed, that a covered institution may enter into a written agreement with a service provider to notify individuals affected by a breach on the covered institution's behalf. ^{955} Some commenters supported this proposed requirement. ^{956} We expect that this provision could reduce the compliance costs of the amendments, especially in the case where the breach happens at the service provider. In this case, the service provider may be in a better position to collect the relevant information and provide the required notice to customers. ^{957}
^{955} See final rule 248.30(a)(5)(ii).
^{956} See Schulte Comment Letter (“Covered Institutions should be permitted to reach commercial agreements that delegate notice obligations to service providers, as long as the notice actually provided to customers with potentially impacted data satisfies the Covered Institution's notice obligations.”); ICI Comment Letter 1 (“We also concur with the Commission that covered institutions should be permitted to have their service providers send breach notices to affected individuals on behalf of the covered institution.”).
^{957} One commenter stated that “if the service provider was the victim of a cyber attack that included unauthorized access to Covered Institution sensitive customer information, then the service provider would be better situated to notify the affected customers.” See Schulte Comment Letter. Even when the service provider notifies customers directly, the obligation to ensure that the affected individuals are notified rests with the covered institution. See supra section II.A.4 and final rule 248.30(a)(5)(iii).
It is possible that a breach that will trigger a notification obligation might occur at a covered institution that will also be a service provider to another covered institution. ^{958} The final amendments provide that the obligation to ensure that affected individuals are notified rests with the covered institution where the breach occurred. ^{959} If this covered institution is also a service provider to another covered institution, it retains the obligation, as a service provider, to notify this other covered institution of the breach. ^{960} This will allow the other covered institution to initiate its own incident response program and to perform its oversight duties on its service providers, and contribute to enhance the protection of customer information. We modified the final amendments such that only one covered institution needs to notify the affected customers. ^{961} By requiring only one notice to be sent for a given incident, this modification will reduce compliance costs—since only one covered institution will have to devote resources to preparing and sending the notice—and reduce potential confusion for the affected customers. ^{962} We do not expect this modification to reduce the benefit for such customers, who will still receive a timely notice.
^{958} For additional discussions of the cases where multiple covered institutions are involved in the same incident, see supra section II.A.3.a and infra section IV.D.2.a.
^{959} The amendments allow the two covered institutions to coordinate with each other as to which institution will send the notice to the affected individuals. See supra section II.A.3.a.
^{960} Because this service provider is itself a covered institution, it will have appropriate policies and procedures in place. Hence, we do not expect that notifying the other covered institution will imply significant costs.
^{961} See supra section II.A.3.a. Some commenters stated that the proposed amendments could be interpreted to lead to duplicative notices. See, e.g., CAI Comment Letter (“This dynamic could also create duplicative notification obligations where there is unauthorized access to sensitive customer information that is held or maintained by one financial institution on behalf of another, since proposed Rule 30 [sic—rule 248.30] notification obligations would appear to apply to both financial institutions simultaneously even though only one set of customer information was accessed.”). The revisions specify that only one notification is required in that circumstance.
^{962} Duplicative notices may nevertheless happen as a result of different requirements from other existing regulations. See supra section IV.C.2.a(3).

2. Extending the Scope of the Safeguards Rule and the Disposal Rule

a. Definition of Customer Information
The final amendments more closely align the scope of the safeguards rule with the scope of the disposal rule. They also broaden the scope of information covered by the rules to all customer information, regardless of whether the customers are a covered institution's own, or those of another financial institution whose customer information has been provided to the covered institution. ^{963} The final amendments define customer information, for any covered institution other than a transfer agent, as “any record containing nonpublic personal information” about a customer of a financial institution, whether in paper, electronic or other form, that is in the possession of a covered institution or that is handled or maintained by the covered institution or on its behalf. Such information is customer information regardless of whether it pertains to (a) individuals with whom the covered institution has a customer relationship or (b) the customers of other financial institutions where such information has been provided to the covered institution. ^{964} For transfer agents, customer information is defined as any record containing nonpublic personal information “identified with any natural person, who is a securityholder of an issuer for which the transfer agent acts or has acted as transfer agent, that is handled or maintained by the transfer agent or on its behalf.” ^{965}
^{963} See supra section II.A.3.a.
^{964} Final rule 248.30(d)(5)(i).
^{965} Final rule 248.30(d)(5)(ii).
While some commenters supported the proposed scope of the rules regarding the definition of customer information, ^{966} one commenter stated that the rule should focus on sensitive customer information, and that the breadth of the proposed amendments was disproportionate to the risks of disclosure. ^{967} This commenter also stated that applying the service provider requirements to all service providers that have access to any customer information would be disproportionate to the benefits and risk presented and suggested that it apply only to service providers with access to sensitive customer information. ^{968}
^{966} See, e.g., EPIC Comment Letter; Better Markets Comment Letter.
^{967} See IAA Comment Letter 1.
^{968} See IAA Comment Letter 1.
We acknowledge that applying the policies and procedures requirements to all customer information will impose costs that would not be incurred if the amendments covered only sensitive customer information. However, this approach creates important benefits. For example, the disclosure of customer information could be used for phishing attacks or similar efforts to access sensitive customer information. Moreover, with respect to policies and procedures specifically, the costs of creating policies and procedures for all information should not be much larger than the cost of creating them for only sensitive customer information, because the cost is in the creation of the policies and procedures rather than in their application. We acknowledge, however, that in some organizations the sensitive customer information could be located in different systems or accessible to different employees, such that policies and procedures for non-sensitive information would be different. In addition, covered institutions' existing policies and procedures may be less likely to meet the new requirements as a result of the breadth of the definition and would thus require modifications.
Because the final amendments extend the scope of customer information subject to protection to information possessed by a covered institution regardless of whether the customers are a covered institution's own, or those of another financial institution whose customer information has been provided to the covered institution, the benefits of the final amendments will extend to a wide range of individuals such as prospective customers, account beneficiaries, recipients of wire transfers, or any other individual whose customer information a covered institution comes to possess, so long as the individuals are customers of a financial institution. ^{969} We anticipate that, in many instances, the preventative measures taken by covered institutions to safeguard customer information in response to the final amendments will generally also protect these additional individuals. ^{970} Hence, while we expect that these measures could have potential significant benefits for these additional individuals, we do not expect them to result in significant additional costs for the covered institutions. However, we acknowledge that, in certain instances, this may not be the case. For example, information about prospective customers used for sales or marketing purposes may be housed in separate systems from the covered institution's “core” customer account management systems and require additional efforts to secure. Regarding the measures taken by covered institutions to comply with the final amendments' incident response program requirements, following a data breach, we do not anticipate that extending the scope of information covered by the final amendments to include these additional individuals will have a significant effect. These costs will include additional reputational harm and litigation as well as increased notice delivery costs. However, given that the distinction between customers and other individuals is generally not relevant under existing State notification laws—which apply to information pertaining to residents of a given State—we expect that most covered institutions will have already undertaken to protect and provide notification of data breaches to these additional individuals.
^{969} See final rule 248.30(d)(5).
^{970} For example, measures aimed at strengthening information safeguards such as improved user access control or staff training will likely protect a covered institution's customer information systems regardless of whether they house the information of the covered institution's own customers or those of another financial institution.
Some commenters agreed that covered institutions should safeguard the customer information they receive from other financial institutions. ^{971} Other commenters disagreed with the proposed requirement that a covered institution would have to notify individuals whose sensitive customer information was compromised even when these individuals were not the covered institution's customers. ^{972} Some commenters stated that it would be impractical for covered institutions to identify and contact such individuals, or that it could confuse these individuals. ^{973} However, such individuals will benefit from their information being included in the scope of the amendments' requirements. Another commenter stated that this provision of the requirement could lead to duplicative notification obligations if the two financial institutions involved—that is, the institution that received the information and the institution that provided the information—were both covered institutions. ^{974} After considering comments, we have modified the amendments to avoid requiring that multiple covered institutions notify the same affected individuals for a given incident. ^{975} The final amendments require that when an incident occurs at a covered institution or at one of its service providers that is not itself a covered institution, the covered institution has the obligation to ensure that a notice is provided to affected individuals, regardless of whether this covered institution has a customer relationship with the individuals. If this covered institution received the customer information from another covered institution, the two covered institutions can coordinate with each other to decide who will send the notice. As discussed above, ^{976} we expect that this modification will reduce compliance costs without reducing the benefits of the final amendments.
^{971} See, e.g., ICI Comment Letter 1; Better Markets Comment Letter.
^{972} See, e.g., SIFMA Comment Letter 2; CAI Comment Letter.
^{973} See ACLI Comment Letter; SIFMA Comment Letter 2; Federated Comment Letter.
^{974} See CAI Comment Letter.
^{975} See final rule 248.30(a)(4); see also supra sections II.A.3.a and IV.D.1.c.
^{976} See supra section IV.D.1.c.

b. Extension To Cover All Transfer Agents
The final amendments extend both the safeguards rule and the disposal rule to apply to any transfer agent registered with the Commission or another appropriate regulatory agency. Before this adoption, the safeguards rule did not apply to any transfer agents, and the disposal rule only applied to transfer agents registered with the Commission. ^{977} In addition to requiring transfer agents to design an incident response program, the benefits and costs of which are discussed separately above, ^{978} the amendments create an additional obligation on transfer agents to develop, implement, and maintain written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information. ^{979} Moreover, the final amendments create an obligation on transfer agents registered with a regulatory agency other than the Commission to develop, implement, and maintain written policies and procedures that address the proper disposal of customer information. ^{980}
^{977} See supra section II.B.2.
^{978} See supra section IV.D.
^{979} See final rule 248.30(a).
^{980} See 17 CFR 248.30(a).
As discussed in sections II.B.2 and IV.C.3.e, in the U.S., transfer agents provide the infrastructure for tracking ownership of securities. Maintaining such ownership records necessarily entails holding or accessing non-public information about a large swath of the U.S. investing public. ^{981} Given the highly concentrated nature of the transfer agent market, ^{982} a general failure of customer information safeguards at a transfer agent could negatively impact large numbers of customers. ^{983}
^{981} One commenter disagreed with this notion, stating that many transfer agents do not have the type or scope of personal information which could lead to further complications for shareholders. See STA Comment Letter 2. Transfer agents that do not possess customer information as defined in final rule 248.30(d)(5) will not be covered by the amendments and as such will not be subject to its associated costs.
^{982} See supra section IV.C.3.e.
^{983} More than 40% of registered transfer agents maintain records for more than 10,000 individual accounts. See supra Figure 8.
One commenter stated that because transfer agents' customers are not the individuals whose information they hold but the issuers of securities, the proposed amendments were ill-fitting, which decreased their efficacy and increased their complications. ^{984} This commenter also stated that the proposed amendments were not well-suited for transfer agents, and that this highlighted the need for a more in-depth analysis of how the final amendments may impact transfer agents, their customers (the issuers of securities), and securityholders. ^{985} In response to this commenter, we have supplemented below the analysis of the benefits and costs of extending the scope of Regulation S-P to transfer agents. ^{986}
^{984} See STA Comment Letter 2.
^{985} See STA Comment Letter 2.
^{986} Additional context is provided in section IV.C.3.f. See also supra section II.B.2 for a discussion of why the amendments are appropriate for transfer agents.
The final amendments extend the scope of the safeguards rule to cover any transfer agent registered with the Commission or another appropriate regulatory agency. As discussed above, ^{987} the safeguards rule requires covered institutions to develop written policies and procedures, including a response program reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures. The benefits and costs of the response program, as detailed above, ^{988} will also apply to transfer agents. Additionally, because transfer agents may be considered service providers under State law, or may maintain but not own or license customer information data, they are likely to be required by State law to notify the entity that owns or licenses the data (the issuer of the securities), which in turn could be required to notify the affected individuals (the holders of the securities). ^{989} Hence, it is possible that the final amendments will result in two notices being sent for the same incident—one by the issuer of the securities, as required by State law, and one by the issuer's transfer agent, as required by the final amendments.
^{987} See supra section IV.D.1.
^{988} See supra section IV.D.1.a; see also infra footnote 1003 and accompanying text for a discussion on additional costs for transfer agents.
^{989} See supra section IV.C.2.a(3).
Some commenters stated that a second notification would have negative consequences for customers without providing any benefits. ^{990} One commenter stated that the proposed requirements would not provide shareholders with helpful, new information but rather that two different notices, from two different entities, concerning the same breach would likely result in shareholder confusion. ^{991} Another commenter added that this second notice could potentially result in confusion, questions, and unnecessary costs to the transfer agent and the issuer. ^{992}
^{990} See, e.g., STA Comment Letter 2.
^{991} See STA Comment Letter 2.
^{992} See Computershare Comment Letter.
We disagree that no helpful, new information will be provided to the affected customers. In the situation where State law requires a notification from the issuer and the final amendments require a notification from the transfer agent as a covered institution, the final amendments will help ensure that the individuals whose information has been breached receive an informative and timely notice, with the benefits over the baseline described above. ^{993} Securityholders will benefit by potentially receiving additional and more timely information on a given breach. ^{994} In addition, in response to commenters' concerns, we have modified the final amendments such that, for the cases where multiple notifying entities are covered institutions, only one notice needs to be sent to satisfy the amendments' requirements. ^{995} Furthermore, some States allow for the entity that is the victim of a breach, but does not own or license the data, to notify individuals directly. ^{996} Hence, we expect that in some instances, the notice required by the final amendments will satisfy the State law requirements and only one notice will be sent. In these instances, additional costs related to the second notice will be avoided. For the instances where two notices will nevertheless be sent, we acknowledge that a second notification will impose costs on the transfer agent or its customer the issuer. As discussed below, we estimate that certain costs associated with the preparation and distribution of notices will be, on average, $5,178 per year per covered institution. ^{997} We understand it is possible that, in some cases, customers may be confused when receiving a notice from an entity they do not recognize and may read the notification as a phishing attempt or another nefarious scheme. However, we do not expect that a second notice will impose significant costs on the affected customers, and we expect that this confusion will be mitigated by the content of the notice. As discussed in section IV.D.1.b(5), the notice is required to include a description of the incident in general terms. We expect that this description will help explain the situation in the case where customers do not have a direct relationship with the transfer agent sending the notice and, therefore, that it will reduce potential customer confusion from duplicative notification, as discussed above. ^{998}
^{993} See supra section IV.D.1.b.
^{994} See supra section IV.D.1.b. Commenters stated that issuers may already have adopted policies and procedures to adhere to the strictest standards thereby already notifying securityholders consistent with the proposed amendments. See Computershare Comment Letter; STA Comment Letter 2. We acknowledge that this may be the case.
^{995} See supra sections IV.D.1.c and IV.D.2.a for additional discussions of the case where two covered institutions are involved in the same incident.
^{996} See, e.g., Wyo. Stat. section 40-12-502(g) (“The person who maintains the data on behalf of another business entity and the business entity on whose behalf the data is maintained may agree which person or entity will provide any required notice as provided in subsection (a) of this section, provided only a single notice for each breach of the security of the system shall be required.”). See also supra section IV.C.2.a(3).
^{997} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $3,862 per year per covered institution. See infra section V.
^{998} See supra section II.B.2.
Before this adoption, transfer agents that are registered with the Commission were not required to notify customers directly in case of a breach under Federal law. ^{999} As discussed above, we also expect that, under State law, transfer agents are likely to be considered service providers (or entities that use or maintain but do not own or license data) and as such are typically only required to notify the issuer of securities in case of breach. ^{1000} Hence, we expect that to satisfy the amendments' requirements, these transfer agents might need to design and implement a response program and notification procedures, which will require some resources. ^{1001} As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures, which include the response program and notification procedures, to comply with the final amendments will be, on average, $17,950 per year per transfer agent. ^{1002} In addition, as for other types of covered institutions, if transfer agents respond to this requirement by improving their customer information safeguards beyond what is required by the final amendments, they will incur additional costs. ^{1003} We expect that the different costs resulting from the written policies and procedures requirement will be passed on to the transfer agents' customers (the issuers of securities) and ultimately to the holders of these securities.
^{999} In 2023, there were 251 such transfer agents. See supra section IV.C.3.e.
^{1000} However, there are some States where transfer agents may be required by State law to notify the affected individuals directly. See supra footnote 574 and accompanying text.
^{1001} Transfer agents registered with the Commission may already have such procedures in place and may already be notifying customers. See ICI Comment Letter 1 (“We understand that this is a common practice today for investment companies wherein their transfer agents assume responsibility for sending affected customers breach notices.”). However, we do not have data on how common such arrangements are and commenters did not provide such data.
^{1002} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per transfer agent. See infra section V. These estimated costs are higher than for other types of covered institutions because transfer agents were not, before this adoption, covered by the safeguards rule. In addition, transfer agents registered with a regulatory agency other than the Commission were not, before this adoption, covered by the disposal rule. The final amendments extend both the safeguards rule and the disposal rule to apply to any transfer agent registered with the Commission or another appropriate regulatory agency. The additional costs that could be incurred by transfer agents as a result are discussed below. See infra text accompanying footnote 1021.
^{1003} We are unable to quantify expected costs resulting from such enhancements. See supra footnote 717 and accompanying text.
Transfer agents that are registered with an appropriate regulatory agency other than the Commission may already be required to notify affected individuals in case of a breach under the Banking Agencies' Incident Response Guidance. ^{1004} As discussed above, although the notification requirement under the final amendments is largely aligned with the Banking Agencies' Incident Response Guidance, there are some differences. ^{1005} Hence, for these institutions, we expect that the costs of the requirements will primarily be to review and, if needed, update their notification procedures to ensure consistency with the amendments, though there may be some costs associated with updating procedures to achieve consistency with the final amendments. ^{1006} As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures to comply with the final amendments will be, on average, $17,950 per year per transfer agent. ^{1007}
^{1004} In 2023, there were 64 such transfer agents; see supra section IV.C.3.e; see also supra section IV.C.2.b.
^{1005} For example, the Banking Agencies' Incident Response Guidance requires entities to notify customers “as soon as possible,” but does not specify a precise deadline, whereas the final amendments require that the notice be sent as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of sensitive customer information has occurred or is reasonably likely to have occurred. In addition, the Banking Agencies' Incident Response Guidance has a different definition of “sensitive customer information” and has different requirements regarding an entity's service providers. See supra section IV.C.2.b for a description of the Banking Agencies' Incident Response Guidance's requirements.
^{1006} We expect these reviews and updates will result in the entities incurring costs generally smaller than the costs of adopting and implementing new policies and procedures, as discussed in Section V.
^{1007} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per transfer agent. See infra section V.
One commenter supported the proposed inclusion of transfer agents in the safeguards rule, stating that it would eliminate the asymmetry between the transfer agents registered with the Commission and those registered with another regulatory agency and that it would promote investor protection, regulatory parity, and fair competition among firms. ^{1008} We agree with this commenter. Another commenter stated that expanding the regulation's scope to include transfer agents was long overdue. ^{1009}
^{1008} See Better Markets Comment Letter.
^{1009} See ICI Comment Letter 1.
Other commenters opposed the proposed inclusion. ^{1010} One commenter stated that requiring transfer agents to notify customers directly would create undue costs for transfer agents, that the proposed amendments included a potential for conflicting regulations where there are overlapping State and Federal regulations, and that this would lead to unnecessary expenses as transfer agents attempt to develop policies and procedures capable of addressing these potentially conflicting regulations. ^{1011} This commenter suggested that the Commission either preempt State law or prepare and produce a cost-benefit analysis identifying the specific ways in which the amendments would be an improvement over existing regulations. ^{1012} Another commenter—a transfer agent—stated that it already had policies and procedures to notify issuers of securities in accordance with State law and that notifying the securityholders directly could violate some of its existing contracts with issuers. ^{1013}
^{1010} See STA Comment Letter 2; Computershare Comment Letter.
^{1011} See STA Comment Letter 2. The commenter did not describe such conflicts.
^{1012} See STA Comment Letter 2.
^{1013} See Computershare Comment Letter (“However, as state breach notification laws have been in effect for nearly two decades, Computershare has long-standing policies and procedures for notification, and contractual obligations to clients that are designed to track state law requirements. Such contract provisions may specifically prohibit Computershare as the transfer agent from notifying securityholders as the issuers have the requirement to notify their securityholders under state law.”).
In response to commenters and as discussed above, ^{1014} we have modified the final amendments to minimize the likelihood of multiple notices being sent for the same incident, which will decrease compliance costs. ^{1015} The final amendments do not necessarily require covered institutions to notify affected customers directly in case of breach, but instead provide that a covered institution must ensure that the required notice is sent. ^{1016} Hence, if a transfer agent has a contract with an issuer that prevents it from notifying securityholders directly, the transfer agent will be able to, under the final amendments, enter into an agreement with the issuer so that the issuer sends the notice on its behalf. ^{1017} In consideration of the commenter's request for an analysis that considers the incremental effects of the rule over existing regulations, we have (i) conducted supplemental analyses of the baseline regarding State law requirements, ^{1018} and (ii) supplemented the analysis of the benefits and costs of the final amendments over this baseline, highlighting the different areas where the final amendments will improve over existing regulations. ^{1019}
^{1014} See supra section IV.D.
^{1015} See also supra section II.B.2 for a discussion of how the final amendments permit transfer agents and issuers to develop arrangements to address potentially conflicting regulations.
^{1016} See final rule 248.30(a)(4).
^{1017} Such contract renegotiation will involve some costs for the transfer agents. It is difficult for us to quantify these costs, as we have no data on the provisions of existing contracts between transfer agents and security issuers relating to customer notification of data breaches, and no commenter suggested such data. Such costs are likely to be contract specific, as they will depend on the degree to which each existing contract may be revised as a result of the final amendments. Many such contracts may not be revised at all, while others may undergo more revisions. Moreover, in many cases, even where a contract could be revised as a means of complying with the final requirements, the covered institution may pursue compliance by other means.
^{1018} See supra section IV.C.2.
^{1019} See supra section IV.D.1.b.
The final amendments to the safeguards rule also require transfer agents to develop, implement, and maintain written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information. ^{1020} In general, transfer agents with written policies and procedures to safeguard customer information would be at reduced risk of experiencing such safeguard failures. ^{1021} Because some State laws require written policies and procedures to protect customer information, ^{1022} and because transfer agents, by the nature of their business models, are likely to hold information about individuals residing in a large number of States, we expect that most transfer agents already have policies and procedures in place. ^{1023} In addition, transfer agents registered with a regulatory agency other than the Commission may also be subject to the Banking Agencies' Safeguards Guidance or other Federal regulation. ^{1024} Hence, we expect the costs of this requirement to be limited and to consist mostly of reviewing and updating existing policies and procedures to ensure consistency with the safeguards rule. ^{1025} As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures to comply with the final amendments will be, on average, $17,950 per year per transfer agent. ^{1026}
^{1020} See final rule 248.30(a)(1).
^{1021} See supra section IV.D.1 for a discussion of the benefits of written policies and procedures generally.
^{1022} See supra section IV.C.2.b.
^{1023} In addition, some transfer agents may also be subject to other regulations, such as the GDPR, and already have customer information safeguards in place as a result. See supra section IV.C.2.b.
^{1024} See supra footnote 604 and accompanying text.
^{1025} We expect these reviews and updates will result in the entities incurring costs generally smaller than the costs of adopting and implementing new policies and procedures, as discussed in section V.
^{1026} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per transfer agent. See infra section V. As discussed above, these estimates reflect all of the policies and procedures required by the final amendments, including those regarding the incident response program. See supra footnote 1003 and accompanying text.
The final amendments extend the disposal rule to transfer agents registered with a regulatory agency other than the Commission. ^{1027} The amendments require these transfer agents to properly dispose of customer information by taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal. ^{1028} Because these transfer agents are subject to regulatory requirements and to State laws which require proper disposal of customer information, ^{1029} we expect that they are likely to already have procedures in place for the disposal of customer information. Therefore, to the extent that transfer agents already have in place procedures that are consistent with these provisions of the final amendments, the benefits and costs relating to this requirement will be reduced for these institutions and for the customers whose information is covered by this requirement. Hence, we expect the costs of this requirement to be limited and to consist mostly of reviewing and updating existing policies and procedures to ensure consistency with the safeguards rule. ^{1030} As discussed below, we estimate that certain costs associated with developing and implementing policies and procedures to comply with the final amendments will be, on average, $17,950 per year per transfer agent. ^{1031}
^{1027} Transfer agents registered with the Commission were already subject to the disposal rule before this adoption. See 17 CFR 248.30(b).
^{1028} See 17 CFR 248.30(b).
^{1029} The Banking Agencies' Safeguards Guidance requires that a covered entity's information security program be designed to ensure the proper disposal of customer information and consumer information. See supra footnote 612 and accompanying text; see also supra section IV.C.2.b for a discussion of State law disposal requirements.
^{1030} We expect these reviews and updates will result in the entities incurring costs generally smaller than the costs of adopting and implementing new policies and procedures, as discussed in section V.
^{1031} This estimate is an annual average for the first three years. The corresponding ongoing annual costs beyond the first three years are estimated to be on average $5,425 per year per transfer agent. See infra section V. As discussed above, these estimates reflect all of the policies and procedures required by the final amendments, including those regarding the incident response program. See supra footnote 1003 and accompanying text.

3. Recordkeeping
The recordkeeping provisions of the final amendments require covered institutions (other than funding portals) to make and maintain written records documenting compliance with the requirements of the safeguards rule and of the disposal rule. ^{1032} Each covered institution (other than funding portals) is required to make and maintain written records documenting its compliance with, among other things: its written policies and procedures required under the final amendments, including those relating to its service providers and its consumer information and customer information disposal practices; its assessments of the nature and scope of any incidents involving unauthorized access to or use of customer information; any notifications of such incidents received from service providers; steps taken to contain and control such incidents; and, where applicable, any investigations into the facts and circumstances of an incident involving sensitive customer information, and the basis for determining that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience. ^{1033}
^{1032} See final rule 248.30(c). As discussed above, funding portals have recordkeeping requirements that are different from those of other covered institutions under the final amendments. See supra footnote 385.
^{1033} See the various provisions of final rule 248.30(a) and 248.30(b)(2).
These recordkeeping requirements will help facilitate the Commission's inspection and enforcement capabilities. Covered institutions may react to this enhanced ability of the Commission staff to detect deficiencies and impose sanctions against non-compliance due to the recordkeeping requirements by taking more care to comply with the substance of the amendments, which may result in material improvement in the response capabilities of covered institutions and mitigate potential harm resulting from the lack of an adequate response program. As such, the amendments' recordkeeping requirements might benefit customers through channels described in section IV.D.1.
One commenter supported the proposed recordkeeping requirements. ^{1034} Another commenter requested a clarification of the proposed requirements, suggesting that the text in the final amendments include more detail. ^{1035} In response to this commenter, we have provided a more detailed description of the requirements in the rule text of the final amendments. ^{1036} We expect that this change will mitigate compliance costs for covered institutions.
^{1034} See ICI Comment Letter 1.
^{1035} See IAA Comment Letter 1.
^{1036} See supra section II.C and final rule 240.30(d)(1).
We do not expect the final recordkeeping requirements to impose substantial compliance costs. As covered institutions are currently subject to similar recordkeeping requirements applicable to other required policies and procedures, we do not anticipate that covered institutions will need to invest in new recordkeeping staff, systems, or procedures to satisfy the new recordkeeping requirements. ^{1037} The incremental administrative costs arising from maintaining additional records related to these provisions using existing systems are covered in the Paperwork Reduction Act analysis in section V and are estimated to be $420 per year per covered institution other than funding portals, and $630 per year per funding portal. ^{1038}
^{1037} See, e.g., 17 CFR 240.17a-3; 17 CFR 275.204-2; 17 CFR 270.31a-1; and 17 CFR 240.17Ad-7. Where permitted, entities may choose to use third-party providers in meeting their recordkeeping obligations. See, e.g., 17 CFR 275.204-2(e)(2).
^{1038} See infra section V. As discussed above, funding portals have recordkeeping requirements that are different from those of other types of covered institutions. See supra footnote 385.

4. Exception From Annual Notice Delivery Requirement
The final amendments incorporate into the regulation an existing statutory exception to the requirement that a broker-dealer, investment company, or registered investment adviser deliver an annual privacy notice to its customers. ^{1039} An institution may rely on the exception to forgo notice if it has not changed its policies and practices with regard to disclosing nonpublic personal information from those it most recently provided to the customer via privacy notice. ^{1040} The effect of the exception is to eliminate the requirement to send the same privacy policy notice to customers on multiple occasions. As such notices would provide no new information, receiving multiple copies of such notices is unlikely to provide any significant benefit to customers. Moreover, we expect that widespread reliance on the proposed exception is more likely to benefit customers, by providing clearer signals of when privacy policies have changed. ^{1041} At the same time, reliance on the exception will reduce costs for covered institutions. However, we expect these cost savings to be limited to the administrative burdens discussed in section V. ^{1042} We received one comment supporting the proposed exception. ^{1043} We did not receive any comments suggesting alternatives to the proposed exception or suggesting that we not proceed with it.
^{1039} See supra section II.D; see also 15 U.S.C. 6803(f). Additionally, under existing statutory exceptions notice is not required when the institution provides certain information to a third party to perform services for or functions on behalf of the institution, such as information sharing necessary to perform transactions on behalf of the customer, information sharing directed by the customer, or reporting to credit reporting agencies. See 15 U.S.C. 6802(e).
^{1040} See final rule 248.5(e)(1)(ii).
^{1041} In other words, reducing the number of privacy notices with no new content allows customers to devote more attention to parsing notices that do contain new content.
^{1042} See infra footnote 1119.
^{1043} See ICI Comment Letter 1.
Because the exception became effective when the statute was enacted, the aforementioned benefits are likely to have already been realized. Consequently, we do not expect that its inclusion will have any economic effects relative to the current status quo.

E. Effects on Efficiency, Competition, and Capital Formation
As discussed above, market imperfections might lead to underinvestment in customer information safeguards, and to information asymmetry about incidents resulting in unauthorized access to or use of customer information. ^{1044} This information asymmetry might prevent customers whose sensitive information was compromised from taking timely mitigating actions. The final amendments aim to mitigate the inefficiency resulting from these imperfections by imposing mandates for policies and procedures. Specifically, the amendments require covered institutions to include a response program for incidents involving unauthorized access to or use of customer information. This response program must address assessment and containment of such incidents, and might thereby reduce potential underinvestment in these areas, improving customer information safeguards as a result. ^{1045} In addition, by requiring notification to customers about certain safeguard failures, the amendments could reduce the aforementioned information asymmetry and help customers choose a covered institution that meets their needs or preferences. The notification requirement, by imposing reputational costs on institutions whose safeguards of customer information fail, might also provide covered institutions with greater incentives to improve their safeguards, contributing to lowering the probability of a breach even further.
^{1044} See supra section IV.B.
^{1045} See supra section IV.D (discussing the benefits and costs of the response program requirements).
While the amendments have the potential to mitigate these inefficiencies, the scale of the overall effect is difficult to estimate. Due to the presence of existing regulations, including State notification laws, and existing security practices, ^{1046} these inefficiencies are likely to be of limited magnitude. However, to the extent that they remain, the amendments might contribute to reduce them. ^{1047} Insofar as the proposed amendments alter covered institutions' practices, the improvement—in terms of the effectiveness of covered institutions' response to incidents, customers' ability to respond to breaches of their sensitive customer information, and in reduced information asymmetry about covered institutions' efforts to safeguard this information—is impracticable to quantify due to data limitations discussed previously. ^{1048}
^{1046} See supra sections IV.C.1 and IV.C.2.
^{1047} Section IV.D.1.b discusses in detail how the amendments' requirements differ from existing State notification laws.
^{1048} See, e.g., supra sections IV.A. and IV.D.1.
The final provisions will not have first order effects on channels typically associated with capital formation ( e.g., taxation policy, financial innovation, capital controls, investor disclosure, market integrity, intellectual property, rule-of-law, and diversification). Thus, the final amendments are unlikely to lead to significant effects on capital formation. ^{1049}
^{1049} While we do not expect first-order effects on capital formation, we agree with one commenter who stated that the amendments would contribute to promote transparency and consistency on capital markets, which would benefit investors, issuers, and other market participants. See Nasdaq Comment Letter. In addition, as discussed below, there might be incremental effects on the capital formation associated with issuers relying on funding portals. See infra text accompanying footnote 1053.
Because the amendments are likely to impose proportionately larger direct and indirect costs on smaller and more geographically limited covered institutions, these institutions' competitiveness vis-à-vis their larger peers might be affected. Such covered institutions—which may be less likely to have written policies and procedures for incident response programs already in place—will face disproportionately higher costs resulting from the proposed amendments. ^{1050} Thus, the amendments might have negative effects on competition, to the extent these higher costs represent a barrier to entry or limit smaller institutions' viability as a competitive alternative to larger institutions. However, given the considerable competitive challenges arising from economies of scale and scope already faced by smaller firms, we do not anticipate that the costs associated with this adoption will significantly alter these challenges and therefore expect the incremental effects of these amendments on competition to be limited.
^{1050} The development of policies and procedures entails a fixed cost component that imposes a proportionately larger burden on smaller firms. We expect smaller broker-dealers and investment advisers will be most affected. See supra sections IV.C.3.a and IV.C.3.c.
On the other hand, the amendments may have positive competitive effects also. Because safeguarding customer information, including through cybersecurity, is disproportionately more expensive for smaller institutions, ^{1051} customers today may already suspect that smaller institutions have more severe under-investments in cybersecurity than larger institutions and may therefore avoid smaller institutions. If disproportionately large costs faced by smaller institutions cause existing and potential customers to suspect that these institutions are more likely to avoid such costs, the existing information asymmetry may be greater for these institutions. Smaller institutions may be unable to overcome these suspicions on their own absent regulatory policy, and so asymmetries of information may represent a barrier to entry for smaller institutions. In this case, if the amendments result in customers having better information on the covered institutions' efforts towards protecting customer information, there will be a positive effect on competition. Hence, the overall effect on smaller and more geographically limited covered institutions' competitiveness remains difficult to predict.
^{1051} See, e.g., Anna Cartwright et al., Cascading Information On Best Practice: Cyber Security Risk Management in UK Micro and Small Businesses and the Role of IT Companies, Computers & Security 131 (2023) for a list of articles discussing the cybersecurity challenges faced by small businesses.
With respect to funding portals, the situation could be different. As discussed above, the final amendments are likely to impose proportionately larger costs on smaller covered institutions, ^{1052} including smaller funding portals. At the margin, it is possible that the final amendments will result in a smaller number of funding portals, which could result in a smaller number of crowdfunding intermediaries available to potential issuers. Crowdfunding intermediaries facilitate capital raising by smaller issuers relying upon Regulation Crowdfunding to offer or sell securities. To the extent that the final amendments result in a decrease in the availability of funding portals or in an increase in the costs of utilizing crowdfunding intermediaries for issuers or investors, they may have incremental negative effects on capital formation associated with issuers relying on such intermediaries. However, we expect the incremental negative effect on competition that could result from this to be mitigated by the already significant degree of concentration among crowdfunding intermediaries observed today. ^{1053} We further expect these effects to be mitigated to the extent that issuers may be able to switch to using other intermediaries for their Regulation Crowdfunding offerings, such as larger funding portals. Lastly, the amendments may have a positive effect on capital formation in offerings under Regulation Crowdfunding to the extent that the additional procedural requirements in the final amendments increase protection of customer information and thereby attract additional potential investors. Hence, the overall effect remains difficult to predict.
^{1052} See supra footnote 1051.
^{1053} See supra section IV.C.3.b.
Two commenters raised concerns about barriers to entry disproportionately affecting smaller covered institutions. One commenter stated that smaller advisers had been significantly affected by “one-size-fits-all” regulations that effectively require substantial fixed investments in infrastructure, personnel, technology, and operations, adding that they were concerned that these stressors and barriers would negatively affect smaller advisers' ability to continue to serve their clients. ^{1054} Another commenter stated that we had done “little analysis” about the impact of recent proposals on small broker-dealers, competition within the brokerage industry, and whether the proposals could contribute to barriers for new entrants into the markets. ^{1055} We acknowledge these commenters' concerns about smaller covered institutions and, as discussed above, understand that smaller covered institutions might be disproportionately affected by the final amendments. ^{1056} In response to these concerns, we have changed the final amendments from the proposal. We expect that some of these changes may mitigate costs and may reduce, but not eliminate, the degree to which the final amendments act as a barrier to entry. ^{1057} We have also responded to commenters' concerns by adopting longer compliance periods for all covered institutions relative to the proposal and an even longer compliance period for smaller covered institutions. ^{1058} The final amendments provide 24 months for smaller covered institutions to comply with the final amendments after the date of publication in the Federal Register , compared to 18 months for larger covered institutions. ^{1059} Since smaller covered institutions are those most likely to exit the market in response to high compliance costs, this longer compliance period will mitigate the negative effect of the final amendments on competition, for example by giving smaller covered institutions opportunities to learn about compliance with the final requirements from larger covered institutions' earlier compliance. ^{1060}
^{1054} See IAA Comment Letter 1.
^{1055} See ASA Comment Letter. In the Proposing Release, we discussed that the compliance costs of the proposed amendments could be higher for smaller covered institutions such as small broker-dealers who do not have a national presence. See Proposing Release at section III.D.1.a. We also discussed the potential negative competitive effects of the proposed amendments on smaller covered institutions and requested comments on the way we characterized the effects on competition. See Proposing Release at sections III.F. and III.G. We received no comment letter discussing specifically how the proposed amendments would affect the level of competition in the different markets in which covered institutions operate.
^{1056} See supra footnote 1051 and accompanying text.
^{1057} These changes include (1) requiring that a service provider notify the affected covered institution of a breach in a period of 72 hours instead of 48 hours; and (2) requiring that covered institutions oversee, monitor, and conduct due diligence on their service providers to ensure that they take appropriate measures to protect customer information and notify the covered institution in case of breach instead of requiring written contracts. See supra section IV.D.1.c on the expected effects of these changes. Because smaller covered institutions are more likely to have limited bargaining power when negotiating with their service providers, we expect that these changes may particularly reduce the burdens on those entities and may reduce, but will not eliminate, the extent to which these requirements act as a barrier to entry.
^{1058} The proposed compliance period was 12 months from effective date for all covered institutions. See Proposing Release at section II.I.
^{1059} See supra Table 3 for a description of small covered institutions for the purposes of the final amendments' tiered compliance period.
^{1060} See FSI Comment Letter (“We propose a longer implementation period for smaller broker-dealers and investments advisers to allow these firms to benefit from implementation for larger industry participants.”).
With respect to competition among transfer agents, the situation could be different. Because transfer agents registered with a regulatory agency other than the Commission may already have been required to notify customers in case of breach, ^{1061} whereas the transfer agents registered with the Commission may, before this adoption, have only been required, by State law, to notify the security issuer, the latter group may face disproportionately high compliance costs compared to the former group since they might have to design and implement new policies and procedures, including the required incident response program and notification procedures. ^{1062} This might affect their competitiveness vis-à-vis the transfer agents registered with a regulatory agency other than the Commission. ^{1063} Because transfer agents registered with the Commission may already have procedures in place to notify individuals affected by a data breach, ^{1064} the magnitude of this effect is difficult to estimate.
^{1061} See supra section IV.C.2.b.
^{1062} In 2023, there were 251 transfer agents registered with the Commission and 64 transfer agents registered with another appropriate regulatory agency. See supra section IV.C.3.e.
^{1063} In addition, because designing and implementing new policies and procedures entails fixed costs, competition among transfer agents registered with the Commission may be affected. See supra discussion of potential competition effects on covered institutions of different sizes.
^{1064} See supra footnote 1002. In addition, we expect that many transfer agents already have some processes in place to contact customers since communicating information from the issuer to its security-holders is one of the core functions of transfer agents.
One commenter supported the proposed extension of the scope of the safeguard and disposal rules to all transfer agents and stated that it would promote fair competition among these firms by reducing asymmetry in the requirements with which different types of transfer agents must comply. ^{1065} We agree with this commenter that including all transfer agents in the scope of both the safeguards rule and the disposal rule will contribute to enhanced competition in the market for transfer agents. ^{1066}
^{1065} See Better Markets Comment Letter.
^{1066} In particular, applying the final amendments to all transfer agents may be beneficial for competition, to the extent that applying different regulations to different entities could exacerbate existing differences in the competitive landscape. See supra section IV.C.3.e (discussing that transfer agents registered with the Banking Agencies are on average smaller than transfer agents registered with the Commission).
With respect to efficiency and competition among covered institutions' service providers, the overall effects of the final amendments are difficult to predict. The final amendments require covered institutions to ensure that their service providers protect against unauthorized access to or use of customer information and notify the covered institution in case of a breach. The final amendments also require covered institutions to oversee their service providers to ensure that these measures are enforced. ^{1067} As discussed above, ^{1068} we expect that most service providers will continue their relationships with covered institutions, but some service providers might not. We expect that four possible scenarios may happen:
^{1067} See final rule 248.30(a)(5).
^{1068} See supra section IV.D.1.c.
• Scenario 1: The service provider already has the processes and procedures in place to satisfy the covered institution's obligations under the final amendments and is willing to cooperate with the oversight activities of the covered institution.
• Scenario 2: The service provider does not have the necessary processes and procedures in place but is willing to adapt them to satisfy the covered institution's obligations under the final amendments and to cooperate with the oversight activities of the covered institution.
• Scenario 3: The service provider does not have the necessary processes and procedures in place and is not willing to adapt to satisfy the covered institution's obligation under the final amendments. ^{1069}
^{1069} See supra section IV.C.3.f. Because taking the appropriate measures to satisfy the amendments' requirements entails fixed costs, we expect that smaller service providers are more likely to exit (or not enter) this market than larger service providers.
• Scenario 4: The service provider already has the processes and procedures in place to satisfy the covered institution's obligations under the final amendments but is not willing to cooperate with the oversight activities of the covered institution.
Under scenarios 1 and 2, the relationship between the covered institution and its service provider is maintained. Hence, we do not expect significant effects on efficiency and competition in these cases. ^{1070} On the other hand, scenarios 3 and 4 imply that the covered institution will have to either switch to a new service provider or perform the former service provider's functions in-house. If the covered institution is unable to find a new service provider that is equivalent in its ability to provide the services, this is likely to result in a second-best outcome for the covered institution and therefore to result in a loss of efficiency. ^{1071}
Scenario 4 could also lead to covered institutions being forced to switch away from large, established service providers and instead to rely on smaller, less established providers that may be less capable of addressing the vulnerabilities within its control. This situation could result in a reduced ability to protect customer information.
^{1070} The other benefits and costs of these scenarios are discussed in section IV.D.1.c.
^{1071} Under scenario 3, we expect this effect on efficiency to be limited since the service providers who are the most efficient at the outsourced function are likely to also be more effective at protecting customer information. We expect this effect to be more significant under scenario 4.
Commenters identified service providers exiting the market as a significant potential cost of the proposed requirements. ^{1072} We expect that the changes that we have made to the final amendments, including the change from a written contract requirement to a requirement to oversee service providers and the change to an extended notification deadline of 72 hours, will reduce the likelihood of scenario 4 by giving covered institutions more flexibility in how they choose to satisfy the service provider requirements of the final amendments. ^{1073} This will reduce the likelihood of this potential negative outcome. However, such an outcome is still possible and to the extent that it occurs, it will represent a cost of the final amendments.
^{1072} See ACLI Comment Letter (“If service providers are unable or unwilling to change their practices, this requirement could cause regulated entities to end essential service provider arrangements with inadequate alternatives”); SIFMA Comment Letter 2 (“Indeed, some service providers may not agree to the contemplated new terms, which could limit the number of service providers that agree to such requirements, causing an undue reliance on a small group of service providers in the industry. Another possible result is that the least commercially savvy service providers would agree to these terms, which could increase unqualified providers working in the industry.”); CAI Comment Letter (“In practice, this will often force covered institutions to choose between either using the best and most dependable service providers or complying with these regulatory requirements, since many leading service providers (such as cloud service providers) do not negotiate the standard terms of their services with customers and those standard terms generally would not meet the proposed contractual requirements.”).
^{1073} See supra section II.A.4. In addition, some commenters mentioned costs associated specifically with written contracts. See, e.g., ASA Comment Letter; IAA Comment Letter 1. These contracting costs could also apply to service providers and potentially result in these service providers terminating their relationship with covered institutions.
Because scenarios 3 and 4 result in service providers exiting the market, they also have effects on competition. While scenario 3 would result in an overall decrease in the number of service providers available to covered institutions, it would not necessarily reduce competition among service providers who are able and willing to satisfy covered institutions' requirements. In fact, the final amendments will prevent service providers that are not willing to satisfy the minimum requirements from operating in that market and from potentially undercutting service providers who do satisfy the requirements. This will improve the competitiveness of the service providers who are able and willing to satisfy the requirements. The situation is different for scenario 4, which would result in a decrease in the number of service providers with adequate customer information safeguards and notification procedures. This would result in a decrease in competition, and this is a potential cost of the regulation.
One commenter stated that the proposed amendments could lead to service providers not agreeing with the new requirements, adding that it could result in covered institutions relying on a small group of service providers in the industry. ^{1074} This commenter also stated that some service providers may choose not to enter into agreements with covered institutions as a result of the proposed amendments. ^{1075} We acknowledge that this is a risk of the final amendments. However, we expect that the modifications that we have made to the service provider provisions of the final amendments will reduce the costs to service providers of satisfying covered institutions' requirements, ^{1076} and might therefore reduce the likelihood of this potential negative outcome.
^{1074} See SIFMA Comment Letter 2.
^{1075} See id.
^{1076} See supra section IV.D.1.c.
Because of the reasons described above, ^{1077} we are unable to estimate the likelihood of the different scenarios and, therefore, we are unable to quantify the efficiency and competition effects of the service provider provisions of the final amendments.
^{1077} See id.
Some commenters requested that the Commission consider interactions between the effects of the proposed rule and other recent Commission rules, as well as practical realities such as implementation timelines. ^{1078} As discussed above, the Commission acknowledges that overlapping compliance periods may in some cases increase costs, particularly for smaller entities with more limited compliance resources. ^{1079} This effect can negatively impact competition because these entities may be less able to absorb or pass on these additional costs, making it difficult for them to remain in business or compete. We acknowledge that to the extent overlap occurs, there could be costs that could affect competition. However, we do not expect these costs to be significant, for two reasons. First, the final amendments mitigate overall costs relative to the proposal, ^{1080} including by adopting longer compliance periods for all covered institutions, and an even longer compliance period for smaller covered institutions because they may have more limited compliance resources. The final amendments also reduce costs for both larger and smaller entities, relative to the proposal, notably by removing the proposed requirement to have a written contract with service providers. Thus, any higher costs or potential negative effects on competition due to overlapping compliance periods raised in the context of the proposal may be mitigated under the final amendments. Second, as explained in section IV.D, many of the rules commenters named affect limited sets of covered institutions, and the compliance dates are generally spread out over a more than three-year period, including several that precede the compliance dates of the final amendments. These factors will limit the incidence of covered institutions affected by overlapping compliance dates.
^{1078} See supra section IV.C.
^{1079} See supra section IV.D.
^{1080} See supra section IV.B.
Additionally, we anticipate that neither the recordkeeping provisions nor the exception from annual privacy notice delivery requirements will have a notable impact on efficiency, competition, or capital formation due to their limited economic effects. ^{1081} As discussed elsewhere, we do not expect the recordkeeping requirements to impose material compliance costs, and we therefore expect the economic effects of the exception to be limited. And, as the economic effects of the recordkeeping provisions are limited, any overlapping compliance dates involving recordkeeping will likewise have limited effect on competition.
^{1081} See final rule 248.30(c) and final rule 248.5; see also supra sections IV.D.3 and IV.D.4.

F. Reasonable Alternatives Considered
In formulating the final amendments, we have considered various reasonable alternatives. These alternatives are discussed below.

1. Reasonable Assurances From Service Providers
Rather than requiring the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers to ensure service providers take appropriate measures to protect against unauthorized access to or use of customer information and provide notification to the covered institution if a breach of security occurs, ^{1082} the Commission considered requiring covered institutions to obtain “reasonable assurances” from service providers instead. One commenter supported this alternative for some service providers. ^{1083} This alternative requirement would be a lower threshold than the final provisions requiring the establishment, maintenance, and enforcement of written policies and procedures designed to require oversight, and as such would be less costly to reach but also less protective for customers.
^{1082} See final rule 248.30(a)(5)(i).
^{1083} See SIFMA Comment letter 2. Other commenters also suggested alternative thresholds that would be lower than the final amendments' provisions. See, e.g., IAA Comment Letter 1; AWS Comment Letter.
Under this alternative we would have used the final amendments' definition of “service provider,” which is “any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.” ^{1084} Thus, similar to the final amendments, this alternative could affect a broad range of service providers including, potentially: email providers, customer relationship management systems, cloud applications, and other technology vendors. Depending on the States where they operate, these service providers may already be subject to State laws applicable to businesses that “maintain” computerized data containing private information. ^{1085} Additionally, it is likely that any service provider that offers a service involving the maintenance of customer information to U.S. financial firms generally, or to any specific financial firm with a national presence, has processes in place to ensure compliance with these State laws.
^{1084} Final rule 248.30(d)(10).
^{1085} See, e.g., Cal. Civil Code section 1798.81.5(b) and 1798.82(b); N.Y. Gen. Bus. Law section 899-AA(3).
For those service providers that provide specialized services aimed at covered institutions, this alternative would, like the final amendments, create market pressure to enhance service offerings so as to provide the requisite assurances and facilitate covered institutions' compliance with the requirements. ^{1086} These service providers might have little choice other than to adapt their services to provide the required assurances, which would result in additional costs for the service providers related to adapting business processes to accommodate the requirements. In general, we expect these costs would be limited in scale in the same ways the costs of the final amendments are limited in scale: specialized service providers are adapted to operating in a highly regulated industry and are likely to have policies and procedures in place to facilitate compliance with State data breach laws. And, as with the final amendments, we generally anticipate that such costs would largely be passed on to covered institutions and ultimately their customers. As compared to the final amendments' requirements, we expect that “reasonable assurances” would in many cases require fewer changes to business processes and, accordingly, lower costs. ^{1087} However, this alternative—without more—could also be less protective than the final amendments.
^{1086} A service provider involved in any business-critical function likely “receives, maintains, processes, or otherwise is permitted access to customer information.” See final rule 248.30(d)(10).
^{1087} See supra section II.A.4 for a discussion of sufficient safeguards for ensuring compliance with covered institution's obligations under the final amendments.
With respect to service providers providing services aimed at a broad range of institutions ( e.g., email, or customer-relationship management), the situation could be different. For these providers, covered institutions are likely to represent a small fraction of their customer base. As under the final service provider provisions, these service providers may again be unwilling to adapt their business processes to the regulatory requirements of a small subset of their customers under this alternative. ^{1088} Some may be unwilling to make the assurances needed, although we anticipate that they would be generally more willing to make assurances than to participate in the covered institutions' oversight activities. ^{1089} If the covered institution could not obtain the reasonable assurances required under this alternative, the covered institution would need to switch service providers and bear the associated switching costs, while the service providers would suffer loss of customers. Although the costs of obtaining reasonable assurances would likely be lower than under the final service provider provisions, and the need to switch providers less frequent, these costs could nonetheless be particularly acute for smaller covered institutions who lack bargaining power with some service providers. And, as outlined above, this alternative would be less protective than the final amendments' requirements.
^{1088} See supra section IV.D.1.c (discussing the final requirement for covered institutions to require policies and procedures reasonably designed to oversee, monitor, and conduct due diligence on service providers).
^{1089} See id. Additionally, the service provider's standard terms and conditions might in some situations provide reasonable assurances adequate to meet the requirement.

2. Lower Threshold for Customer Notice
The Commission considered lowering the threshold for customer notice, such as one based on the “possible misuse” of sensitive customer information (rather than the adopted threshold requiring notice when sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization), or even requiring notification of any breach without exception. One commenter suggested that the final amendments require notification when the unauthorized access to or use of sensitive customer information was “reasonably possible” instead of “reasonably likely.” ^{1090} A lower threshold would increase the number of notices customers receive. Although more frequent notices could potentially reveal incidents that warrant customers' attention and thereby potentially increase the benefits accruing to customers from the notice requirement discussed in section IV.D.1.b, they would also increase the number of false alarms. Such false alarms could be problematic if they reduce customers' ability to discern which notices require action.
^{1090} See NASAA Comment Letter. In addition, another commenter suggested requiring customer notification for any incident of unauthorized access to or use of sensitive customer information regardless of the risk of use in a manner that would result in substantial harm or inconvenience. See Better Markets Comment Letter.
Although a lower threshold could impose some additional compliance costs on covered institutions (due to additional notices being sent), we would not anticipate the additional direct compliance costs to be significant. ^{1091} Of more economic significance to covered institutions would be the resulting reputational effects. ^{1092} However, the direction of these effects is difficult to predict. On the one hand, increased notices resulting from a lower threshold can be expected to lead to additional reputational costs for firms required to issue more of such notices. On the other hand, lower thresholds could result in customers receiving a large number of notices. In this case, notices could become no longer notable, likely leading to the negative reputation effects associated with such notices being reduced.
^{1091} The direct compliance costs of notices are discussed in section V.
^{1092} See supra section IV.B.

3. Encryption Safe Harbor
The Commission considered including a safe harbor to the notification requirement for breaches in which only encrypted information was compromised. Several commenters supported an encryption safe harbor. ^{1093} An encryption safe harbor would also align with many existing State laws. ^{1094} Assuming that such an alternative safe harbor would be sufficiently circumscribed to prevent its application to insecure encryption algorithms, or to secure algorithms used in a manner as to render them insecure, the economic effects of its inclusion would be largely indistinguishable from the final amendments. This is because under the final amendments, notification is triggered by the “reasonable likelihood” that sensitive customer information was accessed or used without authorization. ^{1095} Given the computational complexity involved in deciphering information encrypted using modern encryption algorithms and secure procedures, ^{1096} the compromise of such encrypted information would generally not give rise to “a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.” ^{1097} It would thus not constitute “sensitive customer information,” meaning that the threshold for providing notice would not be met. In addition, when determining that the compromised sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience, a covered institution may consider encryption as a factor. ^{1098} Hence, in some cases, an explicit encryption safe harbor would be superfluous. In certain other cases, however, an explicit encryption safe harbor may not be as protective as the final amendments' Federal minimum standard for determining whether the compromise of customer information could create “a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.” ^{1099} It may also become outdated as technologies and security practices evolve. Thus, while an explicit (and appropriately circumscribed) safe harbor could provide some procedural efficiencies from streamlined application, it could also be misapplied.
^{1093} See, e.g., SIFMA Comment Letter 2; AWS Comment Letter 1. See also supra section II.A.3.b for a discussion of the comments received on this matter.
^{1094} See supra section IV.C.2.a(1).
^{1095} See final rule 248.30(a)(3)(iii).
^{1096} Here, “secure procedures” refers to the secure implementation of encryption algorithms and encompasses proper key generation and management, timely patching, user access controls, etc.
^{1097} See final rule 248.30(d)(9); see also supra footnotes 139 and 141 and accompanying text.
^{1098} See final rule 248.30(a)(4); see also supra footnote 138 and accompanying text.
^{1099} See final rule 248.30(d)(9). The Aug. 2022 breach of the LastPass cloud-based password manager provides an illustrative example. In this data breach a large database of website credentials belonging to LastPass customers was exfiltrated. The customer credentials in this database were encrypted using a secure algorithm and the encryption keys could not have been exfiltrated in the breach, so an encryption safe harbor could be expected to apply in such a case. Nonetheless, customers whose encrypted passwords were divulged in the breach became potential targets for brute force attacks ( i.e., attempts to decrypt the passwords by guessing a customer's master password) and to phishing attacks ( i.e., attempts to induce an affected customer to divulge the master password). See Karim Toubba, Notice of Recent Security Incident, LastPass (Dec. 22, 2022), available at https://blog.lastpass.com/2022/12/notice-of-recent-security-incident/ ; see also Craig Clough, LastPass Security Breach Drained Bitcoin Wallet, User Says, Portfolio Media (Jan. 4, 2023), available at https://www.law360.com/articles/1562534/lastpass-security-breach-drained-bitcoin-wallet-user-says .

4. Longer Customer Notification Deadlines
The Commission considered incorporating longer customer notification deadlines, such as 60 or 90 days instead of the adopted 30 days, as well as providing no fixed customer notification deadline. Several commenters suggested longer customer notification deadlines. ^{1100} Although longer notification deadlines would provide more time for covered institutions to rebut the presumption of notification discussed in section II.A.3.a, we expect that longer investigations would, in general, correlate with more serious or complicated incidents and would therefore be unlikely to end in a determination that sensitive customer information has not been and is not reasonably likely to be used in a manner that would result in substantial harm or inconvenience. We therefore do not expect that longer notification deadlines would ultimately lead to significantly fewer required notifications. Compliance costs conditional on notices being required ( i.e., the actual furnishing of notices to customers) would be largely unchanged under alternative notice deadlines. That said, costs related to incident assessment would likely be somewhat lower due to the reduced urgency of determining the scope of an incident and a reduced likelihood that notifications would need to be made before an incident has been contained. ^{1101} Arguably, longer notification deadlines may increase reputational costs borne by covered institutions that choose to take advantage of the longer deadlines. Overall, however, we do not expect that longer notification deadlines would lead to costs for covered institutions that differ significantly from the costs of the adopted 30-day outside timeframe.
^{1100} See, e.g., FSI Comment Letter; IAA Comment Letter 1. See also supra footnote 796 and accompanying text and supra section II.A.3.d(1) for a discussion of the comments received on this matter.
^{1101} See supra section IV.D.1.b(2).
Providing for longer notifications deadlines would likely reduce the promptness with which some covered institutions issue notifications to customers, potentially reducing their customers' ability to take effective mitigating actions. In particular, as discussed in section IV.D.1.b(2), some breaches are discovered very quickly. For customers whose sensitive customer information is compromised in such breaches, a longer notification deadline could significantly reduce the timeliness—and value—of the notice. ^{1102} On the other hand, where a public announcement could hinder containment efforts, a longer notification timeframe could yield benefits to the broader public (and/or to the affected investors). ^{1103}
^{1102} See supra footnote 784 and accompanying text.
^{1103} See supra footnote 803 and accompanying text.

5. Broader National Security and Public Safety Delay in Customer Notification
The Commission considered providing for a broader delay to the 30-day notification outside timeframe by extending its applicability to cases where any appropriate law enforcement agency requests the delay. ^{1104} This alternative delay would more closely align with the delays adopted by other regulators, such as the Banking Agencies, ^{1105} and by many States. ^{1106} Several commenters suggested broader delays. ^{1107} On the other hand, another commenter stated that the Commission should not allow for any law enforcement delay. ^{1108}
^{1104} The final amendments differ from the proposal in that they allow for a longer national security and public safety delay under certain circumstances and allow for a delay if the notice poses a substantial risk to either public safety or national security (the proposal referred to national security risk only). However, the final amendments allow for such a delay only if the Attorney General informs the Commission, in writing, of such risk. See supra section II.A.3.d(2).
^{1105} See Banking Agencies' Incident Response Guidance.
^{1106} See, e.g., RCW 19.255.010(8); Fla. Stat. section 501.171(4)(b).
^{1107} See, e.g., Nasdaq Comment Letter; ICI Comment Letter 1.
^{1108} See Better Markets Comment Letter.
The principal function of a law enforcement delay is to allow a law enforcement or national security agency to prevent cybercriminals from becoming aware of their detection. Observing a cyberattack that is in progress can allow investigators to take actions that can assist in revealing the attacker's location, identity, or methods. ^{1109} Notifying affected customers has the potential to alert attackers that their intrusion has been detected, hindering these efforts. ^{1110} Thus, a broader delay could generally be expected to enhance law enforcement's efficacy in cybercrime investigations, which would potentially benefit affected customers through damage mitigation and benefit the general public through improved deterrence and increased recoveries, and by enhancing law enforcement's knowledge of attackers' methods. It would also potentially reduce compliance costs for covered institutions by aligning more closely with the existing regulations discussed above. ^{1111}
^{1109} Cybersecurity Advisory: Technical Approaches to Uncovering and Remediating Malicious Activity, Cybersecurity & Infrastructure Sec. Agency (Sept. 24, 2020), available at https://www.cisa.gov/news-events/cybersecurity-advisories/aa20-245a (explaining how and why investigators may “avoid tipping off the adversary that their presence in the network has been discovered”).
^{1110} Id.
^{1111} See supra section IV.C.2.
That said, use of the delay provisions would necessarily result in customers affected by a cyberattack being notified later, reducing the value to customers of such notices. ^{1112} Incidents where law enforcement would like to delay customer notifications are likely to involve numerous customers, who—without timely notice—may be unable to take timely mitigating actions that could prevent additional harm. ^{1113} Law enforcement investigations can also take time to resolve and, even when successful, their benefits to affected customers ( e.g., recovery of criminals' ill-gotten gains) may be limited.
^{1112} See supra footnote 784 and accompanying text.
^{1113} See supra section IV.D.1.b(2).
Information about cybercrime investigations is often confidential. The Commission does not have data on the prevalence of covert cybercrime investigations, their success or lack of success, their deterrent effect if any, or the impact of customer notification on investigations. ^{1114} No commenter suggested such data. Thus, we are unable to quantify the costs and benefits of this alternative. ^{1115}
^{1114} We do, however, have evidence that requests by law enforcement to delay customer notification are relatively rare events. See supra footnote 806.
^{1115} We requested public comment on these topics in the Proposing Release but did not receive any.

V. Paperwork Reduction Act

A. Introduction
Certain provisions of the final amendments contain “collection of information” requirements within the meaning of the Paperwork Reduction Act of 1995 (“PRA”). ^{1116} We are submitting the final collection of information to the Office of Management and Budget (“OMB”) for review in accordance with the PRA. ^{1117} The safeguards rule and the disposal rule we are amending will have an effect on the currently approved existing collection of information under OMB Control No. 3235-0610, the title of which is, “Rule 248.30, Procedures to safeguard customer records and information; disposal of consumer report information.” ^{1118} 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 amended requirement to adopt policies and procedures constitutes a collection of information requirement under the PRA. The collection of information associated with the final amendments will be mandatory, and responses provided to the Commission in the context of its examination and oversight program concerning the final amendments will be kept confidential subject to the provisions of applicable law. A description of the final amendments, including the need for the information and its use, as well as a description of the types of respondents, can be found in section II above, and a discussion of the expected economic effects of the final amendments can be found in section III above. The Commission published notice soliciting comments on the collection of information requirements in the Proposing Release and submitted the proposed collections of information to OMB for review in accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11.
^{1116} 44 U.S.C. 3501 through 3521.
^{1117} 44 U.S.C. 3507(d); 5 CFR 1320.11.
^{1118} The paperwork burden imposed by Regulation S-P's notice and opt-out requirements, 17 CFR 248.1 to 248.18, is currently approved under a separate OMB control number, OMB Control No. 3235-0537. The final amendments will implement a statutory exception that has been in effect since late 2015. We do not believe that the amendment to implement the statutory exception makes any substantive modifications to this existing collection of information requirement or imposes any new substantive recordkeeping or information collection requirements within the meaning of the PRA. Similarly, we do not believe that the final amendments to: (i) Investment Company Act rules 31a-1(b) (OMB control number 3235-0178) and 31a-2(a) (OMB control number 3235-0179) for investment companies that are registered under the Investment Company Act, (ii) Investment Advisers Act rule 204-2 (OMB control number 3235-0278) for investment advisers, (iii) Exchange Act rule 17a-4 (OMB control number 3235-0279) for broker-dealers, and (iv) Exchange Act rule 17Ad-7 (OMB control number 3235-0291) for transfer agents, makes any modifications to this existing collection of information requirement or imposes any new recordkeeping or information collection requirements. Accordingly, we believe that the current burden and cost estimates for the existing collection of information requirements remain appropriate, and we believe that the final amendments should not impose substantive new burdens on the overall population of respondents or affect the current overall burden estimates for this collection of information. We are, therefore, not revising any burden and cost estimates in connection with these amendments.
The Commission did not receive any comments that specifically addressed the estimated PRA analysis in the Proposing Release but did receive comments regarding the costs and burdens of the proposed rules generally. Those comments are discussed in more detail in section IV above. In particular, several commentators raised concerns regarding the costs associated with negotiating and renegotiating written contracts with service providers. ^{1119} One commenter did support the proposed written contract provision due to its very narrow scope. ^{1120} In response to commenters' concerns about the costs of negotiating contracts, we have replaced the proposed requirement for a covered institution to have a written contract with a service provider with a requirement to implement written policies and procedures to oversee, monitor, and conduct due diligence on the service provider. In a modification from the proposal, rather than requiring written policies and procedures requiring the covered institution to enter into a written contract with its service providers to take certain appropriate measures, the policies and procedures required by the final amendments must be reasonably designed to ensure service providers take appropriate measures to: (A) protect against unauthorized access to or use of customer information; and (B) provide notification to the covered institution regarding an incident affecting customer information in the timeframes and circumstances discussed above. The modifications to the proposal are designed to address many of commenters' concerns regarding the costs associated with the service provider provisions of the proposed amendments. We have not reduced the Proposing Release's PRA estimates, however, because the final amendments still require policies and procedures regarding service providers that we estimate will involve PRA burdens consistent with those we estimated for the proposed requirement. As discussed above, some commenters urged for more time to investigate incidents, suggesting that failing to do so would result in an increase in the amount of notices being provided. ^{1121} We are increasing the estimates associated with the final rule with regards to the preparation and distribution of notices because these comments seem to suggest a view that the proposed estimates related to these burdens were too low. We have also adjusted the proposal's estimated annual burden hours and total time costs to reflect updated wage rates.
^{1119} See STA and ComputerShares Comment Letters (transfer agents don't have the leverage to negotiate contracts with service providers); ASA Comment Letter (no discussion or estimate of the costs the written contract requirement would impose on brokers); IAA Comment Letter (individual advisers, particularly smaller advisers, lack leverage to engage in contractual negotiations with many service providers); ACLI Comment Letter; Cambridge Comment Letter; CAI Comment Letter; AWS Comment Letter; Google Comment Letter. Other commenters raised this issue but suggested extending the implementation period as a remedy. See NASDAQ Comment Letter; FIF Comment Letter; SIFMA Comment Letter 2.
^{1120} See ICI Comment Letter.
^{1121} See, e.g., supra footnote 165 and accompanying text.

B. Amendments to the Safeguards Rule and Disposal Rule
As discussed above, the final amendments to the safeguards rule will require covered institutions to develop, implement, and maintain written policies and procedures that include incident response programs reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures. The response program must include procedures to assess the nature and scope of any incident involving unauthorized access to or use of customer information; take appropriate steps to contain and control the incident; and provide notice to each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization (unless the covered institution makes certain determinations as specified in the final amendments).
The final amendments to the disposal rule will require covered institutions that maintain or otherwise possess customer information, or consumer information to adopt and implement written policies and procedures that address proper disposal of such information, which will include taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.
Finally, the final amendments will require covered institutions other than funding portals to make and maintain written records documenting compliance with the requirements of the safeguards rule and the disposal rule. Under the final amendments, the time periods for preserving records will vary by covered institution to be consistent with existing recordkeeping rules. ^{1122}
^{1122} The final amendments will also broaden the scope of information covered by the safeguards rule and the disposal rule (to include all customer information in the possession of a covered institution or is handled or maintained on its behalf, and all consumer information that a covered institution maintains or otherwise possesses for a business purpose) and extend the application of the safeguards provisions to transfer agents registered with the Commission or another appropriate regulatory agency. These amendments do not contain collections of information beyond those related to the incident response program analyzed above.
Based on FOCUS Filing, Form BD Filing, and Form BD-N data, as of the third quarter of 2023, there were 3,476 brokers or dealers, other than notice-registered brokers or dealers or funding portals. Based on Investment Adviser Registration Depository data, as of Oct. 5, 2023, there were 15,565 investment advisers registered with the Commission. As of Sept. 30, 2023, there were 13,766 investment companies. ^{1123} Based on Form TA-1, as of Sept. 30, 2023, there were 251 transfer agents registered with the Commission and 64 transfer agents registered with the Banking Agencies. Based on staff analysis and publicly available filings, as of Dec. 31, 2023, there were 92 funding portals.
^{1123} Data on investment companies registered with the Commission comes from Form N-CEN filings; data on BDCs comes from LSEG BDC Collateral; and data on employees' securities companies comes from Form 40-APP. See supra Table 4.
Table 5 below summarizes our PRA initial and ongoing annual burden estimates associated with the final amendments to the safeguards rule and the disposal rule.
Table 5—Amendments to Safeguards Rule and Disposal Rule—PRA
| Internal initial burden hours | Internal annual burden hours ^1 | Wage rate ^2 | Internal time cost | Annual external cost burden
PROPOSED ESTIMATES
Adopting and implementing policies and procedures | 60 hours | 25 hours ^3 | $455 (blended rate for compliance attorney and assistant general counsel) | $11,375 (equal to the internal annual burden × the wage rate) | $2,655. ^4
Preparation and distribution of notices | 9 hours | 8 hours ^5 | $300 (blended rate for senior compliance examiner and compliance manager) | $2,400 (equal to the internal annual burden × the wage rate) | $2,018. ^6
Recordkeeping | 1 hour | 1 hour | $381 (blended rate for compliance attorney and senior programmer) | $381 | $0.
Total new annual burden per covered institution | | 34 hours (equal to the sum of the above three boxes) | | $14,156 (equal to the sum of the above three boxes) | $4,673 (equal to the sum of the above two boxes).
Number of covered institutions | | × 32,897 covered institutions ^7 | | × 32,897 covered institutions | 16,449. ^8
Total new annual aggregate burden | | 1,118,498 hours | | $465,689,932 | $76,866,177.
| FINAL ESTIMATES
Broker-dealers other than notice registered broker-dealers, investment advisers registered with the Commission and investment companies
Adopting and implementing policies and procedures | 60 hours | 25 hours ^3 | $501 (blended rate for compliance attorney and assistant general counsel) | $12,525 (equal to the internal annual burden × the wage rate) | $2,920. ^9
Preparation and distribution of notices | 12 hours | 9 hours ^5 | $329 (blended rate for senior compliance examiner and compliance manager) | $2,961 (equal to the internal annual burden × the wage rate) | $2,217. ^{10}
Recordkeeping | 1 hour | 1 hour | $420 (blended rate for compliance attorney and senior programmer) | $420 | $0.
Total new annual burden per applicable covered institution | | 35 hours (equal to the sum of the above three boxes) | | $15,906 (equal to the sum of the above three boxes) | $5,137 (equal to the sum of the above two boxes).
Number of applicable covered institutions | | × 32,807 covered institutions ^{11} | | × 32,807 covered institutions | 16,404. ^8
New annual applicable covered institutions aggregate burden | | 1,148,245 hours | | $521,828,142 | $84,267,348.
Transfer Agents
Adopting and implementing policies and procedures | 75 hours | 30 hours ^{12} | $501 (blended rate for compliance attorney and assistant general counsel) | $15,030 (equal to the internal annual burden × the wage rate) | $2,920. ^9
Preparation and distribution of notices | 12 hours | 9 hours ^5 | $329 (blended rate for senior compliance examiner and compliance manager) | $2,961 (equal to the internal annual burden × the wage rate) | $2,217. ^{10}
Recordkeeping | 1 hour | 1 hour | $420 (blended rate for compliance attorney and senior programmer) | $420 | $0.
Total new annual burden per transfer agent | | 40 hours (equal to the sum of the above three boxes) | | $18,411 (equal to the sum of the above three boxes) | $5,137 (equal to the sum of the above two boxes).
Number of transfer agents | | × 315 ^{13} | | × 315 | 158. ^8
New annual transfer agent aggregate burden | | 12,600 | | $5,799,465 | $811,646.
Funding Portals
Adopting and implementing policies and procedures | 60 hours | 25 hours ^3 | $501 (blended rate for compliance attorney and assistant general counsel) | $12,525 (equal to the internal annual burden × the wage rate) | $2,920. ^9
Preparation and distribution of notices | 12 hours | 9 hours ^5 | $329 (blended rate for senior compliance examiner and compliance manager) | $2,961 (equal to the internal annual burden × the wage rate) | $2,217. ^{10}
Recordkeeping | 1.5 hours ^{14} | 1.5 hours | $420 (blended rate for compliance attorney and senior programmer) | $630 | $0.
Total new annual burden per funding portal | | 35.5 hours (equal to the sum of the above three boxes) | | $16,116 (equal to the sum of the above three boxes) | $5,137 (equal to the sum of the above two boxes).
Number of funding portals | | × 92 | | × 92 | 46. ^8
New annual funding portal aggregate burden | | 3,266 | | $1,482,672 | $236,302.
Total Estimated Burdens of the Final Amendments
Total new annual aggregate burden | | 1,164,111 hours | | $529,110,279 | $85,315,296.
TOTAL ESTIMATED BURDENS INCLUDING AMENDMENTS
Current aggregate annual burden estimates | | +65,760 hours | | | +$0.
Revised aggregate annual burden estimates | | 1,229,871 hours | | $529,110,279 | $85,315,296.
Notes:
^1 Includes initial burden estimates annualized over a 3-year period.
^2 The Commission's estimates of the relevant wage rates are based on the SIFMA Wage Report. The estimated figures are modified by firm size, employee benefits, overhead, and adjusted to account for the effects of inflation.
^3 Includes initial burden estimates annualized over a three-year period, plus 5 hours of ongoing annual burden hours. The estimate of 25 hours is based on the following calculation: ((60 initial hours/3) + 5 hours of additional ongoing burden hours) = 25 hours.
^4 This estimated burden is based on the estimated wage rate of $531/hour, for 5 hours, for outside legal services. The Commission's estimates of the relevant wage rates for external time costs, such as outside legal services, takes into account staff experience, a variety of sources including general information websites, and adjustments for inflation.
^5 Includes initial burden estimate annualized over a three-year period, plus 5 hours of ongoing annual burden hours. The estimate of 9 hours is based on the following calculation: ((12 initial hours/3 years) + 5 hours of additional ongoing burden hours) = 9 hours.
^6 This estimated burden is based on the estimated wage rate of $531/hour, for 3 hours, for outside legal services and $85/hour, for 5 hours, for a senior general clerk.
^7 Total number of covered institutions is calculated as follows: 3,401 broker-dealers other than notice registered broker-dealers + 15,129 investment advisers registered with the Commission + 13,965 investment companies + 335 transfer agents registered with the Commission + 67 transfer agents registered with the Banking Agencies = 32,897 covered institutions.
^8 We estimate that 50% of covered institutions will use outside legal services for these collections of information. This estimate takes into account that covered institutions may elect to use outside legal services (along with in-house counsel), based on factors such as budget and the covered institution's standard practices for using outside legal services, as well as personnel availability and expertise.
^9 This estimated burden is based on the estimated wage rate of $584/hour, for 5 hours, for outside legal services. The Commission's estimates of the relevant wage rates for external time costs, such as outside legal services, takes into account staff experience, a variety of sources including general information websites, and adjustments for inflation.
^{10} This estimated burden is based on the estimated wage rate of $584/hour, for 3 hours, for outside legal services and $93/hour, for 5 hours, for a senior general clerk.
^{11} Total number of applicable covered institutions is calculated as follows: 3,476 broker-dealers other than notice-registered broker-dealers or funding portals + 15,565 investment advisers registered with the Commission + 13,766 investment companies = 32,807 covered institutions. The burdens for funding portals and transfer agents are calculated separately.
^{12} Includes initial burden estimates annualized over a three-year period, plus 5 hours of ongoing annual burden hours. The estimate of 30 hours is based on the following calculation: ((75 initial hours/3) + 5 hours of additional ongoing burden hours) = 30 hours.
^{13} The number of transfer agents includes 251 transfer agents registered with the Commission + 64 transfer agents registered with the Banking Agencies = 315 transfer agents.
^{14} Funding portals are not subject to the recordkeeping obligations for brokers found under Rule 17a-4. Instead, they are obligated, pursuant to Rule 404 of Regulation Crowdfunding, to make and preserve all records required to demonstrate their compliance with, among other things, Regulation S-P. While the final amendments do not modify funding portals' recordkeeping requirements to include the same enumerated list of obligations as those applied to brokers under the amendments to Rule 17a-4, funding portals generally should look to make and preserve the same scope of records in connection with demonstrating their compliance with this portion of Regulation S-P. Further, Rule 404 requires funding portals to preserve these records for a longer period of time than brokers are required to preserve records under Rule 17a-4. Due to this longer required period for records preservation, the estimated burden for funding portals is higher than for brokers.

VI. Final Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act (“RFA”) requires the Commission, in promulgating rules under Section 553 of the Administrative Procedure Act, ^{1124} to consider the impact of those rules on small entities. We have prepared this Final Regulatory Flexibility Analysis (“FRFA”) in accordance with Section 604 of the RFA. ^{1125} An Initial Regulatory Flexibility Analysis (“IRFA”) was prepared in accordance with the RFA and was included in the Proposing Release. ^{1126}
^{1124} 5 U.S.C. 553.
^{1125} 5 U.S.C. 604.6.
^{1126} Proposing Release at section V.

A. Need for, and Objectives of, the Final Amendments
The purpose of the final amendments is to limit potential harmful impacts to customers by enhancing and modernizing the protection of customer information. Among other things, the amendments update the rule's requirements to address the expanded use of technology and corresponding risks.
The need for, and objectives of, the final amendments are described in Sections I and II above. We discuss the economic impact and potential alternatives to the amendments in Section IV, and the estimated compliance costs and burdens of the amendments under the PRA in Section V.

B. Significant Issues Raised by Public Comments
In the Proposing Release, the Commission requested comment on any aspect of the IRFA, and particularly on the number of small entities that would be affected by the proposed amendments, the existence or nature of the potential impact of the proposed amendments on small entities discussed in the analysis, how the proposed amendments could further lower the burden on small entities, and how to quantify the impact of the proposed amendments.
One commenter urged the Commission to conduct a more holistic cost-benefit analysis, and in particular consider the disproportionate costs on smaller advisers. ^{1127} The commenter noted that smaller advisers have been significantly burdened by one-size-fits-all regulations—both in isolation and cumulatively—that effectively require substantial fixed investments in infrastructure, personnel, technology, and operations. ^{1128} Another commenter stated that the Commission did little analysis about the impact of these proposals on small broker-dealers, competition within the brokerage industry, and whether they could contribute to barriers for new entrants into the markets. ^{1129} We discuss the cost-benefit analysis and challenges small entities may face above. ^{1130}
^{1127} See IAA Comment Letter 2.
^{1128} See IAA Comment Letter 1.
^{1129} See ASA Comment Letter.
^{1130} See supra section IV.
Additionally, multiple commenters discussed the burden small entities would face. For instance, several commenters stated that an increased compliance cost for implementing new systems, training employees, and conducting audits, may disproportionately affect smaller firms, inhibiting their ability to compete and grow. ^{1131} Multiple commenters asserted small covered institutions, who may not have the negotiating power or leverage to demand specific contract provisions from large third-party service providers, would potentially be harmed by the written contract requirement for service providers. ^{1132} Another commenter noted the outsized impact small broker-dealers face. ^{1133} However, another commenter noted while small firms may be impacted by increased costs, this should not come at the expense of customer protection, and stated that driving competition towards better protections will ultimately benefit customers and promote a healthier market. ^{1134}
^{1131} See Grey Comment Letter, Robinson Comment Letter, and Scouten Comment Letter; see also ASA Comment Letter.
^{1132} See IAA Comment Letter 2; see also STA Comment Letter 2 and Computershare Comment Letter.
^{1133} See FSI Comment Letter.
^{1134} See Wohlfahrt Comment Letter.
Commenters proposed multiple alternatives to lower the burden on small entities. One commenter urged the Commission to provide a longer time to transition for smaller advisers. ^{1135} Additionally, the commenter stated that it has frequently called on the Commission to take steps to tailor its rules to minimize impacts the proposed amendments would have on smaller advisers, for example through preserving a flexible, risk- and principles-based approach, excluding or exempting smaller advisers from specific requirements where the burdens on those advisers outweigh the benefits, and tiering and staggering compliance timetables. ^{1136} Likewise, another commenter proposed a longer implementation period for smaller broker-dealers and investments advisers to allow these firms to benefit from implementation for larger industry participants. ^{1137}
^{1135} See IAA Comment Letter 1.
^{1136} See IAA Comment Letter 2; see also STA Comment Letter suggesting exempting transfer agents that do not maintain a threshold number of shareholder accounts. See supra section IV.E for further discussion of exemption based upon size.
^{1137} See FSI Comment Letter.
We expect the benefits and the costs of the final amendments to vary across covered institutions. ^{1138} For example, because smaller covered institutions are less likely to have an existing incident response program than larger covered institutions, some small entities may be more likely to face greater costs but also expect greater benefits complying with the final amendments, because they must adopt and implement new procedures. Creating new programs will likely cost more, but the new programs would result in improved efficacy in notifying customers and improve the manner incidents are handled. Smaller entities may have less negotiating power than larger entities, so requiring contracts with service providers could potentially be more detrimental to them than other entities. Additionally, smaller covered institutions are less likely to have a national presence, so small entities whose customers are concentrated in States with less informative customer notification laws are likely to face higher costs to comply with the final amendments. These costs and benefits may have an effect on competition for smaller entities. ^{1139}
^{1138} See supra section IV.
^{1139} See supra section IV.E.
We have revised the final amendments in several ways to mitigate potential compliance costs that small entities may face, as raised by commenters. As previously discussed, the changes made to the service provider provisions of the amendments requiring that the covered institution's policies and procedures are reasonably designed to oversee, monitor, and conduct due diligence on service providers instead of requiring written contracts between covered institutions and their service providers, and requiring that the covered institution's policies and procedures be reasonably designed to ensure service providers take appropriate measures to notify covered institutions of an applicable breach in security within 72 hours instead of 48 hours) may reduce some costs relative to the proposal and facilitate their implementation, especially for smaller covered institutions. ^{1140} For example, it could potentially reduce compliance costs by reducing the number of notices being sent ( e.g., if the covered institution is able to determine that a notice is not needed or if it is able to determine with more precision which individuals must be notified). ^{1141} Additionally, we are now adopting a longer compliance period of 24 months for smaller covered institutions, who are less likely to already have policies and procedures broadly consistent with the final amendments.
^{1140} See supra section IV.
^{1141} See supra section IV.
Moreover, the final amendments still maintain that the incident response program must include policies and procedures containing certain general elements but will not prescribe specific steps a covered institution must undertake when carrying out incident response activities, thereby enabling covered institutions to create policies and procedures best suited to their particular circumstances, including size. This design balances the necessity of maintaining general elements to achieve the investor protection objectives the amendments are designed to achieve, while still providing covered institutions the ability to tailor policies to their individual needs. We will not exempt small entities from any specific requirements, because entities of all sizes are vulnerable to the types of data security breach incidents we are trying to address, and therefore, no entity should be exempted from requirements, regardless of size. ^{1142}
^{1142} See infra section VI.E for further discussion of exemption based upon size.
Additionally, one commenter argued that the Commission does not accurately analyze the impact of its regulations on small advisers as required under the RFA because according to the commenter, virtually no SEC-registered advisers fall under the “asset-based” definition of small adviser adopted by the Commission. ^{1143} However, the commenter believes that the vast majority of advisers are small businesses. ^{1144} The commenter stated that the Commission adopted Rule 0-7 under the Advisers Act defining “small business” or “small organization” for purposes of treatment as a “small entity” under the RFA as including an investment adviser that has less than $25 million in assets under management, but with few exceptions, advisers are not permitted to register with the Commission unless they have at least $100 million in assets under management. ^{1145} The commenter argued that this makes any analysis the Commission does regarding the impact on smaller advisers virtually meaningless. ^{1146} As discussed below, we estimate that approximately 872 broker-dealers, ^{1147} 132 transfer agents, 81 investment companies, and 579 registered investment advisers may be considered small entities under the Regulatory Flexibility Act. ^{1148} The Commission takes seriously the potential impact of any new rule on these advisers who meet this definition and on other smaller advisers that do not meet the definition of small entity under the Regulatory Flexibility Act, as considered and discussed throughout this release.
^{1143} See IAA Comment Letter 2.
^{1144} See IAA Comment Letter 2.
^{1145} See IAA Comment Letter 2.
^{1146} See IAA Comment Letter 2.
^{1147} This 872 broker-dealers includes 89 funding portals.
^{1148} See infra section VI.C.

C. Small Entities Subject to Final Amendments
The final amendments to Regulation S-P will affect brokers, dealers, registered investment advisers, investment companies, and transfer agents, including entities that are considered to be a small business or small organization (collectively, “small entity”) for purposes of the RFA. For purposes of the RFA, under the Exchange Act a broker or dealer is a small entity if it: (i) had total capital of less than $500,000 on the date in its prior fiscal year as of which its audited financial statements were prepared or, if not required to file audited financial statements, on the last business day of its prior fiscal year; and (ii) is not affiliated with any person that is not a small entity. ^{1149} A transfer agent is a small entity if it: (i) received less than 500 items for transfer and less than 500 items for processing during the preceding six months; (ii) transferred items only of issuers that are small entities; (iii) maintained master shareholder files that in the aggregate contained less than 1,000 shareholder accounts or was the named transfer agent for less than 1,000 shareholder accounts at all times during the preceding fiscal year; and (iv) is not affiliated with any person that is not a small entity. ^{1150} Under the Investment Company Act, investment companies are considered small entities if they, together with other funds in the same group of related funds, have net assets of $50 million or less as of the end of its most recent fiscal year. ^{1151} Under the Investment Advisers Act, a small entity is an investment adviser that: (i) manages less than $25 million in assets; (ii) has total assets of less than $5 million on the last day of its most recent fiscal year; and (iii) does not control, is not controlled by, and is not under common control with another investment adviser that manages $25 million or more in assets, or any person that has had total assets of $5 million or more on the last day of the most recent fiscal year. ^{1152}
^{1149} 17 CFR 240.0-10. Funding portals, who are considered “brokers” for purposes of this release unless otherwise noted, are also included in this definition. See 17 CFR 227.403(b); See also supra footnote 5.
^{1150} Id.
^{1151} 17 CFR 270.0-10.
^{1152} 17 CFR 275.0-7.
Based on Commission filings, we estimate that approximately 872 broker-dealers, ^{1153} 132 transfer agents, ^{1154} 81 investment companies, ^{1155} and 579 registered investment advisers ^{1156} may be considered small entities.
^{1153} Estimate based on Q3 2023 FOCUS Report data, staff analysis and public filings. This 872 broker-dealers includes 89 funding portals.
^{1154} Estimate based on the number of transfer agents that reported a value of fewer than 1,000 for items 4(a) and 5(a) on Form TA-2 collected by the Commission as of September 30, 2023.
^{1155} Based on Commission staff approximation that approximately 41 open-end funds (including 10 exchange-traded funds), 23 closed-end funds, 3 UITs and 14 business development companies are small entities. This estimate is derived from an analysis of data obtained from Morningstar Direct and data reported to the Commission ( e.g., N-PORT, N-CSR, 10-Q and 10-K) for the second quarter of 2023.
^{1156} Based on SEC-registered adviser responses to Items 5.F. and 12 of Form ADV as of October 5, 2023.

D. Projected Reporting, Recordkeeping, and Other Compliance Requirements
The final amendments to Regulation S-P will require covered institutions to develop incident response programs for unauthorized access to or use of customer information, as well as imposing a customer notification obligation in instances where sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. The final amendments also would include new mandatory recordkeeping requirements and language conforming Regulation S-P's annual privacy notice delivery provisions to the terms of a statutory exception.
Under the final amendments, covered institutions would have to develop, implement, and maintain, within their written policies and procedures designed to comply with Regulation S-P, a program that is reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures. Such policies and procedures will also need to require that covered institutions oversee, monitor, and conduct due diligence on service providers and ensure that service providers take appropriate measures to notify covered institutions of an applicable breach in security within 72 hours. Upon receipt of such notification, the covered institution must initiate its incident response program. As part of its incident response program, a covered institution may also enter into a written agreement with its service provider to have the service provider notify affected individuals on its behalf. However, the covered institution's obligation to ensure that affected individuals are notified in accordance with paragraph (a)(4) of the final amendments rests with the covered institution.
In addition, covered institutions will be required to make and maintain specified written records designed to evidence compliance with these requirements. ^{1157} Such records will be required to be maintained starting from when the record was made, or from when the covered institution terminated the use of the written policy or procedure, for the time periods stated in the amended recordkeeping regulations for each type of covered institution.
^{1157} With regard to funding portals, please see discussion as to their applicable recordkeeping obligations supra footnote 385 and accompanying discussion.
Some covered institutions, including covered institutions that are small entities, will incur increased costs involved in reviewing and revising their current safeguarding policies and procedures to comply with these obligations, including their cybersecurity policies and procedures. Initially, this will require covered institutions to develop as part of their written policies and procedures under the safeguards rule, a program reasonably designed to detect, respond to, and recover from any unauthorized access to or use of customer information, including customer notification procedures, in a manner that provides clarity for firm personnel. Further, in developing these policies and procedures, covered institutions will need to include policies and procedures requiring the covered institution to ensure its service providers take appropriate measures to protect against unauthorized access to or use of customer information, and notify the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider, and upon receipt of such notification, the covered institution must initiate its response program. However, as the Commission recognizes the number and varying characteristics ( e.g., size, business, and sophistication) of covered institutions, these final amendments would help covered institutions to tailor these policies and procedures and related incident response program based on the individual facts and circumstances of the firm, and provide flexibility in addressing the general elements of the response program requirements based on the size and complexity of the covered institution and the nature and scope of its activities.
In addition, the Commission acknowledges that the final amendments will impose greater costs on those transfer agents that are registered with another appropriate regulatory agency, if they are not currently subject to Regulation S-P, as well as those transfer agents registered with the Commission who are not currently subject to the safeguards rule. Such costs will include the development and implementation of necessary policies and procedures, the ongoing costs of required recordkeeping and maintenance requirements, and, where necessary, the costs to comply with the customer notification requirements of the final amendments. Such costs will also include the same minimal costs for employee training or establishing clear procedures for consumer report information disposal that are imposed on all covered institutions. To the extent that such costs are being applied to a transfer agent for the first time as a result of new obligations being imposed, the final amendments would incur higher present costs on those transfer agents than those covered institutions that are already subject to the safeguards rule and the disposal rule.
To comply with these amendments on an ongoing basis, covered institutions will need to respond appropriately to incidents that entail the unauthorized access to or use of customer information. This will entail carrying out the established response program procedures to (i) assess the nature and scope of any incident involving unauthorized access to or use of customer information and identify the customer information systems and types of customer information that may have been accessed or used without authorization; (ii) take appropriate steps to contain and control the incident to prevent further unauthorized access to or use of customer information; and (iii) notify each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization, unless the covered institution determines, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, that the sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
Where the covered institution determines notice is required, the covered institution will need to provide a clear and conspicuous notice, or ensure that such notice is provided, to each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. This notice must be provided as soon as reasonably practicable, but not later than 30 days, after the covered institution becomes aware that unauthorized access to or use of sensitive customer information has, or is reasonably likely to have, occurred, absent an applicable request from the Attorney General. This notice will need to be transmitted by a means designed to ensure that each affected individual can reasonably be expected to receive actual notice in writing. Further, the covered institution will need to satisfy the specified content requirements of that notice, ^{1158} the preparation of which will incur some incremental additional costs on covered institutions.
^{1158} See final rule 248.30(a)(4)(iv). In particular, the covered institution would need to: (i) describe in general terms the incident and the type of sensitive customer information that was or is reasonably believed to have been accessed or used without authorization; (ii) include, if the information is reasonably possible to determine at the time the notice is provided, any of the following: the date of the incident, the estimated date of the incident, or the date range within which the incident occurred; (iii) include contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including the following: a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance; (iv) if the individual has an account with the covered institution, recommend that the customer review account statements and immediately report any suspicious activity to the covered institution; (v) explain what a fraud alert is and how an individual may place a fraud alert in the individual's credit reports to put the individual's creditors on notice that the individual may be a victim of fraud, including identity theft; (vi) recommend that the individual periodically obtain credit reports from each nationwide credit reporting company and that the individual have information relating to fraudulent transactions deleted; (vii) explain how the individual may obtain a credit report free of charge; and (viii) include information about the availability of online guidance from the FTC and usa.gov regarding steps an individual can take to protect against identity theft, a statement encouraging the individual to report any incidents of identity theft to the FTC, and include the FTC's website address where individuals may obtain government information about identity theft and report suspected incidents of identity theft.
Finally, covered institutions will also face costs in complying with the new recordkeeping requirements imposed by these amendments that are incrementally more than those costs covered institutions already incur from their existing regulatory recordkeeping obligations, in light of their already existing record retention systems. However, the record maintenance provisions align with those most frequently employed as to each covered institution subject to this rulemaking, partially in an effort to minimize these costs to firms.
Overall, incremental costs will be associated with the final amendments to Regulation S-P. ^{1159} Some proportion of large or small institutions would be likely to experience some increase in costs to comply with the amendments.
^{1159} Covered institutions are currently subject to similar recordkeeping requirements applicable to other required policies and procedures. Therefore, covered institutions will generally not need to invest in new recordkeeping staff, systems, or procedures to satisfy the new recordkeeping requirements.
More specifically, we estimate that many covered institutions will incur one-time costs related to reviewing and revising their current safeguarding policies and procedures to comply with these obligations, including their cybersecurity policies and procedures. Additionally, some covered institutions, including transfer agents, may incur costs associated with establishing such policies and procedures as these amendments require if those covered institutions do not already have such policies and procedures. We also estimate that the ongoing, long-term costs associated with the final amendments could include costs of responding appropriately to incidents that entail the unauthorized access to or use of customer information.

E. Agency Action To Minimize Effect on Small Entities
The RFA directs us to consider alternatives that would accomplish our stated objectives, while minimizing any significant adverse impact on small entities. Accordingly, we considered the following alternatives:
1. Establishing different compliance or reporting standards that take into account the resources available to small entities;
2. The clarification, consolidation, or simplification of the reporting and compliance requirements under the rule for small entities;
3. Use of performance rather than design standards; and
4. Exempting small entities from coverage of the rule, or any part of the rule.
With regard to the first alternative, the final amendments to Regulation S-P that will continue to permit institutions substantial flexibility to design safeguarding policies and procedures appropriate for their size and complexity, the nature and scope of their activities, and the sensitivity of the personal information at issue. However, it is necessary to require that covered institutions, regardless of their size, adopt a response program for incidents of unauthorized access to or use of customer information, which will include customer notification procedures. ^{1160} The amendments to Regulation S-P arise from our concern with the increasing number of information security breaches that have come to light in recent years, particularly those involving institutions regulated by the Commission. Establishing different compliance or reporting requirements for small entities could lead to less favorable protections for these entities' customers and compromise the effectiveness of the amendments. However, we are providing smaller covered institutions a longer compliance period to establish and implement processes to comply with the final amendments.
^{1160} See final rule 248.30(a)(3).
With regard to the second alternative, the final amendments will, by their operation, simplify reporting and compliance requirements for small entities. Small covered institutions are likely to maintain personal information on fewer individuals than large covered institutions, and they are likely to have relatively simple personal information systems. The amendments will not prescribe specific steps a covered institution must take in response to a data breach, but instead would give the institution flexibility to tailor its policies and procedures to its individual facts and circumstances. The amendments therefore are intended to give covered institutions the flexibility to address the general elements in the response program based on the size and complexity of the institution and the nature and scope of its activities. Accordingly, the requirements of the amendments already will be simplified for small entities. In addition, the requirements of the amendments could not be further simplified, or clarified or consolidated, without compromising the investor protection objectives the amendments are designed to achieve.
With regard to the third alternative, the final amendments are design based. Rather than specifying the types of policies and procedures that an institution would be required to include in its response program, the amendments will require a response program that is reasonably designed to detect, respond to, and recover from both unauthorized access to and unauthorized use of customer information. With respect to the specific requirements regarding notifications in the event of a data breach, institutions provide only the information that seems most relevant for an affected customer to know in order to assess adequately the potential damage that could result from the breach and to develop an appropriate response.
Finally, with regard to alternative four, an exemption for small entities would not be appropriate. Small entities are as vulnerable as large ones to the types of data security breach incidents we are trying to address. In this regard, the specific elements the final amendments must be considered and incorporated into the policies and procedures of all covered institutions, regardless of their size, to mitigate the potential for fraud or other substantial harm or inconvenience to investors. Exempting small entities from coverage of the amendments or any part of the amendments could compromise the effectiveness of the amendments and harm investors by lowering standards for safeguarding investor information maintained by small covered institutions. Excluding small entities from requirements that would be applicable to larger covered institutions also could create competitive disparities between large and small entities, for example by undermining investor confidence in the security of information maintained by small covered institutions.

Statutory Authority
The Commission is amending Regulation S-P pursuant to authority set forth in sections 17, 17A, 23, and 36 of the Exchange Act [15 U.S.C. 78q, 78q-1, 78w, and 78mm], sections 31 and 38 of the Investment Company Act [15 U.S.C. 80a-30 and 80a-37], sections 204, 204A, and 211 of the Investment Advisers Act [15 U.S.C. 80b-4, 80b-4a, and 80b-11], section 628(a) of the FCRA [15 U.S.C. 1681w(a)], and sections 501, 504, 505, and 525 of the GLBA [15 U.S.C. 6801, 6804, 6805, and 6825].

List of Subjects
17 CFR Part 240
Reporting and recordkeeping requirements; Securities.
17 CFR Part 248
Brokers, Consumer protection, Dealers, Investment advisers, Investment companies, Privacy, Reporting and recordkeeping requirements, Securities, Transfer agents.
17 CFR Parts 270 and 275
Reporting and recordkeeping requirements; Securities.

Text of Rule Amendments
For the reasons set out in the preamble, title 17, chapter II of the Code of Federal Regulations is amended as follows:

PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934
1. The authority citation for part 240 and the sectional authorities for §§ 240.17a-14 and 240.17Ad-7 are revised to read, as follows:

Authority:
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78j-4, 78k, 78k-1, 78 l, 78m, 78n, 78n-1, 78 o, 78 o -4, 78 o -10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78dd, 78 ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 1681w(a)(1), 6801-6809, 6825, 7201 et seq., and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
Section 240.17a-14 is also issued under Public Law 111-203, sec. 913, 124 Stat. 1376 (2010).
* * * * *
Section 240.17ad-7 is also issued under 15 U.S.C. 78b, 78q, and 78q-1.
* * * * *
2. Amend § 240.17a-4 by adding a reserved paragraph (e)(13) and adding paragraph (e)(14) to read as follows:
§ 240.17a-4
Records to be preserved by certain exchange members, brokers and dealers.
* * * * *
(e) * * *
(13) [Reserved]
(14)(i) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1) of this chapter until three years after the termination of the use of the policies and procedures;
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3) of this chapter for three years from the date when the records were made;
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4) of this chapter, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination, for three years from the date when the records were made;
(iv) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i) of this chapter until three years after the termination of the use of the policies and procedures;
(v) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5) of this chapter until three years after the termination of such contract or agreement; and
(vi) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2) of this chapter until three years after the termination of the use of the policies and procedures;
* * * * *
§ 240.17Ad-7
[Redesignated as § 240.17ad-7].
3. Redesignate § 240.17Ad-7 as § 240.17ad-7.
4. Amend newly redesignated § 240.17ad-7 by:
a. Revising the section heading;
b. Adding a reserved paragraph (j); and
c. Adding paragraph (k).
The revision and additions read as follows:
§ 240.17ad-7
(Rule 17Ad-7) Record retention.
* * * * *
(j) [Reserved]
(k) Every registered transfer agent shall maintain in an easily accessible place:
(1) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1) of this chapter for no less than three years after the termination of the use of the policies and procedures;
(2) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3) of this chapter for no less than three years from the date when the records were made;
(3) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4) of this chapter, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination, for no less than three years from the date when the records were made;
(4) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i) of this chapter until three years after the termination of the use of the policies and procedures;
(5) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5) of this chapter until three years after the termination of such contract or agreement; and
(6) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2) of this chapter for no less than three years after the termination of the use of the policies and procedures.

PART 248—REGULATIONS S-P, S-AM, and S-ID
5. The authority citation for part 248 continues to read as follows:

Authority:
15 U.S.C. 78q, 78q-1, 78 o -4, 78 o -5, 78w, 78mm, 80a-30, 80a-37, 80b-4, 80b-11, 1681m(e), 1681s(b), 1681s-3 and note, 1681w(a)(1), 6801-6809, and 6825; Pub. L. 111-203, secs. 1088(a)(8), (a)(10), and sec. 1088(b), 124 Stat. 1376 (2010).
* * * * *
6. Amend § 248.5 by revising paragraph (a)(1) and adding paragraph (e) to read as follows:
§ 248.5
Annual privacy notice to customers required.
(a)(1) General rule. Except as provided by paragraph (e) of this section, you must provide a clear and conspicuous notice to customers that accurately reflects your privacy policies and practices not less than annually during the continuation of the customer relationship. Annually means at least once in any period of 12 consecutive months during which that relationship exists. You may define the 12-consecutive-month period, but you must apply it to the customer on a consistent basis.
* * * * *
(e) Exception to annual privacy notice requirement —(1) When exception available. You are not required to deliver an annual privacy notice if you:
(i) Provide nonpublic personal information to nonaffiliated third parties only in accordance with § 248.13, § 248.14, or § 248.15; and
(ii) Have not changed your policies and practices with regard to disclosing nonpublic personal information from the policies and practices that were disclosed to the customer under § 248.6(a)(2) through (5) and (9) in the most recent privacy notice provided pursuant to this part.
(2) Delivery of annual privacy notice after financial institution no longer meets the requirements for exception. If you have been excepted from delivering an annual privacy notice pursuant to paragraph (e)(1) of this section and change your policies or practices in such a way that you no longer meet the requirements for that exception, you must comply with paragraph (e)(2)(i) or (ii) of this section, as applicable.
(i) Changes preceded by a revised privacy notice. If you no longer meet the requirements of paragraph (e)(1) of this section because you change your policies or practices in such a way that § 248.8 requires you to provide a revised privacy notice, you must provide an annual privacy notice in accordance with the timing requirement in paragraph (a) of this section, treating the revised privacy notice as an initial privacy notice.
(ii) Changes not preceded by a revised privacy notice. If you no longer meet the requirements of paragraph (e)(1) of this section because you change your policies or practices in such a way that § 248.8 does not require you to provide a revised privacy notice, you must provide an annual privacy notice within 100 days of the change in your policies or practices that causes you to no longer meet the requirement of paragraph (e)(1) of this section.
(iii) Examples. (A) You change your policies and practices in such a way that you no longer meet the requirements of paragraph (e)(1) of this section effective April 1 of year 1. Assuming you define the 12-consecutive-month period pursuant to paragraph (a) of this section as a calendar year, if you were required to provide a revised privacy notice under § 248.8 and you provided that notice on March 1 of year 1, you must provide an annual privacy notice by December 31 of year 2. If you were not required to provide a revised privacy notice under § 248.8, you must provide an annual privacy notice by July 9 of year 1.
(B) You change your policies and practices in such a way that you no longer meet the requirements of paragraph (e)(1) of this section, and so provide an annual notice to your customers. After providing the annual notice to your customers, you once again meet the requirements of paragraph (e)(1) of this section for an exception to the annual notice requirement. You do not need to provide additional annual notice to your customers until such time as you no longer meet the requirements of paragraph (e)(1) of this section.
§ 248.17
[Amended]
7. Amend § 248.17 in paragraph (b) by removing the words “Federal Trade Commission” and adding in their place “Consumer Financial Protection Bureau” and removing the words “Federal Trade Commission's” and adding in their place “Consumer Financial Protection Bureau's”.
8. Revise § 248.30 to read as follows:
§ 248.30
Procedures to safeguard customer information, including response programs for unauthorized access to customer information and customer notice; disposal of customer information and consumer information.
(a) Policies and procedures to safeguard customer information —(1) General requirements. Every covered institution must develop, implement, and maintain written policies and procedures that address administrative, technical, and physical safeguards for the protection of customer information.
(2) Objectives. These written policies and procedures must be reasonably designed to:
(i) Ensure the security and confidentiality of customer information;
(ii) Protect against any anticipated threats or hazards to the security or integrity of customer information; and
(iii) Protect against unauthorized access to or use of customer information that could result in substantial harm or inconvenience to any customer.
(3) Response programs for unauthorized access to or use of customer information. Written policies and procedures in paragraph (a)(1) of this section must include a program reasonably designed to detect, respond to, and recover from unauthorized access to or use of customer information, including customer notification procedures. This response program must include procedures for the covered institution to:
(i) Assess the nature and scope of any incident involving unauthorized access to or use of customer information and identify the customer information systems and types of customer information that may have been accessed or used without authorization;
(ii) Take appropriate steps to contain and control the incident to prevent further unauthorized access to or use of customer information; and
(iii) Notify each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization in accordance with paragraph (a)(4) of this section unless the covered institution determines, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information, that the sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience.
(4) Notifying affected individuals of unauthorized access or use —(i) Notification obligation. Unless a covered institution has determined, after a reasonable investigation of the facts and circumstances of the incident of unauthorized access to or use of sensitive customer information that occurred at the covered institution or one of its service providers that is not itself a covered institution, that sensitive customer information has not been, and is not reasonably likely to be, used in a manner that would result in substantial harm or inconvenience, the covered institution must provide a clear and conspicuous notice, or ensure that such notice is provided, to each affected individual whose sensitive customer information was, or is reasonably likely to have been, accessed or used without authorization. The notice must be transmitted by a means designed to ensure that each affected individual can reasonably be expected to receive actual notice in writing.
(ii) Affected individuals. If an incident of unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred, but the covered institution is unable to identify which specific individuals' sensitive customer information has been accessed or used without authorization, the covered institution must provide notice to all individuals whose sensitive customer information resides in the customer information system that was, or was reasonably likely to have been, accessed or used without authorization. Notwithstanding the foregoing, if the covered institution reasonably determines that a specific individual's sensitive customer information that resides in the customer information system was not accessed or used without authorization, the covered institution is not required to provide notice to that individual under this paragraph.
(iii) Timing. A covered institution must provide the notice as soon as practicable, but not later than 30 days, after becoming aware that unauthorized access to or use of customer information has occurred or is reasonably likely to have occurred unless the United States Attorney General determines that the notice required under this rule poses a substantial risk to national security or public safety, and notifies the Commission of such determination in writing, in which case the covered institution may delay providing such notice for a time period specified by the Attorney General, up to 30 days following the date when such notice was otherwise required to be provided. The notice may be delayed for an additional period of up to 30 days if the Attorney General determines that the notice continues to pose a substantial risk to national security or public safety and notifies the Commission of such determination in writing. In extraordinary circumstances, notice required under this section may be delayed for a final additional period of up to 60 days if the Attorney General determines that such notice continues to pose a substantial risk to national security and notifies the Commission of such determination in writing. Beyond the final 60-day delay under this paragraph (a)(4)(iii), if the Attorney General indicates that further delay is necessary, the Commission will consider additional requests for delay and may grant such delay through Commission exemptive order or other action.
(iv) Notice contents. The notice must:
(A) Describe in general terms the incident and the type of sensitive customer information that was or is reasonably believed to have been accessed or used without authorization;
(B) Include, if the information is reasonably possible to determine at the time the notice is provided, any of the following: the date of the incident, the estimated date of the incident, or the date range within which the incident occurred;
(C) Include contact information sufficient to permit an affected individual to contact the covered institution to inquire about the incident, including the following: a telephone number (which should be a toll-free number if available), an email address or equivalent method or means, a postal address, and the name of a specific office to contact for further information and assistance;
(D) If the individual has an account with the covered institution, recommend that the customer review account statements and immediately report any suspicious activity to the covered institution;
(E) Explain what a fraud alert is and how an individual may place a fraud alert in the individual's credit reports to put the individual's creditors on notice that the individual may be a victim of fraud, including identity theft;
(F) Recommend that the individual periodically obtain credit reports from each nationwide credit reporting company and that the individual have information relating to fraudulent transactions deleted;
(G) Explain how the individual may obtain a credit report free of charge; and
(H) Include information about the availability of online guidance from the Federal Trade Commission and usa.gov regarding steps an individual can take to protect against identity theft, a statement encouraging the individual to report any incidents of identity theft to the Federal Trade Commission, and include the Federal Trade Commission's website address where individuals may obtain government information about identity theft and report suspected incidents of identity theft.
(5) Service providers. (i) A covered institution's response program prepared in accordance with paragraph (a)(3) of this section must include the establishment, maintenance, and enforcement of written policies and procedures reasonably designed to require oversight, including through due diligence and monitoring, of service providers, including to ensure that the covered institution notifies affected individuals as set forth in paragraph (a)(4) of this section. The policies and procedures must be reasonably designed to ensure service providers take appropriate measures to:
(A) Protect against unauthorized access to or use of customer information; and
(B) Provide notification to the covered institution as soon as possible, but no later than 72 hours after becoming aware that a breach in security has occurred resulting in unauthorized access to a customer information system maintained by the service provider. Upon receipt of such notification, the covered institution must initiate its incident response program adopted pursuant to paragraph (a)(3) of this section.
(ii) As part of its incident response program, a covered institution may enter into a written agreement with its service provider to notify affected individuals on the covered institution's behalf in accordance with paragraph (a)(4) of this section.
(iii) Notwithstanding a covered institution's use of a service provider in accordance with paragraphs (a)(5)(i) and (ii) of this section, the obligation to ensure that affected individuals are notified in accordance with paragraph (a)(4) of this section rests with the covered institution.
(b) Disposal of consumer information and customer information —(1) Standard. Every covered institution, other than notice-registered broker-dealers, must properly dispose of consumer information and customer information by taking reasonable measures to protect against unauthorized access to or use of the information in connection with its disposal.
(2) Written policies, procedures, and records. Every covered institution, other than notice-registered broker-dealers, must adopt and implement written policies and procedures that address the proper disposal of consumer information and customer information according to the standard identified in paragraph (b)(1) of this section.
(3) Relation to other laws. Nothing in this paragraph (b) shall be construed:
(i) To require any covered institution to maintain or destroy any record pertaining to an individual that is not imposed under other law; or
(ii) To alter or affect any requirement imposed under any other provision of law to maintain or destroy records.
(c) Recordkeeping. (1) Every covered institution that is an investment company under the Investment Company Act of 1940 (15 U.S.C. 80a), but is not registered under section 8 thereof (15 U.S.C. 80a-8), must make and maintain:
(i) The written policies and procedures required to be adopted and implemented pursuant to paragraph (a)(1) of this section;
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by paragraph (a)(3) of this section;
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to paragraph (a)(4) of this section, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
(iv) The written policies and procedures required to be adopted and implemented pursuant to paragraph (a)(5)(i) of this section;
(v) The written documentation of any contract or agreement entered into pursuant to paragraph (a)(5) of this section; and
(vi) The written policies and procedures required to be adopted and implemented pursuant to paragraph (b)(2) of this section.
(2) In the case of covered institutions described in paragraph (c)(1) of this section, such records, apart from any policies and procedures, must be preserved for a time period not less than six years, the first two years in an easily accessible place. In the case of policies and procedures required under paragraphs (a) and (b)(2) of this section, covered institutions described in paragraph (c)(1) of this section must maintain a copy of such policies and procedures in effect, or that at any time within the past six years were in effect, in an easily accessible place.
(d) Definitions. As used in this section, unless the context otherwise requires:
(1) Consumer information means:
(i) Any record about an individual, whether in paper, electronic or other form, that is a consumer report or is derived from a consumer report, or a compilation of such records, that a covered institution maintains or otherwise possesses for a business purpose regardless of whether such information pertains to:
(A) Individuals with whom the covered institution has a customer relationship; or
(B) To the customers of other financial institutions where such information has been provided to the covered institution.
(ii) Consumer information does not include information that does not identify individuals, such as aggregate information or blind data.
(2) Consumer report has the same meaning as in section 603(d) of the Fair Credit Reporting Act (15 U.S.C. 1681a(d)).
(3) Covered institution means any broker or dealer, any investment company, and any investment adviser or transfer agent registered with the Commission or another appropriate regulatory agency (“ARA”) as defined in section 3(a)(34)(B) of the Securities Exchange Act of 1934.
(4) Customer. (i) Customer has the same meaning as in § 248.3(j) unless the covered institution is a transfer agent registered with the Commission or another ARA.
(ii) With respect to a transfer agent registered with the Commission or another ARA, for purposes of this section, customer means any natural person who is a securityholder of an issuer for which the transfer agent acts or has acted as a transfer agent.
(5) Customer information. (i) Customer information for any covered institution other than a transfer agent registered with the Commission or another ARA means any record containing nonpublic personal information as defined in § 248.3(t) about a customer of a financial institution, whether in paper, electronic or other form, that is in the possession of a covered institution or that is handled or maintained by the covered institution or on its behalf regardless of whether such information pertains to:
(A) Individuals with whom the covered institution has a customer relationship; or
(B) To the customers of other financial institutions where such information has been provided to the covered institution.
(ii) With respect to a transfer agent registered with the Commission or another ARA, customer information means any record containing nonpublic personal information as defined in § 248.3(t) identified with any natural person, who is a securityholder of an issuer for which the transfer agent acts or has acted as transfer agent, that is in the possession of a transfer agent or that is handled or maintained by the transfer agent or on its behalf, regardless of whether such information pertains to individuals with whom the transfer agent has a customer relationship, or pertains to the customers of other financial institutions and has been provided to the transfer agent.
(6) Customer information systems means the information resources owned or used by a covered institution, including physical or virtual infrastructure controlled by such information resources, or components thereof, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of customer information to maintain or support the covered institution's operations.
(7) Disposal means:
(i) The discarding or abandonment of consumer information or customer information; or
(ii) The sale, donation, or transfer of any medium, including computer equipment, on which consumer information or customer information is stored.
(8) Notice-registered broker-dealer means a broker or dealer registered by notice with the Commission under section 15(b)(11) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b)(11)).
(9) Sensitive customer information. (i) Sensitive customer information means any component of customer information alone or in conjunction with any other information, the compromise of which could create a reasonably likely risk of substantial harm or inconvenience to an individual identified with the information.
(ii) Examples of sensitive customer information include:
(A) Customer information uniquely identified with an individual that has a reasonably likely use as a means of authenticating the individual's identity, including
( 1 ) A Social Security number, official State- or government-issued driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number;
( 2 ) A biometric record;
( 3 ) A unique electronic identification number, address, or routing code;
( 4 ) Telecommunication identifying information or access device (as defined in 18 U.S.C. 1029(e)); or
(B) Customer information identifying an individual or the individual's account, including the individual's account number, name or online user name, in combination with authenticating information such as information described in paragraph (d)(9)(ii)(A) of this section, or in combination with similar information that could be used to gain access to the customer's account such as an access code, a credit card expiration date, a partial Social Security number, a security code, a security question and answer identified with the individual or the individual's account, or the individual's date of birth, place of birth, or mother's maiden name.
(10) Service provider means any person or entity that receives, maintains, processes, or otherwise is permitted access to customer information through its provision of services directly to a covered institution.
(11) Transfer agent has the same meaning as in section 3(a)(25) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(25)).

PART 270—RULES AND REGULATIONS, INVESTMENT COMPANY ACT OF 1940
9. The authority citation for part 270 is revised to read as follows:

Authority:
15 U.S.C. 80a-1 et seq., 80a-34(d), 80a-37, 80a-39, 1681w(a)(1), 6801-6809, 6825, and Pub. L. 111-203, sec. 939A, 124 Stat. 1376 (2010), unless otherwise noted.
* * * * *
Section 270.31a-2 is also issued under 15 U.S.C. 80a-30.
10. Amend § 270.31a-1 by adding paragraph (b)(13) to read as follows:
§ 270.31a-1
Records to be maintained by registered investment companies, certain majority-owned subsidiaries thereof, and other persons having transactions with registered investment companies.
* * * * *
(b) * * *
(13)(i) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1);
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3);
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4), including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
(iv) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i);
(v) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5); and
(vi) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2).
* * * * *
11. Amend § 270.31a-2 by:
a. In paragraph (a)(7), removing the period at the end of the paragraph and adding “; and” in its place; and
b. Adding paragraph (a)(8).
The addition reads as follows:
§ 270.31a-2
Records to be preserved by registered investment companies, certain majority-owned subsidiaries thereof, and other persons having transactions with registered investment companies.
(a) * * *
(8) Preserve for a period not less than six years, the first two years in an easily accessible place, the records required by § 270.31a-1(b)(13) apart from any policies and procedures thereunder and, in the case of policies and procedures required under § 270.31a-1(b)(13), preserve a copy of such policies and procedures in effect, or that at any time within the past six years were in effect, in an easily accessible place.
* * * * *

PART 275—RULES AND REGULATIONS, INVESTMENT ADVISERS ACT OF 1940
12. The authority citation for part 275 is revised to read as follows:

Authority:
15 U.S.C. 80b-2(a)(11)(G), 80b-2(a)(11)(H), 80b-2(a)(17), 80b-3, 80b-4, 80b-4a, 80b-6(4), 80b-6a, 80b-11, 1681w(a)(1), 6801-6809, and 6825, unless otherwise noted.
* * * * *
Section 275.204-2 is also issued under 15 U.S.C. 80b-6.
* * * * *
13. Amend § 275.204-2 by adding paragraph (a)(25) to read as follows:
§ 275.204-2
Books and records to be maintained by investment advisers.
(a) * * *
(25)(i) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(1);
(ii) The written documentation of any detected unauthorized access to or use of customer information, as well as any response to, and recovery from such unauthorized access to or use of customer information required by § 248.30(a)(3) of this chapter;
(iii) The written documentation of any investigation and determination made regarding whether notification is required pursuant to § 248.30(a)(4) of this chapter, including the basis for any determination made, any written documentation from the United States Attorney General related to a delay in notice, as well as a copy of any notice transmitted following such determination;
(iv) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(a)(5)(i) of this chapter;
(v) The written documentation of any contract or agreement entered into pursuant to § 248.30(a)(5) of this chapter; and
(vi) The written policies and procedures required to be adopted and implemented pursuant to § 248.30(b)(2) of this chapter.
* * * * *
By the Commission.
Dated: May 16, 2024.
Vanessa A. Countryman,

Secretary.
89
107
Monday, June 3, 2024
Proposed Rules
Part III
Department of the Treasury
Internal Revenue Service
26 CFR Part 1

Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit; Proposed Rule
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-119283-23]
RIN 1545-BR17
Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit

AGENCY:
Internal Revenue Service (IRS), Treasury.

ACTION:
Notice of proposed rulemaking and notice of public hearing.

SUMMARY:
This document contains proposed regulations relating to the clean electricity production credit and the clean electricity investment credit established by the Inflation Reduction Act of 2022. The proposed regulations would provide rules for: determining greenhouse gas emissions rates resulting from the production of electricity; petitioning for provisional emissions rates; and determining eligibility for these credits in various circumstances. The proposed regulations would affect all taxpayers who produce clean electricity and claim the clean electricity production credit with respect to a facility or the clean electricity investment credit with respect to a facility or energy storage technology, as applicable, that is placed in service after 2024. This document also provides notice of a public hearing on the proposed regulations.

DATES:
Written or electronic comments must be received by August 2, 2024. The public hearing on these proposed regulations is scheduled to be held on August 12, 2024, at 10 a.m. (ET) and August 13, 2024, at 10 a.m. (ET). On August 13, 2024, the public hearing will be held by telephone only. Requests to speak and outlines of topics to be discussed at the public hearing must be received by August 2, 2024. If no outlines are received by August 2, 2024, the public hearing will be cancelled.

ADDRESSES:
Commenters are strongly encouraged to submit public comments electronically via the Federal eRulemaking Portal at https://www.regulations.gov (indicate IRS and REG-119283-23) by following the online instructions for submitting comments. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn. The Department of the Treasury (Treasury Department) and the IRS will publish for public availability any comments submitted to the IRS's public docket. Send paper submissions to: CC:PA:01:PR (REG-119283-23), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT:
Concerning these proposed regulations, the Office of Chief Counsel (Passthroughs and Special Industries) at (202) 317-6853 (not a toll-free number); concerning submissions of comments or the public hearing, Vivian Hayes at (202) 317-6901 (not a toll-free number) or by email to publichearings@irs.gov (preferred).

SUPPLEMENTARY INFORMATION:

Background
This notice of proposed rulemaking contains proposed amendments to the Income Tax Regulations (26 CFR part 1) to implement sections 45Y and 48E of the Internal Revenue Code (Code), which generally replace sections 45 and 48 of the Code with respect to qualified facilities, and for section 48E, with respect to energy storage technology, that is placed in service after December 31, 2024.
The renewable electricity production credit determined under section 45 of the Code (section 45 credit) is generally available for qualified facilities described in section 45(d), which provides that the construction of the qualified facilities must begin before January 1, 2025. Similarly, other than for geothermal heat pump equipment (described in section 48(a)(3)(vii) ^1 ), the energy credit determined under section 48 of the Code (section 48 credit), which is an investment credit under section 46 of the Code, is generally available for energy property the construction of which begins before January 1, 2025. Therefore, as long as construction begins on the relevant qualified facility or energy property before January 1, 2025, a taxpayer may be able to claim a section 45 credit or section 48 credit, respectively, even if the taxpayer places the qualified facility or energy property in service after December 31, 2024.
^1 Section 48(a)(3)(vii) includes as energy property equipment that uses the ground or ground water as a thermal energy source to heat a structure or as a thermal energy sink to cool a structure (geothermal heat pump property), but only with respect to property the construction of which begins before January 1, 2035.
Sections 45Y and 48E were added to the Code, respectively, by sections 13701(a) and 13702(a) of Public Law 117-169, 136 Stat. 1818, 1982 (August 16, 2022), commonly referred to as the Inflation Reduction Act of 2022 (IRA). Section 13701(c) of the IRA provides that the clean electricity production credit determined under section 45Y (section 45Y credit) applies to facilities placed in service after December 31, 2024. Similarly, section 13702(c) of the IRA provides that the clean electricity investment credit determined under section 48E (section 48E credit) applies to property placed in service after December 31, 2024.
Thus, in some cases, if a taxpayer places in service a qualified facility or energy property after 2024, the construction of which begins before 2025, the qualified facility or energy property may be eligible for more than one of the credits determined under section 45, 45Y, 48, or 48E, although a taxpayer can only claim one of these credits with respect to such qualified facility or energy property. Accordingly, a taxpayer must choose which one of these credits to claim with respect to such qualified facility or energy property. Once the taxpayer has claimed one of these credits with respect to a qualified facility or an energy property, the taxpayer cannot claim any other of these credits with respect to the same qualified facility or energy property.

I. Overview of Section 45Y
Section 45Y(a)(1) provides that for purposes of the general business credit under section 38 of the Code, the section 45Y credit for any taxable year is an amount equal to the product of the kilowatt hours (kWh) of eligible electricity produced by the taxpayer at a qualified facility, multiplied by the applicable amount with respect to such qualified facility. For this purpose, eligible electricity is electricity that is either (1) sold by the taxpayer to an unrelated person during the taxable year or (2) in the case of a qualified facility that is equipped with a metering device that is owned and operated by an unrelated person, sold, consumed, or stored by the taxpayer during the taxable year.

A. Amount of Credit
For purposes of the applicable amount used in calculating the section 45Y credit, section 45Y(a)(2) provides a base amount and a higher alternative amount. Section 45Y(a)(2)(A) provides that the applicable amount will be the base amount of 0.3 cents in the case of a qualified facility that does not satisfy the requirements for the higher alternative amount. Section 45Y(a)(2)(B) provides that the alternative amount of 1.5 cents applies in the case of any qualified facility (1) with a maximum net output of less than 1 megawatt (as measured in alternating current), (2) the construction of which begins prior to the date that is 60 days after the Secretary of the Treasury or her delegate (Secretary) publishes guidance on the requirements of section 45Y(g)(9) (wage requirements) and section 45Y(g)(10) (apprenticeship requirements), ^2 or (3) that satisfies section 45Y(g)(9) and, with respect to the construction of such facility, satisfies section 45Y(g)(10).
^2 To meet this requirement, the construction of the qualified facility must begin prior to January 29, 2023. See proposed § 1.45Y-3 as proposed in the notice of proposed rulemaking (REG-100908-23) published in the Federal Register (88 FR 60018) on August 30, 2023, and corrected at 88 FR 73807 on October 27, 2023.
Section 45Y(c)(1) provides for an inflation adjustment for both the base and alternative amounts. Section 45Y(c)(1) provides that in the case of a calendar year beginning after 2024, the 0.3 cent amount in section 45Y(a)(2)(A) and the 1.5 cent amount in section 45Y(a)(2)(B) will each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale, consumption, or storage of the electricity occurs. Section 45Y(c)(1) also addresses the rounding rules to be applied to this computation. Section 45Y(c)(2) provides that the Secretary will, not later than April 1 of each calendar year, determine and publish in the Federal Register the inflation adjustment factor for such calendar year in accordance with section 45Y(c).
Section 45Y(g)(7) provides for an increase in the section 45Y credit amount for any qualified facility located in an energy community, and section 45Y(g)(11) provides for an increase in the section 45Y credit amount if the domestic content bonus requirement is satisfied.
Section 45Y(g)(7) provides that in the case of any qualified facility that is located in an energy community (as defined in section 45(b)(11)(B)), for purposes of determining the amount of the credit under section 45Y(a) with respect to any electricity produced by the taxpayer at such facility during the taxable year, the applicable amount under section 45Y(a)(2) will be increased by an amount equal to 10 percent of the amount otherwise in effect under such paragraph.
Section 45Y(g)(11) provides that in the case of any qualified facility that satisfies the domestic content bonus requirement under section 45Y(g)(11)(B)(i), the amount of the credit determined under section 45Y(a) will be increased by an amount equal to 10 percent of the amount so determined (as determined without application of section 45Y(g)(7)). Section 45Y(g)(11)(B)(i) generally provides that the domestic content bonus requirement is satisfied with respect to any qualified facility if the taxpayer certifies to the Secretary (at such time, and in such form and manner, as the Secretary may prescribe) that any steel, iron, or manufactured product that is a component of such facility (upon completion of construction) was produced in the United States (as determined under section 661 of title 49, Code of Federal Regulations). Section 45Y(g)(11)(B)(iii) provides that for purposes of the domestic content bonus requirement, the manufactured products that are components of a qualified facility upon completion of construction will be deemed to have been produced in the United States if not less than the adjusted percentage (as determined under section 45Y(g)(11)(C)) of the total cost of all such manufactured products of such facility are attributable to manufactured products (including components) that are mined, produced, or manufactured in the United States.

B. Qualified Facility
Section 45Y(b) provides guidance on the meaning of a qualified facility for purposes of section 45Y. Subject to section 45Y(b)(1)(B) through (D), section 45Y(b)(1)(A) defines a qualified facility to mean a facility owned by the taxpayer that is used for the generation of electricity, that is placed in service after December 31, 2024, and for which the greenhouse gas emissions rate (as determined under section 45Y(b)(2)) is not greater than zero.
Section 45Y(b)(1)(B) provides that for purposes of section 45Y, a facility will only be treated as a qualified facility during the 10-year period beginning on the date the facility was originally placed in service.
Section 45Y(b)(1)(C) provides that a qualified facility will include a new unit or any additions of capacity that are placed in service after December 31, 2024, if in connection with a facility described in section 45Y(b)(1)(A) (without regard to section 45Y(b)(1)(A)(ii) describing the requirement that the facility be placed in service after December 31, 2024) that was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility due to the new unit or addition of capacity.
Section 45Y(b)(1)(D) provides that a qualified facility will not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E of the Code is allowed under section 38 for the taxable year or any prior taxable year.
Section 45Y(b)(2) describes the greenhouse gas emissions rate referenced in section 45Y(b)(1)(A)(iii). Section 45Y(b)(2)(A) defines greenhouse gas emissions rate for purposes of section 45Y to mean the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO 2 e per kWh. Section 45Y(e)(1) defines CO 2 e per kWh for purposes of section 45Y to mean, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on global warming potential) per kWh of electricity produced. Section 45Y(e)(2) defines greenhouse gas for purposes of section 45Y to have the same meaning given such term under section 211(o)(1)(G) of the Clean Air Act (CAA) (42 U.S.C. 7545(o)(1)(G)) as in effect on August 16, 2022.
Section 45Y(b)(2)(B) provides that in the case of a facility that produces electricity through combustion or gasification, the greenhouse gas emissions rate (GHG emissions rate) for such facility is equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA (42 U.S.C. 7545(o)(1)(H))) in the production of electricity, expressed as grams of CO 2 e per kWh.
Section 45Y(b)(2)(C) provides for the establishment of GHG emissions rates for facilities either through the publication of emissions rates described in section 45Y(b)(2)(C)(i) or a provisional emissions rate as described in section 45Y(b)(2)(C)(ii). Section 45Y(b)(2)(C)(i) states that the Secretary will annually publish a table that sets forth the GHG emissions rates for types or categories of facilities, that a taxpayer will use for purposes of section 45Y. Section 45Y(b)(2)(C)(ii) provides that in the case of any facility for which a GHG emissions rate has not been established by the Secretary, a taxpayer that owns such facility may file a petition with the Secretary for determination of the GHG emissions rate with respect to such facility.
Section 45Y(b)(2)(D) provides that for purposes of section 45Y(b) the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity cannot include any qualified carbon dioxide that is captured by the taxpayer and either (1) disposed of by the taxpayer in secure geological storage pursuant to any regulations established under section 45Q(f)(2), or (2) utilized by the taxpayer in a manner described in section 45Q(f)(5). Section 45Y(e)(3) defines qualified carbon dioxide for purposes of section 45Y to mean carbon dioxide captured from an industrial source that would otherwise be released into the atmosphere as industrial emission of greenhouse gas, is measured at the source of capture and verified at the point of disposal or utilization, and is captured and disposed or utilized within the United States (within the meaning of section 638(1) of the Code) or a United States territory, which for purposes of section 45Y and the section 45Y regulations has the meaning of the term “possession” of the United States (within the meaning of section 638(2)).

C. Credit Phase-Out
Section 45Y(d) describes the credit phase-out. Section 45Y(d)(1) provides generally that the amount of the clean electricity production credit under section 45Y(a) for any qualified facility the construction of which begins during a calendar year described in section 45Y(d)(2) is equal to the product of the amount of the credit determined under section 45Y(a) without regard to section 45Y(d), multiplied by the phase-out percentage under section 45Y(d)(2). Section 45Y(d)(2) provides that the phase-out percentage is 100 percent for a facility the construction of which begins during the first calendar year following the applicable year; 75 percent for a facility the construction of which begins during the second calendar year following the applicable year; 50 percent for a facility the construction of which begins during the third calendar year following the applicable year; and 0 percent for a facility the construction of which begins during any calendar year subsequent to the calendar year described in section 45Y(d)(2)(C). Section 45Y(d)(3) defines the “applicable year” for purposes of section 45Y(d) to mean the later of the calendar year in which the Secretary determines that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or 2032.

D. Special Rules
Section 45Y(g) provides special rules for section 45Y. Section 45Y(g)(1) provides that consumption, sales, or storage is taken into account under section 45Y only with respect to electricity the production of which is within the United States (within the meaning of section 638(1)), or a United States territory, which for purposes of section 45Y and the section 45Y regulations has the meaning of the term “possession” of the United States (within the meaning of section 638(2)).
Section 45Y(g)(2) provides a rule for combined heat and power system (CHP) property. For purposes of section 45Y(a), section 45Y(g)(2)(A) generally provides that the kWh of electricity produced by a taxpayer at a qualified facility will include any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy will be included for purposes of determining the GHG emissions rate for such facility. Section 45Y(g)(2)(B) defines CHP property for purposes of section 45Y(g)(2) to have the same meaning given such term by section 48(c)(3) (without regard to section 48(c)(3)(A)(iv), (B), and (D) thereof). Section 45Y(g)(2)(C) provides the necessary conversion from BTU to kWh for a taxpayer to calculate a section 45Y credit for useful thermal energy produced by a CHP property.
Section 45Y(g)(3) provides that in the case of a qualified facility in which more than one person has an ownership interest, except to the extent provided in regulations prescribed by the Secretary, production from the facility will be allocated among such persons in proportion to their respective ownership interests in the gross sales from such facility.
Section 45Y(g)(4) provides that persons will be treated as related to each other if such persons would be treated as a single employer under the regulations prescribed under section 52(b). In the case of a corporation that is a member of an affiliated group of corporations filing a consolidated return, such corporation will be treated as selling electricity to an unrelated person if such electricity is sold to such a person by another member of such group.
Section 45Y(g)(5) provides that under regulations prescribed by the Secretary, rules similar to the rules of section 52(d) will apply to a pass-thru in the case of estates and trusts.
Section 45Y(g)(6) provides for the allocation of the credit to patrons of an agricultural cooperative.
Section 45Y(g)(8) provides that rules similar to the rules of section 45(b)(3) will apply to a credit reduced for tax-exempt bonds.
Section 45Y(g)(9) provides that rules similar to the rules of section 45(b)(7) apply with respect to wage requirements. Section 45Y(g)(10) provides rules similar to the rules of section 45(b)(8) apply with respect to apprenticeship requirements.

II. Overview of Section 48E
For purposes of the general business credit under section 38, which includes the investment credit under section 46, section 48E(a)(1) provides a credit for any taxable year in which a qualified investment is made with respect to any qualified facility and any energy storage technology (EST).

A. Amount of Credit
The amount of the section 48E credit is equal to the applicable percentage of the qualified investment in any qualified facility and any EST. Section 48(E)(a)(2) provides a base rate and a higher alternative rate for the applicable percentage. Section 48E(a)(2)(A)(i) provides that in the case of a qualified facility that does not satisfy the requirements for the higher alternative rate, the base rate will be 6 percent. Section 48E(a)(2)(A)(ii) provides that the alternative rate of 30 percent applies in the case of any qualified facility (1) with a maximum net output of less than 1 megawatt (as measured in alternating current), (2) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance on the prevailing wage requirements of section 48E(d)(3) and the apprenticeship requirements of section 48E(d)(4), ^3 or (3) that satisfies the prevailing wage requirements of section 48E(d)(3) and, with respect to the construction of such facility, satisfies the apprenticeship requirements of section 48E(d)(4).
^3 To meet this requirement, the construction of the qualified facility must begin prior to January 29, 2023. See proposed § 1.48E-3 as proposed in the notice of proposed rulemaking (REG-100908-23) published in the Federal Register (88 FR 60018) on August 30, 2023, and corrected at 88 FR 73807 on October 27, 2023.
Similarly, section 48E(a)(2)(B)(ii) provides that the alternative rate of 30 percent applies in the case of an EST (1) with a capacity of less than 1 megawatt, (2) the construction of which begins prior to the date that is 60 days after the Secretary publishes guidance on the requirements of section 48E(d)(3) and (4) ^4 (prevailing wage and apprenticeship requirements, respectively), or (3) that satisfies section 48E(d)(3) and with respect to the construction of such EST, satisfies section 48E(d)(4). Section 48E(a)(2)(B)(i) provides that in the case of an EST that does not satisfy the requirements for the alternative rate, the base rate will be 6 percent.
^4 To meet this requirement, the construction of the EST must begin prior to January 29, 2023. See proposed § 1.48E-3 as proposed in the notice of proposed rulemaking (REG-100908-23) published in the Federal Register at 88 FR 60018 on August 30, 2023, and corrected at 88 FR 73807 on October 27, 2023.
Section 48E(a)(3)(A) provides for an increase in credit rate for a qualified facility or EST located in an energy community (as defined in section 45(b)(11)(B)) and section 48E(a)(3)(B) similarly provides for an increase in credit rate for a qualified facility or EST that meets the domestic content bonus requirements.

B. Qualified Investment With Respect to a Qualified Facility
Section 48E(b) describes a qualified investment with respect to a qualified facility. Generally, for purposes of section 48E(a), section 48E(b)(1)(A) and (B)(i) provide that the qualified investment with respect to a qualified facility for any taxable year is the sum of the basis of any qualified property placed in service by the taxpayer during such taxable year that is part of a qualified facility, plus the amount of expenditures that are paid or incurred by the taxpayer for qualified interconnection property that is properly chargeable to capital account of the taxpayer.
Section 48E(b)(2) provides that for purposes of section 48E, qualified property means property that is tangible personal property, or other tangible property (not including a building or its structural components), but only if such property is used as an integral part of the qualified facility; with respect to which depreciation (or amortization in lieu of depreciation) is allowable; and the construction, reconstruction, or erection of which is completed by the taxpayer, or that is acquired by the taxpayer provided the original use of such property commences with the taxpayer.
Section 48E(b)(1)(B)(i)(I) and (II) provide that qualified interconnection property must be in connection with a qualified facility that has a maximum net output of not greater than 5 megawatts (as measured in alternating current) and be placed in service during the taxable year of the taxpayer. Section 48E(b)(4) provides that the term “qualified interconnection property” has the meaning given such term in section 48(a)(8)(B).
Section 48E(b)(3)(A) provides that for purposes of section 48E, the term “qualified facility” means a facility that is used for the generation of electricity, which is placed in service after December 31, 2024, and for which the anticipated GHG emissions rate (as determined under section 48E(b)(3)(B)(ii)) is not greater than zero.
Section 48E(b)(3)(B) provides additional rules for a qualified facility. Section 48E(b)(3)(B)(i) provides rules on an expansion of facility and incremental production stating that rules similar to the rules of section 45Y(b)(1)(C) apply for purposes of section 48E(b)(3). Section 48E(b)(3)(B)(ii) provides rules to determine the GHG emissions rate of a qualified facility by stating that rules similar to the rules of section 45Y(b)(2) apply for purposes of section 48E(b)(3).
Section 48E(b)(3)(C) provides that a qualified facility will not include any facility for which a renewable electricity production credit determined under section 45, an advanced nuclear power facility production credit determined under section 45J, a carbon oxide sequestration credit determined under section 45Q, a zero-emission nuclear power production credit determined under section 45U, a clean electricity production credit determined under section 45Y, an energy credit determined under section 48, or a qualifying advanced coal project credit under section 48A, is allowed under section 38 for the taxable year or any prior taxable year. Section 48E(b)(5) provides a rule for coordination with the rehabilitation credit stating that the qualified investment with respect to any qualified facility for any taxable year will not include that portion of the basis of any property that is attributable to qualified rehabilitation expenditures (as defined in section 47(c)(2) of the Code).
Section 48E(b)(6) provides that for purposes of section 48E(b), the terms “CO 2 e per kWh” and “greenhouse gas emissions rate” have the same meaning given such terms under section 45Y. Section 48E(f) provides that, in section 48E, the term “greenhouse gas” has the same meaning given such term under section 45Y(e)(2).

C. Qualified Investment With Respect to an Energy Storage Technology
Section 48E(c) describes a qualified investment with respect to EST. For purposes of section 48E(a), section 48E(c)(1) provides that the qualified investment with respect to EST for any taxable year is the basis of any EST placed in service by the taxpayer during such taxable year. Section 48E(c)(2) provides that for purposes of section 48E, the term “energy storage technology” has the meaning given such term in section 48(c)(6) (except that section 48(c)(6)(D) will not apply). Section 48(c)(6)(A)(i) defines “energy storage technology” to mean property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that receives, stores, and delivers energy for conversion to electricity (or, in the case of hydrogen, which stores energy), and has a nameplate capacity of not less than 5 kWh. Section 48(c)(6)(A)(ii) provides that the term “energy storage technology” also includes thermal energy storage property. Section 48(c)(6)(B) describes a rule for modifications of certain property.
Section 48(c)(6)(C)(i) defines “thermal energy storage property” to mean for purposes of section 48(c)(6), subject to section 48(c)(6)(C)(ii), property comprising a system that is directly connected to a heating, ventilation, or air conditioning system, removes heat from, or adds heat to, a storage medium for subsequent use, and provides energy for the heating or cooling of the interior of a residential or commercial building. Section 48(c)(6)(C)(ii) describes the exclusion that thermal energy storage property will not include a swimming pool, combined heat and power system property, or a building or its structural components.
Section 48E(d) provides special rules for section 48E, all of which refer to other provisions. Section 48E(d)(1) provides a rule for qualified progress expenditures, stating that rules similar to the rules of former section 46(c)(4) and (d) (as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990) apply for purposes of section 48E(a). ^5 Section 48E(d)(2) provides a special rule for property financed by subsidized energy financing or private activity bonds, stating that rules similar to the rules of section 45(b)(3) apply. Section 48E(d)(3) provides a rule for prevailing wage requirements, stating that rules similar to the rules of section 48(a)(10) apply. Likewise, section 48E(d)(4) provides a rule for apprenticeship requirements stating that rules similar to the rules of section 45(b)(8) apply. Lastly, section 48E(d)(5) provides a rule for the domestic content requirement for elective payment stating that in the case of a taxpayer making an election under section 6417 with respect to a credit under section 48E, rules similar to the rules of section 45Y(g)(12) apply.
^5 The rules provided by § 1.46-5 related to qualified progress expenditures apply for purposes of section 48E(a).

D. Credit Phase-Out
Section 48E(e) describes the credit phase-out. Section 48E(e)(1) provides generally that the amount of the clean electricity investment credit under section 48E(a) for any qualified investment with respect to any qualified facility or EST the construction of which begins during a calendar year described in section 48E(e)(2) is equal to the product of the amount of the credit determined under section 48E(a) without regard to section 48E(e), multiplied by the phase-out percentage under section 48E(e)(2). Section 48E(e)(2) provides that the phase-out percentage is 100 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the first calendar year following the applicable year; 75 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the second calendar year following the applicable year; 50 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the third calendar year following the applicable year; and 0 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during any calendar year subsequent to the calendar year described in section 48E(e)(2)(C). Section 48E(e)(3) defines the “applicable year” for purposes of section 48E(e) to have the same meaning given such term in section 45Y(d)(3).

E. Recapture Rules
For purposes of the recapture rules under section 50(a), section 48E(g) provides a special recapture rule applicable to qualified facilities. Specifically, section 48E(g) provides that, for purposes of section 50, if the Secretary determines that the GHG emissions rate for a qualified facility is greater than 10 grams of CO 2 e per kWh, any property for which a credit was allowed under section 48E with respect to such facility ceases to be investment credit property in the taxable year in which the determination is made.

III. Notice 2022-49
On October 24, 2022, the Treasury Department and the IRS published Notice 2022-49, 2022-43 I.R.B. 321. The notice requested general comments on issues arising under sections 45Y and 48E, as well as on issues relating to three other credits. For section 45Y, the notice specifically requested comments concerning (1) industry standards for taxpayer eligibility for the credit, (2) what the Treasury Department and the IRS should consider, including around the scope and factors, for the annual GHG emissions rate table, (3) whether guidance is needed to clarify cases in which a metering device is owned and operated by an unrelated person or in which electricity produced at such a qualified facility with such a device is sold, consumed or stored by the taxpayer, and (4) what procedures the Treasury Department and the IRS should provide for a taxpayer whose facility does not have an emissions rate established by the annual rate table, and what should the Secretary consider in making such a determination. For section 48E, the notice specifically requested comments concerning what industry mechanisms currently exist for a taxpayer to demonstrate eligibility for the credit.
The Treasury Department and the IRS received over 100 comments specifically addressing sections 45Y and 48E from industry participants and other stakeholders. The Treasury Department and the IRS appreciate the commentors' interest and engagement on these issues. These comments have been carefully considered in the preparation of these proposed regulations.

IV. Prior Guidance
On August 30, 2023, the Treasury Department and the IRS published a notice of proposed rulemaking and a notice of public hearing (REG-100908-23) in the Federal Register (88 FR 60018), providing guidance on the prevailing wage and registered apprenticeship (PWA) requirements under sections 45, 45Y, 48, 48E and several other sections of the Code (August Proposed Regulations). The August Proposed Regulations also proposed guidance on the one-megawatt exception under sections 45, 45Y, 48, and 48E (One-Megawatt Exception). Under this exception, with respect to certain facilities with a maximum net output (or capacity for energy storage technology under section 48E) of less than one megawatt, increased credit amounts are available.
On November 22, 2023, the Treasury Department and the IRS published a notice of proposed rulemaking and a notice of public hearing (REG-132569-17) in the Federal Register (88 FR 82188), providing guidance under section 48 of the Code. Among other matters, the proposed regulations under section 48 (Section 48 Proposed Regulations) withdrew and reproposed the regulations in § 1.48-13 from the August Proposed Regulations regarding the PWA requirements under section 48, the One-Megawatt Exception under section 48(a)(9)(B)(i), and the recapture rules under section 48(a)(10)(C).

Explanation of Provisions

I. Rules Applicable to the Clean Electricity Production Tax Credit
The proposed regulations under section 45Y are organized in five sections, proposed §§ 1.45Y-1 through 1.45Y-5 (section 45Y regulations). Proposed § 1.45Y-1 would provide an overview of the section 45Y regulations, generally applicable definitions, and general rules applicable to section 45Y, including a rule for calculating the credit for a CHP property. Proposed § 1.45Y-2 would provide rules relating to qualified facilities for purposes of the section 45Y credit. Section 1.45Y-3 is reserved for rules relating to the increased credit amount for meeting the prevailing wage and apprenticeship requirements. A cross reference will be added to § 1.45Y-3 in the final regulations after § 1.45Y-3 is finalized. Proposed § 1.45Y-4 would provide the rules of general application under section 45Y, including rules that attribute production to the taxpayer, rules for the expansion of a facility and incremental production, and rules for retrofits of an existing facility. Proposed § 1.45Y-5 would provide rules pertaining to the determination of a GHG emissions rate for a facility under section 45Y.

A. Amount of Credit
Proposed § 1.45Y-1 would provide an overview of the section 45Y regulations and definitions of terms for purposes of the section 45Y regulations, including the terms “combined heat and power system (CHP) property,” “metering device,” “related person,” “unrelated person,” and “qualified facility.”
Proposed § 1.45Y-1(a)(5)(i) would define, for purposes of section 45Y(a)(1)(A)(ii)(II), the term “metering device” as equipment that is owned and operated by an unrelated person (as defined in paragraph (a)(11) of this section) for energy revenue metering to measure and register the continuous summation of an electricity quantity with respect to time. Further, proposed § 1.45Y-1(a)(5)(ii) would provide standards for maintaining and operating a metering device for purposes of section 45Y(a)(1)(A)(ii)(II) and proposed § 1.45Y-1(a)(5) by requiring a metering device to be maintained in proper working order according to the instructions of its manufacturer. Proposed § 1.45Y-1(a)(5)(ii) would also provide that a metering device should meet the requirements of the American National Standards Institute C12.1-2022 standard, or subsequent revisions, be revenue grade with a +/−0.5% accuracy, and be properly calibrated. Proposed § 1.45Y-1(a)(5)(iii) would provide that for purposes of monitoring the metering device, the unrelated person may share network equipment, such as spare fiber optic cable owned by the taxpayer that produces the electricity, and may co-locate network equipment in the taxpayer's facilities. Proposed § 1.45Y-1(a)(5)(iv) would provide examples illustrating the proposed rules provided by proposed § 1.45Y-1(a)(5).
Proposed § 1.45Y-1(a)(7)(i) would provide that for purposes of section 45Y(a), the term “related person” means a person who is related to another person if such person would be treated as a single employer under the regulations in 26 CFR chapter 1 under section 52(b) of the Code. Proposed § 1.45Y-1(a)(7)(ii) would provide that in the case of a corporation that is a member of a consolidated group (as defined in § 1.1502-1(h)), such corporation will be treated as selling electricity to an unrelated person if such electricity is sold to an unrelated person by another member of such group.
Proposed § 1.45Y-1(a)(11) would provide that for purposes of section 45Y(a), the term “unrelated person” means a person who is not a related person as defined in section 45Y(g)(4) and proposed § 1.45Y-1(a)(7). In the case of sales of electricity to an individual consumer, such sales will be treated as sales to an unrelated party for purposes of the section 45Y credit. Proposed § 1.45Y-1(a)(11) provides an example illustrating the application of these rules.
Proposed § 1.45Y-1(b)(1) would describe the calculation of the section 45Y credit, providing that the credit is an amount equal to the product of the kWh of electricity that is produced by the taxpayer at a qualified facility (as defined in proposed § 1.45Y-2(a)) and sold by the taxpayer to an unrelated person during the taxable year, multiplied by the applicable amount (as described in proposed § 1.45Y-1(b)) with respect to such qualified facility. Proposed § 1.45Y-1(b)(1) would further provide that in the case of a qualified facility that is equipped with a metering device that is owned and operated by an unrelated person, the section 45Y credit for any taxable year is an amount equal to the product of the kWh of electricity that is both produced at the qualified facility (as defined in proposed § 1.45Y-2(a)) and sold, consumed, or stored by the taxpayer during the taxable year, multiplied by the applicable amount with respect to such qualified facility. Proposed § 1.45Y-1(b)(1) would also provide that only one section 45Y credit may be claimed for each kWh of electricity produced by the taxpayer at a qualified facility.
Proposed § 1.45Y-1(b)(2)(i) would define the applicable amount as the base amount described in § 1.45Y-1(b)(2)(ii) or the alternative amount described in § 1.45Y-1(b)(2)(iii). Proposed § 1.45Y-1(b)(2)(i) would further provide that the applicable amount is subject to the inflation adjustment as provided in section 45Y(c)(1) and proposed § 1.45Y-1(b)(3), and that the applicable amount may also be increased as provided in section 45Y(g)(7)) and proposed § 1.45Y-1(b)(4), in the case of a qualified facility that is located in an energy community. Proposed § 1.45Y-1(b)(2)(ii) would describe the base amount as 0.3 cents in the case of any qualified facility that does not satisfy the requirements provided in section 45Y(a)(2)(B). Proposed § 1.45Y-1(b)(2)(iii) would describe the alternative amount as 1.5 cents if prevailing wage and apprenticeship requirements are satisfied as provided in section 45Y(a)(2)(B).
Proposed § 1.45Y-1(b)(3) would provide the rules related to the inflation adjustment factor applicable to the section 45Y credit. Proposed § 1.45Y-1(b)(4) would provide the rules applicable to the energy communities increase in credit. Proposed § 1.45Y-1(b)(5) would provide the domestic content bonus credit amount.
Proposed § 1.45Y-1(c) would provide the credit phase-out rules. Generally, proposed § 1.45Y-1(c)(1) would provide that the amount of the clean electricity production credit under section 45Y(a) for any qualified facility the construction of which begins during a calendar year described in section 45Y(d)(2) is equal to the product of the amount of the credit determined under section 45Y(a) without regard to the credit phaseout rules of section 45Y(d) (credit phase-out), multiplied by the phase-out percentage provided in section 45Y(d)(2). Proposed § 1.45Y-1(c)(2) would provide that the phase-out percentage is 100 percent for a facility the construction of which begins during the first calendar year following the applicable year; 75 percent for a facility the construction of which begins during the second calendar year following the applicable year; 50 percent for a facility the construction of which begins during the third calendar year following the applicable year; and 0 percent for a facility the construction of which begins during any calendar year subsequent to the calendar year described in section 45Y(d)(2)(C).
Proposed § 1.45Y-1(c)(3) would define the “applicable year” for purposes of proposed § 1.45Y-1(c) to mean the later of the calendar year in which the Secretary makes the determination that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or 2032. Proposed § 1.45Y-1(c)(4) would provide that, for the purposes of determining the applicable year, the annual greenhouse gas emissions from the production of electricity in the United States for any year must be assessed separately using both the Energy Information Administration's (EIA) Electric Power Annual, using the sum of the annual carbon dioxide emissions data from conventional power plants and combined heat and power plants as currently listed in Table 9.1 and the Monthly Energy Review annual carbon dioxide emissions from the combustion of biomass to produce electricity in the electric power sector as currently listed in Table 11.7, and the U.S. Environmental Protection Agency (EPA) Inventory of U.S. Greenhouse Gas Emissions and Sinks (GHGI) annual electric power-related carbon dioxide, methane, and nitrous oxide emissions data including carbon dioxide emissions from the combustion of biomass to produce electricity. In the most current version of the GHGI, annual fossil and biogenic CO 2 from electricity production in the electric power sector is available in Table 2-11 and Tables 3-120 and 3-122, respectively; and CH 4 and N 2 O from electricity production in the electric power sector is available in Table 3-8 and Table 3-9, respectively. Based on current and publicly available data in the 2024 GHGI, the estimate for 2022 GHG emissions associated with the production of electricity is 1,613 million metric tons (MMT) CO 2 e. Currently, explicit data on industrial and commercial sector GHG emissions from the production of electricity is not disaggregated from overall sectoral totals. See GHGI, https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks.
For 2022, the EIA Electric Power Annual states that the annual carbon dioxide emissions from conventional power plants and combined heat and power plants are 1,650 MMT, and the Monthly Energy Review annual carbon dioxide emissions from the combustion of biomass to produce electricity in the electric power sector are 35 MMT. Thus, the EIA's data reflects a total of 1,685 MMT in 2022. See EIA Electric Power Annual ( https://www.eia.gov/electricity/annual ); MER ( https://eia.gov/totalenergy/monthly/ ).
Proposed § 1.45Y-1(c)(5) would provide that, for the purposes of determining the applicable year, the Secretary will make such determination only if the annual greenhouse gas emissions from the production of electricity in the United States, as determined separately under both of the data sources described in proposed § 1.45Y-1(c)(4), for the year is equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022. Proposed § 1.45Y-1(c)(5) would provide that if a data source described in proposed § 1.45Y-1(c)(4) becomes unavailable (for example, it is no longer published or it does not provide the specified data), the Secretary must designate a similar data source to replace the unavailable data source. Requiring the applicable year to be determined using data from the EIA's Electric Power Annual and Monthly Energy Review and the EPA's GHGI ensures that this important determination is made transparently and based on reliable information. Both well-established data sources are representative of the annual greenhouse gas emissions from the production of electricity in the United States, but there are slight differences in the greenhouse gases and the emissions sources covered by each data source.
There are other United States Government greenhouse gas datasets that could serve as the basis for the Secretary's determination as to whether the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent compared to 2022. Two such datasets are the EPA Greenhouse Gas Reporting Program (GHGRP) and Emissions & Generation Resource Integrated Database (eGRID). The Treasury Department and the IRS request comment on which datasets are most appropriate to determine the applicable year and why.
Proposed § 1.45Y-1(d) would provide requirements for CHP property and special rules for calculating the section 45Y credit for CHP property. Proposed § 1.45Y-1(d)(1) would provide that CHP property must produce at least 20 percent of its total useful energy in the form of thermal energy that is not used to produce electrical or mechanical power (or combination thereof), and at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof). Proposed § 1.45Y-1(d)(1) would further provide that the energy efficiency percentage of CHP property must exceed 60 percent, and that these percentages are determined on a British thermal unit (Btu) basis. Section 45Y(g)(2)(B) incorporates these requirements by providing that the term “combined heat and power system property” has the same meaning given such term by section 48(c)(3) (without regard to section 48(c)(3)(A)(iv), (B), and (D)).
Proposed § 1.45Y-1(d)(2) would describe the energy efficiency percentage of a CHP property stating that it is the fraction the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, and the denominator of which is the lower heating value of the fuel sources for the system, which is a measure of heat content based on the net energy content of a combustible fuel.
Proposed § 1.45Y-1(d)(3) would provide a special rule for calculating electricity produced by CHP property. For purposes of section 45Y(a) and proposed § 1.45Y-1(b), the kWh of electricity produced by a taxpayer at a qualified facility will include any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy will be included for purposes of determining the GHG emissions rate for such facility.
Proposed § 1.45Y-1(d)(3)(ii)(A) would provide a conversion from Btu to kWh. Proposed § 1.45Y-1(d)(3)(ii))(A) would provide that for purposes of section 45Y(g)(2)(A)(i) and § 1.45Y-1(d)(3), the amount of kWh of electricity produced in the form of useful thermal energy is equal to the quotient of the total useful thermal energy produced by the CHP property within the qualified facility, divided by the heat rate for such facility.
Proposed § 1.45Y-1(d)(3)(ii)(B) would define the term “heat rate” to mean the amount of energy used by the qualified facility to generate 1 kWh of electricity, expressed as Btus per net kWh generated. In calculating the heat rate of a qualified facility that includes CHP property that uses combustion, a taxpayer must use the annual average heat rate, defined as the total annual fuel consumption of the CHP property (in Btus, using the lower heating value of the fuel) during the taxable year for which the section 45Y credit is claimed, divided by the annual net electricity generation (in kWh) of the CHP property during such taxable year.
Section 45Y(g)(2), by cross reference to section 48(c)(3), requires that the energy efficiency percentage of the CHP property must exceed 60 percent, calculated as (1) the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, divided by (2) the lower heating value (LHV) of the fuel sources for the system. The LHV is calculated based on combustion. Some CHP property may not involve combustion, such as nuclear cogeneration. In these scenarios, because there is no calculable LHV, the energy efficiency percentage of the CHP property cannot be determined using the calculation provided in the statute.
The Treasury Department and the IRS request comments regarding the application of the energy efficiency percentage requirements to CHP property for which there is no combustion. Relatedly, comment is requested on whether the existing definition of heat rate provided in section 45Y(g)(2)(C)(ii) for purposes of calculating the section 45Y credit for CHP property that does not use combustion should be clarified.

B. Qualified Facility
Proposed § 1.45Y-2(a) would define a “qualified facility” to mean a facility owned by the taxpayer and used for the generation of electricity, that is placed in service after December 31, 2024, and has a GHG emissions rate of not greater than zero (as determined under rules provided in proposed § 1.45Y-5).

1. Property Included in Qualified Facility
Proposed § 1.45Y-2(b) would provide a description of the property included in a qualified facility. Proposed § 1.45Y-2(b)(1) would provide that a qualified facility includes a unit of qualified facility (as defined in proposed § 1.45Y-2(b)(2)(i)) that meets the requirements of proposed § 1.45Y-2(b)(2)(ii). Proposed § 1.45Y-2(b)(1) would provide that a qualified facility also includes qualified property owned by the taxpayer that is an integral part of a qualified facility (as defined in proposed § 1.45Y-2(b)(3)). Section 45Y is silent regarding the credit eligibility of components that are part of a qualified facility but located in different locations. Proposed § 1.45Y-2(b)(1) would clarify that any property that meets the requirements of a qualified facility described in proposed § 1.45Y-2(b) is part of a qualified facility, regardless of where such property is located. Proposed § 1.45Y-2(b)(1) would provide that a qualified facility also generally does not include equipment that is an addition or modification to an existing qualified facility, however, proposed § 1.45Y-2(b)(1) would reference proposed § 1.45Y-4(c) for rules regarding the expansion of a facility or incremental production and proposed § 1.45Y-4(d) for rules regarding a retrofitted qualified facility (80/20 Rule).

2. Unit of Qualified Facility
Proposed § 1.45Y-2(b)(2)(i) would provide that for purposes of the section 45Y credit, the unit of qualified facility includes all functionally interdependent components of property (as defined in proposed § 1.45Y-2(b)(2)(ii)) owned by the taxpayer that are operated together and that can operate apart from other property to produce electricity. Proposed § 1.45Y-2(b)(2)(i) would clarify that no provision of proposed § 1.45Y-1, or proposed § 1.45Y-4 through § 1.45Y-5 uses the term “unit” in respect of a qualified facility with any meaning other than that provided in proposed § 1.45Y-2(b)(2)(i). A reference to § 1.45Y-3 will also be added to the previous sentence in proposed § 1.45Y-2(b)(2)(i) when proposed § 1.45Y-2(b)(2)(i) is finalized, but it cannot be added until § 1.45Y-3 is finalized.
Proposed § 1.45Y-2(b)(2)(ii) would provide that components are functionally interdependent if placing in service each component is dependent upon placing in service other components to produce electricity. See the discussion in section I.A. of the Explanation of Provisions regarding the special rule for CHP property.

3. Integral Part
Proposed § 1.45Y-2(b)(3)(i) would provide that for purposes of thesection 45Ycredit, a component of property owned by a taxpayer is an integral part of a facility if it is used directly in the intended function of the qualified facility and is essential to the completeness of such function.
Proposed § 1.45Y-2(b)(3)(ii) would provide that components of property that are an integral part of a qualified facility include power conditioning equipment and transfer equipment. Proposed § 1.45Y-2(b)(3)(ii) would provide that power conditioning equipment includes equipment that modifies the characteristics of electricity into a form suitable for use or transmission or distribution. Proposed § 1.45Y-2(b)(3)(ii) would provide that parts related to the functioning or protection of power conditioning equipment are also treated as power conditioning equipment and includes examples.
Proposed § 1.45Y-2(b)(3)(ii) would provide that transfer equipment includes components that permit the aggregation of electricity generated by components of qualified facilities and components that alter voltage in order to permit transfer to a transmission or distribution line. Proposed § 1.45Y-2(b)(3)(ii) would also clarify that transfer equipment does not include transmission or distribution lines. Proposed § 1.45Y-2(b)(3)(ii) would provide that examples of transfer equipment include, but are not limited to, wires, cables, and combiner boxes that conduct electricity. Proposed § 1.45Y-2(b)(3)(ii) would provide that parts related to the functioning or protection of transfer equipment are also treated as transfer equipment and include examples.
Proposed § 1.45Y-2(b)(3)(iii) would provide that roads that are an integral part of a qualified facility are those roads integral to the intended function of the qualified facility, such as onsite roads that are used to operate and maintain the qualified facility. Proposed § 1.45Y-2(b)(3)(iii) would also clarify that roads used primarily for access to the site, or roads used primarily for employee or visitor vehicles, are not integral to the intended function of the qualified facility and thus are not an integral part of a qualified facility.
Proposed § 1.45Y-2(b)(3)(iv) and (v) would also provide that fences and buildings (also referred to as structures) are generally not integral parts of a qualified facility because they are not integral to the intended function of the qualified facility. However, a building (or structure) may be an integral part of a qualified facility if it is essentially an item of machinery or equipment and a structure that houses components of property that are integral to the intended function of the qualified facility if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
Proposed § 1.45Y-2(b)(3)(vi) would provide a rule for shared integral property by stating that multiple qualified facilities (whether owned directly by one or more taxpayers), including qualified facilities with respect to which a taxpayer has claimed a credit under section 45Y or section 48E, may include shared property that can be considered an integral part of each qualified facility. Proposed § 1.45Y-2(b)(3)(vi) would also provide that a component of property that is shared by a qualified facility (as defined in section 45Y(b)) (45Y Qualified Facility) and a qualified facility (as defined in section 48E(b)(3)) (48E Qualified Facility) that is an integral part of both qualified facilities will not affect the eligibility of the section 45Y Qualified Facility to claim the section 45Y credit or the section 48E Qualified Facility to claim a section 48E credit. Proposed § 1.45Y-2(b)(3)(vii) would provide examples illustrating proposed § 1.45Y-2(b)(3).

4. Coordination With Other Credits
Proposed § 1.45Y-2(c)(1) would provide that the term “qualified facility” (as defined in section 45Y(b)) will not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E is allowed under section 38 of the Code for the taxable year or any prior taxable year. Proposed § 1.45Y-2(c)(1) would further clarify that a taxpayer that directly owns a qualified facility (as defined in section 45Y(b)) that is eligible for both a section 45Y credit and another Federal income tax credit is eligible for the section 45Y credit only if the other Federal income tax credit was not allowed with respect to the qualified facility. Proposed § 1.45Y-2(c)(1) would also add that nothing in § 1.45Y-2(c) precludes a taxpayer from claiming a section 45Y credit with respect to a qualified facility (as defined in section 45Y(b)) that is co-located with another facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E is allowed under section 38 for the taxable year or any prior taxable year. Proposed § 1.45Y-2(c)(2) would clarify that for purposes of proposed § 1.45Y-2(c)(1), the term “allowed” only includes credits that taxpayers have claimed on a Federal income tax return or Federal return, as appropriate, and that the IRS has not challenged in terms of the taxpayer's eligibility. Proposed § 1.45Y-2(c)(3) includes several examples illustrating the rules of § 1.45Y-2(c).

C. Rules of General Application to Section 45Y

1. Only Production in the United States Taken Into Account
Proposed § 1.45Y-4(a) would provide that consumption, sales, or storage of electricity are taken into account for purposes of the section 45Y credit only with respect to electricity produced within the United States (as defined in section 638(1)), or a United States territory, which for purposes of section 45Y and the section 45Y regulations has the meaning of the term “possession” of the United States (as defined in section 638(2)).

2. Production Attributable to the Taxpayer and Section 761(a) Elections
Proposed § 1.45Y-4(b)(1) would provide that in the case of a qualified facility in which more than one person has an ownership share (and such arrangement is not treated as a partnership for Federal tax purposes), production from the qualified facility is allocated among such persons in proportion to their respective ownership share in the gross sales from such qualified facility during the taxable year. The respective owners each determine their respective section 45Y credit under section 45Y(a) based on their respective ownership shares in the gross sales from such qualified facility. Proposed § 1.45Y-4(b)(2) would provide an example demonstrating the application of this rule.
Proposed § 1.45Y-4(b)(3) would provide that if a qualified facility is owned through an unincorporated organization that has made a valid election under section 761(a) of the Code, each member's undivided ownership share in the qualified facility will be treated as a separate qualified facility owned by such member.

3. Expansion of Facility; Incremental Production
Proposed § 1.45Y-4(c)(1) would provide, solely for purposes of proposed § 1.45Y-4(c), that the term “qualified facility” includes either a new unit or an addition of capacity placed in service after December 31, 2024, in connection with a facility described in section 45Y(b)(1)(A) (without regard to clause (ii) of such paragraph), which was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit or addition of capacity. Proposed § 1.45Y-4(c)(1) would also provide that a new unit or an addition of capacity will be treated as a separate qualified facility. Proposed § 1.45Y-4(c)(1) would provide for purposes of proposed § 1.45Y-4(c), that a new unit or an addition of capacity require the addition or replacement of components of property, including any new or replacement integral property, added to a facility necessary to increase capacity. If applicable for purposes of proposed § 1.45Y-4(c), taxpayers must use modified or amended facility operating licenses or the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a facility to determine its nameplate capacity. Additionally, proposed § 1.45Y-4(c)(1) would provide that for purposes of section 45Y(a)(2)(B)(i) (that is, the One-Megawatt Exception), the capacity for a new unit or an addition of capacity is the sum of the nameplate capacity of the added qualified facility and the nameplate capacity of the facility to which the qualified facility was added.
Proposed § 1.45Y-4(c)(2) would provide that solely for purposes of § 1.45Y-4(c), a facility that is decommissioned or in the process of decommissioning and restarts can be considered to have increased capacity if the following conditions are met: (1) the existing facility must have ceased operations; (2) the existing facility must have a shutdown period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC)); and (3) the increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
Proposed § 1.45Y-4(c)(3) would describe how to compute the increased amount of electricity produced as a result of a new unit or an addition of capacity. Proposed § 1.45Y-4(c)(3) would provide that to determine the increased amount of electricity produced by a facility by reason of a new unit or an addition of capacity, a taxpayer must multiply the amount of electricity that the facility produces during a taxable year after the new unit or addition of capacity is placed in service by a fraction, the numerator of which is the added nameplate capacity that results from the new unit or addition of capacity, and the denominator of which is the total nameplate capacity of the facility with the new unit or addition of capacity added.
Proposed § 1.45Y-4(c)(4) would illustrate the application of these rules to determine the increased amount of electricity attributable to a new unit or an addition of capacity described in § 1.45Y-4(c).

4. Retrofit of an Existing Facility (80/20 Rule)
Proposed § 1.45Y-4(d)(1) would provide that for purposes of section 45Y(b)(1)(B), a facility may qualify as originally placed in service even if it contains some used components of property within the unit of qualified facility, provided the fair market value of the used components of the unit of qualified facility is not more than 20 percent of the total value of the unit of qualified facility (that is, the cost of the new components of property plus the fair market value of the used components of property within the unit of qualified facility) (80/20 Rule). Proposed § 1.45Y-4(d)(1) would further provide that if a facility satisfies the requirements of the 80/20 Rule, then the date on which such qualified facility is considered originally placed in service for purposes of section 45Y(B)(1)(b) is the date on which the new components of property of the unit of qualified facility are placed in service. Proposed § 1.45Y-4(d)(2) would provide that, for purposes of this 80/20 Rule, the cost of new components of the unit of qualified facility includes all costs properly included in the depreciable basis of the new components of property. Lastly, proposed § 1.45Y-4(d)(3) would provide examples demonstrating the 80/20 Rule.

D. Greenhouse Gas Emissions Rates
Section 45Y(b)(2) provides rules for determining GHG emissions rates. Proposed § 1.45Y-5(a) would provide an overview of the rules pertaining to GHG emissions rates for facilities under section 45Y.

1. Definitions Related to Greenhouse Gas Emissions Rates
Proposed § 1.45Y-5(b) would provide definitions of terms relevant to determining GHG emissions rates. Section 45Y(e)(1) defines the term “CO 2 e per kWh” as, with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on global warming potential) per kWh of electricity produced. Proposed § 1.45Y-5(b)(1) would clarify that the term “CO 2 e per kWh” means with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on the 100-year time horizon global warming potential (GWP-100)) per kWh of electricity produced. Proposed § 1.45Y-5(b)(1) would also provide global warming potentials for certain greenhouse gases from the Intergovernmental Panel on Climate Change's Fifth Assessment Report (AR5).
Proposed § 1.45Y-5(b)(8) would provide that the term “fuel” means material directly used to produce electricity or energy inputs that are used to produce electricity. Proposed § 1.45Y-5(b)(9) would provide that the term “feedstock” means any raw material used in a process for electricity generation or to produce an intermediate product or finished fuel used for electricity generation.
Section 45Y(b)(2)(B) provides rules for determining a GHG emissions rate for a facility that produces electricity through combustion or gasification. Proposed § 1.45Y-5(b)(2) would provide that the term “combustion” means a rapid exothermic chemical reaction, specifically the oxidation of a fuel, which liberates energy including heat and light. This proposed definition of “combustion” would include, for example, burning fossil fuels, but it would not include the reaction that produces electricity inside a fuel cell.
Gasification produces fuel but not electricity. Proposed § 1.45Y-5(b)(3) would provide that the term “gasification” means a thermochemical process that converts carbon-containing materials into syngas, a gaseous mixture that is composed primarily of carbon monoxide, carbon dioxide, and hydrogen. Because gasification does not produce electricity, the inclusion of the term “gasification” as a category separate from “combustion” in section 45Y(b)(2)(B) would have no independent significance unless it is interpreted as applying to the production of an energy source that is ultimately used by the facility to generate electricity (for example, syngas used to make electricity). Thus, proposed § 1.45Y-5(b)(4) would interpret the phrase “facility which produces electricity through combustion or gasification” in section 45Y(b)(2)(B) as applying to facilities that produce electricity through combustion or use an input energy source to produce electricity, which energy source was produced through a fundamental transformation, or multiple transformations, of one energy source into another using combustion or gasification. The Treasury Department and the IRS request comment on this proposed interpretation, including whether the application of this proposed interpretation should be clarified with respect to any type of fundamental transformation of an energy source and any related activities or operations. Comment is also requested on supply chain tracing requirements that the Treasury Department and the IRS may apply to verify whether or not a feedstock or fuel (including energy inputs) used by a facility to produce electricity was produced using combustion or gasification.
Section 45Y(b)(2)(B) provides that in the case of electricity produced through combustion or gasification, the GHG emissions rate for such facility is equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA (42 U.S.C. 7545(o)(1)(H)) in the production of electricity. Proposed § 1.45Y-5(b)(4) would provide that a “facility that produces electricity through combustion or gasification” (C&G Facility) means a facility that produces electricity through combustion or uses an input energy source to produce electricity, if the input energy source was produced through a fundamental transformation, or multiple transformations, of one energy source into another using combustion or gasification. Under proposed § 1.45Y-5(b)(4), a facility that produces electricity using any fuel that was produced using electricity that had been produced, in whole or in part, from the combustion of fossil fuels would be considered a C&G Facility. For example, a hydrogen fuel cell would be considered a C&G Facility if it produced electricity using hydrogen that was produced by an electrolyzer powered, in whole or in part, by electricity from the grid because some of the electricity from the grid was produced through combustion or gasification. A fuel cell facility such as a solid oxide fuel cell, which uses methane as fuel, would be considered a C&G Facility, because the methane reforming reaction that produces syngas within the fuel cell prior to the production of electricity would be considered a gasification reaction. In contrast, a hydrogen fuel cell facility using hydrogen produced exclusively using electricity from a new solar array or wind farm co-located with the hydrogen fuel cell facility would not be considered a C&G Facility, because the input energy source was not produced through a transformation of one energy source into another using combustion or gasification.
The Treasury Department and the IRS request comment on whether the proposed definitions of gasification, combustion, and C&G Facility would result in certain types of fuel cells that use fossil or biogenic fuel inputs (via combustion or gasification) to produce electricity being unable to demonstrate a net rate of greenhouse gas emissions that is not greater than zero with a lifecycle analysis because they are not classified as a C&G Facility as defined in proposed § 1.45Y-5(b)(4). Because the energy transformation that produces electricity in a fuel cell would not be considered combustion under the definition in proposed § 1.45Y-5(b)(2), a fuel cell facility would only qualify as a C&G Facility if the fuel it used to produce electricity was produced through combustion or gasification under these proposed regulations.
Proposed § 1.45Y-5(b)(7) would provide that a “Non-C&G Facility” means a facility that produces electricity and is not described in proposed § 1.45Y-5(b)(4).
Proposed § 1.45Y-5(b)(5) would provide that, consistent with section 45Y(b)(2)(A), the term “greenhouse gas emissions rate” means the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO 2 e per kWh.
Proposed § 1.45Y-5(b)(6) would provide that, for the purposes of section 45Y(b)(2)(A), for both C&G Facilities and Non-C&G Facilities, the term “greenhouse gases emitted into the atmosphere by a facility in the production of electricity” means emissions from a facility that directly occur from the process that transforms the input energy source into electricity. Proposed § 1.45Y-5(b)(6)(i) through § 1.45Y-5(b)(6)(vi) would exclude emissions that may relate to a facility but do not occur “in the production of electricity” as specified in section 45Y(b)(2)(A). Proposed § 1.45Y-5(c)(1) would provide, for Non-C&G Facilities only, additional types of excluded emissions under section 45Y(b)(2)(A). Proposed § 1.45Y-5(d)(2) would provide, for C&G Facilities only, that additional rules on included and excluded emissions apply in order to conduct a lifecycle analysis as required by section 45Y(b)(2)(B).
Proposed § 1.45Y-5(b)(6)(i) through § 1.45Y-5(b)(6)(vi) would clarify that for the purposes of both Non-C&G and C&G Facilities this definition excludes: (1) emissions from back-up generators that are primarily used in maintaining critical systems in case of a power system outage or for supporting restart of a generator after an outage; (2) emissions from routine operational and maintenance activities that are integral to the production of electricity, including, but not limited to, emissions from internal combustion vehicles used to access and perform maintenance on remote electricity generating facilities or emissions occurring from heating and cooling control rooms or dispatch centers; (3) emissions from a step-up transformer that conditions the electricity into a form suitable for productive use or sale; (4) emissions that occur before commercial operations commence or after commercial operations terminate, including, but not limited to, on-site emissions occurring from construction or manufacturing of the facility itself, emissions from the off-site manufacturing of facility components, or emissions occurring due to siting or decommissioning; (5) emissions from infrastructure associated with the facility, including, but not limited to, emissions from road construction for feedstock production; and (6) emissions from the distribution of electricity to consumers.

2. Greenhouse Gas Emissions Rates for Non-C&G Facilities
Proposed § 1.45Y-5(c) would provide the rules for determining a GHG emissions rate for Non-C&G Facilities, including by the Secretary when publishing a table described in section 45Y(b)(2)(C)(i) or determining an emissions rate as provided in section 45Y(b)(2)(C)(ii). Proposed § 1.45Y-5(c)(1) would provide that GHG emissions rates for Non-C&G Facilities must be determined under proposed § 1.45Y-5(c) and (e). In addition, proposed § 1.45Y-5(c)(1)(i) would provide that, with respect to Non-C&G Facilities only, greenhouse gases emitted into the atmosphere by a facility in the production of electricity excludes emissions of greenhouse gases that are not directly produced by the fundamental transformation of the input energy source into electricity, including, but not limited to, the following: (1) emissions from hydropower reservoirs due to anoxic conditions; (2) ebullitive, diffuse, and degassing emissions from hydropower operations; (3) emissions of non-condensable gases from underground reservoirs during geothermal operations; (4) emissions from a step-up transformer that conditions the electricity into a form suitable for productive use or sale; and (5) emissions occurring due to activities and operations occurring off-site, including but not limited to, the production and transportation of fuels used by the facility, or land use change from siting or changes in demand. Proposed § 1.45Y-5(c)(1)(i) would thus exclude emissions that may relate to a Non-C&G Facility but do not occur “in the production of electricity” as specified in section 45Y(b)(2)(A) because such emissions do not arise directly from the transformation of the input energy source into electricity. For example, emissions from land use change from siting or changes in demand would be excluded because such emissions do not occur “in the production of electricity” for Non-C&G Facilities under section 45Y(b)(2)(A), but this exclusion does not apply to C&G Facilities because section 45Y(b)(2)(B) requires a broader standard for assessing GHG emissions than section 45Y(b)(2)(A).
Proposed § 1.45Y-5(c)(1)(ii) would provide that, subject to proposed § 1.45Y-5(b)(6) and (c)(1), a GHG emissions rate for a Non-C&G Facility must be determined through a technical and engineering assessment of the fundamental energy transformation into electricity, and that such assessment must consider all input and output energy carriers and chemical reactions or mechanical processes taking place at the facility in the production of electricity. Proposed § 1.45Y-5(c)(1)(iii) would provide an example of a GHG emissions rate determination for a Non-C&G Facility.
Proposed § 1.45Y-5(c)(2) would identify certain types or categories of facilities that are categorically Non-C&G Facilities with a GHG emissions rate that is not greater than zero. Proposed § 1.45Y-5(c)(2)(i) through (viii) would provide that these include wind facilities (including small wind properties), hydropower facilities (including retrofits adding power production to non-powered dams, conduit hydropower, hydropower using new impoundments, and hydropower using diversions such as a penstock or channel), marine and hydrokinetic facilities, solar facilities (including photovoltaic and concentrating solar power), geothermal facilities (including flash and binary plants), nuclear fission facilities, nuclear fusion facilities, and waste energy recovery property (WERP) that derives energy from any of the energy sources described in proposed § 1.45Y-5(c)(2)(i) through (vii) (including geothermal or solar waste heat recovery such as from a district geothermal heating system, and waste heat recovery such as from a nuclear reactor dedicated to heat production for an industrial facility).
WERP is property that generates electricity solely from heat from buildings or equipment if the primary purpose of such building or equipment is not the generation of electricity. Examples of buildings or equipment the primary purpose of which is not the generation of electricity include, but are not limited to, manufacturing plants, medical care facilities, facilities on school campuses, pipeline compressor stations, and associated equipment. The Treasury Department and the IRS request comment on whether this definition of WERP is appropriate. Comment is further requested on whether and why it would be appropriate to revise proposed § 1.45Y-5(c)(2)(viii) to include additional energy sources (such as energy from exothermic chemical reactions or pressure drop technologies) that do not rely on combustion or gasification but could include equipment related to the transport of fossil fuels (for example, natural gas).
For purposes of proposed § 1.45Y-5(c)(2)(ii), hydropower includes retrofits that add electricity production to non-powered dams, conduit hydropower, hydropower using new impoundments, and hydropower using diversions such as a penstock or channel. Greenhouse gas emissions are not created by the fundamental transformation of electricity needed to produce electricity in a hydropower facility. A hydropower facility converts the potential energy of flowing water into electricity. The potential energy results from changes in gravitational potential energy from the flowing water, which the hydropower facility captures with a turbine which spins a rotor within a generator to produce electricity. Hydropower facilities may release greenhouse gas emissions from the hydropower reservoir due to diffusion at the water surface or due to ebullition, and from degassing when water passes through a pump house or turbine. Such emissions from hydropower facilities would not be considered greenhouse gases emitted into the atmosphere by a Non-C&G Facility in the production of electricity under proposed § 1.45Y-5(b)(6)(C), because emissions of greenhouse gasses are not created by the fundamental transformation of potential energy in flowing water into electricity, but rather from processes that are not fundamental to the transformation of potential energy into electricity.
Similarly, greenhouse gas emissions are not created by the fundamental transformation of energy from high-pressure hot water into electricity in a flash geothermal facility, which is included in proposed § 1.45Y-5(c)(2)(v). A flash geothermal facility uses high-pressure hot water from deep inside the earth and converts it directly to steam that drives a turbine and generator. After the steam passes through the turbine, it is released into the atmosphere and any non-condensable gases including greenhouse gases dissolved in the steam are also released. Such emissions from flash geothermal facilities would not be considered greenhouse gases emitted into the atmosphere by a facility in the production of electricity under proposed § 1.45Y-5(c)(1)(i)(C), because the greenhouse gases are already present in the underground water and are not created by the fundamental transformation of the thermal energy in the water into electricity, but rather by processes that are not fundamental to the transformation of the thermal energy into electricity. This proposed treatment of flash geothermal facilities is supported by surveys indicating that underground carbon dioxide in certain geothermal reservoirs is emitted passively into the atmosphere even in the absence of geothermal electricity generation. The Treasury Department and the IRS request comment on whether the identification of flash geothermal facilities as Non-C&G Facilities with a GHG emissions rate that is not greater than zero in proposed § 1.45Y-5(c)(2)(v) is appropriate.
For purposes of proposed § 1.45Y-5(c)(2)(iv), solar includes concentrated solar power. Concentrated solar power facilities may have auxiliary burners that in some cases use combustion exclusively for the purposes of cold starts or freeze protection of thermal working fluids, but in other cases, may also be used to generate electricity in hybrid configurations. The Treasury Department and the IRS request comment on whether the existing definitions of C&G Facilities and Non-C&G Facilities is sufficient to distinguish between these two categories of facilities, or whether additional clarification is needed.

3. Greenhouse Gas Emissions Rates for C&G Facilities
Section 45Y(b)(2)(B) provides that in the case of electricity produced through combustion or gasification, the GHG emissions rate for such facility is equal to the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA) in the production of electricity.
Section 211(o)(1)(H) of the CAA provides that “lifecycle greenhouse gas emissions” means the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes) related to the full fuel lifecycle, including all stages of fuel and feedstock production and distribution, from feedstock generation or extraction through the distribution and delivery and use of the finished fuel to the ultimate consumer, if the mass values for all greenhouse gases are adjusted to account for their relative global warming potential.
The EPA promulgated its interpretation of section 211(o)(1)(H) of the CAA in a 2010 notice-and-comment rulemaking establishing the regulatory framework for the updated renewable fuel standard (RFS2) program. The EPA interpreted section 211(o)(1)(H) of the CAA in the context of the facts and policy framework of the RFS program and based on information available at that time; however, the EPA's analysis and implementation of the RFS2 rule offer relevant precedent for the Treasury Department's and the IRS's interpretation of section 45Y(b)(2)(B). In the RFS2 rulemaking, the EPA interpreted 211(o)(1)(H) of the CAA as requiring the agency to account for the real-world emissions consequences of increased production of biofuels. Thus, the EPA determined in the RFS2 context that the inclusion of direct emissions and significant indirect emissions such as significant emissions from land-use changes in section 211(o)(1)(H) of the CAA requires a consequential approach to considering the real-world emissions associated with biofuel production. A “consequential” approach considers the real-world greenhouse gas emissions associated with biofuel production, including secondary or indirect emissions resulting from market interactions induced by expanded biofuel production and use. Such an approach includes consideration of market interactions induced by expanded biofuel production and use that may result in secondary or indirect greenhouse gas emissions, domestically and globally.
Proposed § 1.45Y-5(d) would provide the rules applicable to determining a net rate of GHG emissions for C&G Facilities, including by the Secretary when publishing a table described in section 45Y(b)(2)(C)(i) or determining an emissions rate as provided in section 45Y(b)(2)(C)(ii). Proposed § 1.45Y-5(d)(1) would provide that GHG emissions rates for C&G Facilities must be determined by a lifecycle analysis (LCA) that complies with proposed § 1.45Y-5(d) and (e), and that such rate equals the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the CAA) in the production of electricity, expressed as grams of CO 2 e per kWh.
Proposed § 1.45Y-5(d)(2) would provide that an LCA used for determining the net rate of greenhouse gases emitted into the atmosphere by a facility must comply with the requirements provided in proposed § 1.45Y-5(d)(2)(i) through (vii). Proposed § 1.45Y-5(d)(2)(i) would provide that the starting boundary of the LCA for an LCA involving generation-derived feedstocks (such as biogenic feedstocks) is feedstock generation, and the starting boundary of the LCA for an LCA involving extraction-derived feedstocks (such as fossil fuel feedstocks) is feedstock extraction. Under proposed § 1.45Y-5(d)(2)(i), the starting boundaries would include the processes necessary to produce and collect or extract the raw materials used to produce electricity from combustion or gasification technologies, including those used as energy inputs to electricity production. This includes the emissions effects of relevant land management activities or changes related to or associated with feedstock production. The starting conditions are the material and energy flows, including associated direct and indirect greenhouse gas emissions, of the processes associated with the extraction or production of raw feedstock materials or fuel.
Proposed § 1.45Y-5(d)(2)(ii) would provide that the ending boundary of an LCA for electricity that is transmitted to the grid or electricity that is used on-site is the meter at the point of production of the C&G Facility. The distribution, transmission, and use of such electricity generated by a C&G Facility (and other types of energy sources it may displace while in use) are outside of the LCA boundary; therefore, such emissions would not be taken into account because they do not occur in the “production of electricity” as described in section 45Y(b)(2)(B). Given the particular context of section 45Y(b)(2)(B) (that is, a tax credit for the production of clean electricity), proposed § 1.45Y-5(d)(2)(ii) is consistent with section 45Y(b)(2)(B) of the Code (and the term “ultimate consumer” in section 211(o)(1)(H) of the CAA referenced therein) because it would treat the C&G Facility as the ultimate consumer of the fuel used to produce electricity.
Proposed § 1.45Y-5(d)(2)(iii) would provide that an LCA must be based on a future anticipated baseline, which projects future status quo in the absence of the availability of the sections 45Y and 48E credits (taking into account anticipated changes in technology, policies, practices, and environmental and other socioeconomic conditions).
Proposed § 1.45Y-5(d)(2)(iv) would provide that offsets and offsetting activities that are unrelated to the production of electricity by a C&G Facility, including the production and distribution of any input fuel, may not be taken into account in an LCA.
Proposed § 1.45Y-5(d)(2)(v) would interpret the reference to section 211(o)(1)(H) of the CAA as requiring that an LCA must take into account direct emissions, significant indirect emissions in the United States or other countries, emissions associated with market-mediated changes in related commodity markets, emissions associated with feedstock generation or extraction, emissions consequences of increased production of feedstocks, emissions at all stages of fuel and feedstock production and distribution, and emissions associated with distribution, delivery, and use of feedstocks to and by a C&G Facility. Proposed § 1.45Y-5(d)(2)(v) would interpret section 45Y(b)(2)(B) of the Code (and the term “ultimate consumer” in section 211(o)(1)(H) of the CAA referenced therein) as applying to the C&G Facility because it is the ultimate consumer of the fuel used to produce electricity.
Proposed § 1.45Y-5(d)(2)(v)(A) would provide that direct emissions include, but are not limited to: (1) emissions from feedstock generation, production, and extraction (including emissions from feedstock and fuel harvesting and extraction and direct land use change and management, including emissions from fertilizers, and changes in carbon stocks); (2) emissions from feedstock and fuel transport (including emissions from transporting the raw or processed feedstock to the fuel processing facility); (3) emissions from transporting and distributing fuels to the electricity production facility; (4) emissions from handling, processing, upgrading, and/or storing feedstocks, fuels and intermediate products (including emissions from on/offsite storage and preparation/pre-treatment for use (for example, torrefaction or pelletization) and emissions from process additives); and (5) emissions from combustion and gasification at the electricity generating facility (including emissions from the combustion and/or gasification process and emissions from gasification or combustion additives). Proposed § 1.45Y-5(d)(2)(v)(B) would provide examples of significant indirect emissions including, but not limited to, emissions from indirect land use and land use change and other induced emissions associated with the increased use of the feedstock for electricity production. Significant indirect emissions may include positive or negative emissions. For biogenic resources, significant indirect emissions may include emissions from growth and regrowth.
Proposed § 1.45Y-5(d)(2)(vi) would provide principles for excluded emissions by listing types of emissions that the LCA must not take into account.
Proposed § 1.45Y-5(d)(2)(vii) would provide that an LCA may consider alternative fates and may account for avoided emissions. Alternative fate means a set of informed assumptions (for example, production processes, material outcomes, market-mediated effects) used to estimate the emissions from the use of each feedstock were it not for the feedstock's new use due to the implementation of policy (that is, to produce electricity). Avoided emissions means the estimated emissions associated with the feedstock, including the feedstock's production and use, that would have occurred in the alternative fate (if such feedstock had not been diverted for electricity production) but are instead avoided with the feedstock's use for electricity production. It is important to note that, while, in some circumstances, emissions may be avoided if compared to the alternative fate, in others the new use of the material (for example, for electricity production) may involve additional emissions that were not emitted in the alternative fate estimation. Relatedly, in some circumstances, emissions may be avoided in one part of the supply chain only to occur elsewhere along the supply chain due to the new use.

4. Additional Issues Regarding Greenhouse Gas Emissions Rates for C&G Facilities
The determination of net GHG emissions rates for C&G Facilities raises a range of complex technical questions that are relevant to determining eligibility for the section 45Y and section 48E credits. The Treasury Department and the IRS request comment on the following topics: (1) the treatment of renewable natural gas (RNG) and fugitive sources of methane; (2) analytical LCA parameters, including spatial scales and time horizons; (3) whether and how to distinguish between co-products, byproducts, and waste products and how emissions should be allocated to each in LCAs; (4) how to attribute emissions to the heat produced by facilities using combined heat and power systems; (5) how to create and maintain LCA baselines; and (6) certain issues related to LCA modeling.

a. Treatment of Biogas, Renewable Natural Gas (RNG), or Fugitive Sources of Methane
The Treasury Department and the IRS intend to provide rules addressing facilities that produce electricity using biogas, renewable natural gas (RNG), or fugitive sources of methane (for example, from coal mine operations) for purposes of the section 45Y credit or the section 48E credit, collectively referred to as the “Clean Electricity Tax Credits.” In the context of this guidance, the term “RNG” refers to biogas that has been upgraded to be equivalent in nature to fossil natural gas. Fugitive methane refers to the release of methane through, for example, equipment leaks during the extraction, processing, transformation, and delivery of fossil fuels to the point of final use, such as coal mine methane. Such rules would apply to all biogas, RNG, or fugitive methane used for the purposes of the Clean Electricity Tax Credits and would provide requirements that must be met to account for any greenhouse gas emissions benefits from biogas, RNG, or fugitive methane in determining GHG emissions rates for purposes of the Clean Electricity Tax Credits. Such requirements would be designed to reflect the ways in which additional demand for biogas, RNG or fugitive methane can impact greenhouse gas emissions outcomes.
The Treasury Department and the IRS anticipate requiring that for purposes of the Clean Electricity Tax Credits, in order for biogas, biogas-based RNG, or fugitive methane to receive an emissions value consistent with such gases (and not standard natural gas), the biogas or RNG used to produce electricity or to produce a feedstock or fuel that is used to produce electricity must originate from the first productive use of the relevant methane. For any specific source of biogas, RNG, or fugitive methane, productive use is generally defined as any valuable application of the relevant methane (including to provide heat or cooling, generate electricity, or upgraded to RNG in the case of biogas or fugitive methane), and specifically excludes venting to the atmosphere or capture and flaring. The Treasury Department and the IRS further propose to define first productive use of the relevant methane as the time when a producer of that gas first begins using or selling it for productive use in the same taxable year as (or after) the electricity production facility was placed in service. The implication of this proposal is that biogas, for example, from any source that had been productively used in a taxable year prior to the taxable year in which the relevant electricity production facility was placed in service would not include GHG emissions benefits that might otherwise be attributable to biogas-based RNG, but would instead receive a value consistent with natural gas. This proposal would limit emissions associated with the diversion of biogas, RNG, or fugitive methane from other pre-existing productive uses.
For existing biogas sources that typically productively use or sell a portion of the biogas and flare or vent the remaining excess, the flared or vented portion may be eligible for first productive use as defined above if the flaring or venting volume can be adequately demonstrated and verified. In such circumstances, the flared or vented volume may be determined based on the previous taxable year's flared or vented volume as demonstrated via reported data to programs such as the Greenhouse Gas Reporting Program. Requirements would be established to reduce the risk that entities will deliberately generate additional biogas for purposes of the Clean Electricity Tax Credits, above historic and expected future levels or an equivalent metric, for example by generating biogas through the intentional generation of waste, and to ensure that other factors affecting the emissions rate of electricity produced with biogas, biogas-based RNG or RNG procurement via RNG certificates are taken into account. The Treasury Department and the IRS request comment on these and other potential conditions. Any fugitive sources of methane would be treated in the same fashion as biogas or RNG with respect to these requirements, albeit with different considerations in development of the counterfactual.
The Treasury Department and the IRS also recognize that different sources of methane may have significantly different characteristics (for example, counterfactuals, alternative fates, baseline characteristics, upstream leakage rates, etc.) and therefore significantly different lifecycle emissions. For this reason, the Treasury Department and the IRS are considering requiring an LCA to be conducted for electricity produced by each category of feedstock, rather than across all feedstocks used for the production of electricity by a facility. The Treasury Department and the IRS request comment on whether LCAs should be conducted on a feedstock-by-feedstock basis or averaged across feedstocks, and how to determine the appropriate categories of feedstock.
For purposes of the Clean Electricity Tax Credits, producers using biogas, RNG, or fugitive methane would be required to acquire and retire corresponding energy attribute certificates (EACs) through a book-and-claim system that can verify in an electronic tracking system that all applicable requirements are met.
Electricity producers would also be required to have a pipeline interconnection and measurement capability using a revenue grade meter. These rules would apply to the use of EACs with both direct and non-direct claims of biogas, RNG, or fugitive methane use. Direct use would involve a direct exclusive pipeline connection to a facility that generates biogas or RNG or from which fugitive methane is being sourced, while non-direct use would involve production using biogas, RNG, or fugitive methane sourced from a commercial or common-carrier natural gas or other specified pipeline. In all cases, EACs would need to document the biogas, RNG, or fugitive methane procurement use claims and that the energy attributes of the RNG or fugitive methane being used are not sold to other parties or used for compliance with other policies or programs.
The Treasury Department and the IRS request comments on these and other approaches related to biogas, RNG and fugitive methane. Regarding these sources of methane, the Treasury Department and the IRS request comment on the appropriate LCA considerations associated with them, such as counterfactual scenarios (that is, appropriate baselines), to account for direct and significant indirect emissions, and also the manner in which to assess methane from these sources if the current practice is flaring. In particular, the Treasury Department and the IRS request comments on the following questions:
(1) What data sources and peer reviewed studies provide information on fugitive methane, biogas, and RNG production systems (including biogas production and reforming systems), markets, monitoring, reporting, and verification processes, and greenhouse gas emissions associated with these production systems and markets?
(2) What conditions for the use of biogas, RNG, and fugitive methane would ensure that emissions accounting for purposes of the Clean Electricity Tax Credits reflect and reduce the risk of indirect emissions effects from electricity production using biogas and RNG? How can taxpayers verify that they have met these requirements?
(3) How broadly available and reliable are existing electronic tracking systems and verification protocols and practices for biogas, RNG, or fugitive methane certificates in book and claim systems? What developments may be required, if any, before such systems are appropriate for use with biogas or RNG certificates used to claim the Clean Electricity Tax Credits?
(4) How should biogas, RNG or fugitive methane resulting from the first productive use of methane be defined, documented, and verified? What industry best practices or alternative methods would enable such verification to be reflected in a biogas, RNG or methane certificate or other documentation? What additional information should be included in such EACs to help certify compliance?
(5) What are the emissions associated with different methods of transporting biogas, RNG or fugitive methane to electricity producers (for example, vehicular transport, pipeline)?
(6) How can the final regulations reflect and mitigate indirect emissions effects from the diversion of biogas, RNG, or fugitive methane from potential future productive uses? What other new uses of biogas, RNG, or fugitive methane could be affected in the future if more gas from new capture and productive use of methane from these sources is used in the electricity production process?
(7) How can the potential for the generation of additional emissions from the production of additional waste, waste diversion from lower-emitting disposal methods, and changes in waste management practices be limited through emissions accounting or rules for biogas and RNG use established for purposes of the Clean Electricity Tax Credits?
(8) To limit the additional production of waste, should the final regulations limit eligibility to methane sources that existed as of a certain date or waste or waste streams that were produced before a certain date, such as the date that the IRA was enacted? If so, how can that be documented or verified? How should any changes in volumes of waste and waste capacity at existing methane sources be documented and treated for purposes of the Clean Electricity Tax Credits? How should additional capture of existing waste or waste streams be documented and treated?
(9) Are geographic or temporal deliverability requirements needed to reflect and reduce the risk of indirect emissions effects from biogas, RNG, or fugitive methane use in the electricity production process? If so, what should these requirements be and are electronic tracking systems able to capture these details?
(10) How should variation in methane leakage across the existing natural gas pipeline system be taken into account in estimating the emissions from the transportation of RNG or fugitive methane or establishing rules for RNG or fugitive methane use? How should methane leakage rates be estimated based on factors such as the location where RNG or fugitive methane is injected and withdrawn, the distance between the locations where RNG or fugitive methane is injected and withdrawn, season of year, age of pipelines, or other factors? Are data or analysis available to support this?
(11) What counterfactual assumptions and data should be used to assess the net greenhouse gas emissions of facilities that rely on biogas, RNG, or fugitive methane (for example, venting, flaring, or other practice)? Is venting an appropriate counterfactual assumption in some cases? If not, what other factors should be considered?
(12) What criteria should be used in assessing biogas, fugitive methane, or RNG-based provisional emissions rates? What practices should be put in place to reduce the risk of unintended consequences (for example, gaming)? Should conservative default parameters and counterfactuals be used unless proven otherwise by a third party?
(13) What are the effects on greenhouse gas emissions of capturing methane emissions for use as biogas or RNG, such as on livestock farms?
The Treasury Department and the IRS recognize that sufficient tracking and verification mechanisms for biogas, RNG, or fugitive methane are not yet available, and existing systems have limited capabilities for tracking and verifying RNG pathways, especially in the part of the production process before the methane has been reformed to RNG. Existing tracking and verification systems do not clearly distinguish between inputs, verify or require verification of underlying practices claimed by biogas or RNG production sources, require proof of generator interconnection or revenue-quality metering, provide validation of generation methodology, include exclusively United States based-generation, verify generator registration, and track the vintage of generator interconnection. The Treasury Department and the IRS are considering providing rules to address whether or how book-and-claim systems with sufficient tracking and verification mechanisms may be used to attribute the environmental benefits of biogas, RNG, or fugitive methane in the final regulations.
The treatment of biogas, RNG, and fugitive methane presents a range of complex issues that the Treasury Department and the IRS will consider in the development of the final regulations.

b. Analytical LCA Parameters, Including Spatial Scales and Time Horizons
An LCA may require decisions on a wide range of analytical parameters that may have a meaningful impact on the accuracy and utility of its results. The Treasury Department and the IRS request comment on the analytical LCA parameters that are most relevant to particular types of categories of facilities that may be eligible for the Clean Electricity Tax Credits.
The Treasury Department and the IRS specifically request comment regarding spatial and temporal scales, including the factors that should be considered in setting the spatial and temporal scales for LCAs conducted for the Clean Electricity Tax Credits. Spatial scale involves defining the area over which emissions impacts will be evaluated. Temporal scale involves defining the time period over which emissions impacts will be evaluated. The decision of setting the spatial scale should be considered in conjunction with decisions on temporal scale, as the two can interact in ways that affect greenhouse gas assessment outcomes.
In conducting a greenhouse gas assessment for biomass feedstocks, for example, carbon stocks or flows that have high variability at fine spatial or temporal scales may have much less variability if averaged over larger areas or longer temporal scales. Averaging over long temporal scales may reduce the variability observed at small spatial scales, and averaging over large areas may reduce the variability observed over small temporal scales. However, it is not safe to assume that integrating over large areas and long timeframes is always preferable. Large spatial scales and long temporal scales are not necessarily the most accurate way to conduct specific policy or program assessments because the combination of the two may obscure important information (for example, biophysical differences in species or landscapes, or shorter time frames or subregional analysis needed for policy analysis) or may mask important smaller-scale impacts. It is important to note that utilizing a large spatial scale and a short temporal scale could yield the same result as a small spatial scale combined with a longer temporal scale.
The Treasury Department and the IRS acknowledge that it may be appropriate to utilize different spatial and temporals scales for different feedstocks given their heterogeneity. The Treasury Department and the IRS request comment on the following questions regarding spatial and temporal scale:
(1) What factors should be considered in establishing the timeframe for the LCA analysis? What timeframe would provide confidence that significant emissions have been accounted for?
(2) Should the LCA distinguish between an “emissions horizon” (the timeframe over which emissions effects from the feedstock use persist into the future) and an “assessment horizon” (the timeframe over which the emissions effects are included in the analysis), and how would that be reflected in the choice of temporal scale? What assessment horizon will provide reasonable confidence that significant LCA emissions have been incorporated? Should the modeled future anticipated baseline include estimated emissions from electricity production to reflect the effects of the anticipated phase out of the Clean Electricity Tax Credits?
(3) If the assessment horizon is shorter than the emissions horizon, should an estimate of the emissions beyond the assessment horizon be included in the LCA?
(4) What considerations should be reflected in the choice(s) of spatial scale? For example, the increased use of some fuels/feedstocks may have global effects (for example, changes in commodity production and ensuing land use and greenhouse gas changes), though this may not be the case for all feedstocks or fuels. What factors should be considered to assess whether a global scale is necessary for certain feedstocks to ensure that significant emissions are captured? Should all feedstock/fuels assessments be conducted with the same spatial scale to determine the extent to which increased use has estimated global ramifications?
(5) The choice of spatial scale can be greatly influenced by the availability and accuracy of data and the precision with which one can measure and model feedstock production as well as market dynamics. What sources of data would be most important to consider for modeling? What strengths or weaknesses do these sources have?

c. Distinguish Between Co-Products, Byproducts, and Waste Products and How Emissions Should Be Allocated to Each in LCAs
The categorization and assessment of products as co-products, byproducts, or waste products in an LCA may affect the LCA's results. Products, co-products, byproducts, and wastes may all be produced in the full fuel cycle or used as inputs to the same. A co-product is a product produced together with another product, both of which are economic drivers of the process. A byproduct is a product that is produced together with another product, and which has a productive use but is not the primary economic driver of the process from which it is produced. It is not solely or separately produced. A waste product is a substance or object that the holder intends or is required to dispose of. See ISO:14040, “Environmental management—Life cycle assessment—Principles and framework. For biogenic sources, scientific literature often classifies byproducts, wastes, and residues together in one category.
The categorization of products as co-products, byproducts, and waste products may be relevant to an LCA's assessment of the greenhouse gas emissions related to the production of inputs to electricity generation or in the generation of electricity itself if the LCA modeling approach or approaches used for purposes of the Clean Electricity Tax Credits have the ability to distinguish between such categories. For example, in certain circumstances, the use of a waste product as a feedstock or fuel for electricity production may generate more, less, or the same greenhouse gas emissions than relevant disposal practices for that waste material. The emissions released in the production process during which a waste product is created could be fully allocated to the main product, co-products, and byproducts of that process meaning that the emissions associated with the production of the waste could be considered zero in the LCA assessment pending further analysis, potentially reducing the overall LCA GHG emissions rates for the electricity production. Alternatively, if the waste product were considered to have a productive use and therefore instead categorized as a co-product it would be considered as a driver of the production process and could have a positive emissions value. A material may initially have no economic value or useful purpose, but if that material later gains an economic value, its categorization may shift to a byproduct or co-product.
The Treasury Department and the IRS intend to clarify the principles for categorizing products as co-products, byproducts, or waste input materials and products and assessing the emissions impacts for such products in an LCA for C&G Facilities in the final regulations for the Clean Electricity Tax Credits if such categorization is relevant to the LCA model or models used. Under such principles, if byproducts are produced concurrently with electricity production, then a portion of the process emissions may be allocated to those byproducts. If applying an analytical approach that considers the consequences of the material being used for electricity production and byproducts are produced concurrent with electricity production, the LCA may consider the market impacts associated with the byproducts. In addition, if wastes are produced concurrently with electricity production, then no process emissions may be allocated to those wastes; all emissions must be associated with the electricity produced. Whether alternative productive uses of a byproduct-derived feedstock exist would be determined by expert analysis of the likely alternative uses of the byproduct, taking into account technological and economic capabilities and common practice. The alternative fate of waste-derived feedstocks would be determined by expert analysis, literature review, and historical practice.
To inform the development of these categorization principles for the final regulations, the Treasury Department and the IRS request comment on the following:
(1) What principles should be used to distinguish between co-products, byproducts, and waste products for the purposes of the Clean Electricity Tax Credits? Are there common scientific or industry definitions that can be relied upon to distinguish between co-products, byproducts, and waste products?
(2) What principles should be used to determine whether a product has sufficient value to be considered a co-product or byproduct?
(3) The Clean Electricity Tax Credits may provide additional economic incentive for the consumption of a product categorized as waste prior to the availability of the incentive provided by the Clean Electricity Tax Credits. How should this additional economic incentive be considered to determine if a product is a waste product, byproduct, or co-product? Should this categorization be reevaluated and, if so, how often?
(4) To limit the additional production of waste, should the final regulations limit eligible waste sources that existed as of a certain date, or waste or waste streams that were produced before a certain date, such as the date that the IRA was enacted? If so, how could that be documented or verified? How should any changes in volumes of waste and waste capacity at existing sources be documented and treated for purposes of the Clean Electricity Tax Credits? How should additional capture of existing waste or waste streams be documented and treated?
(5) More generally, how could the potential for the intentional generation of waste or co-products for the purposes of lowering the allocated process emissions to electricity be addressed?
(6) Would the classification of feedstocks as products, co-products, byproducts, or waste change depending on the technology? For example, would products, co-products, byproducts, and waste be described and accounted for differently if derived from biogenic sources, such as biogenic biomass?

d. Attributing Emissions to the Heat Produced by Facilities Using CHP Property
Section 45Y(g)(2)(A) provides that the kWh of electricity produced by a taxpayer at a qualified facility includes any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy will be included for purposes of determining the GHG emissions rate for such facility. See Explanation of Provisions section I.A. for the definition of CHP property. The inclusion of thermal energy production-related emissions in an LCA for a CHP facility introduces additional considerations, such as how to set an appropriate baseline for useful energy production-related emissions and what rules should govern the attribution of emissions for thermal energy production. The Treasury Department and the IRS intend to clarify the principles for assessing the emissions related to the generation of useful thermal energy by a CHP facility in an LCA in the final regulations for the Clean Electricity Tax Credits. Accordingly, the Treasury Department and the IRS request comment on the following:
(1) To determine the amount of greenhouse gases emitted by a CHP facility, the LCA must include the greenhouse gas emissions emitted by that facility in the production of useful thermal energy. For purposes of the LCA of a CHP facility, what principles should govern how emissions from the production of useful thermal energy are calculated?
(2) What principles should be used to determine the baseline for useful thermal energy production by a CHP facility? For example, should the baseline for the heat production for a CHP facility be an alternative form of thermal energy production such as natural gas boilers, such that emissions from the production of thermal energy from the boilers would be subtracted from the facility's emissions? Alternatively, is it more appropriate if the baseline for a CHP facility is no thermal energy production by the facility?
(3) There may be scenarios in which a facility generates electricity that is used (a) by the electricity generation facility in the production of electricity or (b) in the production of fuel ultimately consumed by that facility to generate electricity. For example, a wastewater treatment plant's post-processing materials are digested to produce biogas; this biogas is then used in a CHP facility that produces electricity; this electricity is consumed by the wastewater treatment facility. In such scenarios, what principles should be used to determine how emissions from the consumption of electricity in the production of electricity or in the production of the fuel consumed by the facility are calculated? Similarly, there may be scenarios in which a facility self-consumes thermal energy that it produces, for example, if a facility generates steam as a byproduct that is used (a) by the facility to turn a turbine that generates electricity or (b) to clean or compress fuel ultimately consumed by that facility to generate electricity. What principles should be used be used to determine emissions from the self-consumption of thermal energy by the CHP facility?

e. Certain Issues Related to LCA Baselines and Modeling
The Treasury Department and the IRS intend to provide additional rules and principles addressing what factors must be considered to assess the emissions associated with feedstocks used by C&G Facilities to produce electricity for purposes of the Clean Electricity Tax Credits.
Such rules would apply to all feedstocks used for the purposes of the Clean Electricity Tax Credits and would provide conditions that must be met in determining GHG emissions rates for purposes of the Clean Electricity Tax Credits. The CAA explicitly defines the term “lifecycle greenhouse gas emissions” to include “the aggregate quantity of greenhouse gas emissions (including direct emissions and significant indirect emissions such as significant emissions from land use changes).” Given the highly interconnected economic, energy, and agricultural and other lands-based systems involved in electricity production, the Treasury Department and the IRS recognize that electricity production may have effects, including emissions effects, beyond the direct supply chain. The Treasury Department and the IRS think that the provision “including direct emissions and significant indirect emissions” requires any LCA for the Clean Electricity Tax Credits to adopt an approach that considers the consequential, or market-mediated, impacts of increased demand for the input feedstocks or fuels used in electricity production.
The EPA interpreted CAA 211(o)(1)(H) as requiring the agency in the RFS context to account for the real-world emissions consequences of increased production of biofuels. Thus, the EPA determined that CAA section 211(o)(1)(H)'s inclusion of “direct emissions and significant indirect emissions such as significant emissions from land-use changes” requires a “consequential” approach to considering the real-world emissions associated with biofuel production. Such an approach includes consideration of market interactions induced by expanded biofuel production and use that may result in secondary or indirect greenhouse gas emissions.
The Treasury Department and the IRS propose to use a future anticipated baseline approach for analyzing the greenhouse gas emissions associated with the production of electricity by C&G Facilities and feedstocks used by such facilities. This approach would require generating a baseline projection of the future, which reflects estimated future conditions under a business-as-usual (BAU) trajectory that incorporates key drivers and trends informed by historical data and other considerations. This baseline would then serve as the “reference” against which another scenario in which specific conditions or changes, such as implementation of the policy embodied by the Clean Electricity Tax Credits, can be projected. This construct would allow for the evaluation of the projected estimated change or difference of emissions outcomes between the two scenarios. These scenarios would include (1) the baseline scenario (that is, without the Clean Electricity Tax Credits) and (2) a policy scenario (that is, with the Clean Electricity Tax Credits).
These scenarios would require, to the extent possible, data on: (1) feedstock or fuel production systems (including fuel/feedstock generation or extraction, etc.); (2) associated greenhouse gas emissions and, if applicable, carbon pool fluxes; (3) the feedstock or fuel's sector details; (4) feedstock or fuel demand and prices; (5) energy market projections, including electricity demand and supply and prices, if applicable; (6) future macroeconomic factors (for example, EIA Annual Energy Outlook-derived population growth, gross domestic product projections, demand functions tied to population or income); (7) technological progress assumptions, especially if applicable to stationary sources for which efficiency improvements are possible and anticipated; and (8) other parameters (for example, representation of current and anticipated, energy, environmental, or other policies including expected outcomes from other parts of the IRA or other policies, if relevant, that can inform or constrain BAU trajectories).
For example, the list that follows identifies proposed key modeling approach elements and considerations for simulation of a future anticipated baseline and policy scenarios specific to biomass-based feedstocks: (1) model function types and model dynamics (for example, economic optimization, intertemporal and/or recursive dynamic); (2) anticipated future conditions (for example, macroeconomic, biophysical, chemical); (3) greenhouse gas emissions representation, by including the different greenhouse gases and the relevant greenhouse gas emissions and sequestration sources (for example, how greenhouse gases and their effects on the environment are incorporated and represented, such as what emissions sources and factors are reflected in the model or models); (4) forest sector representation (for example, how are forestry and forest industries reflected in the model and how are they tied to the rest of the economy); (5) agricultural sector representation; (6) land use competition; (7) energy sector representation; and (8) the appropriate spatial scale (for example, international representation) for all of these considerations.
There may be different ways to model or estimate greenhouse gas emissions associated with the production of electricity by a C&G Facility. Consistent with the parameters in proposed § 1.45Y-5(d), the Treasury Department and the IRS seek comment on general principles and factors to be considered to estimate net greenhouse gas emissions associated with electricity production by C&G Facilities, including the selection or creation of an assessment or modeling approach for the purposes of Clean Electricity Tax Credits. Comment is specifically requested on the following topics:
(1) What factors should be considered in deciding how to create and maintain LCA baseline scenarios?
(2) What factors should be considered in deciding how to create and maintain LCA scenarios other than the baseline?
(3) What existing model or suite of models are capable of completing an LCA consistent with the section 45Y(b)(2)(B) and proposed § 1.45Y-5(d) and (e)? Please explain whether any such model or models are open source or proprietary including what type of documentation is publicly available detailing the model design, data, inputs, and assumptions, as well as whether such models are able to link with external data sources or models. Please also explain which entities own, manage, or update such models. Furthermore, because some LCA models may be used for only a certain aspect of the total required analysis (for example, a model may solely assess the agriculture sector) or only include certain feedstocks or technologies, please specify what technologies, feedstocks, or type of impacts are included or are not included in the recommended model or models. Please also explain how widely and for what purposes the recommended model or models are used, including whether the model has previously been used by a Federal or State agency or national laboratory. Please explain whether and how the model has been peer-reviewed. Finally, please explain whether the recommended model or models would need to be updated or combined with another model in order to be fully consistent with section 45Y(b)(2)(B) and proposed § 1.45Y-5(d) and (e).
(4) What data sources and peer-reviewed studies provide information on different feedstock production systems that would be most important to consider for gathering data for LCA modeling? These sources and studies should provide information on the feedstock production process (ideally, beginning with the extraction or generation of the feedstock and ending at the electrical meter) and on markets related to the feedstock production process. Appropriate sources and studies should also describe the greenhouse gas emissions associated with these production systems and markets, as well as any monitoring, reporting, and verification processes used in the creation of the source or study. If recommending data sources or peer-reviewed studies, please specify whether they are open source or proprietary; their temporal and spatial scale (for example, regional versus national studies); whether they are regularly updated and with what frequency; whether they are collected by a Federal or State agency or statistical agency or national laboratory; and whether they employ direct measurements or modeling or use remote sensing data. Finally, please assess overall the strengths and weaknesses of the recommended sources or studies with respect to their usefulness as modeling data inputs.
(5) The availability of the Clean Electricity Tax Credits may create an incentive to use a given material differently than in the past (for example, a material that was not typically used for electricity production is initially used or used more broadly after the credits are available). How could an LCA or LCAs establish and account for whether the incentives created by the Clean Electricity Tax Credits have resulted in a reduction, removal of, or increase in greenhouse gas emissions beyond the emissions that would have occurred in the absence of the Clean Electricity Tax Credits? For example, consider a scenario in which, in the absence of the incentive provided by the Clean Electricity Tax Credits, an amount of woody biomass would be either left standing or laying in a forest, pile burned, or used to create timber products, such as charcoal or mulch, each an “alternative fate.” In the presence of the Clean Electricity Tax Credits, that amount of woody biomass is now being used to generate electricity. How should the possible fates of the feedstock in the absence of the Clean Electricity Tax Credits (for example, left in standing or laying in a forest, pile burned, or used to create a timber product, such as charcoal or mulch) be represented in an LCA, including the different potential direct and indirect greenhouse gas effects of those fates?
(6) How could an LCA account for alternative fates stemming from events such as potential future greenhouse gas emissions from wildfires that could be associated with woody biomass feedstocks that may be left on the landscape in the absence of the incentive created by the Clean Electricity Tax Credits? How would these considerations be affected if, in the absence of the incentive provided by the Clean Electricity Tax Credits, a feedstock is used productively but not in electricity production?
(7) Which feedstock classification categories should be established for purposes of LCA analyses, if any? To what extent should the LCA or LCAs differentiate between the sources and subtypes of a given feedstock for electricity production or not (for example, all forest-derived materials as one category, or subcategories such as logging residues)? If applied, should subcategories of feedstocks be aggregated in modeling, or should they be should they be separately modeled? How could the LCA or LCAs account for the emissions attributed to feedstocks that include a mixture of sub-types of feedstocks, such as products, coproducts, byproducts and residues? Should LCAs be standardized or provide average estimates for feedstocks and how could such standardization best be done?
(8) What factors should be considered to determine the appropriate scale(s) of feedstock demand changes or other shocks to evaluate the extent to which the production, processing, and use of the feedstocks used for electricity production results in net greenhouse gas emissions?
(9) Should the shock reflect a small incremental increase in use of the feedstock to reflect the marginal impact, or a large increase to reflect the average effect of all potential users?
(10) What could the general increment of the shock be? Should it be specified as an absolute or relative increase?
(11) What factors should be considered to determine whether shocks for different feedstocks should be implemented in isolation (separate model runs), in aggregate (for example, as an across-the-board increase in biomass usage endogenously allocated by the model across feedstocks), or something in between (for example, separately model agriculture-derived and forest-derived feedstocks, but endogenously allocate within each category)?
(12) How should variation and uncertainty be considered in evaluating model estimates of the GHG emissions associated with an increase in the use of a feedstock for electricity generation? Feedstock modeling will likely involve uncertainties and variabilities associated with data, parameterization, scenario, and model choices. For example, if the modeling reports a range of GHG emissions changes that are greater and less than zero, how should such a range of outcomes be evaluated under section 45Y(b)(2)(B)?

f. Book and Claim Accounting
The Treasury Department and the IRS are considering whether to allow and provide rules governing the use of book and claim accounting in the final regulations for the Clean Electricity Tax Credits. Under these proposed regulations, the methods used, and emissions associated with the production of fuels and feedstocks used in the generation of electricity are essential to determining whether a facility is a C&G Facility and assessing its GHG emissions rate. See Explanation of Provisions sections I.D.1 and I.D.3 for discussion of tracking fuel or feedstock production to determine whether a facility is a C&G Facility or Non-C&G Facility. EACs are a form of book-and-claim accounting that conveys information about the attributes associated with a unit of energy, including the fuel or feedstock used to create the energy. EACs may also include information about the location of the facility that generated the unit of energy, when that facility began operations, and when the unit of energy was produced. Because EACs can serve as a system for tracking the attributes associated with the production of a unit of energy and as a means to avoid double-counting, the Treasury Department and the IRS are considering whether to provide rules that address the use of book-and-claim systems as a means of verifying the emissions profile of a facility's use of fuel and electricity production. The Treasury Department and the IRS request comment on whether and how it may be appropriate for such systems to be used in determining GHG emissions rates in the final regulations for the Clean Electricity Tax Credits. In particular, comment is requested regarding what types of energy inputs, including fuels and feedstocks, have or may develop sufficiently robust book-and-claim systems that may be suitable for use in substantiating and verifying claims of use of such energy inputs for purposes of the Clean Electricity Tax Credits. The Treasury Department and the IRS are considering providing rules that may permit the use of book and claim accounting in the final regulations if there are sufficient assurances that the energy attributes claimed under such system are verifiable and not susceptible to double counting.

5. Carbon Capture and Sequestration
Proposed § 1.45Y-5(e) would provide that, for purposes of proposed § 1.45Y-5(c) and (d), the GHG emissions rate for a Non-C&G Facility or C&G Facility must exclude any qualified carbon dioxide in such facility's production of electricity that is captured by the taxpayer, and, pursuant to any regulations established under section 45Q(f)(2), disposed of by the taxpayer in secure geological storage, or utilized by the taxpayer in a manner described in section 45Q(f)(5) and any regulations established under such section. The Treasury Department and the IRS request comment on the following:
(1) What requirements should apply to substantiate and verify that carbon dioxide that is captured by the taxpayer is (a) disposed of by the taxpayer in secure geological storage pursuant to any regulations established under section 45Q(f)(2), disposed of by the taxpayer in secure geological storage, or (b) utilized by the taxpayer in a manner described in section 45Q(f)(5)? For example, would it be appropriate to limit the carbon dioxide that may be considered to be qualified carbon dioxide under section 45Y(e)(3), and thus excluded under section 45Y(b)(2)(D), to carbon dioxide that has been reported to the U.S. Greenhouse Gas Reporting Program (GHGRP)? If so, which GHGRP subpart or subparts should be used?
(2) In the event that carbon dioxide that was captured and sequestered as required by section 45Y(e)(3) subsequently escapes into the atmosphere after such carbon dioxide was taken into account by a taxpayer that claimed a Clean Electricity Tax Credit, what enforcement mechanisms or regulatory regimes should be used to identify when such emissions leakages have occurred? How should such emissions leakages be taken into account in determining compliance with the GHG emissions rate requirements under sections 45Y and 48E? Are the existing recapture provisions under section 45Q sufficient for this purpose?
(3) Should carbon capture and sequestration that occurs in the production of fuel that is used by a facility to produce electricity be taken into account under proposed § 1.45Y-5(e) and section 45Y(e)(3)? If so, how should such use of carbon capture and sequestration (for example, emissions from CO 2 capture, purification and compression, transportation, and CO 2 site injection) be assessed in an LCA? Should emissions that occur from carbon capture and sequestration be taken into account in determining the net rate of greenhouse gases emitted into the atmosphere by a C&G Facility in the production of electricity? What verification and substantiation requirements would be appropriate to establish that carbon capture and sequestration that met the requirements of proposed § 1.45Y-5(e) and section 45Y(e)(3) were met in the production of a fuel or feedstock? Are the existing recapture provisions under section 45Q sufficient for this purpose?

6. Annual Table
Proposed § 1.45Y-5(f)(1) would provide that, as required by section 45Y(b)(2)(C)(i), the Secretary will annually publish a table that sets forth the GHG emissions rates for types or categories of facilities (Annual Table), which a taxpayer must use for purposes of section 45Y. Proposed § 1.45Y-5(f)(1) would further provide that, except as provided in proposed § 1.45Y-5(h), a taxpayer that owns a facility that is described in the Annual Table on the first day of the taxpayer's taxable year in which the section 45Y or section 48E credit is determined with respect to such facility must use the Annual Table as of such date to determine an emissions rate for such facility for such taxable year. Types or categories of facilities must be added or removed from the Annual Table consistent with, for Non-C&G Facilities, a technical assessment of the fundamental energy transformation into electricity as provided in proposed § 1.45Y-5(c)(1)(ii), and, for C&G Facilities, an LCA that complies with proposed § 1.45Y-5(d) and (e). Proposed § 1.45Y-5(f)(2) would also provide that in connection with the publication of the Annual Table, the Secretary must publish an accompanying expert analysis that addresses any types or categories of facilities added or removed from the Annual Table since its last publication. Such analysis must be prepared by one or more of the National Laboratories, in consultation with other agency experts, such as experts from DOE, the Treasury Department, the United States Department of Agriculture (USDA), and the EPA, as appropriate, and must address whether the addition or removal of types or categories of facilities from the Annual Table complies with section 45Y(b)(2)(A) and 45Y(b)(2)(B) (which refers to the definition of lifecycle greenhouse gas emissions in section 211(o)(1)(H) of the CAA) of the Code and proposed § 1.45Y-5. The Treasury Department and the IRS view the requirement to publish an expert analysis prepared by the National Laboratories of changes to the Annual Table as essential to ensuring public accountability and adherence to sound scientific principles. This requirement would also ensure that the Secretary has a robust record to inform any changes to the Annual Table.
The Treasury Department and the IRS intend to include in the Annual Table the types or categories of facilities that are described in the final regulations as having a GHG emissions rate that is not greater than zero. The Treasury Department and the IRS intend to publish the first Annual Table after the publication of the final regulations. Until the first publication of the Annual Table, taxpayers may treat the types or categories of facilities that are listed in proposed § 1.45Y-5(c)(2)(i) through (viii) as being described in an Annual Table as having a GHG emissions rate that is not greater than zero. Further, any types or categories of facilities that are added or removed from this list in the first publication of the Annual Table must be accompanied by the publication of an expert analysis of such change as provided in proposed § 1.45Y-5(f)(2).

7. Provisional Emissions Rates
Proposed § 1.45Y-5(g) would provide the rules applicable to provisional emissions rates. Proposed § 1.45Y-5(g)(1) would provide that, in the case of any facility that is of a type or category for which an emissions rate has not been established by the Secretary under proposed § 1.45Y-5(g), a taxpayer that owns such facility may file a petition with the Secretary for the determination of the emissions rate with respect to such facility (Provisional Emissions Rate or PER).
Proposed § 1.45Y-5(g)(2) would provide that an emissions rate has not been established by the Secretary for a facility for purposes of section 45Y(b)(2)(C)(ii) if such facility is not described in the Annual Table. Proposed § 1.45Y-5(g)(2) would further provide that if a taxpayer's request for an emissions value pursuant to proposed § 1.45Y-5(g)(5) is pending at the time such facility is or becomes described in the Annual Table, the taxpayer's request for an emissions value will be automatically denied.
Proposed § 1.45Y-5(g)(3) would provide the process for filing a PER petition. Proposed § 1.45Y-5(g)(3) would provide that to file a PER petition with the Secretary, a taxpayer must submit a PER petition by attaching it to the taxpayer's Federal income tax return or Federal return, as appropriate, for the first taxable year in which the taxpayer claims the section 45Y credit with respect to the facility to which the PER petition applies. Proposed § 1.45Y-5(g)(3) would further provide that a PER petition must contain an emissions value and, if applicable, the associated DOE letter. An emissions value may be obtained from DOE or by using the LCA model designated in proposed § 1.45Y-5(g)(6). An emission value obtained from DOE will be based on an analytical assessment of the emissions rate associated with the facility, performed by one or more National Laboratories, in consultation with other agency experts as appropriate, consistent with proposed § 1.45Y-5. A taxpayer would be required to retain in its books and records the request to DOE for an emissions value, including any information provided by the taxpayer to DOE pursuant to the emissions value request process provided in proposed § 1.45Y-5(g)(5). Alternatively, an emissions value can be determined by the taxpayer for a facility using the most recent version of an LCA model or models, as of the time the PER petition is filed, that have been designated by the Secretary for such use under proposed § 1.45Y-5(g)(6). If an emissions value is determined using the designated model, a taxpayer is required to provide to the IRS information to support its determination of the emissions value in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. A taxpayer may not request an emissions value from DOE for a facility for which an emissions value can be determined by using the most recent version of an LCA model or models that have been designated by the Secretary for such use under proposed § 1.45Y-5(g)(6).
Proposed § 1.45Y-5(g)(4) would provide that, upon the IRS's acceptance of the taxpayer's Federal income tax return or Federal return, as appropriate, containing a PER petition, the emissions value of the facility specified on such petition will be deemed accepted. Proposed § 1.45Y-5(g)(4) would further provide that a taxpayer would be able to rely upon an emissions value provided by DOE for purposes of calculating and claiming a section 45Y credit, provided that any information, representations, or other data provided to DOE in support of the request for an emissions value are accurate. If applicable, a taxpayer may rely upon an emissions value determined for a facility using the most recent version of the LCA model or models that, as of the time the PER petition is filed, have been designated by the Secretary for such use under proposed § 1.45Y-5(g)(6), provided that any information, representations, or other data used to obtain such emissions value are accurate. The IRS's deemed acceptance of an emissions value is the Secretary's determination of the PER. Finally, proposed § 1.45Y-5(g)(4) would provide that the taxpayer must still comply with all applicable requirements for the section 45Y credit and any information, representations, or other data supporting an emissions value are subject to later examination by the IRS.
Proposed § 1.45Y-5(g)(5) would provide the rules applicable to the emissions value request process. Proposed § 1.45Y-5(g)(5) would provide that an applicant that submits a request for an emissions value must follow the procedures specified by DOE to request and obtain such emissions value, and that emissions values will be determined consistent with the rules provided in proposed § 1.45Y-5. Proposed § 1.45Y-5(g)(5) would further provide that an applicant may request an emissions value from DOE only after a front-end engineering and design (FEED) study or similar indication of project maturity, as determined by DOE, such as the completion of a project specification and cost estimation sufficient to inform a final investment decision for the facility. Proposed § 1.45Y-5(g)(5) would provide that DOE may decline to review applications that are non-responsive and those applications that relate to a facility that is described in the Annual Table (consistent with proposed § 1.45Y-5(g)(2)) or a facility that can determine an emissions value using a designated LCA model under proposed § 1.45Y-5(g)(6) (consistent with proposed § 1.45Y-5(g)(3)), or applications that are incomplete. Proposed § 1.45Y-5(g)(5) would also provide that applicants must follow DOE's guidance and procedures for requesting and obtaining an emissions value from DOE. DOE will publish guidance and procedures that applicants must follow to request and obtain an emissions value from DOE. DOE's guidance and procedure will include a process, under limited circumstances, for a taxpayer to request a revision to DOE's initial assessment of an emissions value on the basis of revised technical information or facility design and operation. The Treasury Department and the IRS anticipate that the emissions value request process will open after the publication of the final regulations.
Proposed § 1.45Y-5(g)(6) would provide that the Secretary may designate one or more LCA models for a taxpayer to determine an emissions value for C&G Facilities that are not described in the Annual Table. Proposed § 1.45Y-5(g)(6) would further provide that a model may only be designated if it complies with section 45Y(b)(2)(B) and proposed § 1.45Y-5(d) and (e). The Secretary may revoke the designation of an LCA model or models. In connection with the designation or revocation of a designation of an LCA model or models, the Secretary would be required to publish an accompanying expert analysis of the model prepared by one or more of the National Laboratories, in consultation with other agency experts as appropriate, and such analysis must address the model's compliance with section 45Y(b)(2)(B) of the Code and proposed § 1.45Y-5(d) and (e). The Treasury Department and the IRS view the requirement to publish an expert analysis prepared by the National Laboratories of the designation or revocation of designation of an LCA model or models as essential to ensuring public accountability and adherence to sound scientific principles. This requirement would also ensure that the Secretary has a robust record to inform any designations or revocations of an LCA model or models.
Proposed § 1.45Y-5(g)(7) would provide the rules governing the effect of a PER. Proposed § 1.45Y-5(g)(7) would provide that a taxpayer may use a PER determined by the Secretary to determine the section 45Y credit for the facility to which the PER applies, provided all other requirements of section 45Y are met. Proposed § 1.45Y-5(g)(7) would further provide that the Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 45Y credit is claimed. Finally, proposed § 1.45Y-5(g)(7) would provide that a PER determination does not signify that the IRS has determined that the requirements of section 45Y have been satisfied for any taxable year.

8. Reliance on Annual Table or Provisional Emissions Rate
Proposed § 1.45Y-5(h) would provide that taxpayers may rely on the Annual Table in effect as of the date a facility began construction or the provisional emissions rate that has been determined by the Secretary for the taxpayer's facility under proposed § 1.45Y-5(g)(4) to determine the facility's GHG emissions rate for that facility for any taxable year that is within the 10-year period described in section 45Y(b)(1)(B), provided that the facility continues to operate as a type of facility that is described in the Annual Table or the facility's emissions value request, as applicable, for the entire taxable year.

9. Substantiation
Taxpayers have a general obligation to substantiate and verify that they have met the requirements of any tax credits claimed on their tax returns. Section 6001 of the Code provides that every person liable for any tax imposed by the Code, or for the collection thereof, must keep such records as the Secretary may from time to time prescribe. Section 1.6001-1(a) provides that any person subject to income tax must keep such permanent books of account or records as are sufficient to establish the amount of gross income, deductions, credits, or other matters required to be shown by such person in any return of such tax. Section 1.6001-1(e) provides that the books and records required by § 1.6001-1 must be retained so long as the contents thereof may become material in the administration of any internal revenue law.
In addition to this general obligation to substantiate eligibility for a claimed tax credit, taxpayers may also be required to keep specific records as prescribed by the Secretary. This may be appropriate for purposes of the section 45Y credit because certain types of facilities may depend on operational choices, such as the use of certain types of feedstocks or fuels or engaging in carbon capture and sequestration, to achieve a net GHG emissions rate that is not greater than zero for a taxable year, and these operational choices may vary by year. Proposed § 1.45Y-5(i)(1) would provide that a taxpayer must maintain in its books and records documentation regarding the design, operation, and if applicable, feedstock or fuel source used by the facility that establishes that such facility had a GHG emissions rate, as determined under § 1.45Y-5, that is not greater than zero for the taxable year. The Treasury Department and the IRS intend to require in the final regulations that taxpayers maintain specific types of documentation to substantiate that a facility for which a section 45Y credit is claimed has a net GHG emissions rate that is not greater than zero. The Treasury Department and the IRS request comment on the types of documentation taxpayers should be required to maintain to substantiate eligibility for the section 45Y credit.
Proposed § 1.45Y-5(i)(2) would further provide that documentation that is sufficient to substantiate that a facility had a GHG emissions rate of not greater than zero includes documentation or a report prepared by an unrelated party that verifies that a facility had such an emissions rate. Proposed § 1.45Y-5(i)(2) would also provide that facilities described in § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a GHG emissions rate showing that the facility is described in § 1.45Y-5(c)(2). Finally, proposed § 1.45Y-5(i)(2) would provide that future guidance may describe sufficient documentation to substantiate that certain facilities have a GHG emissions rate of not greater than zero. Because certain types or categories of facilities may have emissions rates that are highly variable and dependent on complex interactions between design choices, operational choices, and fuel and feedstock sourcing choices, the Treasury Department and the IRS seek comment on the relative risk of inadvertently crediting above-zero-emissions electricity generation for types or categories of facilities that may potentially be eligible for the section 45Y credit. In addition, comment is also requested on supply chain tracing and substantiation requirements that the Treasury Department and the IRS may require in the final regulations to demonstrate whether a facility used a specific fuel to produce electricity and that such fuel has the emissions attributes claimed by the taxpayer. Specifically, to inform the development of the substantiation rules for the Clean Electricity Tax Credits, comment is requested on the following topics:
(1) What types of documentation or substantiation should a taxpayer maintain to establish that an input in the supply chain of a fuel/feedstock used for electricity production has the energy attributes or other relevant characteristics (for example, source and production process) that were taken into account in determining a GHG emissions rate?
(2) What existing systems, industry standards, or practices may be used to substantiate that a facility's operations and the supply chain for the inputs it used to produce electricity resulted in a GHG emissions rate that is not greater than zero for a taxable year? If existing systems, standards, or practices are currently not sufficiently developed to serve as a form of substantiation, how should such tracking and verification systems be developed and how long might such development take?
(3) What supply chain tracing systems or verification bodies address fuels or feedstocks that may be commonly used by facilities that may be eligible for the Clean Electricity Tax Credits? What fuels or feedstocks could these systems or bodies address and for what purpose?

E. One-Megawatt Exception for Section 45Y
The Treasury Department and the IRS intend to provide a more detailed definition for the One-Megawatt Exception in section 45Y(a)(2)(B)(i) by expanding upon the definition provided in the August Proposed Regulations. The final regulations would provide that, for purposes of section 45Y(a)(2)(B)(i), the determination of whether a qualified facility has a maximum net output of less than one megawatt of electricity (as measured in alternating current) is determined based on the nameplate capacity. If applicable, taxpayers must use the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a qualified facility. For purposes of this measurement, the nameplate capacity is the maximum electrical generating output in MW (as measured in alternating current) that the qualified facility is capable of producing on a steady state basis and during continuous operation under standard conditions, as measured by the manufacturer and consistent with the definition of nameplate capacity provided in 40 CFR 96.202. The Treasury Department and the IRS request comment on this proposed definition. This rule is proposed to apply to qualified facilities placed in service after December 31, 2024, and during taxable years ending on or after the date of publication of the final regulations in the Federal Register .

II. Rules Applicable to the Clean Electricity Investment Tax Credit
These proposed regulations are organized in five sections, proposed §§ 1.48E-1 through 1.48E-5 (section 48E regulations). Proposed § 1.48E-1 would provide an overview of the section 48E regulations, generally applicable definitions, and the rules applicable to the calculation of section 48E credit. Proposed § 1.48E-2 would provide rules relating to a qualified facility, a qualified investment, a qualified property, and an energy storage technology (EST). Section 1.48E-3 is reserved for rules relating to the increased credit amount for meeting the prevailing wage and apprenticeship requirements. A cross reference will be added to § 1.48E-3 in the final regulations when § 1.48E-3 is finalized. Proposed § 1.48E-4 would provide the rules of general application under section 48E, including the rules regarding the inclusion of qualified interconnection costs in the basis of a low-output associated qualified facility, rules for expansion of a facility and incremental production, rules for retrofitting an existing facility, rules for the ownership of a qualified facility or an EST, rules regarding the coordination of the section 48E credit with other Federal income tax credits, and rules for credit recapture. Proposed § 1.48E-5 would provide rules pertaining to the determination of a GHG emissions rate for a facility under section 48E.

A. Amount of Credit
Proposed § 1.48E-1(a) would provide an overview of the section 48E regulations and provide definitions of terms for purposes of the section 48E regulations. Proposed § 1.48E-1(b) would explain how to calculate the amount of the section 48E credit for any taxable year.
Proposed § 1.48E-1(b)(1) would provide that the credit is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to any qualified facility (as defined in proposed § 1.48E-2(a)) and any EST (as defined in proposed § 1.48E-2(g)). Proposed § 1.48E-1(b)(2) would define the applicable percentage as the base rate in proposed § 1.48E-1(b)(3) or the alternative rate in proposed § 1.48E-1(b)(4). Proposed § 1.48E-1(b)(2) would also propose that the applicable percentage may be increased as provided in section 48E(a)(3)(A) and proposed § 1.48E-1(b)(5) in the case of a qualified facility that is located in an energy community. Similarly, § 1.48E-1(b)(2) would propose that the applicable percentage may be increased as provided in section 48E(a)(3)(B) and proposed § 1.48E-1(b)(6) in the case of a qualified facility that satisfies the domestic content requirements.
Proposed § 1.48E-1(b)(3) would describe the base rate as 6 percent. Proposed § 1.48E-1(b)(4) would describe the alternative rate as 30 percent if certain prevailing wage and apprenticeship requirements are satisfied.
Proposed § 1.48E-1(b)(5) would provide rules applicable to the energy communities increase in credit rate. Proposed § 1.48E-1(b)(6) would provide rules applicable to the domestic content increase in credit rate.
Proposed § 1.48E-1(c) would provide the credit phase-out rules. Generally, proposed § 1.48E-1(c)(1) would provide that the amount of the clean electricity investment credit under section 48E for any qualified facility or EST the construction of which begins during a calendar year described in section 48E(e)(2) is equal to the product of the amount of the credit determined under section 48E(a) and proposed § 1.48E-1(b) without regard to section 48E(e), multiplied by the phase-out percentage under section 48E(e)(2) and proposed § 1.48E-1(c)(2). Proposed § 1.48E-1(c)(2) would provide that the phase-out percentage is 100 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the first calendar year following the applicable year; 75 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the second calendar year following the applicable year; 50 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during the third calendar year following the applicable year; and 0 percent for any qualified investment with respect to any qualified facility or EST the construction of which begins during any calendar year subsequent to the calendar year described in section 48E(e)(2)(C). Proposed § 1.48E-1(c)(3) would define “applicable year” for purposes of proposed § 1.48E-1(c) as having the same meaning as provided in proposed § 1.45Y-1(c)(3).

B. Qualified Facility
Proposed § 1.48E-2(a) would define a “qualified facility” to mean a facility that is used for the generation of electricity; is placed in service by the taxpayer after December 31, 2024; and has a GHG emissions rate of not greater than zero (as determined under rules provided in § 1.45Y-5).

1. Property Included in Qualified Facility
Proposed § 1.48E-2(b) would provide that a qualified facility includes a unit of qualified facility (as defined in proposed § 1.48E-2(b)(2)(i)) and property owned by the same taxpayer that is integral to the unit of qualified facility (as described in proposed § 1.48E-2(b)(3)). Proposed § 1.48E-2(b)(1) would provide that any component of property that meets the requirements of proposed § 1.48E-2(b) is part of a qualified facility regardless of where such component of property is located. Proposed § 1.48E-2(b)(1) would provide that a qualified facility does not include any electrical transmission equipment, such as transmission lines and towers, or any equipment beyond the electrical transmission stage. Proposed § 1.48E-2(b)(1) would also provide that a qualified facility generally does not include equipment that is an addition or modification to an existing qualified facility. However, proposed § 1.48E-2(b)(1) would reference proposed § 1.48E-4(b) regarding the expansion of a facility or incremental production and proposed § 1.48E-4(c) for rules regarding retrofitted facilities (80/20 Rule).

2. Functionally Interdependent
Proposed § 1.48E-2(b)(2)(i) would provide that the unit of a qualified functionally interdependent components of a property (as defined in § 1.48E-2(b)(2)(ii) owned by the taxpayer that are operated together and that can operate apart from other property to produce electricity. Proposed § 1.48E-2(b)(2)(i) would further provide that no provision of this section, § 1.48E-1, or § 1.48E-4 through 1.48E-5 uses the term “unit” in respect of a qualified facility with any meaning other than that provided in § 1.48E-2(b)(2)(ii). A reference to § 1.48E-3 will also be added to the previous sentence in proposed § 1.48E-2(b)(2)(i) when that regulation is finalized, but it cannot be added until § 1.48E-3 is finalized. Proposed § 1.48E-2(b)(2)(ii) would define components as “functionally interdependent” if the placing in service of each of the components is dependent upon the placing in service of each of the other components to produce electricity.

3. Integral Part
Proposed § 1.48E-2(b)(3)(i) would provide that property owned by a taxpayer is an integral part of a qualified facility owned by the same taxpayer if it is used directly in the intended function of the qualified facility and is essential to the completeness of the intended function. Proposed § 1.48E-2(b)(3)(i) would also clarify that property that is an integral part of a qualified facility is part of the qualified facility. Lastly, proposed § 1.48E-2(b)(3)(i) would explain that a taxpayer may not claim the section 48E credit for any property that is an integral part of a qualified facility that is not owned by the taxpayer.
Proposed § 1.48E-2(b)(3)(ii) would describe power conditioning equipment and transfer equipment as integral parts of a qualified facility. Proposed § 1.48E-2(b)(3)(ii) would further provide that power conditioning equipment includes equipment that modifies the characteristics of electricity into a form suitable for use or transmission or distribution. Proposed § 1.48E-2(b)(3)(ii) would also provide that parts related to the functioning or protection of power conditioning equipment are also treated as power conditioning equipment and include examples.
Proposed § 1.48E-2(b)(3)(ii) would further provide that transfer equipment includes components that permit the aggregation of electricity generated by components of qualified facilities and components that alter voltage to permit transfer to a transmission or distribution line and would clarify that transfer equipment does not include transmission or distribution lines. Proposed § 1.45Y-2(b)(3)(ii) would provide examples of transfer equipment that include, but are not limited to, wires, cables, and combiner boxes that conduct electricity. Proposed § 1.45Y-2(b)(3)(ii) would provide that parts related to the functioning or protection of transfer equipment are also treated as transfer equipment and include examples.
Proposed § 1.48E-2(b)(3)(iii) would provide that roads that are an integral part of a qualified facility are those roads integral to the intended function of the qualified facility such as onsite roads that are used to operate and maintain the qualified facility. Proposed § 1.48E-2(b)(3)(iii) would also clarify that roads primarily for access to the site, or roads used primarily for employee or visitor vehicles, are not integral to the intended function of the qualified facility, and thus are not an integral part of a qualified facility.
Proposed § 1.48E-2(b)(3)(iv) and (v) would provide that fences and buildings (also referred to as structures) are generally not integral parts of a qualified facility because they are not integral to the intended function of the qualified facility. However, a building (or structure) may be an integral part of a qualified facility if it is essentially an item of machinery or equipment and a structure that houses property that is integral to the intended function of the qualified facility, if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
Proposed § 1.48E-2(b)(3)(vi) would provide a rule for shared integral property stating that multiple qualified facilities (whether owned by one or more taxpayers), including qualified facilities with respect to which a taxpayer has claimed a credit under section 48E or another Federal income tax credit, may include shared property that may be considered an integral part of each qualified facility so long as the cost basis for the shared property is properly allocated to each qualified facility and the taxpayer only claims a section 48E credit with respect to the portion of the cost basis properly allocable to a facility for which the taxpayer is claiming a section 48E credit. Proposed § 1.48E-2(b)(3)(vi) would further clarify that the total cost basis of such shared property divided among the qualified facilities may not exceed 100 percent of the cost of such shared property. Lastly, proposed § 1.48E-2(b)(3)(vi) specifies that property that is shared by a qualified facility (as defined in section 48E(b)(3)) (48E Qualified Facility) and a qualified facility (as defined by section 45Y(b) (45Y Qualified Facility) that is an integral part of both qualified facilities will not affect the eligibility of the 48E Qualified Facility for the section 48E credit or the 45Y Qualified Facility for the section 45Y credit.

4. Coordination With Other Credits
Proposed § 1.48E-2(c)(1) would provide that the term “qualified facility” (as defined in section 48E(b)(3)) will not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 45Y, 48, or 48A is allowed under section 38 for the taxable year or any prior taxable year. Proposed § 1.48E-2(c)(1) would further clarify that a taxpayer that directly owns a qualified facility (as defined in section 48E(b)(3)) that is eligible for both a section 48E credit and another Federal income tax credit is eligible for the section 48E credit only if the other Federal income tax credit was not allowed with respect to the qualified facility. Proposed § 1.48E-2(c)(1) would provide that nothing in proposed § 1.48E-2(c) precludes a taxpayer from claiming a section 48E credit with respect to a qualified facility (as defined in section 48E(b)(3)) that is co-located with another facility for which a credit determined under section 45, 45J, 45Q, 45U, 45Y, 48, or 48A is allowed under section 38 for the taxable year or any prior taxable year.
Proposed § 1.48E-2(c)(2) would clarify that for purposes of proposed § 1.48E-2(c)(1), the term “allowed” only includes credits that taxpayers have claimed on a Federal income tax return or Federal return, as appropriate, and that the IRS has not challenged in terms of the taxpayer's eligibility.
Proposed § 1.48E-2(c)(3) would include several examples that illustrate the application of the rules provided in proposed § 1.48E-2(c).

5. Qualified Investment With Respect to a Qualified Facility
Proposed § 1.48E-2(d) would describe a qualified investment with respect to any qualified facility for any taxable year as the sum of the basis of any qualified property (as defined in proposed § 1.48E-2(e)(1)) placed in service by the taxpayer during such taxable year that is part of a qualified facility (as defined in proposed § 1.48E-2(a)) and the amount of any expenditures paid or incurred by the taxpayer for qualified interconnection property (as defined in proposed § 1.48E-4(a)(2)).

6. Qualified Property

a. Generally
Proposed § 1.48E-2(e) would define “qualified property” for purposes of proposed § 1.48E-2(a) to mean property that meets three requirements. First, proposed § 1.48E-2(e)(1)(i) would require that the property is tangible personal property (as defined in proposed § 1.48E-2(f)(1)) or other tangible property (not including a building or its structural components) (as defined in proposed § 1.48E-2(f)(2)), but only if such other tangible property is used as an integral part (as defined proposed § 1.48E-2(b)(3)) of the qualified facility (as defined in proposed § 1.48E-2(a)).
Second, proposed § 1.48E-2(e)(1)(ii) would require that depreciation (or amortization in lieu of depreciation) be allowable (as defined in proposed § 1.48E-2(f)(6)) with respect to the property.
Third, proposed § 1.48E-2(e)(1)(iii) would require that the taxpayer either constructs, reconstructs, or erects the property (as defined in proposed § 1.48E-2(f)(3)) or acquires the property (as defined in proposed § 1.48E-2(f)(4)) if the original use of the property (as defined in proposed § 1.48E-2(f)(5)) commences with the taxpayer.
Proposed § 1.48E-2(e)(2) would provide that any component of a qualified property that meets the requirements of proposed § 1.48E-2(e) is part of a qualified facility regardless of where such component of property is located.

b. Definitions Related to Qualified Property

Tangible Personal Property
Proposed § 1.48E-2(f)(1) would define the term “tangible personal property” for purposes of section 48E and proposed § 1.48E-2(b) to mean any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures (including items that are structural components of such buildings or structures). Proposed § 1.48E-2(f)(1) would further provide that tangible personal property includes all property (other than structural components) that is contained in or attached to a building and that all property that is in the nature of machinery (other than structural components of a building or other inherently permanent structure) is considered tangible personal property even though located outside a building. Finally, proposed § 1.48E-2(f)(1) would clarify that local law is not controlling for purposes of determining whether property is or is not tangible property or tangible personal property. Therefore, proposed § 1.48E-2(f)(1) would explain that tangible property may be personal property for purposes of the section 48E credit even though under local law the property is considered a fixture and therefore real property.

Other Tangible Property
Proposed § 1.48E-2(f)(2) would define the term “other tangible property” to mean tangible property other than tangible personal property (not including a building and its structural components), that is used as an integral part of furnishing electricity by a person engaged in a trade or business of furnishing any such service.

Construction, Reconstruction, or Erection of Qualified Property
Proposed § 1.48E-2(f)(3) would define the term “construction, reconstruction, or erection of qualified property” to mean work performed to construct, reconstruct, or erect qualified property either by the taxpayer or for the taxpayer in accordance with the taxpayer's specifications.

Acquisition of Qualified Property
Proposed § 1.48E-2(f)(4) would define the term “acquisition of qualified property” to mean a transaction by which a taxpayer obtains rights and obligations with respect to qualified property including title to the qualified property under the law of the jurisdiction in which the qualified property is placed in service, unless the qualified property is possessed or controlled by the taxpayer as a lessee, and physical possession or control of the qualified property.

Original Use of Qualified Property
Proposed § 1.48E-2(f)(5)(i) would provide that the term “original use of qualified property” means the first use to which qualified property is put, whether or not such use is by the taxpayer. Proposed § 1.48E-2(f)(5)(ii) would clarify that a retrofitted qualified facility acquired by the taxpayer will not be treated as being put to original use by the taxpayer unless the rules in proposed § 1.48E-4(c) regarding retrofitted qualified facilities (80/20 Rule) apply. Proposed § 1.48E-2(f)(5)(ii) explains that the question of whether a qualified facility meets the 80/20 Rule is a facts and circumstances determination.

Depreciation Allowable
Proposed § 1.48E-2(f)(6)(i) would provide a general rule for purposes of applying proposed § 1.48E-2(b), that depreciation (or amortization in lieu of depreciation) is allowable with respect to qualified property if such property is of a character subject to the allowance for depreciation under section 167 of the Code and the basis or cost of such property is recovered using a method of depreciation (for example, the straight line method), which includes any additional first year depreciation deduction method of depreciation (for example, under section 168(k) of the Code). Proposed § 1.48E-2(f)(6)(i) would further clarify that if an adjustment with respect to the Federal income tax or Federal return for such taxable year requires the basis or cost of such qualified property to be recovered using a method of depreciation, depreciation is allowable to the taxpayer with respect to the qualified property. Proposed § 1.48E-2(f)(6)(ii) would describe exclusions from allowable depreciation stating that for purposes of proposed § 1.48E-2(b), depreciation is not allowable with respect to a qualified facility if the basis or cost of such qualified facility is not recovered through a method of depreciation but, instead, such basis or cost is recovered through a deduction of the full basis or cost of the qualified facility in one taxable year (for example, under section 179 of the Code).

Placed in Service
Proposed § 1.48E-2(f)(7)(i) would provide the general rule for determining when a qualified facility has been placed in service for purposes of the section 48E credit. Proposed § 1.48E-2(f)(7)(ii) would provide that notwithstanding the general placed in service rules provided in proposed § 1.48E-2(b)(7)(i), a qualified facility with respect to which an election is made under § 1.48-4 to treat the lessee as having purchased such qualified facility is considered placed in service by the lessor in the taxable year in which possession is transferred to such lessee.

Claim
Proposed § 1.48E-2(f)(8) would provide that with respect to a section 48E credit determined with respect to qualified facility of a taxpayer, the term “claim” would be defined to mean filing a completed Form 3468, Investment Credit, or any successor form(s), with the taxpayer's timely filed (including extensions) Federal income tax return or Federal return, as appropriate, for the taxable year in which the qualified facility is placed in service, and includes making an election under section 6417 or 6418 of the Code and corresponding regulations with respect to such section 48E credit and made on the taxpayer's filed return.

C. Energy Storage Technology

1. General Rule
Proposed § 1.48E-2(g)(1) would provide that an EST includes a unit of EST that meets the requirements of proposed § 1.48E-2(g)(2)(i). An EST also would include property owned by the taxpayer that is an integral part (as defined in proposed § 1.48E-2(g)(3)) of the unit of EST. Proposed § 1.48E-2(g)(1) would provide that equipment that is an addition or modification to an existing EST is not eligible for the section 48E credit. Proposed § 1.48E-2(g)(1) would further provide that, an EST would include electrical energy storage property described in proposed § 1.48E-2(g)(6)(i), thermal energy storage property described in proposed § 1.48E-2(g)(6)(ii), and hydrogen energy storage property described in proposed § 1.48E-2(g)(6)(iii).
Proposed § 1.48E-2(g)(2) would provide that a unit of EST includes all functionally interdependent components of property (as defined in proposed § 1.48E-2(g)(2)(ii)), owned by the taxpayer that are operated together and that can operate apart from other property to perform the intended function of the EST.

2. Functionally Interdependent
Proposed § 1.48E-2(g)(2)(i) would provide that for purposes of the section 48E credit, a unit of EST includes all functionally interdependent components of property (as defined in paragraph proposed § 1.48E-2(g)(2)(ii)) owned by the taxpayer that are operated together and that can operate apart from other property to perform the intended function of the EST. Proposed § 1.48E-2(g)(2)(i) would also provide that no provision of this section, § 1.48E-1, or § 1.48E-3 through 1.48E-5 uses the term unit in respect of an EST with any meaning other than that provided in § 1.48E-2(g)(2)(i). Proposed § 1.48E-2(g)(2)(ii) would provide that components are functionally interdependent if the placing in service of each of the components is dependent upon the placing in service of each of the other components to perform the intended function of the EST.

3. Integral Part
Proposed § 1.48E-2(g)(3) would provide that property owned by a taxpayer is an integral part of EST owned by the same taxpayer if it is used directly in the intended function of the EST and is essential to the completeness of such function. Proposed § 1.48E-2(g)(3) would also provide that property that is an integral part of an EST is part of an EST. Lastly, proposed § 1.48E-2(g)(3) would provide that a taxpayer may not claim the section 48E credit for any property that is an integral part of an EST that is not owned by the taxpayer.

4. Qualified Investment With Respect to Energy Storage Technology
Proposed § 1.48E-2(g)(4) would describe the qualified investment with respect to any EST for any taxpayer year as the basis of any EST placed in service by the taxpayer during such taxable year.

5. Placed in Service
Proposed § 1.48E-2(g)(5)(i) would provide rules for determining when an EST has been placed in service for purposes of the section 48E credit. Proposed § 1.48E-2(g)(5)(ii) also would provide that notwithstanding the general placed in service rules provided in proposed § 1.48E-2(g)(5)(i), an EST with respect to which an election is made under § 1.48-4 to treat the lessee as having purchased such EST is considered placed in service by the lessor in the taxable year in which possession is transferred to such lessee.

6. Types of Energy Storage Technologies
Proposed § 1.48E-2(g)(6)(i) would describe electrical energy storage property as property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that receives, stores, and delivers energy for conversion to electricity and has a nameplate capacity of not less than 5 kWh. See subsection C of Overview of Section 48E. Proposed § 1.48E-2(g)(6)(i) also would provide examples of such electrical energy storage property, subject to the exclusion for property primarily used in the transportation of goods or individuals.
The Treasury Department and the IRS understand that this exclusion for property primarily used in the transportation of goods or individuals, at a minimum, would apply to batteries and other EST that are incorporated into or otherwise physically integrated within motor vehicles and other modes of transportation of goods or individuals and from which an electric motor of such vehicle or other mode of transportation draws electricity for propulsion.
Proposed § 1.48E-2(g)(6)(ii) would describe thermal energy storage property as property comprising a system that is directly connected to a heating, ventilation, or air conditioning (HVAC) system; removes heat from, or adds heat to, a storage medium for subsequent use; and provides energy for the heating or cooling of the interior of a residential or commercial building. See section C of Overview of Section 48E. Proposed § 1.48E-2(g)(6)(ii) would also provide that thermal energy storage property includes equipment and materials, and parts related to the functioning of such equipment, to store thermal energy for later use to heat or cool, or to provide hot water for use in heating a residential or commercial building. In addition, proposed § 1.48E-2(g)(6)(ii) would provide that thermal energy storage property does not include a swimming pool, CHP property, or a building or its structural components. Lastly, proposed § 1.48E-2(g)(6)(ii) would provide examples of thermal energy storage property.
Proposed § 1.48E-2(g)(6)(iii) would provide that hydrogen energy storage property is property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that stores hydrogen and has a nameplate capacity of not less than 5 kWh, equivalent to 0.127 kg of hydrogen or 52.7 standard cubic feet (scf) of hydrogen. Proposed § 1.48E-2(g)(6)(iii) would also provide that hydrogen energy storage property must store hydrogen that is solely used as energy and not for other purposes such as for the production of end products such as fertilizer. Proposed § 1.48E-2(g)(6)(iii) would also provide examples of hydrogen energy storage property.
Although the list of examples of energy storage technologies that proposed § 1.48E-2(g)(6) would provide is nonexclusive, and therefore many other technologies that are not addressed would meet these functional definitions, there are some examples that do not meet the functional definition. For example, some technologies are marketed as “virtual batteries,” which are aggregations of controllable electricity demand providing similar electrical grid services to an electrical grid battery. Such “virtual batteries” receive energy in the form of electricity, but they do not store it for later discharge as electricity. The function of “virtual batteries” is to shift demand to different points in time. Because such demand shifting is not a storage activity for purposes of section 48(c)(6) (and thus for purposes of section 48E(c)(2)), this technology is not an EST. There are other technologies for which the determination of whether they meet the statutory requirements is less clear.

7. Modification of Energy Storage Technology
Proposed § 1.48E-2(g)(7) would provide rules for modification of EST. Based on the rules in section 48(c)(6)(B), proposed § 1.48E-2(g)(7) would provide that with respect to electrical energy storage property and hydrogen energy storage property, modified as set forth in proposed § 1.48E-2(g)(7), such property will be will be treated as an electrical energy storage property (as described in proposed § 1.48E-2(g)(6)(i)) or a hydrogen energy storage property (as described in proposed § 1.48E-2(g)(6)(iii)), except that the basis of any existing electrical energy storage property or hydrogen energy storage property prior to such modification is not taken into account for purposes of proposed § 1.48E-2(g)(7) and section 48E.

8. Claim
Proposed § 1.48E-2(g)(8) would provide that with respect to a section 48E credit determined with respect to an EST of a taxpayer, the term “claim” means filing a completed Form 3468, Investment Credit, or any successor form(s), with the taxpayer's timely filed (including extensions) Federal income tax return or Federal return, as appropriate, for the taxable year in which the EST is placed in service, and includes making an election under section 6417 or 6418 and corresponding regulations with respect to such section 48E credit and made on the taxpayer's filed return.

D. Rules of General Application to Section 48E

1. Rules for Certain Lower-Output Qualified Facilities
Proposed § 1.48E-4(a)(1) would provide rules for qualified facilities with a maximum net output of not greater than 5 megawatts to include qualified interconnection costs in the basis of an associated qualified facility. Proposed § 1.48E-4(a)(1) would provide that the qualified investment for a qualified facility includes amounts paid or incurred by the taxpayer for qualified interconnection property in connection with the installation of a qualified facility that has a maximum net output of not greater than 5 MW (as measured in alternating current) (Five-Megawatt Limitation). Proposed § 1.48E-4(a)(1) would provide that the qualified interconnection property must provide for the transmission or distribution of the electricity produced by a qualified facility and must be properly chargeable to the capital account of the taxpayer as reduced by proposed § 1.48E-4(a)(6). Proposed § 1.48E-4(a)(2) would define the term “qualified interconnection property.” Proposed § 1.48E-4(a)(2) would further provide that qualified interconnection property is not taken into account to determine if a qualified facility meets the requirements for the increase in credit rate for energy communities or domestic content because qualified interconnection property is not part of a qualified facility.
Proposed § 1.48E-4(a)(3) would describe the Five-Megawatt Limitation as a measurement taken at the qualified facility level. Proposed § 1.48E-4(a)(3)(i) would provide that the maximum net output of a qualified facility is measured only by the nameplate generating capacity of the unit of qualified facility, which does not include the nameplate capacity of any integral property, at the time that the qualified facility is placed in service. Further, proposed § 1.48E-4(a)(3)(i) would also provide that the nameplate generating capacity of the unit of qualified facility is measured independently from any other qualified facilities that share the same integral property.
Proposed § 1.48E-4(a)(4) would define the term “interconnection agreement.” and proposed § 1.48E-4(a)(5) would define the term “utility.”
Proposed § 1.48E-4(a)(6) would provide that expenses paid or incurred for qualified interconnection property and amounts otherwise chargeable to capital account with respect to such expenses must be reduced under rules similar to the rules contained in section 50(c). The taxpayer must pay or incur the interconnection property costs, and therefore, any reimbursement, including by a utility, must be accounted for by reducing the taxpayers' expenditure to determine eligible costs.
A taxpayer that is reimbursed for these costs may not include such reimbursed costs in the amount paid or incurred by the taxpayer for qualified interconnection property. Proposed § 1.48E-4(a)(6) would adopt this rule. In the case of a utility reimbursing a taxpayer for costs the taxpayer pays or incurs for qualified interconnection property, the utility should provide the taxpayer with information regarding such costs by the date on which the project is placed in service.
The Treasury Department and the IRS are aware of common situations in which a taxpayer could ultimately receive a payment, credit, or service from another entity, including a utility, related to the costs the taxpayer pays or incurs for qualified interconnection property. For example, one taxpayer may place in service a qualified facility and make payments to a utility with respect to qualified interconnection property involving the addition, modification, or upgrade to the utility's transmission system related to such qualified facility. Subsequently, a different taxpayer may, at a later date, place in service a qualified facility and make payments to the same utility related to the same additions, modifications, or upgrades to the utility's transmission system that were made in response to the first taxpayer's interconnection. The utility may pay, credit, or provide services to the first taxpayer in an amount related to the costs paid by the second taxpayer. The likely amount or timing of any such payment, credit, or service would not be known at the time the first taxpayer interconnects to the utility's transmission system.
The Treasury Department and the IRS request comment on whether such payment, credit, or service received by the first taxpayer, as the result of subsequent payments made to a utility by other parties, should be treated as a reimbursement to the first taxpayer and impact the amount of the costs of qualified interconnection property that the first taxpayer may include in its basis for purposes of the section 48E credit. The Treasury Department and the IRS also request comment on whether the costs paid by the second taxpayer should be treated as amounts paid or incurred for qualified interconnection property in connection with the installation of the second taxpayer's qualified facility. The Treasury Department and the IRS request comment on industry practices relevant to the determination of costs paid or incurred for qualified interconnection property, including the accounting treatment of costs paid or incurred for qualified interconnection property. The Treasury Department and the IRS also request comment on whether any clarifications are needed regarding the tax treatment of amounts paid or incurred for qualified interconnection property, including reimbursement of costs paid or incurred by a taxpayer for qualified interconnection costs.
In section 3.02(1)(b)(ii) of Notice 2022-49, the Treasury Department and the IRS requested comments concerning what type of documentation, in addition to interconnection agreements and cost certification reports, is readily available for a taxpayer to demonstrate that they have paid or incurred interconnection costs in the context of the section 48 credit. Taxpayers must retain documentation in compliance with section 6001. The proposed regulations do not provide any specific type of required documentation, and any documentation that satisfies section 6001 will suffice to substantiate that a taxpayer has paid or incurred qualified interconnection costs. Commenters to Notice 2022-49 provided feedback on the documentation that taxpayers may use to substantiate costs paid or incurred for qualified interconnection property in the context of the section 48 credit. The Treasury Department and the IRS request comments on this same question in the context of the section 48E credit.
Qualified interconnection property is either constructed, reconstructed, or erected by the taxpayer, or the taxpayer pays or incurs the cost with respect to the construction, reconstruction, or erection of such property; and the original use of which, pursuant to an interconnection agreement, commences with a utility. Therefore, in some cases, taxpayers will have the necessary information and documentation on these costs. In other cases, the taxpayers will need to receive this information from the utility, which, the Treasury Department and the IRS understand, will be a common scenario. For situations in which property is constructed, reconstructed, or erected by a party other than the taxpayer, final information with conclusive details such as a true-up report with the actual costs, final invoices, proof of payment or reimbursement, and permission to operate documentation or any other final project accounting documentation should be maintained. Other examples of cost documentation records include, but are not limited to, the interconnection agreement, interconnection study, signed customer contracts, and cost certification reports.

2. Expansion of Facility; Incremental Production
Proposed § 1.48E-4(b) would provide rules related to the expansion of capacity of a qualified facility by the addition of a new unit or an addition of capacity. Proposed § 1.48E-4(b)(1) would provide, that solely for purposes of § 1.48E-4(b), the term “qualified facility” includes either a new unit or an addition of capacity placed in service after December 31, 2024, in connection with a facility described in section 48E(b)(3)(A) (without regard to clause (ii) of such paragraph), which was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit or addition of capacity. Proposed § 1.48E-4(b)(1) further provides that a new unit or an addition of capacity that meets the requirements of proposed § 1.48E-4(b) will be treated as a separate qualified facility. Proposed § 1.48E-4(b) provides that a new unit or addition of capacity requires the addition or replacement of qualified property (as defined in § 1.48E-2(e)), including any new or replacement integral property added to the facility necessary to increase capacity. If applicable, taxpayers must use modified or amended facility operating licenses or the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a facility to determine nameplate capacity. Additionally, § 1.48E-4(b)(1) would provide that for purposes of section 48E(a)(2)(B)(ii)(I) (that is, the One-Megawatt Exception), the capacity for a new unit or an addition of capacity is the sum of the nameplate capacity of the added qualified facility and the nameplate capacity of the facility to which the qualified facility was added.
Proposed § 1.48E-4(b)(2) would provide that solely for purposes of § 1.48E-4(b), a facility that is decommissioned or in the process of decommissioning and restarts can be considered to have increased capacity if the following conditions are met: (1) the existing facility must have ceased operations; (2) the existing facility must have a period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC)); and (3) the increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
Proposed § 1.48E-4(b)(3) would describe two different methods for a taxpayer to compute the qualified investment that increased the amount of electricity produced by either a new unit or an addition of capacity described in § 1.48E-4(b)(1). Proposed § 1.48E-4(b)(3)(i) would provide that the term “new unit” means components of property including any new or replacement integral property added to a facility necessary to increase the capacity of the facility but do not replace the existing capacity of the facility. Further, proposed § 1.48E-4(b)(3)(i) would provide that the taxpayer's qualified investment in the new unit during the taxable year that results in an increase in capacity is eligible for the section 48E credit.
Proposed § 1.48E-4(b)(3)(ii) would address the application of the rule to an addition of capacity by providing that the term “addition of capacity” means components of property, including any new or replacement integral property added to a facility necessary to increase the capacity of the facility by replacing, in whole or in part, the existing capacity of the facility. Proposed § 1.48E-4(b)(3)(ii) would provide that to determine a taxpayer's qualified investment during the taxable year that resulted in an increased capacity of a facility by reason of an addition of capacity not described in proposed § 1.48E-4(b)(3)(i), a taxpayer must multiply its total qualified investment during the taxable year with respect to the facility, by a fraction, the numerator of which is the increase in nameplate capacity that results from the addition of capacity, and the denominator of which is the total nameplate capacity associated with the components of property that result in the addition of capacity.
Proposed § 1.48E-4(b)(4) would provide examples to illustrate the application of both methods to determine the increased amount of electricity attributable to a new unit or an addition of capacity described in § 1.48E-4(b)(1).

3. Retrofit of an Existing Facility (80/20 Rule)
Proposed § 1.48E-4(c) would provide rules related to the retrofit of an existing qualified facility. Proposed § 1.48E-4(c)(1) would provide that for purposes of section 48E(b)(3)(A)(ii), a facility may qualify as originally placed in service even if it contains some used components of property within the unit of qualified facility, provided that the fair market value of the used components of the unit of qualified facility is not more than 20 percent of the unit of qualified facility's total value (that is, the cost of the new components of property plus the value of the used components of property within the unit of qualified facility) (80/20 Rule).
Proposed § 1.48E-4(c)(2) would provide that only expenditures paid or incurred that related to the new components of the unit of qualified facility are taken into account for computing the section 48E credit with respect to the unit of qualified facility.
Proposed § 1.48E-4(c)(3) would provide that the cost of new components of the unit of qualified facility includes all costs properly included in the depreciable basis of the new components.
Proposed § 1.48E-4(c)(4) would provide that if the taxpayer satisfies the 80/20 Rule with regard to a unit of qualified facility, and the taxpayer incurs new costs for property that is an integral part of the qualified facility, the taxpayer may include these new costs paid or incurred for property that is an integral part of the qualified facility in the basis of the qualified facility for purposes of calculating the section 48E credit.
Proposed § 1.48E-4(c)(5) would provide that costs incurred for new components of property added to used components of a unit of qualified facility may not be taken into account for purposes of the section 48E credit unless the taxpayer satisfies the 80/20 Rule. Proposed § 1.48E-4(c)(6) would provide examples.

4. Special Rules Regarding Ownership
Proposed § 1.48E-4(d) would provide rules related to the ownership of a qualified facility or EST. Proposed § 1.48E-4(d)(1) would provide that a taxpayer that owns a qualified investment with respect to a qualified facility or EST is eligible for the section 48E credit only to the extent of the taxpayer's eligible investment in the qualified facility or EST. In the case of multiple taxpayers holding direct ownership through their qualified investments in a single qualified facility or EST, each taxpayer determines its eligible investment based on the taxpayer's fractional ownership interest in the qualified facility or EST.
Proposed § 1.48E-4(d)(2) would provide that a taxpayer must directly own at least a fractional interest in the entire unit of qualified facility (as defined in § 1.48E-2(b)(2) or unit of EST (as defined in § 1.48E-2(g)(2)) for a section 48E credit to be determined with respect to such taxpayer's interest. Proposed § 1.48E-4(d)(2) also provides that no section 48E credit may be determined with respect to a taxpayer's ownership of one or more separate components of a qualified facility or EST if the components do not constitute a unit of qualified facility (as defined in proposed § 1.48E-2(b)(2)) or unit of EST (as defined in proposed § 1.48E-2(g)(2)). However, proposed § 1.48E-4(d)(2) provides that the use of the components of property owned by one taxpayer that is an integral part of a qualified facility or EST owned by another taxpayer will not prevent a section 48E credit from being determined with respect to the second taxpayer's qualified investment in a qualified facility or EST.
Proposed § 1.48E-4(d)(3) would provide that if a qualified facility or EST is owned through an unincorporated organization that has made a valid election under section 761(a), each member's undivided ownership share in the facility or EST will be treated as a separate qualified facility or EST owned by such member.
Proposed § 1.48E-4(d)(4)(i) would define the term “related taxpayers” and proposed § 1.48E-4(d)(4)(ii) would provide a related taxpayer rule, that related taxpayers are treated as one taxpayer in determining whether a taxpayer has made an investment in a qualified facility or EST with respect to which a section 48E credit may be determined. Proposed § 1.48E-4(d)(5) would provide examples illustrating these ownership rules.

5. Coordination Rule for Section 42 and 48E Credits
Proposed § 1.48E-4(e) would provide that as provided under section 50(c)(3)(C), in the case of a taxpayer determining eligible basis for purposes of calculating a credit under section 42 of the Code (section 42 credit), a taxpayer is not required to reduce its basis in a qualified facility or EST by the amount of the section 48E credit determined with respect to the qualified investment with respect to such qualified facility or EST. Further, proposed § 1.48E-4(e) would provide that the qualified investment with respect to a qualified facility or EST may be used to determine a section 48E credit and may also be included in eligible basis to determine a section 42 credit.

6. Credit Recapture
Proposed § 1.48E-4(f)(1) would provide recapture rules for the section 48E credit that incorporate the recapture provisions of section 50(a). Proposed § 1.48E-4(f)(1) would further provide that the credit calculated under proposed § 1.48E-1(b) is subject to recapture for any qualified facility that has a GHG emissions rate (as determined under proposed § 1.48E-5) that exceeds 10 grams of CO 2 e per kWh during the five-year period beginning on the date such qualified facility is originally placed in service (five-year recapture period).

Recapture Event
Proposed § 1.48E-4(f)(2)(i) would provide that any failure of the qualified facility to not exceed a GHG emissions rate of 10 grams per CO 2 e per kWh during the five-year recapture period is a recapture event. If a qualified facility's GHG emissions rate exceeds 10 grams of CO 2 e per kWh averaged over the taxable year, the section 48E credit is subject to recapture. Proposed § 1.48E-4(f)(2)(ii) would provide that a change to the GHG emissions rate for a type or category of facility that is published in the Annual Table (as defined in proposed § 1.45Y-5(f)) after the facility is placed in service does not result in a recapture event.
Proposed § 1.48E-4(f)(2)(iii) would provide that a determination of whether a recapture event has occurred must be made for each taxable year (or portion thereof) occurring within the five-year recapture period, beginning with the taxable year ending after the date the qualified facility is placed in service. For each taxable year that begins or ends within the five-year recapture period, the taxpayer must determine, for any qualified facility for which it has claimed the section 48E credit, whether such facility has maintained a GHG emissions rate of not greater than 10 grams of CO 2 e per kWh. A taxpayer that has claimed the section 48E credit amount under proposed § 1.48E-1 or transferred a specified credit portion under section 6418 of the Code is required to provide to the IRS information on the GHG emissions rate of the qualified facility during the recapture period at the time and in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin.
Proposed § 1.48E-4(f)(2)(iv) would provide that in the case of any recapture event, the carrybacks and carryforwards under section 39 must be adjusted by reason of such recapture event.
Proposed § 1.48E-4(f)(3)(i) would provide that if a recapture event has occurred, the tax under chapter 1 of the Code for the taxable year in which the recapture event occurs is increased by an amount equal to the applicable recapture percentage multiplied by the credit amount that was claimed by the taxpayer under proposed § 1.48E-1. Proposed § 1.48E-4(f)(3)(ii) provides the applicable recapture percentage for each year during the five-year recapture period.
Proposed § 1.48E-4(f)(4) would provide that the five-year recapture period begins on the date the qualified facility is placed in service and ends on the date that is five full years after the placed-in-service date. Each 365-day period (366-day period in the case of a leap year) within the five-year recapture period is a separate recapture year for recapture purposes.
Proposed § 1.48E-4(f)(5) would provide that the increased tax under chapter 1 of the Code for the recapture of the credit amount under proposed § 1.48E-1 occurs in the year of the recapture event.

E. Greenhouse Gas Emissions Rates
Section 48E(b)(3)(B)(ii) provides that rules similar to the rules of section 45Y(b)(2) regarding greenhouse emissions rates apply for purposes of section 48E. Proposed § 1.48E-5(a) would provide an overview of the rules pertaining to GHG emissions rates for qualified facilities under section 48E. Proposed § 1.48E-5(b) through (f) would clarify that the definitions of certain terms, rules for determining GHG emissions rates for Non-C&G Facilities, the rules for determining net GHG emissions rates for C&G Facilities, rules regarding carbon capture and sequestration, and requirement to publish the Annual Table provided in proposed § 1.45Y-5(b) through (f) also apply for purposes of section 48E and this section.
Proposed § 1.48E-5(g) would provide the rules applicable to provisional emissions rates. Proposed § 1.48E-5(g)(1) would provide that, in the case of any facility for which an emissions rate has not been established by the Secretary, a taxpayer that owns such facility may file a petition with the Secretary for determination of the emissions rate with respect to such facility (Provisional Emissions Rate or PER).
Proposed § 1.48E-5(g)(2) would provide that an emissions rate has not been established by the Secretary for a facility if such facility is not described in the Annual Table. Proposed § 1.48E-5(g)(2) would further provide that if a taxpayer's request for an emissions value pursuant to proposed § 1.48E-5(g)(5) is pending at the time such facility is or becomes described in the Annual Table, the taxpayer's request for an emissions value would be automatically denied.
Proposed § 1.48E-5(g)(3) would provide the process for filing a PER petition. Proposed § 1.48E-5(g)(3) would provide that to file a PER petition with the Secretary, a taxpayer must submit a PER petition attached to the taxpayer's Federal income tax return or Federal return, as appropriate, for the taxable year in which the taxpayer claims the section 48E credit with respect to the facility. Proposed § 1.48E-5(g)(3) would further provide that a PER petition must contain an emissions value and, if applicable, include as an attachment the DOE letter. An emissions value obtained from DOE based on an analytical assessment of the emissions rate associated with the facility performed by one or more of the National Laboratories, in consultation with other agency experts as appropriate, consistent with proposed § 1.48E-5. A taxpayer would be required to retain its books and records a copy of the taxpayer's request to DOE for an emissions value, including any information provided by the taxpayer to DOE pursuant to the emissions value request process provided in proposed § 1.48E-5(g)(5). Alternatively, an emissions value can be determined for a facility by using the most recent version of an LCA model, as of the time the PER petition is filed, that has been designated by the Secretary for such use under paragraph (g)(6) of this section. If an emissions value is determined using a designated LCA model or models, the taxpayer would be required to provide to the IRS information to support its use of the model or models in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. A taxpayer may not request an emissions value from DOE for a facility for which an emissions value can be determined by using the most recent version of an LCA model or models that have been designated by the Secretary for such use under proposed § 1.48E-5(g)(6).
Proposed § 1.48E-5(g)(4) would provide that, upon the IRS's acceptance of the taxpayer's Federal income tax return or Federal return, as appropriate, containing a PER petition, the emissions value of the facility specified on such petition will be deemed accepted. Proposed § 1.48E-5(g)(4) would further provide that a taxpayer would be able to rely upon an emissions value provided by DOE for purposes of claiming a section 48E credit, provided that any information, representations, or other data provided to DOE in support of the request for an emissions value are accurate. If applicable, a taxpayer may rely upon an emissions value determined for a facility using an LCA model or models that have been designated by the Secretary for such use under proposed § 1.48E-5(g)(6), provided that any information, representations, or other data used to obtain such emissions value are accurate. The IRS's deemed acceptance of an emissions value would be the Secretary's determination of the PER. Finally, proposed § 1.48E-5(g)(4) would provide that the taxpayer must also comply with all applicable requirements for the section 48E credit, and any information, representations, or other data provided to DOE in support of the request for an emissions value would be subject to later examination by the IRS.
Proposed § 1.48E-5(g)(5) would provide the rules applicable to the emissions value request process. Proposed § 1.48E-5(g)(5) would provide that an applicant that submits a request for an emissions value must follow the procedures specified by DOE to request and obtain such emissions value, and that emissions values will be determined consistent with the rules provided in proposed § 1.48E-5. Proposed § 1.48E-5(g)(5) would further provide that an applicant may request an emissions value from DOE only after a front-end engineering and design (FEED) study or similar indication of project maturity, as determined by DOE, such as the completion of a project specification and cost estimation sufficient to inform a final investment decision for the facility. Proposed § 1.48E-5(g)(5) would provide that DOE may decline to review applications that are non-responsive, and those applications that relate to a facility that is described in the Annual Table (consistent with proposed § 1.48E-5(g)(2)) or a facility that can determine an emissions value using a designated LCA model under proposed § 1.48E-5(g)(6) (consistent with proposed § 1.48E-5(g)(3)), or applications that are incomplete. Proposed § 1.45Y-5(g)(5) would also provide that applicants must follow DOE's guidance and procedures for requesting and obtaining an emissions value from DOE. DOE will publish guidance and procedures that applicants must follow to request and obtain an emissions value from DOE. DOE's guidance and procedures will include a process that, under limited circumstances, a taxpayer may request a revision to DOE's initial assessment of an emissions value on the basis of revised technical information or facility design and operation. The Treasury Department and the IRS anticipate that the emissions value request process will open after the publication of the final regulations.
Proposed § 1.48E-5(g)(6) would provide that the rules provided in proposed § 1.45Y-5(g)(6) regarding the designation of an LCA model or models for determining an emissions value for C&G Facilities apply for purposes of section 48E and this section.
Proposed § 1.48E-5(g)(7) would provide rules governing the effect of a PER. Proposed § 1.48E-5(g)(7) would provide that a taxpayer may use a PER determined by the Secretary to determine the eligibility for the section 48E credit for a taxable year for the facility to which the PER relates, provided all other requirements of section 48E are met, unless the emissions rate for such type or category of facility is provided in the Annual Table for any portion of the taxable year. Proposed § 1.48E-5(g)(7) would further provide that the Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 48E credit is claimed. Finally, proposed § 1.48E-5(g)(7) would provide that a PER determination does not signify that the IRS has determined that the requirements of section 48E have been satisfied for any taxable year.
Proposed § 1.48E-5(h) would provide the rules applicable to determining an anticipated GHG emissions rate. Proposed § 1.48E-5(h)(1) would provide that a facility's anticipated GHG emissions rate must be objectively determined based on an examination of all the facts and circumstances. Proposed § 1.48E-5(h)(1) would further provide that certain Non-C&G Facilities, such as the facilities described in proposed § 1.45Y-5(c)(2), may have an anticipated GHG emissions rate that is not greater than zero based on the technology and practices they rely upon to generate electricity. Finally, proposed § 1.48E-5(h)(1) would provide that for facilities that require the use of certain feedstocks or carbon capture and sequestration, which may vary, to generate electricity with a GHG emissions rate that is not greater than zero, objective indicia that such facilities will operate with a GHG emissions rate that is not greater than zero for at least 10 years beginning from the date the facility is placed in service are required to establish that its anticipated GHG emissions rate is not greater than zero.
Proposed § 1.48E-5(h)(2) would provide a non-exhaustive list of examples of objective indicia that may establish an anticipated GHG emissions rate that is not greater than zero. Proposed § 1.48E-5(h)(2)(i) through (iv) would provide that these examples include co-location of the facility with a fuel source for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero; a 10-year contract to purchase fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero; or a facility type that only accommodates one type of fuel or a small range of fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero; or a 10-year contract for the capture, disposal, or utilization of qualified carbon dioxide from the facility for which the combination of fuel, type of facility, and practice is reasonably expected to result in a GHG emissions rate that is not greater than zero.
The Treasury Department and the IRS interpret the reference in section 48E(b)(3)(A)(iii) to an “anticipated greenhouse gas emissions rate” that is not greater than zero to require a reasonable expectation that a facility will operate with a rate or net rate of greenhouse gas emissions that is not greater than zero over a specified period of time (for example, the anticipated lifetime of the facility). The Treasury Department and the IRS request comment on what evidence or substantiation taxpayers should be required to maintain to establish an anticipated GHG emissions rate for a facility. In addition, comment is requested on the appropriate period of time for which taxpayers should be required to demonstrate that there is a reasonable expectation that a facility will operate with a GHG emissions rate that is not greater than zero.
Proposed § 1.48E-5(i) would provide that taxpayers may rely on the Annual Table in effect as of the date a facility began construction or the provisional emissions rate determined by the Secretary for the taxpayer's facility to determine the facility's GHG emissions rate, provided that the facility continues to operate as a type of facility that is described in the Annual Table or the facility's emissions value request, as applicable, for the entire taxable year.
Proposed § 1.48E-5(j)(1) would provide that a taxpayer must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had an anticipated GHG emissions rate that is not greater than zero in the year in which the section 48E credit is determined and operated with a GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period that applies for purposes of section 48E(g).
Proposed § 1.48E-5(j)(2) would further provide that documentation sufficient to substantiate that a facility had a GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period includes documentation or a report prepared by an unrelated party that verifies the facility's actual emissions rate. Proposed § 1.48E-5(j)(2) would also provide that facilities described in § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period by showing that the facility is described in § 1.45Y-5(c)(2). Finally, proposed § 1.48E-5(j)(2) would provide that future guidance may describe sufficient documentation to substantiate that certain other types of facilities have a GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period.

Proposed Applicability Dates
These regulations are proposed to apply to qualified facilities (and for § 1.48E-1 through 1.48E-4, energy storage technologies) placed in service after December 31, 2024, and during taxable years ending on or after the date of publication of the final regulations in the Federal Register .

Special Analyses

I. Regulatory Planning and Review—Economic Analysis
Pursuant to the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the IRS are not subject to the requirements of section 6 of Executive Order 12866, as amended. Therefore, a regulatory impact assessment is not required.

II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA) generally requires that a Federal agency obtain the approval of the Office of Management and Budget (OMB) before collecting information from the public, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit.
The collections of information in these proposed regulations contain recordkeeping and reporting requirements that are required to substantiate eligibility to claim a section 45Y or section 48E credit. These collections of information would generally be used by the IRS for tax compliance purposes and by taxpayers to facilitate proper reporting and compliance. The general recordkeeping requirements mentioned within these proposed regulations are considered general tax records under § 1.6001-1(e).
The recordkeeping requirements in these proposed regulations with respect to section 45Y would include the requirement in proposed § 1.45Y-5(i)(1) that taxpayers claiming the section 45Y credit must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had a GHG emissions rate that is not greater than zero for the taxable year. Included in proposed § 1.45Y-5(i)(2) are examples of documentation that sufficiently substantiates that a facility has a GHG emissions rate that is not greater than zero for the taxable year, which includes documentation, or a report prepared by an unrelated party that verifies that a facility had such an emissions rate. A facility described in proposed § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a GHG emissions rate that is not greater than zero for the taxable year by showing that it is a type of facility described in proposed § 1.45Y-5(c)(2). Proposed § 1.45Y-5(i)(2) would provide that Secretary may determine that other types of facilities can sufficiently substantiate a GHG emissions rate, as determined under this section, that is not greater than zero with certain documentation and will describe such facilities and documentation in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. For PRA purposes, these general tax records are already approved by OMB under 1545-0074 for individuals, 1545-0123 for business entities, 1545-0092 for trust and estate filers, and 1545-0047 for tax-exempt organizations.
The recordkeeping requirements in these proposed regulations with respect to section 48E would include the requirement in proposed § 1.48E-5(i)(1) that a taxpayer must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had an anticipated GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period that applies for purposes of section 48E(g). Included in proposed § 1.48E-5(i)(2) are examples of documentation that sufficiently substantiates that a facility has a GHG emissions rate that is not greater 10 grams of CO 2 e per kWh during each year of the recapture period, which includes documentation, or a report prepared by an unrelated party that verifies that a facility had such an emissions rate. A facility described in proposed § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh by showing that it is a type of facility described in proposed § 1.45Y-5(c)(2). The Secretary may determine that other types of facilities can sufficiently substantiate a GHG emissions rate that is not greater than 10 grams of CO 2 e per kWh with certain documentation and will describe such facilities and documentation in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. For PRA purposes, these general tax records are already approved by OMB under 1545-0074 for individuals, 1545-0123 for business entities, 1545-0092 for trust and estate filers, and 1545-0047 for tax-exempt organizations.
The reporting requirements in these proposed regulations are in proposed §§ 1.45Y-5 and 1.48E-5, which provide the process for applicants to file a petition with the Secretary for a PER determination. To file a PER petition with the Secretary, a taxpayer must submit the PER petition attached to the taxpayer's Federal income tax return or Federal return, as appropriate, for the taxable year in which the taxpayer claims the section 45Y credit or the section 48E credit with respect to the facility to which the PER petition relates. A PER petition must contain an emissions value. If the applicant obtained an emissions value from DOE, the PER petition made to the IRS must include and emissions value letter from DOE. This emission value letter process will be approved by OMB under the DOE Control Number 1910-####. A taxpayer must retain in its books and records a copy of the taxpayer's request to DOE for an emissions value, including the supporting documentation provided to DOE with the request. Alternatively, if applicable, a PER petition may contain an emissions value determined for a facility using the most recent version of an LCA model, as of the time the PER petition is filed, that has been designated by the Secretary for such use. If an emissions value is determined using a designated model, a taxpayer is required to provide to the IRS information to support its determination of the emissions value in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. The burden for these requirements will be included within the forms and instructions applicable to sections 45Y and 48E. For section 45Y, the burden for these requirements will be associated the form and instructions applicable to claiming this credit and will be approved by OMB, in accordance with 5 CFR 1320.10, under the following OMB control numbers: 1545-0074 for individuals/sole proprietors, 1545-0123 for business entities, 1545-0047 for tax-exempt organizations, and 1545-0092 for trust and estate filers. For section 48E, the burden for these requirements will be associated with Form 3468, Investment Credit, and will be approved by OMB, in accordance with 5 CFR 1320.10, under the following OMB control numbers: 1545-0074 for individuals/sole proprietors, 1545-0123 for business entities, 1545-0047 for tax-exempt organizations, and 1545-0092 for trust and estate filers.

III. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) (RFA) imposes certain requirements with respect to Federal rules that are subject to the notice and comment requirements of section 553(b) of the Administrative Procedure Act (5 U.S.C. 551 et seq. ) and that are likely to have a significant economic impact on a substantial number of small entities. Unless an agency determines that a proposal is not likely to have a significant economic impact on a substantial number of small entities, section 603 of the RFA requires the agency to present an initial regulatory flexibility analysis (IRFA) of the proposed rule. The Treasury Department and the IRS have not determined whether the proposed rule, when finalized, will likely have a significant economic impact on a substantial number of small entities. This determination requires further study. However, because there is a possibility of significant economic impact on a substantial number of small entities, an IRFA is provided in these proposed regulations. The Treasury Department and the IRS invite comments on both the number of entities affected and the economic impact on small entities.
Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel of the Office of Advocacy of the Small Business Administration for comment on its impact on small business.

A. Need for and Objectives of the Rule
The proposed regulations would provide greater clarity to taxpayers for purposes of claiming the section 45Y credit or the section 48E credit. The proposed regulations would provide necessary definitions rules regarding the determination of credit amounts and the procedure for requesting a provisional emissions rate. The proposed regulations will provide greater clarity to taxpayers for purposes of claiming the section 45Y credit and the section 48E credit and encourage taxpayers to produce clean energy or invest in clean energy projects and facilities. Thus, the Treasury Department and the IRS intend and expect that the proposed rules will deliver benefits across the economy that will beneficially impact various industries.

B. Affected Small Entities
The RFA directs agencies to provide a description of, and if feasible, an estimate of, the number of small entities that may be affected by the proposed rules, if adopted. The Small Business Administration's Office of Advocacy estimates in its 2023 Frequently Asked Questions that 99.9 percent of American businesses meet its definition of a small business. The applicability of these proposed regulations does not depend on the size of the business, as defined by the Small Business Administration.
As described more fully in the preamble to this proposed regulation and in this IRFA, the section 45Y credit and the section 48E credit incentivize the production of clean energy and the investment in clean energy projects and facilities. Because the potential credit claimants can vary widely, it is difficult to estimate at this time the impact of these proposed regulations, if any, on small businesses.
The Treasury Department and the IRS expect to receive more information on the impact on small businesses through comments on these proposed rules and again once taxpayers start to claim the section 45Y credit or the section 48E credit using the guidance and procedures provided in these proposed regulations.

C. Impact of the Rules
The proposed regulations will allow taxpayers to plan investments and transactions based on the ability to claim the section 45Y production credit and/or the section 48E investment credit. The increased use of these credits will incentivize increased production and use of clean energy as well as the development of new methods and technologies for generating clean energy. The use of the credits will also incentivize additional investment in the projects and facilities that produce and develop clean energy.
Because recordkeeping and reporting requirements relating to the section 45Y and 48E credits will not materially differ from the requirements relating to existing energy production and investment tax credits, the recordkeeping and reporting requirements should not materially increase for taxpayers that already claim existing credits. To claim the section 45Y credit or the 48E credit, taxpayers will continue to need to execute the relevant form (or successor form, or pursuant to instructions and other guidance) and file such form with the taxpayer's timely filed return (including extensions) for the taxable year in which the property is placed in service.
Although the Treasury Department and the IRS do not have sufficient data to precisely determine the likely extent of the increased costs of compliance, the estimated burden of complying with the recordkeeping and reporting requirements are described in the Paperwork Reduction Act section of this preamble.

D. Alternatives Considered
The Treasury Department and the IRS considered alternatives to the proposed regulations. For example, the Treasury Department and the IRS considered whether to impose different rules for determining if a section 48E qualified facility had a recapture event, and how and when a taxpayer was required to notify the Secretary that the emissions rate at a qualified facility was greater than 10 grams of CO 2 e per kWh. The proposed regulations were designed to minimize burdens on taxpayers while ensuring that the IRS has sufficient information to determine if a section 48E qualified facility's emissions rate exceeded the recapture threshold. The proposed guidance requires that a taxpayer that claimed the section 48E credit to annually report to the IRS its GHG emissions rate in the form and manner prescribed in IRS forms or instructions or in published guidance as published in the Internal Revenue Bulletin.
An additional example is that the Treasury Department and the IRS considered alternatives to how a taxpayer should compute any increase in capacity at a qualified facility that for purposes of section 45Y and 48E was a qualified facility due to an increase in capacity. The proposed regulations were designed to provide a rule that was administrable for the IRS and taxpayers. Thus, the proposed regulations adopt a rule for taxpayers to compute the increase in capacity by multiplying the amount of electricity that the facility produces during a taxable year after the new unit or an addition of capacity is placed in service by a fraction, the numerator of which is the nameplate capacity that results from the new unit or an addition of capacity, and the denominator of which is the total nameplate capacity of the facility with the new unit or an addition of capacity
Comments are requested on the requirements in the proposed regulations, including specifically, whether there are less burdensome alternatives that ensure the IRS has sufficient information to administer the Clean Electricity Tax Credits.

E. Duplicative, Overlapping, or Conflicting Federal Rules
The proposed rules would not duplicate, overlap, or conflict with any relevant Federal rules. As discussed above, the proposed regulations would provide guidance relating to the section 45Y tax credit and the section 48E tax credit. The Treasury Department and the IRS invite input from interested members of the public about identifying and avoiding overlapping, duplicative, or conflicting requirements.

IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or Indian Tribal government, in the aggregate, or by the private sector, of $100 million (updated annually for inflation). This proposed rule does not include any Federal mandate that may result in expenditures by State, local, or Indian Tribal governments, or by the private sector in excess of that threshold.

V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This proposed rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.

VI. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments
Executive Order 13175 (Consultation and Coordination With Indian Tribal Governments) prohibits an agency from publishing any rule that has Tribal implications if the rule either imposes substantial, direct compliance costs on Indian Tribal governments, and is not required by statute, or preempts Tribal law, unless the agency meets the consultation and funding requirements of section 5 of the Executive order. This proposed rule does not have substantial direct effects on one or more federally recognized Indian tribes and does not impose substantial direct compliance costs on Indian Tribal governments within the meaning of the Executive order.

Comments and Public Hearing
Before these proposed amendments to the regulations are adopted as final regulations, consideration will be given to comments regarding the notice of proposed rulemaking that are submitted timely to the IRS as prescribed in the preamble under the ADDRESSES section. The Treasury Department and the IRS request comments on all aspects of the proposed regulations. All comments will be made available at https://www.regulations.gov. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn.
A public hearing with respect to this notice of proposed rulemaking has been scheduled for August 12, 2024, beginning at 10 a.m. (ET) and August 13, 2024, at 10 a.m. (ET). The hearing scheduled for August 12, 2024, will be held in the Auditorium at the Internal Revenue Building, 1111 Constitution Avenue NW, Washington, DC Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. Participants may alternatively attend the public hearing on August 12, 2024, by telephone. On August 13, 2024, the public hearing will be by telephone only.
The rules of 26 CFR 601.601(a)(3) apply to the public hearing. Persons who wish to present oral comments at the public hearing must submit an outline of the topics to be discussed and the time to be devoted to each topic by August 2, 2024. A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the public hearing. If no outline of the topics to be discussed at the public hearing is received by August 2, 2024, the public hearing will be cancelled. If the public hearing is cancelled, a notice of cancellation of the public hearing will be published in the Federal Register .
Individuals who want to testify in person at the public hearing must send an email to publichearings@irs.gov to have your name added to the building access list. The subject line of the email must contain the regulation number REG-119283-23 and the language TESTIFY In Person. For example, the subject line may say: Request to TESTIFY In Person at Hearing for REG-119283-23.
Individuals who want to testify by telephone at the public hearing must send an email to publichearings@irs.gov to receive the telephone number and access code for the public hearing. The subject line of the email must contain the regulation number REG-119283-23 and the language TESTIFY Telephonically. For example, the subject line may say: Request to TESTIFY Telephonically at Hearing for REG-119283-23.
Individuals who want to attend the public hearing in person without testifying must also send an email to publichearings@irs.gov to have your name added to the building access list. The subject line of the email must contain the regulation number REG-119283-23 and the language ATTEND In Person. For example, the subject line may say: Request to ATTEND Hearing In Person for REG-119283-23. Requests to attend the public hearing must be received by 5 p.m. ET on August 8, 2024.
Individuals who want to attend the public hearing by telephone without testifying must also send an email to publichearings@irs.gov to receive the telephone number and access code for the public hearing. The subject line of the email must contain the regulation number REG-119283-23 and the language ATTEND Hearing Telephonically. For example, the subject line may say: Request to ATTEND Hearing Telephonically for REG-119283-23. Requests to attend the public hearing must be received by 5 p.m. ET on August 8, 2024.
Public hearings will be made accessible to people with disabilities. To request special assistance during a public hearing please contact the Publications and Regulations Branch of the Office of Associate Chief Counsel (Procedure and Administration) by sending an email to publichearings@irs.gov (preferred) or by telephone at (202) 317-6901 (not a toll-free number) and must be received by 5 p.m. ET on August 7, 2024.

Statement of Availability of IRS Documents
Guidance cited in this preamble is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.

Drafting Information
The principal author of these proposed regulations is the Office of the Associate Chief Counsel (Passthroughs and Special Industries). However other personnel from the Treasury Department, the DOE, the EPA, the USDA, and the IRS participated in the development of the proposed regulations.

List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations
Accordingly, the Treasury Department and the IRS propose to amend 26 CFR part 1 as follows:

PART 1—INCOME TAXES
Paragraph 1. The authority citation for part 1 is amended by adding entries in numerical order for §§ 1.45Y-1 through 1.45Y-5 and 1.48E-1 through 1.48E-5 to read in part as follows:

Authority:
26 U.S.C. 7805 * * *
* * * * *
Section 1.45Y-1 also issued under 26 U.S.C. 45Y(a), (c), (d), and (g).
Section 1.45Y-2 also issued under 26 U.S.C. 45Y(b) and (e).
Section 1.45Y-3 also issued under 26 U.S.C. 45Y(a) and (g).
Section 1.45Y-4 also issued under 26 U.S.C. 45Y(b) and (g).
Section 1.45Y-5 also issued under 26 U.S.C. 45Y(b).
* * * * *
Section 1.48E-1 also issued under 26 U.S.C. 48E(a) and (c).
Section 1.48E-2 also issued under 26 U.S.C. 48E(b) and (c).
Section 1.48E-3 also issued under 26 U.S.C. 48E(a) and (b).
Section 1.48E-4 also issued under 26 U.S.C. 48E(b), (d), and (g).
Section 1.48E-5 also issued under 26 U.S.C. 48E(b).
* * * * *
Par. 2. An undesignated center heading is added immediately following § 1.37-3 to read as follows:

General Business Credits
* * * * *
Par. 3. Sections 1.45Y-0 through 1.45Y-5 are added to read as follows:
Sec.
* * * * *
1.45Y-0
Table of contents.
1.45Y-1
Clean electricity production credit.
1.45Y-2
Qualified facility for purposes of section 45Y.
1.45Y-3
[Reserved]
1.45Y-4
Rules of general application.
1.45Y-5
Greenhouse gas emissions rates for qualified facilities under section 45Y.
* * * * *
§ 1.45Y-0
Table of contents.
This section lists the captions contained in §§ 1.45Y-1 through 1.45Y-5.
§
1.45Y-1
Clean electricity production credit.
(a) Overview.
(1) In general.
(2) CHP property.
(i) In general.
(ii) Components excluded.
(iii) Unit of qualified facility.
(3) Code.
(4) kWh.
(5) Metering device.
(i) In general.
(ii) Standards for maintaining and operating a metering device.
(iii) Network equipment.
(iv) Examples.
(6) Qualified facility.
(7) Related person.
(i) In general.
(ii) Member of a consolidated group.
(8) Secretary.
(9) Section 45Y credit.
(10) Section 45Y regulations.
(11) Unrelated person.
(b) Credit amount.
(1) In general.
(2) Applicable amount.
(i) In general.
(ii) Base amount.
(iii) Alternative amount.
(3) Inflation adjustment.
(i) In general.
(ii) Annual computation.
(iii) Inflation adjustment factor.
(iv) GDP implicit price deflator.
(4) Energy communities increase in credit.
(5) Domestic content bonus credit amount.
(c) Credit phase-out.
(1) In general.
(2) Phase-out percentage.
(3) Applicable year.
(4) Phase-out data.
(5) Determination of phase-out.
(d) Requirements for CHP property.
(1) In general.
(2) Energy efficiency percentage.
(3) Special rule for calculating electricity produced by CHP property.
(i) In general.
(ii) Conversion from Btu to kWh.
(e) Applicability date.
§
1.45Y-2
Qualified facility for purposes of section 45Y.
(a) Qualified facility.
(b) Property included in qualified facility.
(1) In general.
(2) Unit of qualified facility.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(i) In general.
(ii) Power conditioning and transfer equipment.
(iii) Roads.
(iv) Fences.
(v) Buildings.
(vi) Shared integral property.
(vii) Examples.
(c) Coordination with other credits.
(1) In general.
(2) Allowed.
(3) Examples.
(d) Applicability date.
§
1.45Y-3
[Reserved]
§
1.45Y-4
Rules of general application.
(a) Only production in the United States taken into account.
(b) Production attributable to the taxpayer.
(1) In general.
(2) Example of gross sales.
(3) Section 761(a) election.
(c) Expansion of facility; Incremental production.
(1) In general.
(2) Special rule for restarted facilities.
(3) Computation of increased amount of electricity produced.
(4) Examples.
(d) Retrofit of an existing facility (80/20 Rule).
(1) In general.
(2) Cost of new components of property.
(3) Examples.
(e) Applicability date.
§ 1.45Y-5 Greenhouse gas emissions rates for qualified facilities under section 45Y.
(a) In general.
(b) Definitions.
(1) CO 2 e per kWh.
(2) Combustion.
(3) Gasification.
(4) Facility that produces electricity through combustion or gasification.
(5) Greenhouse gas emissions rate.
(6) Greenhouse gases emitted into the atmosphere by a facility in the production of electricity.
(7) Non-C&G Facility.
(8) Fuel.
(9) Feedstock.
(c) Non-C&G Facilities.
(1) Determining a greenhouse gas emissions rate for Non-C&G Facilities.
(i) Excluded emissions.
(ii) Emissions assessment process.
(iii) Example of greenhouse gas emissions rate determination for a Non-C&G Facility.
(2) Non-C&G Facilities with a greenhouse gas emissions rate that is not greater than zero.
(d) C&G Facilities.
(1) Determining a greenhouse gas emissions rate for C&G Facilities.
(2) LCA requirements.
(i) Starting boundary.
(ii) Ending boundary.
(iii) Baseline.
(iv) Offsets and offsetting activities.
(v) Principles for included emissions.
(vi) Principles for excluded emissions.
(vii) Alternative fates and avoided emissions.
(e) Carbon capture and sequestration.
(f) Annual publication of emissions rates.
(1) In general.
(2) Publication of analysis required for changes to the Annual Table.
(g) Provisional emissions rates.
(1) In general.
(2) Rate not established.
(3) Process for filing a PER petition.
(4) PER determination.
(5) Emissions value request process.
(6) LCA model for determining an emissions value for C&G Facilities.
(7) Effect of PER.
(h) Reliance on Annual Table or Provisional Emissions Rate.
(i) Substantiation.
(1) In general.
(2) Sufficient substantiation.
(j) Applicability date.
§ 1.45Y-1
Clean electricity production credit.
(a) Overview —(1) In general. For purposes of section 38 of the Code, the section 45Y credit is determined under section 45Y of the Code and the section 45Y regulations (as defined in paragraph (a)(10) of this section). This paragraph (a) provides definitions of terms that, unless otherwise specified, apply for purposes of section 45Y, the section 45Y regulations, and any provision of the Code or this chapter that expressly refers to any provision of section 45Y or the section 45Y regulations. Paragraph (b) of this section provides rules for determining the amount of the section 45Y credit for any taxable year. Paragraph (c) of this section provides rules regarding the phase-out of the section 45Y credit. Paragraph (d) of this section provides rules regarding combined heat and power system (CHP) property. See § 1.45Y-2 for rules relating to qualified facilities for purposes of the section 45Y credit. See § 1.45Y-4 for rules of general application for the section 45Y credit. See § 1.45Y-5 for rules to determine greenhouse gas emissions rates for qualified facilities.
(2) CHP property —(i) In general. For purposes of section 45Y(g)(2)(B) and paragraph (d) of this section, the term CHP property means property comprising a system that uses the same energy source for the simultaneous or sequential generation of electrical power, mechanical shaft power, or both, in combination with the generation of steam or other forms of useful thermal energy (including for heating and cooling applications).
(ii) Components excluded. CHP property does not include property used to transport the energy source to the generating facility or to distribute energy produced by the facility.
(iii) Unit of qualified facility. For purposes of § 1.45Y-2(a), a unit of qualified facility includes all functionally interdependent components of property owned by the taxpayer that are operated together and that can operate apart from other property to produce useful thermal energy and electricity.
(3) Code. The term Code means the Internal Revenue Code.
(4) kWh. The term kWh means kilowatt hours.
(5) Metering device —(i) In general. For purposes of section 45Y(a)(1)(A)(ii)(II), the term metering device, means equipment that is owned and operated by an unrelated person (as defined in paragraph (a)(11) of this section) for energy revenue metering to measure and register the continuous summation of an electricity quantity with respect to time.
(ii) Standards for maintaining and operating a metering device. For purposes of section 45Y(a)(1)(A)(ii)(II) and this section, a metering device must be maintained in proper working order in accordance with the instructions of its manufacturer, meet the requirements of the American National Standards Institute C12.1-2022 standard, or subsequent revisions, be revenue grade with a +/− 0.5% accuracy and be properly calibrated.
(iii) Network equipment. For purposes of operating the metering device, the unrelated person may share network equipment, such as spare fiber optic cable owned by the taxpayer that produces the electricity and co-locate network equipment in the taxpayer's facilities.
(iv) Examples. This paragraph (a)(5)(iv) provides examples illustrating the application of this paragraph (a)(5).
(A) Example 1. Qualified facility equipped with a metering device owned and operated by an unrelated person. X owns a qualified facility equipped with a metering device that is owned and operated by Y, an unrelated person. The metering device meets the requirements of paragraphs (a)(5)(i) through (iii). X sells electricity produced at the qualified facility to Z, a related person during the taxable year. Because the qualified facility is equipped with a metering device that is owned and operated by an unrelated person and meets the requirements of paragraphs (a)(5)(i) through (iii), X may claim a section 45Y credit based on the electricity produced by X and sold to Z during the taxable year.
(B) Example 2. Electricity produced by the taxpayer at a qualified facility sold, consumed, or stored by the taxpayer during the taxable year. X owns a qualified facility equipped with a metering device that is owned and operated by an unrelated person, Y. The metering device meets the requirements of paragraphs (a)(5)(i) through (iii). Because the qualified facility is equipped with a metering device that is owned and operated by an unrelated person and that meets the requirements of paragraphs (a)(5)(i) through (iii), X may sell electricity produced at the qualified facility during the taxable year to a related or unrelated person. X may also consume the electricity produced at the qualified facility during the taxable year onsite. Additionally, X may store the electricity produced at the qualified facility during the taxable year in EST owned by X. In any of these three situations, X may claim a section 45Y credit for the taxable year for the kWh of electricity produced at the qualified facility and sold, consumed, or stored by X during the taxable year.
(6) Qualified facility. The term qualified facility for purposes of the section 45Y credit has the meaning provided in § 1.45Y-2(a).
(7) Related person —(i) In general. For purposes of the section 45Y credit, the term related person means a person that is related to another person if such persons would be treated as a single employer under the regulations in this chapter under section 52(b) of the Code.
(ii) Member of a consolidated group. In the case of a corporation that is a member of a consolidated group (as defined in § 1.1502-1(h)), such member will be treated as selling electricity to an unrelated person if such electricity is sold to an unrelated person by another member of such group.
(8) Secretary. The term Secretary means the Secretary of the Treasury or her delegate.
(9) Section 45Y credit. The term section 45Y credit means the clean electricity production credit determined under section 45Y of the Code and the section 45Y regulations.
(10) Section 45Y regulations. The term section 45Y regulations means this section and §§ 1.45Y-2 through 1.45Y-5.
(11) Unrelated person. For purposes of section 45Y(a), the term unrelated person means a person who is not a related person as defined in section 45Y(g)(4) and paragraph (a)(7) of this section. In the case of sales of electricity to an individual consumer, such sales will be treated as sales to an unrelated party for purposes of the section 45Y credit. For example, assume Taxpayer X produces electricity at a qualified facility and sells it to Consumer Y. Consumer Y is an individual consumer and is not subject to aggregation under the regulations prescribed under section 52(b). Therefore, Consumer Y is not treated as a single employer with Taxpayer X under section 52(b), and a sale to Consumer Y is treated as a sale to an unrelated person. The result is the same if Consumer Y is an individual consumer who is a member of a cooperative or Indian tribe that owns or controls, directly or indirectly, Taxpayer X. The result is also the same if Consumer Y is an individual consumer who is a resident of a State or municipality that owns or controls, directly or indirectly, Taxpayer X.
(b) Credit amount —(1) In general. For purposes of section 38 of the Code, the section 45Y credit for any taxable year is an amount equal to the product of the kWh of electricity that is produced at a qualified facility and sold by the taxpayer to an unrelated person during the taxable year, multiplied by the applicable amount with respect to such qualified facility. In the case of a qualified facility equipped with a metering device that is owned and operated by an unrelated person, the section 45Y credit for any taxable year is an amount equal to the product of the kWh of electricity that is produced at a qualified facility and sold, consumed, or stored by the taxpayer during the taxable year, multiplied by the applicable amount with respect to such qualified facility. Only one section 45Y credit can be claimed for each kWh of electricity produced by the taxpayer at a qualified facility.
(2) Applicable amount —(i) In general. The term applicable amount means the base amount described in paragraph (b)(2)(ii) of this section or the alternative amount described in paragraph (b)(2)(iii) of this section. The applicable amount is subject to the inflation adjustment as provided in section 45Y(c)(1) and paragraph (b)(3) of this section. The applicable amount may also be increased as provided in section 45Y(g)(7) and paragraph (b)(4) of this section in the case of a qualified facility that is located in an energy community.
(ii) Base amount. In the case of any qualified facility that does not satisfy the requirements provided in section 45Y(a)(2)(B), the term base amount means 0.3 cents.
(iii) Alternative amount. In the case of any qualified facility that satisfies the prevailing wage and apprenticeship requirements provided in section 45Y(a)(2)(B), the term alternative amount means 1.5 cents.
(3) Inflation adjustment —(i) In general. In the case of a calendar year beginning after 2024, the base amount and the alternative amount will each be adjusted by multiplying such amount by the inflation adjustment factor for the calendar year in which the sale, consumption, or storage of the electricity occurs. If the base amount as adjusted under this paragraph (b)(3)(i) is not a multiple of 0.05 cent, such amount will be rounded to the nearest multiple of 0.05 cent. If the alternative amount as adjusted under this paragraph (b)(3)(i) is not a multiple of 0.1 cent, such amount will be rounded to the nearest multiple of 0.1 cent.
(ii) Annual computation. The inflation adjustment factor for each calendar year will be published in the Federal Register not later than April 1 of that calendar year. The base amount and the alternative amount, as adjusted under paragraph (b)(3)(i) of this section, will also be published in the Federal Register not later than April 1 of each calendar year.
(iii) Inflation adjustment factor. The term inflation adjustment factor means, with respect to a calendar year, a fraction—
(A) The numerator of which is the GDP implicit price deflator for the preceding calendar year, and
(B) The denominator of which is the GDP implicit price deflator for the calendar year 1992.
(iv) GDP implicit price deflator. The term GDP implicit price deflator means the most recent revision of the implicit price deflator for the gross domestic product as computed and published by the Department of Commerce before March 15 of the calendar year.
(4) Energy communities increase in credit. In the case of any qualified facility that is located in an energy community (as defined in section 45(b)(11)(B)), for purposes of determining the amount of the section 45Y credit with respect to any electricity produced by the taxpayer at such facility during the taxable year, the applicable amount will be increased by an amount equal to 10 percent of the applicable amount. The 10 percent increase under this paragraph (b)(4) applies after the inflation adjustment under paragraph (b)(3) of this section.
(5) Domestic content bonus credit amount. In the case of any qualified facility that satisfies the requirements of section 45Y(g)(11)(B)(i) (domestic content requirement), for purposes of determining the amount of the section 45Y credit with respect to any electricity produced by the taxpayer at such facility during the taxable year, the amount of the credit otherwise determined under this paragraph (b), without application of paragraph (b)(4) of this section (related to energy communities), is increased by 10 percent.
(c) Credit phase-out —(1) In general. The amount of the section 45Y credit for any qualified facility, the construction of which begins during a calendar year provided in section 45Y(d)(2) and described in paragraph (c)(2) of this section, is equal to the product of—
(i) The amount of the credit determined under section 45Y(a) and described in paragraph (b) of this section, without regard to section 45Y(d) and this paragraph (c), multiplied by
(ii) The phase-out percentage provided under section 45Y(d)(2) and described in paragraph (c)(2) of this section.
(2) Phase-out percentage. The phase-out percentage described in this paragraph (c)(2) is equal to—
(i) For a facility the construction of which begins during the first calendar year following the applicable year, 100 percent,
(ii) For a facility the construction of which begins during the second calendar year following the applicable year, 75 percent,
(iii) For a facility the construction of which begins during the third calendar year following the applicable year, 50 percent, and
(iv) For a facility the construction of which begins during any calendar year subsequent to the calendar year described in paragraph (c)(2)(iii) of this section, 0 percent.
(3) Applicable year. For purposes of this paragraph (c), the term applicable year means the later of—
(i) The calendar year in which the Secretary makes the determination that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022, or
(ii) 2032.
(4) Phase-out data. For purposes of paragraph (c)(3)(i) of this section, the annual greenhouse gas emissions from the production of electricity in the United States for any calendar year must be assessed separately using both of the following data sources:
(i) The U.S. Energy Information Administration's Electric Power Annual, summing the annual carbon dioxide emissions data from conventional power plants and combined heat and power plants and the Monthly Energy Review annual carbon dioxide emissions from the combustion of biomass to produce electricity in the Electric Power Sector; and
(ii) The U.S. Environmental Protection Agency (EPA) Inventory of U.S. Greenhouse Gas Emissions and Sinks (GHGI) annual electric power-related carbon dioxide, methane, and nitrous oxide emissions data including carbon dioxide emissions from the combustion of biomass to produce electricity.
(5) Determination of phase-out. For purposes paragraph (c)(3)(i) of this section, the Secretary will determine that the annual greenhouse gas emissions from the production of electricity in the United States are equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022 only if, the annual greenhouse gas emissions from the production of electricity in the United States, as determined separately under both of the data sources described in paragraph (c)(4) of this section, are each equal to or less than 25 percent of the annual greenhouse gas emissions from the production of electricity in the United States for calendar year 2022. If a data source described in paragraph (c)(4) of this section becomes unavailable (for example, it is no longer published or does not provide the specified data), the Secretary must designate a similar data source to replace the unavailable data source.
(d) Requirements for CHP property —(1) In general. To be eligible for the section 45Y credit, a CHP property must produce at least 20 percent of its total useful energy in the form of useful thermal energy that is not used to produce electrical or mechanical power (or combination thereof), and at least 20 percent of its total useful energy in the form of electrical or mechanical power (or combination thereof). The energy efficiency percentage of CHP property must exceed 60 percent. These percentages are determined on a British thermal unit (Btu) basis.
(2) Energy efficiency percentage. The energy efficiency percentage of a CHP property is the fraction the numerator of which is the total useful electrical, thermal, and mechanical power produced by the system at normal operating rates, and expected to be consumed in its normal application, and the denominator of which is the lower heating value of the fuel sources for the system.
(3) Special rule for calculating electricity produced by CHP property —(i) In general. For purposes of section 45Y(a) and paragraph (b) of this section, the kWh of electricity produced by a taxpayer at a qualified facility includes any production in the form of useful thermal energy by any CHP property within such facility, and the amount of greenhouse gases emitted into the atmosphere by such facility in the production of such useful thermal energy is included for purposes of determining the greenhouse gas emissions rate for such facility.
(ii) Conversion from Btu to kWh —(A) In general. For purposes of section 45Y(g)(2)(A)(i) and this paragraph (d)(3), the amount of kWh of electricity produced in the form of useful thermal energy is equal to the quotient of the total useful thermal energy produced by the CHP property within the qualified facility, divided by the heat rate for such facility.
(B) Heat rate. For purposes of this paragraph (d)(3), the term heat rate means the amount of energy used by the qualified facility to generate 1 kWh of electricity, expressed as Btus per net kWh generated. In calculating the heat rate of a qualified facility that includes CHP property that uses combustion, a taxpayer must use the annual average heat rate, defined as the total annual fuel consumption of the CHP property (in Btus, using the lower heating value of the fuel) during the taxable year for which the section 45Y credit is claimed, divided by the annual net electricity generation (in kWh) of the CHP property during such taxable year.
(e) Applicability date. This section applies to qualified facilities placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE FEDERAL REGISTER ].
§ 1.45Y-2
Qualified facility for purposes of section 45Y.
(a) Qualified facility. For purposes of the section 45Y credit, the term qualified facility means a facility owned by the taxpayer that meets the following requirements:
(1) The facility is used for the generation of electricity,
(2) The facility is placed in service after December 31, 2024, and
(3) The facility has a greenhouse gas emissions rate of not greater than zero (as determined under rules provided in § 1.45Y-5).
(b) Property included in qualified facility —(1) In general. A qualified facility includes a unit of qualified facility (as defined in paragraph (b)(2) of this section) that meets the requirements of paragraph (b)(2) of this section. A qualified facility also includes qualified property owned by the taxpayer that is an integral part (as defined in paragraph (b)(3) of this section) of the qualified facility. Any component of property that meets the requirements of this paragraph (b) is part of a qualified facility regardless of where such component of property is located. A qualified facility generally does not include equipment that is an addition or modification to an existing qualified facility. However, see § 1.45Y-4(c) for rules regarding the expansion of a facility or incremental production and § 1.45Y-4(d) for rules regarding a retrofitted qualified facility (80/20 Rule).
(2) Unit of qualified facility —(i) In general. For purposes of the section 45Y credit, the unit of qualified facility includes all functionally interdependent components of property (as defined in paragraph (b)(2)(ii)) of this section) owned by the taxpayer that are operated together and that can operate apart from other property to produce electricity. No provision of this section, § 1.45Y-1, or § 1.45Y-4 through 1.45Y-5 uses the term unit in respect of a qualified facility with any meaning other than that provided in this paragraph (b)(2)(i).
(ii) Functionally interdependent. Components of property are functionally interdependent if placing in service each component is dependent upon placing in service other components to produce electricity.
(3) Integral part —(i) In general. For purposes of thesection 45Ycredit, a component of property owned by a taxpayer is an integral part of a qualified facility if it is used directly in the intended function of the qualified facility and is essential to the completeness of such function. Property that is an integral part of a qualified facility is part of the qualified facility.
(ii) Power conditioning and transfer equipment. Power conditioning equipment and transfer equipment are integral parts of a qualified facility. Power conditioning equipment includes equipment that modifies the characteristics of electricity into a form suitable for use, transmission, or distribution. Parts related to the functioning or protection of power conditioning equipment are also treated as power conditioning equipment and include, but are not limited to, switches, circuit breakers, arrestors, and hardware and software used to monitor, operate, and protect power conditioning equipment. Transfer equipment includes components of property that allow for the aggregation of electricity generated by a qualified facility and components of property that alter voltage to permit electricity to be transferred to a transmission or distribution line. Transfer equipment does not include transmission or distribution lines. Examples of transfer equipment include, but are not limited to, wires, cables, and combiner boxes that conduct electricity. Parts related to the functioning or protection of transfer equipment are also treated as transfer equipment and may include items such as current transformers used for metering, electrical interrupters (such as circuit breakers, fuses, and other switches), and hardware and software used to monitor, operate, and protect transfer equipment.
(iii) Roads. Roads that are an integral part of a qualified facility are those roads integral to the intended function of the qualified facility such as onsite roads that are used to operate and maintain the qualified facility. Roads used primarily for access to the site, or roads used primarily for employee or visitor vehicles, are not integral to the intended function of the qualified facility and thus are not an integral part of a qualified facility.
(iv) Fences. Fencing is not an integral part of a qualified facility because it is not integral to the intended function of the qualified facility.
(v) Buildings. Generally, buildings are not integral parts of a qualified facility because they are not integral to the intended function of the qualified facility. However, the following structures are not treated as buildings for this purpose:
(A) A structure that is essentially an item of machinery or equipment; and
(B) A structure that houses components of property that are integral to the intended function of a qualified facility if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
(vi) Shared integral property. Multiple qualified facilities (whether owned by one or more taxpayers), including qualified facilities with respect to which a taxpayer has claimed a credit under section 48E or another Federal income tax credit, may include shared property that may be considered an integral part of each qualified facility. In addition, a component of property that is shared by a qualified facility (as defined in section 45Y(b)) (45Y Qualified Facility) and a qualified facility (as defined by section 48E(b)(3)) (48E Qualified Facility) that is an integral part of both qualified facilities will not affect the eligibility of the 45Y Qualified Facility for the section 45Y credit or the 48E Qualified Facility for the section 48E credit.
(vii) Examples. This paragraph (b)(3)(vii) provides examples illustrating the rules of paragraphs (b)(3)(i) through (vi) of this section.
(A) Example 1. Co-located qualified facilities owned by the same taxpayer that share integral property. X constructs a solar farm (Solar Qualified Facility) and nearby also constructs a wind facility (Wind Qualified Facility) that are each a qualified facility (as defined in § 1.45Y-2(a)). The Solar Qualified Facility and Wind Qualified Facility each connect to a transformer that steps up the electricity produced by each qualified facility to electrical grid voltage before it is transmitted to the electrical grid through an intertie. The fact that the Solar Qualified Facility and Wind Qualified Facility share property that is integral to both does not impact the ability of X to claim a section 45Y credit for both qualified facilities.
(B) Example 2. Co-located qualified facilities owned by different taxpayers that share integral property. X constructs a solar farm (Solar Qualified Facility), and nearby Y constructs a wind facility (Wind Qualified Facility) that are each a qualified facility (as defined in § 1.45Y-2(a)). X's Solar Qualified Facility and Y's Wind Qualified Facility each connect to a transformer that steps up the electricity produced by both qualified facilities to electrical grid voltage before it is transmitted to the electrical grid through an intertie. The fact that the Solar Qualified Facility and Wind Qualified Facility share property that is integral to both does not impact the ability of X or Y to claim a section 45Y credit for the electricity produced by their respective qualified facilities.
(C) Example 3. Co-located qualified facility and Energy Storage Technology owned by the same taxpayer that share integral property. X constructs a wind facility that is a qualified facility (as defined in § 1.45Y-2(a)) (Wind Qualified Facility) that is co-located with an EST (as defined in § 1.48E-2(g)) (Energy Storage). The Wind Qualified Facility and Energy Storage share transfer equipment that is integral to both. The fact that the Wind Qualified Facility and Energy Storage share property that is integral to both does not impact the ability of X to claim a section 45Y credit for the electricity produced by the Wind Qualified Facility or to claim a section 48E credit for the Energy Storage.
(D) Example 4. Co-located wind qualified facility and Energy Storage Technology owned by different taxpayers that share integral property. X constructs a solar farm that is a qualified facility (as defined in § 1.45Y-2(a)) (Solar Qualified Facility) that is co-located with an EST (as defined in § 1.48E-2(g)) (Energy Storage) owned by Y. The Wind Qualified Facility and Energy Storage share transfer equipment that is integral to both. The fact that the Wind Qualified Facility and Energy Storage share property that is integral to both does not impact the ability of X to claim a section 45Y credit for the electricity produced by the Wind Qualified Facility or the ability of Y to claim a section 48E credit for the Energy Storage.
(c) Coordination with other credits —(1) In general. The term qualified facility (as defined in section 45Y(b)) does not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E is allowed under section 38 of the Code for the taxable year or any prior taxable year. A taxpayer that directly owns a qualified facility (as defined in section 45Y(b)) that is eligible for both a section 45Y credit and another Federal income tax credit is eligible for the section 45Y credit only if the other Federal income tax credit was not allowed with respect to the qualified facility. Nothing in this paragraph (c) precludes a taxpayer from claiming a section 45Y credit with respect to a qualified facility (as defined in section 45Y(b)) that is co-located with another facility for which a credit determined under section 45, 45J, 45Q, 45U, 48, 48A, or 48E is allowed under section 38 for the taxable year or any prior taxable year.
(2) Allowed. For purposes of paragraph (c)(1) of this section, the term allowed only includes credits that taxpayers have claimed on a Federal income tax return or Federal return, as appropriate, and that the Internal Revenue Service (IRS) has not challenged in terms of the taxpayer's eligibility.
(3) Examples. This paragraph (c)(3) provides examples illustrating the rules of paragraph (c) of this section.
(i) Example 1. Taxpayer claims a section 45Y credit on a solar farm and section 48E credit on co-located EST. X owns a solar farm that is a qualifying facility (as defined in § 1.45Y-2(a)) (Solar Qualified Facility), and X owns a co-located EST (as defined in § 1.48E-2(g)) (Energy Storage). The Energy Storage is not part of the Solar Qualified Facility, and, therefore, X may claim the section 45Y credit based on the kWh of electricity produced by the Solar Qualified Facility, and X may also claim the section 48E credit based on its qualified investment in the Energy Storage.
(ii) Example 2. Different taxpayers claim section 45Y credit for a solar farm and a section 48E credit for co-located Energy Storage Technology. X owns a solar farm that is a qualifying facility (as defined in § 1.45Y-2(a)) (Solar Qualified Facility), and Y owns a co-located EST (as defined in § 1.48E-2(g)) (Energy Storage). The Energy Storage is not part of the Solar Qualified Facility, and therefore, X may claim the section 45Y credit based on the kWh of electricity produced by the Solar Qualified Facility, and Y may claim the section 48E credit based on its qualified investment in the Energy Storage.
(iii) Example 3. Taxpayer claiming a section 45Y credit; another credit is not allowed to the Taxpayer. X owns a wind facility that satisfies the requirements of a qualified facility (as defined in § 1.45Y-2(a)) as well as the requirements of a qualified facility (as defined in § 1.48E-2(a)). X claims a section 45Y credit with respect to the wind facility. While a credit may be available with regard to the wind facility under section 48E, because X has claimed a section 45Y credit with respect to the wind facility, a section 48E credit is not allowed.
(iv) Example 4. Interaction of section 45Y and section 45Q credits. X owns a qualified facility (as defined in § 1.45Y-2(a)) (45Y Facility) that includes carbon capture equipment, which is functionally interdependent to the production of electricity by the 45Y Facility. X used the carbon capture equipment to capture and utilize (as described in section 45Q(f)(5)) qualified carbon dioxide and claimed a section 45Q credit in a prior taxable year. As a result, X cannot claim a credit for its 45Y Facility because a qualified facility does not include a facility for which a credit determined under section 45Q is allowed.
(d) Applicability date. This section applies to qualified facilities placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE FEDERAL REGISTER ].
§ 1.45Y-3
[Reserved]
§ 1.45Y-4
Rules of general application.
(a) Only production in the United States taken into account. Consumption, sales, or storage are taken into account for purposes of the section 45Y credit only with respect to electricity the production of which is within the United States (within the meaning of section 638(1) of the Code), or a United States territory, which for purposes of section 45Y and the section 45Y regulations has the meaning of the term a possession of the United States (within the meaning of section 638(2)).
(b) Production attributable to the taxpayer —(1) In general. In the case of a qualified facility in which more than one person has an ownership share (and the arrangement is not treated as a partnership for Federal tax purposes) production from the qualified facility is allocated among such persons in proportion to their respective ownership shares in the gross sales from such qualified facility. The respective owners each determine their respective section 45Y credit under section 45Y(a) and based on their respective ownership shares in the gross sales from such qualified facility during the taxable year.
(2) Example of gross sales. A, B and C, all calendar year taxpayers, each own an interest in Facility, which is a qualified facility (as defined in § 1.45Y-2(a)). A owns 45 percent, B owns 35 percent, and C owns 20 percent, and each are allocated gross sales from Facility in proportion to their ownership interest. Facility produced 1000 kWh of electricity during the taxable year. A, B, and C will each determine their respective section 45Y credit under section 45Y(a) and § 1.45Y-1(b) based on their allocable share of the gross sales from the 1000 kWh of electricity produced at Facility during the taxable year.
(3) Section 761(a) election. If a qualified facility is owned through an unincorporated organization that has made a valid election under section 761(a) of the Code, each member's undivided ownership share in the qualified facility will be treated as a separate qualified facility owned by such member.
(c) Expansion of facility; Incremental production —(1) In general. Solely for purposes of this paragraph (c), the term qualified facility includes either a new unit or an addition of capacity placed in service after December 31, 2024, in connection with a facility described in section 45Y(b)(1)(A) (without regard to clause (ii) of such paragraph), which was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit or addition of capacity. A new unit or an addition of capacity that meets the requirements of this paragraph (c) will be treated as a separate qualified facility. For purposes of this paragraph (c), a new addition or an addition of capacity requires the addition or replacement of components of property, including any new or replacement integral property added to a facility necessary to increase capacity. If applicable for purposes of this paragraph (c), taxpayers must use modified or amended facility operating licenses or the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a facility to determine its nameplate capacity. For purposes of assessing the One-Megawatt Exception provided in section 45Y(a)(2)(B)(i), the capacity for a new unit or an addition of capacity is the sum of the nameplate capacity of the added qualified facility and the nameplate capacity of the facility to which the qualified facility was added.
(2) Special rule for restarted facilities. Solely for purposes of this paragraph (c), a facility that is decommissioned or in the process of decommissioning and restarts can be considered to have increased capacity if the following conditions are met:
(i) The existing facility must have ceased operations;
(ii) The existing facility must have a shutdown period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC); and
(iii) The increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
(3) Computation of increased amount of electricity produced. To determine the increased amount of electricity produced by a facility by reason of a new unit or an addition of capacity, a taxpayer must multiply the amount of electricity that the facility produces during a taxable year after the new unit or addition of capacity is placed in service by a fraction, the numerator of which is the added nameplate capacity that results from the new unit or addition of capacity, and the denominator of which is the total nameplate capacity of the facility with the new unit or addition of capacity added.
(4) Examples. This paragraph (c)(4) provides examples illustrating the rules of paragraph (c) of this section.
(i) Example 1. New Unit. X owns a hydropower facility (Facility H) that was originally placed in service in 2020, with a nameplate capacity of 600 megawatts. During taxable years 2020 through 2024, X claimed a section 45 credit for the electricity produced by Facility H. On July 1, 2025, X places in service components of property comprising a new unit that results in Facility H having an increased nameplate capacity of 900 megawatts in 2025. For purposes of paragraph (c) of this section, this new unit will be treated as a separate facility (Facility J). X may claim a section 45Y credit during the 10-year credit period starting on July 1, 2025, based on the increased amount of electricity generated as a result of the new unit, which is determined by multiplying the electricity that Facility H produces by one-third (equal to the 300-megawatt increase in nameplate capacity that results from the addition of Facility J divided by the 900 megawatt nameplate capacity of Facility H with Facility J). Even though X claimed a section 45 credit for the existing capacity of Facility H in taxable years 2020 through 2024, X can claim a section 45Y credit for the production of electricity associated with Facility J. X may also continue to claim the section 45 credit through taxable year 2030 for electricity generated by Facility H (excluding the incremental electricity generation related to Facility J).
(ii) Example 2. Addition of Capacity. Y owns a nuclear facility (Facility N) that was originally placed in service on January 1, 2000, with a nameplate capacity of 800 megawatts. Y claimed a section 45U credit in taxable years 2024 and 2025 for the electricity generated by Facility N. On January 15, 2026, Y removed components of property with a nameplate capacity of 200 megawatts and placed in service components of property with a nameplate capacity of 400 megawatts. For purposes of this paragraph (c), Facility N's addition of capacity is treated as a new separate qualified facility placed in service on January 15, 2026 (Facility P). Y may claim a section 45Y credit during the 10-year credit period starting on January 15, 2026, based on the increased amount of electricity produced at Facility N that is attributable to the addition of capacity (Facility P), which is determined by multiplying the electricity that Facility N produces by 1/5 (equal to the 200-megawatt increase in nameplate capacity divided by Facility N's new total nameplate capacity of 1,000 megawatts). Even though Y claimed a section 45U credit in taxable years 2024 and 2025 for the existing capacity of Facility N, Y can claim a section 45Y credit for the production of electricity associated with Facility P. Y may also continue to claim the section 45U credit through taxable year 2032 for electricity generated by Facility N (excluding the incremental electricity generation related to Facility P).
(d) Retrofit of an existing facility (80/20 Rule)— (1) In general. For purposes of section 45Y(b)(1)(B), a facility may qualify as originally placed in service even if it contains some used components of property within the unit of qualified facility, provided the fair market value of the used components of the unit of qualified facility is not more than 20 percent of the total value of the unit of qualified facility (that is, the cost of the new components of property plus the fair market value of the used components of property within the unit of qualified facility) (80/20 Rule). If a facility satisfies the requirements of the 80/20 Rule, then the date on which such qualified facility is considered originally placed in service for purposes of section 45Y(b)(1)(B) is the date on which the new components of property of the unit of qualified facility are placed in service.
(2) Cost of new components of property. For purposes of this 80/20 Rule, the cost of new components of the unit of qualified facility includes all costs properly included in the depreciable basis of the new components of property of the unit of qualified facility.
(3) Examples. The following examples illustrate the rules of this paragraph (d).
(i) Example 1. Retrofitted facility that that meets the 80/20 Rule. A owns an existing wind facility. On February 1, 2026, A replaces used components of the wind facility with new components at a cost of $2 million. The fair market value of the remaining original components of the wind facility is $400,000, which is not more than 20 percent of the retrofitted wind facility's total fair market value of $2.4 million (the cost of the new components ($2 million) + the fair market value of the remaining original components ($400,000)). Thus, the retrofitted wind facility will be considered newly placed in service for purposes of section 45Y, and the section 45Y credit is allowable for electricity produced by A at the wind qualified facility and sold, consumed, or stored, during the 10-year period beginning on February 1, 2026, assuming all the other requirements of section 45Y are met.
(ii) Example 2. Retrofit of an existing facility that meets the 80/20 Rule. Facility Z, a facility that was originally placed in service on January 1, 2026, was not a qualified facility (as described in § 1.45Y-2(a)) when it was placed in service because it did not meet the greenhouse gas emissions rate requirements (as determined under rules provided in § 1.45Y-5). On January 1, 2027, Facility Z was retrofitted and now meets the requirements to be a qualified facility under § 1.45Y-2(a). After the retrofit, the cost of the new property included in Facility Z is greater than 80 percent of Facility Z's total fair market value. Because Facility Z meets the 80/20 Rule, Facility Z is deemed to be originally placed in service on January 1, 2027. Therefore, a section 45Y credit is allowable for electricity produced by Facility Z and sold, consumed, or stored during the 10-year period beginning on January 1, 2027, assuming all the other requirements of section 45Y are met.
(iii) Example 3. Retrofitted nuclear facility that satisfied the 80/20 Rule. T owns a nuclear facility (Facility N) that was originally placed in service on March 1, 1982, and was decommissioned on September 20, 2010. T replaces used components of property at Facility N with new components at a cost of $200 million, and then places Facility N in service on July 15, 2026. The fair market value of the remaining original components of the Facility N, after being decommissioned and prior to restart, is $30 million, which is not more than 20 percent of Facility N's total fair market value of $230 million (the cost of the new components ($200 million) + the fair market value of the remaining original components ($30 million)). Thus, Facility N will be considered newly placed in service on July 15, 2026, for purposes of section 45Y, and T will be able to claim a section 45Y credit based on the electricity generated at Facility N, assuming all the other requirements of section 45Y are met.
(iv) Example 4. Capital improvements to an existing qualified facility that do not satisfy the 80/20 Rule. X owns an existing facility, Facility C, that was originally placed in service on January 1, 2023. X makes capital improvements to Facility C that are placed in service on June 1, 2026. The cost of the capital improvements is $500,000 and the fair market value of Facility C after the improvements is $2 million. The value of the old components of property is $1,500,000 out of $2.0 million, or 75 percent of the total fair market value of Facility C after the improvements. Because the fair market value of the new property included in Facility C is less than 80 percent of Facility C's total fair market value, Facility C does not meet the 80/20 Rule. Facility C will not be considered a qualified facility (as defined in § 1.45Y-2(a)) eligible for the section 45Y credit.
(e) Applicability date. This section applies to qualified facilities placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE FEDERAL REGISTER ].
§ 1.45Y-5
Greenhouse gas emissions rates for qualified facilities under section 45Y.
(a) In general. This section provides rules and definitions for determining emissions rates for purposes of section 45Y. Section 1.45Y-5(b)(4) provides a definition for a facility that produces electricity through combustion or gasification and § 1.45Y-5(b)(7) defines a facility that does not produce electricity through combustion or gasification. Section 1.45Y-5(c) through (e) provide rules for determining the greenhouse gas emissions rates for facilities for purposes of section 45Y. Section 1.45Y-5(f) provides rules for the annual publication of emissions rates. Section 1.45Y-5(g) provides rules related to provisional emissions rates. Section § 1.45Y-5(h) provides rules regarding reliance on the annual publication of emissions rates and provisional emissions rates. Finally, § 1.45Y-5(i) provides rules regarding substantiation requirements.
(b) Definitions. The following definitions apply for purposes of this section.
(1) CO 2 e per kWh. The term CO 2 e per kWh means with respect to any greenhouse gas, the equivalent carbon dioxide (as determined based on global warming potential) per kWh of electricity produced. The 100-year time horizon global warming potentials (GWP-100) from the Intergovernmental Panel on Climate Change's Fifth Assessment Report (AR5) must be used to convert emissions to equivalent carbon dioxide emissions. For purposes of this definition, the GWP-100 from AR5 (as shown in Table 1) excludes climate-carbon feedbacks. Table 1 provides GWP-100 amounts for certain greenhouse gases applicable to this section.
Table 1 to Paragraph ( b )(1)—100 Year Global Warming Potentials for Greenhouse Gases
Greenhouse gas | GWP
CO 2 | 1.
CH 4 | 28.
N 2 O | 265.
SF 6 | 23,500.
Hydrofluorocarbons | Varies by gas.
Perfluorocarbons | Varies by gas.
(2) Combustion. The term combustion means a rapid exothermic chemical reaction, specifically the oxidation of a fuel, which liberates energy including heat and light.
(3) Gasification. The term gasification means a thermochemical process that converts carbon-containing materials into syngas, a gaseous mixture that is composed primarily of carbon monoxide, carbon dioxide, and hydrogen.
(4) Facility that produces electricity through combustion or gasification. The term facility that produces electricity through combustion or gasification (C&G Facility ) means a facility that produces electricity through combustion or uses an input energy source to produce electricity, if the input energy source was produced through a fundamental transformation, or multiple transformations, of one energy source into another using combustion or gasification.
(5) Greenhouse gas emissions rate. Consistent with section 45Y(b)(2)(A), the term greenhouse gas emissions rate means the amount of greenhouse gases emitted into the atmosphere by a facility in the production of electricity, expressed as grams of CO 2 e per kWh.
(6) Greenhouse gases emitted into the atmosphere by a facility in the production of electricity. For purposes of section 45Y(b)(2)(A), for both C&G and Non-C&G Facilities, the term greenhouse gases emitted into the atmosphere by a facility in the production of electricity means emissions from a facility that directly occur from the process that transforms the input energy source into electricity. This definition excludes the following:
(i) Emissions from electricity production by back-up generators that are primarily used in maintaining critical systems in case of a power system outage or for supporting restart of a generator after an outage.
(ii) Emissions from routine operational and maintenance activities that are integral to the production of electricity, including, but not limited to, emissions from internal combustion vehicles used to access and perform maintenance on remote electricity generating facilities or emissions occurring from heating and cooling control rooms or dispatch centers.
(iii) Emissions from a step-up transformer that conditions the electricity into a form suitable for productive use or sale.
(iv) Emissions that occur before commercial operations commence or after commercial operations terminate, including, but not limited to, on-site emissions occurring from construction or manufacturing of the facility itself, emissions from the off-site manufacturing of facility components, or emissions occurring due to siting or decommissioning.
(v) Emissions from infrastructure associated with the facility, including, but not limited to, emissions from road construction for feedstock production.
(vi) Emissions from the distribution of electricity to consumers.
(7) Non-C&G Facility. The term Non-C&G Facility means a facility that produces electricity and is not described in § 1.45Y-5(b)(4).
(8) Fuel. The term fuel means material directly used to produce electricity or energy inputs that are used to produce electricity.
(9) Feedstock. The term feedstock means any raw material used in a process for electricity generation or to produce an intermediate product or finished fuel used for electricity generation.
(c) Non-C&G Facilities —(1) Determining a greenhouse gas emissions rate for Non-C&G Facilities. Greenhouse gas emissions rates for Non-C&G Facilities must be determined under this paragraph (c) and paragraph (e) of this section.
(i) Excluded emissions. With respect to Non-C&G Facilities only, greenhouse gases emitted into the atmosphere by a facility in the production of electricity excludes emissions of greenhouse gases that are not directly produced by the fundamental transformation of the input energy source into electricity, including, but not limited to, the following:
(A) Emissions from hydropower reservoirs due to anoxic conditions;
(B) Ebullitive, diffuse, and degassing emissions from hydropower operations;
(C) Emissions of non-condensable gases from underground reservoirs during geothermal operations; and
(D) Emissions occurring due to activities and operations occurring off-site, including but not limited to, the production and transportation of fuels used by the facility, or land use change from siting or changes in demand.
(ii) Emissions assessment process. Subject to § 1.45Y-5(b)(6) and (c)(1), a greenhouse gas emissions rate for a Non-C&G Facility must be determined through a technical and engineering assessment of the fundamental energy transformation into electricity. This assessment must consider all input and output energy carriers and chemical reactions or mechanical processes taking place at the facility in the production of electricity.
(iii) Example of greenhouse gas emissions rate determination for a Non-C&G Facility.
(A) Facts. A facility uses solar photovoltaic technologies to convert light directly into electricity through use of the photovoltaic effect. This is a physical phenomenon in which certain semiconducting materials upon exposure to light, absorb the light and transform the energy contained in the light directly into an electric current. There are many materials that may be used to generate electricity through this method, including crystalline silicon, amorphous silicon, cadmium telluride, copper indium gallium diselenide, perovskites, quantum dots, and carbon-based materials known as organic photovoltaics. The smallest unit of photovoltaic materials is a cell. Multiple cells are typically assembled into a panel or module and electrically connected. Multiple modules or panels are generally connected to comprise a solar system or installation. Solar photovoltaic technologies produce direct current electricity that can be used as is or, more typically, can be fed into inverters to transform it into alternating current. Solar panels can be ground mounted at a fixed angle or can be mounted with tracking systems that move the panels to track the location of the sun over the course of the day and season in order to maximize electricity production. Solar panels may also be mounted on buildings (for example, on roofs), or solar photovoltaic materials can be integrated into other building components such as roofing tiles.
(B) Analysis. For solar photovoltaic technologies, the fundamental transformation of input energy (solar electromagnetic radiation) into electricity using the photovoltaic effect involves no mechanical energy or chemical reactions. Academic studies on the lifecycle greenhouse gas emissions from solar photovoltaic power indicate that there is a small but non-zero amount of emissions associated with the operational phase of these technologies. However, these emissions exclusively occur due to ongoing maintenance (for example, the washing of solar panels), preventative maintenance (for example, the periodic replacement of electrical equipment such as inverters), and a minimal amount of project management (for example, inverter standby mode at night). These emissions do not occur directly due to the production of electricity. Therefore, consistent with § 1.45Y-5(c)(1)(ii), the greenhouse gas emissions rate for facilities that produce electricity by solar photovoltaic properties is not greater than zero.
(2) Non-C&G Facilities with a greenhouse gas emissions rate that is not greater than zero. The following types or categories of facilities are Non-C&G Facilities with a greenhouse gas emissions rate that is not greater than zero:
(i) Wind (including small wind properties);
(ii) Hydropower (including retrofits that add electricity production to non-powered dams, conduit hydropower, hydropower using new impoundments, and hydropower using diversions such as a penstock or channel);
(iii) Marine and hydrokinetic;
(iv) Solar (including photovoltaic and concentrated solar power);
(v) Geothermal (including flash and binary plants);
(vi) Nuclear fission;
(vii) Nuclear fusion; and
(viii) Waste energy recovery property that derives energy from a source described in paragraphs (c)(2)(i) through (vii) of this section.
(d) C&G Facilities —(1) Determining a greenhouse gas emissions rate for C&G Facilities. Greenhouse gas emissions rates for C&G Facilities must be determined by a lifecycle analysis (LCA) that complies with this paragraph (d) and paragraph (e) of this section. The greenhouse gas emissions rate for a C&G Facility equals the net rate of greenhouse gases emitted into the atmosphere by such facility (taking into account lifecycle greenhouse gas emissions, as described in section 211(o)(1)(H) of the Clean Air Act (42 U.S.C. 7545(o)(1)(H))) in the production of electricity, expressed as grams of CO 2 e per kWh.
(2) LCA requirements. For purposes of this paragraph (d), an LCA must comply with the following requirements:
(i) Starting boundary. The starting boundary of the LCA for an LCA involving generation-derived feedstocks (such as biogenic feedstocks) is feedstock generation. The starting boundary of the LCA for an LCA involving extraction-derived feedstocks (such as fossil fuel feedstocks) is feedstock extraction. The starting boundaries include the processes necessary to produce and collect or extract the raw materials used to produce electricity from combustion or gasification technologies, including those used as energy inputs to electricity production. This includes the emissions effects of relevant land management activities or changes related to or associated with feedstock production. The starting conditions are the material and energy flows, including associated direct and indirect greenhouse gas emissions, of the processes associated with the extraction or production of raw feedstock materials or fuel.
(ii) Ending boundary. The ending boundary of the LCA for electricity that is transmitted to the grid or electricity that is used on-site is the meter at the point of production of the C&G Facility. The use of such electricity generated by the C&G Facility (and what other types of energy sources it displaces), including emissions from transmission and distribution, are outside of the LCA boundary.
(iii) Baseline. The LCA must be based on a future anticipated baseline, which projects future status quo in the absence of the availability of the sections 45Y and 48E credits (taking into account anticipated changes in technology, policies, practices, and environmental and other socioeconomic conditions).
(iv) Offsets and offsetting activities. Offsets and offsetting activities that are unrelated to the production of electricity by the C&G Facility, including the production and distribution of any input fuel, may not be taken into account in the LCA.
(v) Principles for included emissions. The LCA must take into account direct emissions, significant indirect emissions in the United States or other countries, emissions associated with market-mediated changes in related commodity markets, emissions associated with feedstock generation or extraction, emissions consequences of increased production of feedstocks, emissions at all stages of fuel and feedstock production and distribution, and emissions associated with distribution, delivery, and use of feedstocks to and by a C&G Facility.
(A) Direct emissions. For purposes of paragraph this paragraph (d)(2)(v), direct emissions include, but are not limited to:
( 1 ) Emissions from feedstock generation, production, and extraction (including emissions from feedstock and fuel harvesting and extraction and direct land use change and management, including emissions from fertilizers, and changes in carbon stocks);
( 2 ) Emissions from feedstock and fuel transport (including emissions from transporting the raw or processed feedstock to the fuel processing facility);
( 3 ) Emissions from transporting and distributing fuels to electricity production facility;
( 4 ) Emissions from handling, processing, upgrading, and/or storing feedstocks, fuels and intermediate products (including emissions from on/offsite storage and preparation/pre-treatment for use (for example, torrefaction or pelletization) and emissions from process additives); and
( 5 ) Emissions from combustion and gasification at the electricity generating facility (including emissions from the combustion and/or gasification process and emission from gasification or combustion additives).
(B) Significant indirect emissions. For purposes of this paragraph (d)(2)(v), examples of significant indirect emissions include, but are not limited to, emissions from indirect land use and land use change and induced emissions associated with the increased use of the feedstock for energy production.
(vi) Principles for excluded emissions. The LCA must not take into account the following types of emissions:
(A) Emissions from facility construction, siting or decommissioning (including on-site emissions occurring from construction or manufacturing of the facility itself);
(B) Emissions from facility maintenance (including emissions from the on and offsite construction or maintenance of the facility; emissions from vehicles used to access and perform maintenance on electricity generating facilities; emissions from back-up generators that do not provide additional firm power and are used in maintaining critical systems in case of a power system outage or for supporting restart of a generator after an outage; and emissions occurring from heating and cooling control rooms or dispatch centers);
(C) Emissions from infrastructure associated with the facility (including emissions from road construction for feedstock production and emissions from onsite backup or emergency generators used in an emergency or unplanned outage); and
(D) Emissions from the distribution of electricity to consumers.
(vii) Alternative fates and avoided emissions. The LCA may consider alternative fates and account for avoided emissions.
(e) Carbon capture and sequestration. For purposes of paragraphs (c) and (d) of this section, a greenhouse gas emissions rate for a Non-C&G Facility or C&G Facility must exclude any qualified carbon dioxide (as defined in section 45Y(c)(3)) that is produced in such facility's production of electricity, captured by the taxpayer, and pursuant to any regulations established under section 45Q(f)(2), disposed of by the taxpayer in secure geological storage, or utilized by the taxpayer in a manner described in section 45Q(f)(5) and any regulations established under such section.
(f) Annual publication of emissions rates —(1) In general. As required by section 45Y(b)(2)(C)(i), the Secretary will annually publish a table that sets forth the greenhouse gas emissions rates for types or categories of facilities (Annual Table), which a taxpayer must use for purposes of section 45Y. Except as provided in paragraph (h) of this section, a taxpayer that owns a facility that is described in the Annual Table on the first day of the taxpayer's taxable year in which the section 45Y credit or section 48E credit is determined with respect to such facility must use the Annual Table as of such date to determine an emissions rate for such facility for such taxable year.
(2) Publication of analysis required for changes to the Annual Table. In connection with the publication of the Annual Table, the Secretary must publish an accompanying expert analysis that addresses any types or categories of facilities added or removed from the Annual Table since its last publication. Types or categories of facilities will be added or removed from the Annual Table consistent with, for Non-C&G Facilities, a technical assessment of the fundamental energy transformation into electricity as provided in paragraph (c)(1)(ii) of this section, and, for C&G Facilities, an LCA that complies with paragraphs (d) and (e) of this section. Such expert analysis must be prepared by one or more of the National Laboratories, in consultation with other agency experts as appropriate, and must address whether the addition or removal of types or categories of facilities from the Annual Table complies with section 45Y(b)(2)(A) and (B) of the Internal Revenue Code and this section.
(g) Provisional emissions rates —(1) In general. In the case of any facility that is of a type or category for which an emissions rate has not been established by the Secretary under this paragraph (g), a taxpayer that owns such facility may file a petition with the Secretary for the determination of the emissions rate with respect to such facility (Provisional Emissions Rate or PER). A PER must be determined and obtained under the rules of this section.
(2) Rate not established. An emissions rate has not been established by the Secretary for a facility for purposes of section 45Y(b)(2)(C)(ii) if such facility is not described in the Annual Table. If a taxpayer's request for an emissions value pursuant to paragraph (g)(5) of this section is pending at the time such facility is or becomes described in the Annual Table, the taxpayer's request for an emissions value will be automatically denied.
(3) Process for filing a PER petition. To file a PER petition with the Secretary, a taxpayer must submit a PER petition by attaching it to the taxpayer's Federal income tax return or Federal return, as appropriate, for the first taxable year in which the taxpayer claims the section 45Y credit with respect to the facility to which the PER petition applies. The PER petition must contain an emissions value, and, if applicable, the associated letter from DOE. An emissions value may be obtained from the Department of Energy (DOE) or by using an LCA model in accordance with paragraph (g)(6) of this section. An emission value obtained from DOE will be based on an analytical assessment of the emissions rate associated with the facility, performed by one or more National Laboratories, in consultation with other agency experts as appropriate, consistent with this section. A taxpayer must retain in its books and records a copy of the application and correspondence to and from DOE including a copy of the taxpayer's request to DOE for an emissions value, including any information provided by the taxpayer to DOE pursuant to the emissions value request process provided in paragraph (g)(5) of this section. Alternatively, an emissions value can be determined by the taxpayer for a facility using the most recent version of an LCA model, as of the time the PER petition is filed, that has been designated by the Secretary for such use under paragraph (g)(6) of this section. If an emissions value is determined using the most recent version of the model or models, the taxpayer is required to provide to the IRS information to support its determination in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. See § 601.601 of this chapter. A taxpayer may not request an emissions value from DOE for a facility for which an emissions value can be determined by using the most recent version of an LCA model or models that have been designated by the Secretary for such use under paragraph (g)(6) of this section.
(4) PER determination. Upon the IRS's acceptance of the taxpayer's Federal income tax return or Federal return, as appropriate, containing a PER petition, the emissions value of the facility specified on such petition will be deemed accepted. A taxpayer may rely upon an emissions value provided by DOE for purposes of claiming a section 45Y credit, provided that any information, representations, or other data provided to DOE in support of the request for an emissions value are accurate. If applicable, a taxpayer may rely upon an emissions value determined for a facility using the most recent version of the specific LCA model or models that, as of the time the PER petition is filed, have been designated by the Secretary for such use under paragraph (g)(6) of this section, provided that any information, representations, or other data used to obtain such emissions value are accurate. The IRS's deemed acceptance of an emissions value is the Secretary's determination of the PER. However, the taxpayer must still comply with all applicable requirements for the section 45Y credit and any information, representations, or other data supporting an emissions value are subject to later examination by the IRS.
(5) Emissions value request process. An applicant that submits a request for an emissions value must follow the procedures specified by DOE to request and obtain such emissions value. Emissions values will be determined consistent with the rules provided in this section. An applicant may request an emissions value from DOE only after a front-end engineering and design (FEED) study or similar indication of project maturity, as determined by DOE, such as completion of a project specification and cost estimation sufficient to inform a final investment decision for the facility. DOE may decline to review applications that are not responsive, including those applications that relate to a facility described in the Annual Table (consistent with paragraph (g)(2) of this section) or a facility for which an emissions value can be determined by an LCA model designated under paragraph (g)(6) of this section (consistent with paragraph (g)(3) of this section), or applications that are incomplete. DOE will publish guidance and procedures that applicants must follow to request and obtain an emissions value from DOE. DOE's guidance and procedures will include a process for, under limited circumstances, requesting a revision to DOE's initial assessment of an emissions value based on revised technical information or facility design and operation.
(6) LCA model for determining an emissions value for C&G Facilities. The Secretary may designate one or more LCA models for determining an emissions value for C&G Facilities that are not described in the Annual Table. The Secretary may only designate a model under this paragraph (g)(6) if the model complies with section 45Y(b)(2)(B) and paragraphs (d) and (e) of this section. The Secretary may revoke the designation of an LCA model or models. In connection with the designation or revocation of a designation of an LCA model or models, the Secretary is required to publish an accompanying expert analysis of the model that is prepared by one or more of the National Laboratories, in consultation with other agency experts as appropriate, and such analysis must address the model's compliance with section 45Y(b)(2)(B) of the Internal Revenue Code and paragraphs (d) and (e) of this section.
(7) Effect of PER. A taxpayer may use a PER determined by the Secretary to determine eligibility for the section 45Y credit for the facility to which the PER applies, provided all other requirements of section 45Y are met. The Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 45Y credit is claimed. Further, a PER determination does not signify that the IRS has determined that the requirements of section 45Y have been satisfied for any taxable year.
(h) Reliance on Annual Table or Provisional Emissions Rate. Taxpayers may rely on the Annual Table in effect as of the date a facility began construction or the provisional emissions rate determined by the Secretary for the taxpayer's facility under paragraph (g)(4) of this section to determine the facility's greenhouse gas emissions rate for any taxable year that is within the 10-year period described in section 45Y(b)(1)(B), provided that the facility continues to operate as a type of facility that is described in the Annual Table or the facility's emissions value request, as applicable, for the entire taxable year.
(i) Substantiation —(1) In general. A taxpayer must maintain in its books and records documentation regarding the design, operation, and, if applicable, feedstock or fuel source used by the facility that establishes that such facility had a greenhouse gas emissions rate, as determined under this section, that is not greater than zero for the taxable year.
(2) Sufficient substantiation. Documentation sufficient to substantiate that a facility had a greenhouse gas emissions rate, as determined under this section, that is not greater than zero for the taxable year includes documentation or a report prepared by an unrelated party that verifies that a facility had such an emissions rate. A facility described in paragraph (c)(2) of this section can maintain sufficient documentation to demonstrate a greenhouse gas emissions rate that is not greater than zero for the taxable year by showing that it is the type of facility described in paragraph (c)(2) of this section. The Secretary may determine that other types of facilities can sufficiently substantiate a greenhouse gas emissions rate, as determined under this section, that is not greater than zero with certain documentation and will describe such facilities and documentation in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. See § 601.601 of this chapter.
(j) Applicability date. This section applies to qualified facilities placed in service after December 31, 2024, and during a taxable year ending on or after [the date of publication of the final regulations in the Federal Register ].
Par. 4. Sections 1.48E-0 through 1.48E-5 are added to read as follows:
Sec.
* * * * *
§ 1.48E-0
Table of contents.
§ 1.48E-1
Clean electricity investment credit.
§ 1.48E-2
Qualified investments in qualified facilities and EST for purposes of section 48E.
§ 1.48E-3
[Reserved]
§ 1.48E-4
Rules of general application.
§ 1.48E-5
Greenhouse gas emissions rates for qualified facilities under section 48E.
* * * * *
§ 1.48E-0
Table of contents.
This section lists the captions contained in §§ 1.48E-1 through 1.48E-5.
§ 1.48E-1
Clean electricity investment credit.
(a) Overview.
(1) In general.
(2) Code.
(3) EST.
(4) kWh.
(5) Qualified facility.
(6) Qualified investment with respect to a qualified facility.
(7) Qualified investment with respect to EST.
(8) Secretary.
(9) Section 48E credit.
(10) Section 48E regulations.
(b) Credit amount.
(1) In general.
(2) Applicable percentage.
(3) Base rate.
(4) Alternative rate.
(5) Energy communities increase in credit rate.
(i) In general.
(ii) Applicable credit rate increase.
(6) Domestic content increase in credit rate.
(i) In general.
(ii) Applicable credit rate increase.
(c) Credit phase-out.
(1) In general.
(2) Phase-out percentage.
(3) Applicable year.
(d) Applicability date.
§ 1.48E-2
Qualified investments in qualified facilities and EST for purposes of section 48E.
(a) Qualified facility.
(b) Property included in qualified facility.
(1) In general.
(2) Unit of qualified facility.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(i) In general.
(ii) Power conditioning and transfer equipment.
(iii) Roads.
(iv) Fences.
(v) Buildings.
(vi) Shared integral property.
(vii) Examples.
(c) Coordination with other credits.
(1) In general.
(2) Allowed.
(3) Examples.
(d) Qualified investment with respect to a qualified facility.
(e) Qualified property.
(1) In general.
(2) Location of qualified property.
(f) Definitions related to requirements for qualified property.
(1) Tangible personal property.
(2) Other tangible property.
(3) Construction, reconstruction, or erection of qualified property.
(4) Acquisition of qualified property.
(5) Original use of qualified property.
(i) In general.
(ii) Retrofitted qualified facility.
(6) Depreciation allowable.
(i) In general.
(ii) Exclusions from allowable.
(7) Placed in service.
(i) In general.
(ii) Qualified facility subject to § 1.48-4 election to treat lessee as purchaser.
(8) Claim.
(g) EST.
(1) Property included in EST.
(2) Unit of EST.
(i) In general.
(ii) Functionally interdependent.
(3) Integral part.
(4) Qualified investment with respect to EST.
(5) Placed in service.
(i) In general.
(ii) EST subject to § 1.48-4 election to treat lessee as purchaser.
(6) Types of EST.
(i) Electrical energy storage property.
(ii) Thermal energy storage property.
(iii) Hydrogen energy storage property.
(7) Modification of EST.
(8) Claim.
(h) Applicability date.
§ 1.48E-3 [Reserved]
§ 1.48E-4 Rules of general application.
(a) Rules for certain lower-output qualified facilities to include qualified interconnection costs in the basis of associated qualified facility.
(1) In general.
(2) Qualified interconnection property.
(3) Five-Megawatt Limitation.
(i) In general.
(ii) Nameplate capacity for purposes of the Five-Megawatt Limitation.
(4) Interconnection agreement.
(5) Utility.
(6) Reduction to amounts chargeable to capital account.
(7) Examples.
(b) Expansion of facility; Incremental production.
(1) In general.
(2) Special rule for restarted facilities.
(3) Computation of qualified investment for a new unit or an addition of capacity.
(i) New unit.
(ii) Addition of capacity.
(4) Examples.
(c) Retrofit of an existing facility (80/20 Rule).
(1) In general.
(2) Expenditures taken into account.
(3) Cost of new components.
(4) New costs.
(5) Excluded costs.
(6) Examples.
(d) Special rules regarding ownership.
(1) Qualified investment with respect to a qualified facility or EST.
(2) Multiple owners.
(3) Section 761(a) election.
(4) Related taxpayers.
(i) Definition.
(ii) Related taxpayer rule.
(5) Examples.
(e) Coordination rule for section 42 credits and section 48E credits.
(f) Recapture.
(1) In general.
(2) Recapture event.
(i) In general.
(ii) Changes to the Annual Table.
(iii) Yearly determination.
(iv) Carryback and carryforward adjustments.
(3) Recapture amount.
(i) In general.
(ii) Applicable recapture percentage.
(4) Recapture period.
(5) Increase in tax for recapture.
(g) Cross references.
(h) Applicability date.
§ 1.48E-5
Greenhouse gas emissions rates for qualified facilities under section 48E.
(a) In general.
(b) Definitions.
(c) Non-C&G Facilities.
(d) C&G Facilities.
(e) Carbon capture and sequestration.
(f) Annual publication of emissions rates.
(g) Provisional emissions rates.
(1) In general.
(2) Rate not established.
(3) Process for filing a PER petition.
(4) PER determination.
(5) Emissions value request process.
(6) LCA model for determining an emissions value for C&G Facilities.
(7) Effect of PER.
(h) Determining anticipated greenhouse gas emissions rate.
(1) In general.
(2) Examples of objective indicia.
(i) Reliance on Annual Table or Provisional Emissions Rate.
(j) Substantiation.
(1) In general.
(2) Sufficient substantiation.
(k) Applicability date.
§ 1.48E-1
Clean electricity investment credit.
(a) Overview —(1) In general. For purposes of section 46 of the Code, the section 48E credit is determined under section 48E of the Code and the section 48E regulations (as defined in paragraph (a)(10) of this section). This paragraph (a) provides definitions of terms that, unless otherwise specified, apply for purposes of section 48E, the section 48E regulations, and any provision of the Code or this chapter that expressly refers to any provision of section 48E or the section 48E regulations. Paragraph (b) of this section provides rules for determining the amount of the section 48E credit for any taxable year. Paragraph (c) of this section provides rules regarding the phase-out of the section 48E credit. See § 1.48E-2 for rules relating to qualified investments in qualified facilities and energy storage technology (EST) for purposes of the section 48E credit. See § 1.48E-4 for rules of general application for the section 48E credit. See § 1.48E-5 for rules to determine greenhouse gas emissions rates for qualified facilities under section 48E.
(2) Code. The term Code means the Internal Revenue Code.
(3) EST. The term EST for purposes of the section 48E credit means energy storage technology as defined in § 1.48E-2(g).
(4) kWh. The term kWh means kilowatt hours.
(5) Qualified facility. The term qualified facility for purposes of the section 48E credit has the meaning provided in § 1.48E-2(a).
(6) Qualified investment with respect to a qualified facility. The term qualified investment with respect to a qualified facility for purposes of the section 48E credit has the meaning provided in § 1.48E-2(d).
(7) Qualified investment with respect to EST. The term qualified investment with respect to EST for purposes of the section 48E credit has the meaning provided in § 1.48E-2(g)(4).
(8) Secretary. The term Secretary means the Secretary of the Treasury or her delegate.
(9) Section 48E credit. The term section 48E credit means the clean electricity investment credit determined under section 48E of the Code and the section 48E regulations.
(10) Section 48E regulations. The term section 48E regulations means this section and §§ 1.48E-2 through 1.48E-5.
(b) Credit amount —(1) In general. For purposes of section 46 of the Code, the section 48E credit for any taxable year is an amount equal to the applicable percentage of the qualified investment for such taxable year with respect to any qualified facility and any EST.
(2) Applicable percentage. The term applicable percentage means the base rate described in paragraph (b)(3) of this section or the alternative rate described in paragraph (b)(4) of this section. The applicable percentage may be increased as provided in section 48E(a)(3)(A) and paragraph (b)(5) of this section in the case of a qualified facility that is located in an energy community. Similarly, the applicable percentage may be increased as provided in section 48E(a)(3)(B) and paragraph (b)(6) of this section in the case of a qualified facility that satisfies the domestic content requirements.
(3) Base rate. In the case of any qualified facility or EST that does not satisfy the requirements provided in section 48E(a)(2)(A)(ii) or (B)(ii), the term base rate means 6 percent.
(4) Alternative rate. In the case of any qualified facility or EST that satisfies the prevailing wage and apprenticeship requirements provided in section 48E(a)(2)(A)(ii) or (B)(ii), the term alternative rate means 30 percent.
(5) Energy communities increase in credit rate —(i) In general. In the case of any qualified facility or EST that is placed in service within an energy community (as defined in section 45(b)(11)(B)), the applicable percentage under section 48E(a)(2) and paragraph (b)(2) of this section will be increased by the applicable credit rate increase described in section 48E(a)(3)(A)(ii) and paragraph (b)(5)(ii) of this section.
(ii) Applicable credit rate increase. In the case of any qualified investment with respect to a qualified facility or EST to which the base rate is applicable, the applicable credit rate increase is 2 percentage points, and with respect to any qualified investment with respect to a qualified facility or EST to which the alternative rate is applicable, the applicable credit rate increase is 10 percentage points.
(6) Domestic content increase in credit rate —(i) In general. In the case of any qualified facility or EST that satisfies the requirements of section 45(b)(9)(B) (domestic content requirement), the applicable percentage under section 48E(a)(2) and paragraph (b)(2) of this section will be increased by the applicable credit rate increase described in paragraph (b)(6)(ii) of this section.
(ii) Applicable credit rate increase. In the case of any qualified investment with respect to a qualified facility or EST to which the base rate is applicable, 2 percentage points, and with respect to any qualified investment with respect to a qualified facility or EST to which the alternative rate is applicable, 10 percentage points.
(c) Credit phase-out —(1) In general. The amount of the credit as determined under section 48E(a) and paragraph (b) of this section for any qualified facility or EST, the construction of which begins during a calendar year described in section 48E(e)(2) and paragraph (c)(2) of this section is equal to the product of—
(i) The amount of the credit determined under section 48E(a) and paragraph (b) of this section without regard to section 48E(e) and paragraph (c) of this section, multiplied by
(ii) The phase-out percentage under section 48E(e)(2) and paragraph (c)(2) of this section.
(2) Phase-out percentage. The phase-out percentage under this paragraph (c)(2) is equal to—
(i) For any qualified investment with respect to any qualified facility or EST the construction of which begins during the first calendar year following the applicable year, 100 percent,
(ii) For any qualified investment with respect to any qualified facility or EST the construction of which begins during the second calendar year following the applicable year, 75 percent,
(iii) For any qualified investment with respect to any qualified facility or EST the construction of which begins during the third calendar year following the applicable year, 50 percent, and
(iv) For any qualified investment with respect to any qualified facility or EST the construction of which begins during any calendar year subsequent to the calendar year described in paragraph (c)(2)(iii) of this section, 0 percent.
(3) Applicable year. For purposes of this paragraph (c), the term applicable year has the same meaning provided under § 1.45Y-1(c)(3).
(d) Applicability date. This section applies to qualified facilities and ESTs placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE Federal Register ].
§ 1.48E-2
Qualified investments in qualified facilities and EST for purposes of section 48E.
(a) Qualified facility. For purposes of the section 48E credit, the term qualified facility means a facility that meets all the following requirements:
(1) The facility is used for the generation of electricity;
(2) The facility is placed in service by the taxpayer after December 31, 2024; and
(3) The facility has a greenhouse gas emissions rate of not greater than zero (as determined under rules provided in § 1.45Y-5).
(b) Property included in qualified facility —(1) In general. A qualified facility includes a unit of qualified facility (as defined in paragraph (b)(2) of this section). A qualified facility also includes components of property owned by the taxpayer that are an integral part (as defined in paragraph (b)(3) of this section) of the qualified facility. Any component of property that meets the requirements of this paragraph (b) is part of a qualified facility regardless of where such component of property is located. A qualified facility does not include any electrical transmission equipment, such as transmission lines and towers, or any equipment beyond the electrical transmission stage. A qualified facility also generally does not include equipment that is an addition or modification to an existing qualified facility. However, see § 1.48E-4(b) regarding the expansion of a facility or incremental production and § 1.48E-4(c) for rules regarding a retrofitted qualified facility (80/20 Rule).
(2) Unit of qualified facility —(i) In general. For purposes of the section 48E credit, the unit of qualified facility includes all functionally interdependent components of property (as defined in paragraph (b)(2)(ii) of this section) owned by the taxpayer that are operated together and that can operate apart from other property to produce electricity. No provision of this section, § 1.48E-1, or § 1.48E-4 through 1.48E-5 uses the term unit in respect of a qualified facility with any meaning other than that provided in this paragraph (b)(2)(i).
(ii) Functionally interdependent. Components of property are functionally interdependent if the placing in service of each of the components is dependent upon the placing in service of each of the other components to produce electricity.
(3) Integral part —(i) In general. For purposes of the section 48 E credit, a component of property owned by a taxpayer is an integral part of a qualified facility if it is used directly in the intended function of the qualified facility and is essential to the completeness of such function. Property that is an integral part of a qualified facility is part of the qualified facility. A taxpayer may not claim the section 48E credit for any property that is an integral part of the taxpayer's qualified facility that is not owned by the taxpayer.
(ii) Power conditioning and transfer equipment. Power conditioning equipment and transfer equipment are integral parts of a qualified facility. Power conditioning equipment includes equipment that modifies the characteristics of electricity into a form suitable for use, transmission, or distribution. Parts related to the functioning or protection of power conditioning equipment are also treated as power conditioning equipment and include, but are not limited to, switches, circuit breakers, arrestors, and hardware and software used to monitor, operate, and protect power conditioning equipment. Transfer equipment includes components of property that allow for the aggregation of electricity generated a qualified facility and components of property that alter voltage to permit electricity to be transferred to a transmission or distribution line. Transfer equipment does not include transmission or distribution lines. Examples of transfer equipment include, but are not limited to, wires, cables, and combiner boxes that conduct electricity. Parts related to the functioning or protection of transfer equipment are also treated as transfer equipment and may include items such as current transformers used for metering, electrical interrupters (such as circuit breakers, fuses, and other switches), and hardware and software used to monitor, operate, and protect transfer equipment.
(iii) Roads. Roads that are an integral part of a qualified facility are those roads integral to the intended function of the qualified facility such as onsite roads that are used to operate and maintain the qualified facility. Roads used primarily for access to the site, or roads used primarily for employee or visitor vehicles, are not integral to the intended function of the qualified facility, and thus are not an integral part of a qualified facility.
(iv) Fences. Fencing is not an integral part of a qualified facility because it is not integral to intended function of the qualified facility.
(v) Buildings. Generally, buildings are not integral parts of a qualified facility because they are not integral to the intended function of the qualified facility. However, the following structures are not treated as buildings for this purpose:
(A) A structure that is essentially an item of machinery or equipment; and
(B) A structure that houses components of property that is integral to the intended function of the qualified facility if the use of the structure is so closely related to the use of the housed components of property therein that the structure clearly can be expected to be replaced if the components of property it initially houses are replaced.
(vi) Shared integral property. Multiple qualified facilities (whether owned by one or more taxpayers), including qualified facilities with respect to which a taxpayer has claimed a credit under section 48E or another Federal income tax credit, may include shared property that may be considered an integral part of each qualified facility so long as the cost basis for the shared property is properly allocated to each qualified facility and the taxpayer only claims a section 48E credit with respect to the portion of the cost basis properly allocable to a qualified facility for which the taxpayer is claiming a section 48E credit. The total cost basis of such shared property divided among the qualified facilities may not exceed 100 percent of the cost of such shared property. In addition, a component of property that is shared by a qualified facility (as defined by section 48E(b)(3)) (48E Qualified Facility) and a qualified facility (as defined in section 45Y(b)) (45Y Qualified Facility) that is an integral part of both qualified facilities will not affect the eligibility of the 48E Qualified Facility to claim a section 48E credit or the 45Y Qualified Facility to claim the section 45Y credit.
(vii) Examples. This paragraph (b)(3)(vii) provides examples illustrating the rules of this paragraph (b)(3).
(A) Example 1. Co-located qualified facilities owned by the same taxpayer that share integral property. X constructs a solar farm (Solar Qualified Facility) and nearby also constructs a wind facility (Wind Qualified Facility) that are each a qualified facility (as defined in § 1.48E-2(a)). The Solar Qualified Facility and Wind Qualified Facility each connect to a transformer that steps up the electricity produced by each qualified facilities to electrical grid voltage before it is transmitted to the electrical grid through an intertie. X assigns 50% of the cost of the shared transformer to the Solar Qualified Facility and the Wind Qualified Facility, respectively. The fact that the Solar Qualified Facility and Wind Qualified Facility share property that is integral to both does not impact the ability of X to claim a section 48E credit for both qualified facilities. When X places the qualified facilities in service, 50% of the cost of the transformer is included in X's basis in each of the qualified facilities for purposes of computing the section 48E credit.
(B) Example 2. Co-located qualified facilities owned by different taxpayers that share integral property. X constructs a solar farm (Solar Qualified Facility), and nearby Y constructs a wind facility (Wind Qualified Facility) that are each a qualified facility (as defined in § 1.48E-2(a)). The Solar Qualified Facility and the Wind Qualified Facility both connect to a transformer that steps up the electricity produced by both qualified facilities to electrical grid voltage before it is transmitted to the electrical grid through an intertie. X and Y each pay 50% of the cost of the transformer. The fact that the Solar Qualified Facility and Wind Qualified Facility share property that is integral to both does not impact the ability of X or Y to claim a section 48E credit for their respective qualified facilities. When X and Y place their respective qualified facilities in service, 50% of the cost of the transformer is included in X's and Y's basis in their respective qualified facilities for purposes of computing the section 48E credit.
(C) Example 3. Co-located qualified facility and Energy Storage Technology owned by the same taxpayer. X constructs a wind qualified facility (as defined in § 1.48E-2(a)) (Wind Qualified Facility) that is co-located with an EST (as defined in § 1.48E-2(g)) (Energy Storage). The Wind Qualified Facility and Energy Storage share transfer equipment that is integral to both. X assigns 50% of the cost of the shared transfer equipment to the Wind Qualified Facility and 50% of the cost to the Energy Storage. The fact that the Wind Qualified Facility and Energy Storage share property that is integral to both does not impact the ability of X to claim a section 48E credit for the Wind Qualified Facility and the Energy Storage. X may include 50% of the cost of the transfer equipment in its basis to determine a section 48E credit for the Wind Qualified Facility and the Energy Storage.
(D) Example 4. Co-located qualified facility and Energy Storage Technology owned by different taxpayers. X constructs a solar farm that is a qualified facility (as defined in § 1.48E-2(a)) (Solar Qualified Facility) and is co-located with an EST (as defined in § 1.48E-2(g)) (Energy Storage) owned by Y. The Solar Qualified Facility and Energy Storage share transfer equipment that is integral to both. X and Y each incur 50% of the cost of the transfer equipment. The fact that the Solar Qualified Facility and Energy Storage share property that is integral to both does not impact the ability of X to claim a section 48E credit for the Solar Qualified Facility or Y to claim a section 48E credit for the Energy Storage. When X and Y place in service the Solar Qualified Facility and Energy Storage, for purposes of computing the section 48E credit, 50% of the cost of the transfer equipment is included in X's basis in the Solar Qualified Facility and 50% of the cost is included in Y's basis in the Energy Storage.
(c) Coordination with other credits —(1) In general. The term qualified facility (as defined in section 48E(b)(3)) and paragraph (a) of this section does not include any facility for which a credit determined under section 45, 45J, 45Q, 45U, 45Y, 48, or 48A is allowed under section 38 of the Code for the taxable year or any prior taxable year. A taxpayer that directly owns a qualified facility (as defined in section 48E(b)(3)) that is eligible for both a section 48E credit and another Federal income tax credit is eligible for the section 48E credit only if the other Federal income tax credit was not allowed with respect to the qualified facility. Nothing in this paragraph (c) precludes a taxpayer from claiming a section 48E credit with respect to a qualified facility (as defined in section 48E(b)(3)) that is co-located with another facility for which a credit determined under section 45, 45J, 45Q, 45U, 45Y, 48, or 48A is allowed under section 38 of the Code for the taxable year or any prior taxable year.
(2) Allowed. For purposes of paragraph (c)(1) of this section, the term allowed only includes credits that taxpayers have claimed on a Federal income tax return or Federal return, as appropriate, and that the Internal Revenue Service (IRS) has not challenged in terms of the taxpayer's eligibility.
(3) Examples. This paragraph (c)(3) provides examples illustrating the rules provided in this paragraph (c).
(i) Example 1. Taxpayer claims a section 45Y credit on a solar farm and section 48E credit on co-located Energy Storage Technology. X owns a solar farm that is a qualifying facility (as defined in § 1.45Y-2(a)) (45Y Solar Qualified Facility), and a co-located EST (as defined in § 1.48E-2(g)) (Energy Storage). The Energy Storage is not part of the 45Y Solar Qualified Facility, and therefore X may claim the section 45Y credit based on the kWh of electricity produced by the 45Y Solar Qualified Facility, and X may also claim the section 48E credit based on its qualified investment in the Energy Storage.
(ii) Example 2. Different taxpayers claim section 45Y credit for a solar farm and a co-located Energy Storage Technology. X owns a solar farm that is a qualifying facility (as defined in § 1.45Y-2(a)) (45Y Solar Qualified Facility), and Y owns a co-located EST (as defined in § 1.48E-2(g)) (Energy Storage). The Energy Storage is not part of the 45Y Solar Qualified Facility, and therefore, X may claim the section 45Y credit based on the kWh of electricity produced by the 45Y Solar Qualified Facility, and Y may claim the section 48E credit based on its qualified investment in the Energy Storage.
(iii) Example 3. Taxpayer claiming a section 48E credit; another credit is not allowed. X owns a wind facility that satisfies the requirements of a qualified facility (as defined in § 1.48E-2(a)) under section 48E as well as the requirements of a qualified facility (as defined in § 1.45Y-2(a)) under section 45Y. X claims a section 48E credit with respect to the wind facility. While a credit may be available with regard to the wind facility under section 45Y, because X claimed a section 48E credit with respect to the wind facility, a section 45Y credit is not allowed.
(d) Qualified investment with respect to a qualified facility. For purposes of the section 48E credit, the qualified investment with respect to any qualified facility for any taxable year is the sum of the following—
(1) The basis of any qualified property (as defined in paragraph (e)(1) of this section) placed in service by the taxpayer during such taxable year that is part of a qualified facility (as defined in paragraph (a) of this section); and
(2) The amount of any expenditures paid or incurred by the taxpayer for qualified interconnection property (as defined in § 1.48E-4(a)(2)).
(e) Qualified property —(1) In general. For purposes of this paragraph (e), the term qualified property means property that meets all the following requirements:
(i) The property is tangible personal property (as defined in paragraph (f)(1) of this section) or other tangible property (not including a building or its structural components) (as defined in paragraph (f)(2) of this section), but only if such other tangible property is used as an integral part of the qualified facility;
(ii) Depreciation (or amortization in lieu of depreciation) is allowable (as defined paragraph (f)(6) of this section) with respect to the property; and
(iii) Either—
(A) The construction, reconstruction, or erection of the property is completed by the taxpayer (as defined in paragraph (f)(3) of this section); or
(B) The taxpayer acquires the property (as defined in paragraph (f)(4) of this section) if the original use of the property (as defined paragraph (f)(5) of this section) commences with the taxpayer.
(2) Location of qualified property. Any component of a qualified property that meets the requirements of paragraph (e) of this section is part of a qualified facility regardless of where such component of property is located.
(f) Definitions related to requirements for qualified property. For purposes of section 48E and paragraph (b) of this section, the definitions of this paragraph (f) apply:
(1) Tangible personal property. The term tangible personal property means any tangible property except land and improvements thereto, such as buildings or other inherently permanent structures (including items that are structural components of such buildings or structures). Tangible personal property includes all property (other than structural components) that is contained in or attached to a building. Further, all property that is in the nature of machinery (other than structural components of a building or other inherently permanent structure) is considered tangible personal property even though located outside a building. Local law is not controlling for purposes of determining whether property is or is not tangible property or tangible personal property. Thus, tangible property may be personal property for purposes of the energy credit even though under local law the property is considered a fixture and therefore real property.
(2) Other tangible property. The term other tangible property means tangible property other than tangible personal property (not including a building and its structural components), that is used as an integral part of furnishing electricity by a person engaged in a trade or business of furnishing any such service.
(3) Construction, reconstruction, or erection of qualified property. The term construction, reconstruction, or erection of qualified property means work performed to construct, reconstruct, or erect qualified property either by the taxpayer or for the taxpayer in accordance with the taxpayer's specifications.
(4) Acquisition of qualified property. The term acquisition of qualified property means a transaction by which a taxpayer obtains rights and obligations with respect to qualified property including—
(i) Title to the qualified property under the law of the jurisdiction in which the qualified property is placed in service, unless the qualified property is possessed or controlled by the taxpayer as a lessee, and
(ii) Physical possession or control of the qualified property.
(5) Original use of qualified property —(i) In general. The term original use of qualified property means the first use to which the unit of qualified property is put, whether or not such use is by the taxpayer.
(ii) Retrofitted qualified facility. A retrofitted qualified facility acquired by the taxpayer will not be treated as being put to original use by the taxpayer unless the rules in § 1.48E-4(c) regarding retrofitted qualified facilities (80/20 Rule) apply. The question of whether a qualified facility meets the 80/20 Rule is a facts and circumstances determination.
(6) Depreciation allowable —(i) In general. For purposes of applying paragraph (b) of this section, depreciation (or amortization in lieu of depreciation) is allowable with respect to qualified property (as defined in paragraph (e) of this section) if such property is of a character subject to the allowance for depreciation under section 167 of the Code and the basis or cost of such property is recovered using a method of depreciation (for example, the straight line method), which includes any additional first year depreciation deduction method of depreciation (for example, under section 168(k) of the Code). Further, if an adjustment with respect to the Federal income tax or Federal return, as appropriate, for such taxable year requires the basis or cost of such qualified property to be recovered using a method of depreciation, depreciation is allowable to the taxpayer with respect to the qualified property.
(ii) Exclusions from allowable. For purposes of paragraph (b) of this section, depreciation is not allowable with respect to a qualified facility if the basis or cost of such qualified facility is not recovered through a method of depreciation but, instead, such basis or cost is recovered through a deduction of the full basis or cost of the qualified facility in one taxable year (for example, under section 179 of the Code).
(7) Placed in service —(i) In general. A qualified facility is considered placed in service in the earlier of:
(A) The taxable year in which, under the taxpayer's depreciation practice, the period for depreciation with respect to such qualified facility begins; or
(B) The taxable year in which the qualified facility is placed in a condition or state of readiness and availability to produce electricity, whether in a trade or business or in the production of income. A qualified facility in a condition or state of readiness and availability to produce electricity includes, but is not limited to, components of property that are acquired and set aside during the taxable year for use as replacements for a particular qualified facility (or facilities) in order to avoid operational time loss and equipment that is acquired for a specifically assigned function and is operational but is undergoing testing to eliminate any defects. However, components of property acquired to be used in the construction of a qualified facility are not considered in a condition or state of readiness and availability for a specifically assigned function.
(ii) Qualified facility subject to § 1.48-4 election to treat lessee as purchaser. Notwithstanding paragraph (f)(7)(i) of this section, a qualified facility with respect to which an election is made under section 50(d)(5) of the Code and § 1.48-4 to treat the lessee as having purchased such qualified facility is considered placed in service by the lessor in the taxable year in which possession is transferred to such lessee.
(8) Claim. With respect to a section 48E credit determined with respect to a qualified facility of a taxpayer, the term claim means filing a completed Form 3468, Investment Credit, or any successor form(s), with the taxpayer's timely filed (including extensions) Federal income tax return or Federal return, as appropriate, for the taxable year in which the qualified facility is placed in service, and includes making an election under section 6417 or 6418 of the Code and corresponding regulations with respect to such section 48E credit and made on the taxpayer's filed return.
(g) EST —(1) Property included in EST. An EST includes a unit of energy storage technology (unit of EST) (as defined in paragraph (g)(2) of this section) that meets the requirements of paragraph (g)(2)(ii) of this section. An EST also includes property owned by the taxpayer that is an integral part (as defined in paragraph (g)(3) of this section) of the EST. An EST does not include equipment that is an addition or modification to an existing EST. For purposes of the section 48E credit, EST includes electrical energy storage property (as described in paragraph (g)(6)(i) of this section), thermal energy storage property (as described in paragraph (g)(6)(ii) of this section), and hydrogen energy storage property (as described in paragraph (g)(6)(iii) of this section).
(2) Unit of EST —(i) In general. For purposes of the section 48E credit, a unit of EST includes all functionally interdependent components of property (as defined in paragraph (g)(2)(ii) of this section) owned by the taxpayer that are operated together and that can operate apart from other property to perform the intended function of the EST. No provision of this section, § 1.48E-1, or § 1.48E-4 through 1.48E-5 uses the term unit in respect of an EST with any meaning other than that provided in this paragraph (g)(2)(i).
(ii) Functionally interdependent. Components of property are functionally interdependent if the placing in service of each of the components is dependent upon the placing in service of each of the other components to perform the intended function of the EST.
(3) Integral part. For purposes of the section 48 E credit, property owned by a taxpayer is an integral part of an EST owned by the same taxpayer if it is used directly in the intended function of the EST and is essential to the completeness of such function. Property that is an integral part of an EST is part of an EST. A taxpayer may not claim the section 48E credit for any property that is an integral part of the taxpayer's EST that is not owned by the taxpayer.
(4) Qualified investment with respect to EST. The qualified investment with respect to any EST for any taxable year is the basis of any EST placed in service by the taxpayer during such taxable year.
(5) Placed in service— (i) In general. An EST is considered placed in service in the earlier of:
(A) The taxable year in which, under the taxpayer's depreciation practice, the period for depreciation with respect to such EST begins; or
(B) The taxable year in which the EST is placed in a condition or state of readiness and availability for the intended function of the EST, whether in a trade or business or in the production of income. An EST in a condition or state of readiness and availability for its intended function includes, but is not limited to, components of property that are acquired and set aside during the taxable year for use as replacements for a particular EST (or ESTs) in order to avoid operational time loss and equipment that is acquired for a specifically assigned function and is operational but is undergoing testing to eliminate any defects. However, components of property acquired to be used in the construction of an EST are not considered in a condition or state of readiness and availability for a specifically assigned function.
(ii) EST subject to § 1.48-4 election to treat lessee as purchaser. Notwithstanding paragraph (g)(5)(i) of this section, EST with respect to which an election is made under section 50(d)(5) of the Code and § 1.48-4 to treat the lessee as having purchased such EST is considered placed in service by the lessor in the taxable year in which possession is transferred to such lessee.
(6) Types of EST —(i) Electrical energy storage property. Electrical energy storage property is property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that receives, stores, and delivers energy for conversion to electricity, and has a nameplate capacity of not less than 5 kWh. For example, subject to the exclusion for property primarily used in the transportation of goods or individuals, electrical energy storage property includes but is not limited to rechargeable electrochemical batteries of all types (such as lithium-ion, vanadium redox flow, sodium sulfur, and lead-acid); ultracapacitors; physical storage such as pumped storage hydropower, compressed air storage, flywheels; and reversible fuel cells.
(ii) Thermal energy storage property. Thermal energy storage property is property comprising a system that is directly connected to a heating, ventilation, or air conditioning (HVAC) system; removes heat from, or adds heat to, a storage medium for subsequent use; and provides energy for the heating or cooling of the interior of a residential or commercial building. Thermal energy storage property includes equipment and materials, and parts related to the functioning of such equipment, to store thermal energy for later use to heat or cool, or to provide hot water for use in heating a residential or commercial building. It does not include a swimming pool, combined heat and power system property (as defined in section 45Y(g)(2)), or a building or its structural components. For example, thermal energy storage includes, but is not limited to, thermal ice storage systems that use electricity to run a refrigeration cycle to produce ice that is later connected to the HVAC system as an exchange medium for air conditioning a building, heat pump systems that store thermal energy in an underground tank or borehole field to be extracted for later use for heating and/or cooling, and electric furnaces that use electricity to heat bricks to high temperatures and later use this stored energy to heat a building through the HVAC system.
(iii) Hydrogen energy storage property. Hydrogen energy storage property is property (other than property primarily used in the transportation of goods or individuals and not for the production of electricity) that stores hydrogen and has a nameplate capacity of not less than 5 kWh, equivalent to 0.127 kg of hydrogen or 52.7 standard cubic feet (scf) of hydrogen. Hydrogen energy storage property must store hydrogen that is solely used as energy and not for other purposes such as for the production of end products such as fertilizer. For example, hydrogen energy storage property includes, but is not limited to, a hydrogen compressor and associated storage tank and an underground storage facility and associated compressors.
(7) Modification of EST. With respect to an electrical energy storage property or a hydrogen energy storage property, modified as set forth in this paragraph (g)(7), such property will be treated as an electrical energy storage property (as described in paragraph (g)(6)(i) of this section) or a hydrogen energy storage property (as described in paragraph (g)(6)(iii) of this section), except that the basis of any existing electrical energy storage property or hydrogen energy storage property prior to such modification is not taken into account for purposes of this paragraph (g)(7) and section 48E. This paragraph (g)(7) applies to any electrical energy storage property and hydrogen energy storage property that either:
(i) Was placed in service before August 16, 2022, and would be described in section 48(c)(6)(A)(i), except that such property had a capacity of less than 5 kWh and is modified in a manner that such property (after such modification) has a nameplate capacity of not less than 5 kWh; or
(ii) Is described in section 48(c)(6)(A)(i) and is modified in a manner that such property (after such modification) has an increase in nameplate capacity of not less than 5 kWh.
(8) Claim. With respect to a section 48E credit determined with respect to an EST of a taxpayer, the term claim means filing a completed Form 3468, Investment Credit, or any successor form(s), with the taxpayer's timely filed (including extensions) Federal income tax return or Federal return, as appropriate, for the taxable year in which the EST is placed in service, and includes making an election under section 6417 or 6418 of the Code and corresponding regulations with respect to such section 48E credit and made on the taxpayer's filed return.
(h) Applicability date. This section applies to qualified facilities and EST placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE FEDERAL REGISTER ].
§ 1.48E-3
[Reserved]
§ 1.48E-4
Rules of general application.
(a) Rules for certain lower-output qualified facilities to include qualified interconnection costs in the basis of associated qualified facility —(1) In general. For purposes of determining the section 48E credit, the qualified investment with respect to a qualified facility (as defined in § 1.48E-2(a)) includes amounts paid or incurred by the taxpayer for qualified interconnection property (as defined in paragraph (a)(2) of this section), in connection with a qualified facility (as defined in § 1.48E-2(a)) that has a maximum net output of not greater than 5 MW (as measured in alternating current) as described in paragraph (a)(3) of this section (Five-Megawatt Limitation). The qualified interconnection property must provide for the transmission or distribution of the electricity produced by a qualified facility and must be properly chargeable to the capital account of the taxpayer as reduced by paragraph (a)(6) of this section.
(2) Qualified interconnection property. For purposes of this paragraph (a), the term qualified interconnection property means, with respect to a qualified facility, any tangible property that is part of an addition, modification, or upgrade to a transmission or distribution system that is required at or beyond the point at which the qualified facility interconnects to such transmission or distribution system in order to accommodate such interconnection; is either constructed, reconstructed, or erected by the taxpayer (as defined in § 1.48E-2(f)(3)), or for which the cost with respect to the construction, reconstruction, or erection of such property is paid or incurred by such taxpayer; and the original use (as defined in § 1.48E-2(f)(5)) of which, pursuant to an interconnection agreement (as defined in paragraph (a)(4) of this section), commences with a utility (as defined in paragraph (a)(5) of this section). Qualified interconnection property is not part of a qualified facility. As a result, qualified interconnection property is not taken into account in determining whether a qualified facility satisfies the requirements for the increase in credit rate for energy communities provided in section 48E(a)(3)(A) or for the increase in credit rate for domestic content referenced in section 48E(a)(3)(B) (by reference to rules similar to the rules of section 48(a)(12)).
(3) Five-Megawatt Limitation —(i) In general. For purposes of this paragraph (a), the Five-Megawatt Limitation is measured at the level of the qualified facility in accordance with section 48E(b)(1)(B). The maximum net output of a qualified facility is measured only by nameplate generating capacity of the unit of qualified facility, which does not include the nameplate capacity of any integral property, at the time the qualified facility is placed in service. The nameplate generating capacity of the unit of qualified facility is measured independently from any other qualified facilities that share the same integral property.
(ii) Nameplate capacity for purposes of the Five-Megawatt Limitation. The determination of whether a qualified facility has a maximum net output of not greater than 5 MW (as measured in alternating current) is based on the nameplate capacity of the unit of qualified facility. The nameplate capacity for purposes of the Five-Megawatt Limitation is the maximum electrical generating output in megawatts that the unit of qualified facility is capable of producing on a steady state basis and during continuous operation under standard conditions, as measured by the manufacturer and consistent with the definition of nameplate capacity provided in 40 CFR 96.202. If applicable, taxpayers should use the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a unit of qualified facility.
(4) Interconnection agreement. For purposes of this paragraph (a), the term interconnection agreement means an agreement with a utility for the purposes of interconnecting the qualified facility owned by such taxpayer to the transmission or distribution system of the utility.
(5) Utility. For purposes of this paragraph (a), the term utility means the owner or operator of an electrical transmission or distribution system that is subject to the regulatory authority of a State or political subdivision thereof, any agency or instrumentality of the United States, a public service or public utility commission or other similar body of any State or political subdivision thereof, or the governing or ratemaking body of an electric cooperative.
(6) Reduction to amounts chargeable to capital account. For purposes of this paragraph (a), in the case of expenses paid or incurred for qualified interconnection property (as defined in paragraph (a)(2) of this section), amounts otherwise chargeable to capital account with respect to such expenses must be reduced under rules similar to the rules of section 50(c) of the Code, specifically the rules under section 50(c)(3). In addition, the taxpayer must pay or incur the interconnection property costs; therefore, any reimbursement, including by a utility, must be accounted for by reducing the taxpayer's expenditure to determine eligible costs.
(7) Examples. This paragraph (a)(7) provides examples illustrating the rules of this paragraph (a).
(i) Example 1. Application of Five-Megawatt Limitation to an interconnection agreement for qualified facilities owned by taxpayer. X places in service two solar qualified facilities (48E Facilities) each with a maximum net output of 5 MW (as measured in alternating current). The two 48E Facilities each have their own inverter, which is integral property to each facility, and share a step-up transformer, which is integral property to both facilities. As part of the development of the 48E Facilities, interconnection costs are required by the utility to modify and upgrade the transmission system at or beyond the common intertie to the utility's transmission system to accommodate the interconnection. X has an interconnection agreement with the utility that allows for a maximum output of 10 MW (as measured in alternating current). The interconnection agreement provides the total cost of the qualified interconnection property. X may include the costs paid or incurred by X, respectively, for qualified interconnection property subject to the terms of the interconnection agreement, to calculate X's section 48E credit for each of the 48E Facilities because each qualified facility has a maximum net output of not greater than 5 MW.
(ii) Example 2. Application of Five-Megawatt Limitation to an interconnection agreement for qualified facilities owned by separate taxpayers. X places in service a solar farm that is a qualified facility (as defined in § 1.48E-2(a)) (Solar Qualified Facility) with a maximum net output of 5 MW (as measured in alternating current). The Solar Qualified Facility includes an inverter, which is integral property. Y places in service a wind facility (as defined in § 1.48E-2(a)) (Wind Qualified Facility), with a maximum net output of 5 MW (as measured in alternating current). The Solar Qualified Facility and the Wind Qualified Facility share a step-up transformer, which is integral to both facilities. As part of the development of the Solar Qualified Facility and Wind Qualified Facility, interconnection costs are required by the utility to modify and upgrade the transmission system at or beyond the common intertie to the utility's transmission system to accommodate the interconnection. X and Y are party to the same interconnection agreement with the utility that allows for a maximum output of 10 MW (as measured in alternating current). The interconnection agreement provides the total cost of the qualified interconnection property. X and Y may include the costs paid or incurred by X and Y, respectively, for qualified interconnection property subject to the terms of the interconnection agreement, to calculate their respective section 48E credits for the Solar Qualified Facility and the Wind Qualified Facility because each has a maximum net output of not greater than 5 MW.
(b) Expansion of facility; Incremental production —(1) In general. Solely for purposes of this paragraph (b), the term qualified facility includes either a new unit or an addition of capacity placed in service after December 31, 2024, in connection with a facility described in section 48E(b)(3)(A) (without regard to clause (ii) of such paragraph), which was placed in service before January 1, 2025, but only to the extent of the increased amount of electricity produced at the facility by reason of such new unit or addition of capacity. A new unit or an addition of capacity that meets the requirements of this paragraph (b) will be treated as a separate qualified facility. For purposes of this paragraph (b), a new unit or an addition of capacity requires the addition or replacement of qualified property (as defined in § 1.48E-2(e)), including any new or replacement integral property added to a facility necessary to increase capacity. If applicable for purposes of this paragraph (b), taxpayers must use modified or amended facility operating licenses or the International Standard Organization (ISO) conditions to measure the maximum electrical generating output of a facility to determine nameplate capacity. For purposes of assessing the One-Megawatt Exception in section 48E(a)(2)(A)(ii)(I), the capacity for a new unit or an addition of capacity is the sum of the nameplate capacity of the added qualified facility and the nameplate capacity of the facility to which the qualified facility was added.
(2) Special rule for restarted facilities. Solely for purposes of this paragraph (b), a facility that is decommissioned or in the process of decommissioning and restarts can be considered to have increased capacity if the following conditions are met:
(i) The existing facility must have ceased operations;
(ii) The existing facility must have a shutdown period of at least one calendar year during which it is without a valid operating license from its respective Federal regulatory authority (that is, the Federal Energy Regulatory Commission (FERC) or the Nuclear Regulatory Commission (NRC)); and
(iii) The increased capacity of the restarted facility must have a new, reinstated, or renewed operating license issued by either FERC or NRC.
(3) Computation of qualified investment for a new unit or an addition of capacity —(i) New unit. For purposes of this paragraph (b), the term new unit means components of property including any new or replacement integral property added to a facility necessary to increase the capacity of the facility but do not replace the existing capacity of the facility. The taxpayer's qualified investment in the new unit during the taxable year that results in an increase in capacity is eligible for the section 48E credit.
(ii) Addition of capacity. For purposes of this paragraph (b), the term addition of capacity means components of property, including any new or replacement integral property added to a facility necessary to increase the capacity of the facility by replacing, in whole or in part, the existing capacity of the facility. To determine a taxpayer's qualified investment during the taxable year that resulted in an increased capacity of a facility by reason of an addition of capacity (not described in paragraph (b)(3)(i) of this section), a taxpayer must multiply its total qualified investment during the taxable year with respect to the facility, by a fraction, the numerator of which is the increase in nameplate capacity that results from the addition of capacity, and the denominator of which is the total nameplate capacity associated with the components of property that result in the addition of capacity.
(4) Examples. This paragraph (b)(4) provides examples illustrating the rules of this paragraph (b).
(i) Example 1. New Unit. X owns a hydropower facility (Facility H) that was originally placed in service in 2020, with a nameplate capacity of 600 megawatts. During taxable years 2020 through 2024, X claimed a section 45 credit for the electricity produced by Facility H. On July 1, 2025, X places in service components of property comprising a new unit that results in Facility H having an increased nameplate capacity of 900 megawatts in 2025. For purposes of this paragraph (b), this new unit will be treated as a separate facility (Facility J). X determines the amount of its section 48E credit based on the amount of its qualified investment in Facility J. Even though X claimed a section 45 credit for the existing electricity capacity of Facility H in taxable years 2020 through 2024, X can claim a section 48E credit for its qualified investment in Facility J. X may also continue to claim the section 45 credit through taxable year 2030 for electricity generated by Facility H (excluding the incremental electricity generation related to Facility J).
(ii) Example 2. Addition of Capacity. Y owns a nuclear facility (Facility N) that was originally placed in service on January 1, 2000, with a nameplate capacity of 800 megawatts. Y claimed a section 45U credit in taxable years 2024 and 2025 for the electricity generated by Facility N. On January 15, 2026, Y removed components of property with a nameplate capacity of 200 megawatts and placed in service components of property with a nameplate capacity of 300 megawatts at Facility N. For purposes of this paragraph (b), Facility N's addition of capacity is treated as a new separate qualified facility placed in service on January 15, 2026 (Facility P). Y determines the amount of its section 48E credit based on the amount of its qualified investment in Facility P, which is determined by multiplying Y's qualified investment with respect to the addition of capacity by one-third (equal to the 100-megawatt increase in nameplate capacity divided by the 300 megawatt nameplate capacity associated with the new components of property that result in the addition of capacity). Even though Y claimed a section 45U credit in taxable years 2024 and 2025 for the existing capacity of Facility N, Y can claim a section 48E credit for its investment in the addition of capacity associated with Facility P. Y may also continue to claim the section 45U credit through taxable year 2032 for electricity generated by Facility N (excluding the incremental electricity generation related to Facility P).
(c) Retrofit of an existing facility (80/20 Rule) —(1) In general. For purposes of section 48E(b)(3)(A)(ii), a retrofitted qualified facility may qualify as originally placed in service even if it contains some used components of property within the unit of qualified facility, provided that the fair market value of the used components of the unit of qualified facility is not more than 20 percent of the total value of the unit of qualified facility (that is, the cost of the new components of property plus the value of the used components of property within the unit of qualified facility) (80/20 Rule).
(2) Expenditures taken into account. Notwithstanding the rule provided in paragraph (c)(1) of this section, only expenditures paid or incurred that relate to the new components of the unit of qualified facility are taken into account for purposes of computing the credit determined under section 48E with respect to the qualified facility.
(3) Cost of new components. For purposes of this 80/20 Rule, the cost of new components of the unit of qualified facility includes all costs properly included in the depreciable basis of the new components of the unit of qualified facility.
(4) New costs. If the taxpayer satisfies the 80/20 Rule with regard to the unit of qualified facility and the taxpayer pays or incurs new costs for property that is an integral part of the qualified facility (as defined in § 1.48E-2(a)), the taxpayer may include these new costs paid or incurred for property that is an integral part of the qualified facility in the basis of the qualified facility for purposes of the section 48E credit.
(5) Excluded costs. Costs incurred for new components of property added to used components of a unit of qualified facility may not be taken into account for purposes of the section 48E credit unless the taxpayer satisfies the 80/20 Rule by placing in service a unit of qualified facility for which the fair market value of the used components of property is not more than 20 percent of the total value of the unit of qualified facility taking into account the cost of the new components of property plus the value of the used components of property.
(6) Examples. The following examples illustrate the rules of this paragraph (c).
(i) Example 1. Retrofitted facility that satisfies the 80/20 Rule. A owns an existing wind facility. On February 1, 2026, A replaces used components of the wind facility with new components at a cost of $2 million. The fair market value of the remaining original components of the wind facility is $400,000, which is not more than 20 percent of the retrofitted facility's total fair market value of $2.4 million (the cost of the new components ($2 million) + the fair market value of the remaining original components ($400,000)). Thus, the retrofitted wind facility will be considered newly placed in service for purposes of section 48E, assuming all the other requirements of section 48E are met, and A will be able to claim a section 48E credit based on its investment in 2026 ($2 million).
(ii) Example 2. Retrofit of an existing facility that meets the 80/20 Rule. Facility Z, a facility that was originally placed in service on January 1, 2026, was not a qualified facility (as defined in § 1.48E-2(a)) when it was placed in service because it did not meet the greenhouse gas emission rate requirements (as determined under rules provided in § 1.48E-5). On January 1, 2027, Facility Z was retrofitted and now meets the requirements to be a qualified facility (as defined in § 1.48E-2(a)). After the retrofit, the cost of the new property included in Facility Z is greater than 80 percent of Facility Z's total fair market value. Because Facility Z meets the 80/20 Rule, Facility Z is deemed to be originally placed in service on January 1, 2027. Assuming all the other requirements of section 48E are met, Z may claim a section 48E credit based on its investment in the new components used to retrofit the existing facility in 2027.
(iii) Example 3. Retrofitted nuclear facility that satisfied the 80/20 Rule. T owns a nuclear facility (Facility N) that was originally placed in service on March 1, 1982, and was decommissioned on September 20, 2010. T replaces used components of property at Facility N with new components at a cost of $200 million, and then places in Facility N in service on July 15, 2026. The fair market value of the remaining original components of Facility N, after being decommissioned and prior to restart, is $30 million, which is not more than 20 percent of Facility N's total fair market value of $230 million (the cost of the new components ($200 million) + the fair market value of the remaining original components ($30 million)). Thus, assuming all the other requirements of section 48E are met, Facility N will be considered newly placed in service on July 15, 2026, for purposes of section 48E, and T will be able to claim a section 48E credit based on its investment in the new components ($200 million).
(iv) Example 4. Capital improvements to an existing qualified facility that do not satisfy the 80/20 Rule. X owns an existing facility, Facility C, that was originally placed in service on January 1, 2023. X makes capital improvements to Facility C that are placed in service on June 6, 2026. The cost of the capital improvements total $500,000 and the fair market value of Facility C after the improvements is $2 million. The fair market value of the old components of Facility C is $1,500,000 or 75 percent of the total fair market value of the Facility C after the improvements. Because the fair market value of the new property included in Facility C is less than 80 percent of Facility C's total fair market value, Facility C does not meet the 80/20 Rule. Facility C will not be considered a qualified facility (as defined in § 1.48E-2(a)) eligible for the section 48E credit.
(d) Special rules regarding ownership —(1) Qualified investment with respect to a qualified facility or EST. For purposes of this paragraph (d), a taxpayer that owns a qualified investment with respect to a qualified facility or EST is eligible for the section 48E credit only to the extent of the taxpayer's eligible investment in the qualified facility or EST. In the case of multiple taxpayers holding direct ownership through their qualified investments in a single qualified facility or EST (and such arrangement is not treated as a partnership for Federal income tax purposes), each taxpayer determines its eligible investment based on its fractional ownership interest in the qualified facility or EST.
(2) Multiple owners. A taxpayer must directly own at least a fractional interest in the entire unit of qualified facility (as defined in § 1.48E-2(b)(2)) or unit of EST (as defined in § 1.48E-2(g)(2)) for a section 48E credit to be determined with respect to such taxpayer's interest. No section 48E credit may be determined with respect to a taxpayer's ownership of one or more separate components of a qualified facility or an EST if the components do not constitute a unit of qualified facility (as defined in § 1.48E-2(b)(2)) or unit of EST (as defined in § 1.48E-2(g)(2)). However, the use of property owned by one taxpayer that is an integral part of a qualified facility or EST owned by another taxpayer will not prevent a section 48E credit from being determined with respect to the second taxpayer's qualified investment in a qualified facility or EST. See § 1.48E-2(b)(3)(vi) for rules regarding shared integral property.
(3) Section 761(a) election. If a qualified facility or EST is owned through an unincorporated organization that has made a valid election under section 761(a) of the Code, each member's undivided ownership share in the qualified facility or EST will be treated as a separate qualified facility or EST owned by such member.
(4) Related taxpayers —(i) Definition. For purposes of the section 48E credit, the term related taxpayers means members of a group of trades or businesses that are under common control (as defined in § 1.52-1(b)).
(ii) Related taxpayer rule. For purposes of the section 48E credit, related taxpayers are treated as one taxpayer in determining whether a taxpayer has made an investment in a qualified facility or EST with respect to which a section 48E credit may be determined.
(5) Examples. The following examples illustrate the rules in this paragraph (d). In each example, X and Y are unrelated taxpayers.
(i) Example 1. Fractional ownership required to satisfy section 48E. X and Y each own a direct fractional ownership interest in an entire qualified facility (as defined in § 1.48E-2(a)) and as a result, a section 48E credit may be determined with respect to X's and Y's qualified investment in their fractional ownership interests in the qualified facility.
(ii) Example 2. Ownership of separate components of property that are part of a qualified facility. X and Y each own separate components of a qualified facility, which taken together would constitute a unit of qualified facility but taken separately would not constitute a unit of qualified facility. X owns component A and Y owns component B. No section 48E credit may be determined with respect to either component A or component B because X and Y each owns a separate component of a qualified facility that does not constitute a unit of qualified facility (as defined in § 1.48E-2(b)(2)).
(iii) Example 3. Separate ownership of property that is an integral part of separate qualified facilities. X owns a solar farm that is a qualified facility (as defined in § 1.48E-2(a)) (Solar Qualified Facility), which includes property that is an integral part of the Solar Qualified Facility, specifically a transformer in which the electricity is stepped up to electrical grid voltage before being transmitted to the electrical grid through an intertie. Y owns a wind facility that is a qualified facility (as defined in § 1.48E-2(a)) (Wind Qualified Facility) that connects to X's transformer. Because Y does not hold an ownership interest in the transformer, Y may compute its section 48E credit for the Wind Qualified Facility, but it may not include any costs relating to the transformer in its section 48E credit base.
(e) Coordination rule for section 42 credits and section 48E credits. As provided under section 50(c)(3)(C) of the Code, in the case of a taxpayer determining eligible basis for purposes of calculating a credit under section 42 of the Code (section 42 credit), a taxpayer is not required to reduce its basis in a qualified facility or EST by the amount of the section 48E credit determined with respect to the taxpayer's qualified investment with respect to such qualified facility or EST. The qualified investment with respect to a qualified facility or EST property may be used to determine a section 48E credit and may also be included in eligible basis to determine a section 42 credit. See paragraph (d) of this section for special rules regarding ownership.
(f) Recapture —(1) In general. The credit calculated under section 48E(a) and § 1.48E-1(b) is subject to general recapture rules under section 50(a). Additionally, section 48E(g) provides for recapture for any qualified facility for which a taxpayer claimed a section 48E credit that has a greenhouse gas emissions rate (as determined under rules provided in § 1.45Y-5) of greater than 10 grams of CO 2 e per kWh during the five-year period beginning on the date such qualified facility is originally placed in service (five-year recapture period).
(2) Recapture event —(i) In general. Any event that results in a qualified facility having a greenhouse gas emissions rate (as determined under rules provided in § 1.45Y-5) of greater than 10 grams of CO 2 e per kWh during the five-year period is a recapture event. If a qualified facility's greenhouse gas emissions rate exceeds 10 grams of CO 2 e per kWh, the section 48E credit is subject to recapture.
(ii) Changes to the Annual Table. A change to the greenhouse gas emissions rate for a type or category of facility that is published in the Annual Table (as defined in 1.45Y-5(f)) after a facility is placed in service does not result in a recapture event.
(iii) Yearly Determination. (A) In general. A determination of whether a recapture event occurred under paragraph (f)(2) of this section must be made for each taxable year (or portion thereof) occurring within the five-year recapture period, beginning with the taxable year ending after the date the qualified facility is placed in service. Thus, for each taxable year that begins or ends within the five-year recapture period, the taxpayer must determine, for any qualified facility for which it has claimed the section 48E credit, whether such facility has maintained a greenhouse gas emissions rate of not greater than 10 grams of CO 2 e per kWh.
(B) Annual Reporting Requirement. A taxpayer that has claimed the section 48E credit amount under § 1.48E-1(b) or transferred a specified credit portion under section 6418 of the Code is required to provide to the IRS information on the greenhouse gas emissions rate of the qualified facility during the recapture period at the time and in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. See § 601.601 of this chapter.
(iv) Carryback and carryforward adjustments. In the case of any recapture event described in paragraph (f)(2) of this section, the carrybacks and carryforwards under section 39 of the Code must be adjusted by reason of such recapture event.
(3) Recapture Amount —(i) In general. If a recapture event occurred as described in paragraph (f)(2) of this section, the tax under chapter 1 of the Code for the taxable year in which the recapture event occurs is increased by an amount equal to the applicable recapture percentage multiplied by the credit amount that was claimed by the taxpayer under § 1.48E-1(b).
(ii) Applicable recapture percentage. If the recapture event occurs:
(A) Within one full year after the property is placed in service, the recapture percentage is 100;
(B) Within one full year after the close of the period described in paragraph (f)(3)(ii)(A) of this section, the recapture percentage is 80;
(C) Within one full year after the close of the period described in paragraph (f)(3)(ii)(B) of this section, the recapture percentage is 60;
(D) Within one full year after the close of the period described in paragraph (f)(3)(ii)(C) of this section, the recapture percentage is 40;
(E) Within one full year after the close of the period described in paragraph (f)(3)(ii)(D) of this section, the recapture percentage is 20.
(4) Recapture period. The five-year recapture period begins on the date the qualified facility is placed in service and ends on the date that is five full years after the placed in service date. Each 365-day period (366-day period in case of a leap year) within the five-year recapture period is a separate recapture year for recapture purposes.
(5) Increase in tax for recapture. The increase in tax under chapter 1 of the Code for the recapture of the credit amount claimed under section 48E(a) and § 1.48E-1(b) occurs in the year of the recapture event.
(g) Cross references. (1) To determine applicable recapture rules, see section 50(a) of the Code.
(2) For rules regarding the credit eligibility of property used outside the United States, see section 50(b)(1) of the Code.
(3) For rules regarding the credit eligibility of property used by certain tax-exempt organizations, see section 50(b)(3) of the Code. See section 6417(d)(2) of the Code for an exception to this rule in the case of an applicable entity making an elective payment election.
(4) For application of the normalization rules to the section 48E credit in the case of certain regulated companies, including rules regarding the election not to apply the normalization rules to energy storage technology (as defined in section 48(c)(6) of the Code), see section 50(d)(2) of the Code.
(5) For rules relating to certain leased property, see section 50(d)(5) of the Code.
(h) Applicability date. This section applies to qualified facilities and energy storage technologies placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE FEDERAL REGISTER ].
§ 1.48E-5
Greenhouse gas emissions rates for qualified facilities under section 48E.
(a) In general. Section 48E(b)(3)(B)(ii) provides that rules similar to the rules of section 45Y(b)(2) regarding greenhouse emissions rates apply for purposes of section 48E. Paragraphs (b) through (f) of this section thus provide that the definitions and rules regarding greenhouse gas emission rate requirements (as determined under rules provided in § 1.45Y-5) apply for purposes of section 48E and this section. Paragraph (g) of this section provides rules related to provisional emissions rates for purposes of section 48E and this section. Paragraph (h) of this section provides rules for determining an anticipated greenhouse gas emissions rate. Paragraph (i) of this section provides rules regarding reliance on the annual publication of emissions rates and provisional emissions rates. Finally, paragraph (j) of this section provides rules for substantiation.
(b) Definitions. The definitions provided in § 1.45Y-5(b) apply for purposes of section 48E and this section.
(c) Non-C&G Facilities. The rules provided in § 1.45Y-5(c) apply for purposes of determining greenhouse gas emissions rates for Non-C&G Facilities for purposes of section 48E and this section.
(d) C&G Facilities. The rules provided in § 1.45Y-5(d) apply for purposes of determining greenhouse gas emissions rates for C&G Facilities for purposes of section 48E and this section.
(e) Carbon capture and sequestration. The rules provided in § 1.45Y-5(e) regarding carbon capture and sequestration apply for purposes of section 48E and this section.
(f) Annual publication of emissions rates. The rules provided in § 1.45Y-5(f) regarding the annual publication of a table (Annual Table) that sets forth the greenhouse gas emissions rates for types or categories of facilities apply for purposes of section 48E and this section.
(g) Provisional emissions rates —(1) In general. In the case of any facility for which an emissions rate has not been established by the Secretary, a taxpayer that owns such facility may file a petition with the Secretary for determination of the emissions rate with respect to such facility (Provisional Emissions Rate or PER). A PER must be determined and obtained under the rules of this section.
(2) Rate not established. An emissions rate has not been established by the Secretary for a facility for purposes of sections 45Y(b)(2)(C)(ii) and 48E(b)(3)(B)(ii) if such facility is not described in the Annual Table. If a taxpayer's request for an emissions value pursuant to paragraph (g)(5) of this section is pending at the time such facility is or becomes described in the Annual Table, the taxpayer's request for an emissions value will be automatically denied.
(3) Process for filing a PER petition. To file a PER petition with the Secretary, a taxpayer must submit a PER petition by attaching it to the taxpayer's Federal income tax return or Federal return, as appropriate, for the taxable year in which the taxpayer claims the section 48E credit with respect to the facility to which the PER petition relates. The PER petition must contain an emissions value and, if applicable, the associated letter from DOE. An emissions value may be obtained from DOE or by using the designated LCA model in accordance with paragraph (g)(6) of this section. An emission value obtained from DOE will be based on an analytical assessment of the emissions rate associated with the facility performed by one or more of the National Laboratories, in consultation with other agency experts as appropriate, consistent with this section. A taxpayer must retain in its books and records the application and correspondence to and from DOE including a copy of the taxpayer's request to DOE for an emissions value, including any information provided by the taxpayer to DOE pursuant to the emissions value request process provided in paragraph (g)(5) of this section. Alternatively, an emissions value can be determined by the taxpayer for a facility using the most the recent version of an LCA model, as of the time the PER petition is filed, that has been designated by the Secretary for such use under paragraph (g)(6) of this section. If an emissions value is determined using the designated LCA model under paragraph (g)(6) of this section, a taxpayer is required to provide to the IRS information to support its determination in the form and manner prescribed in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. See § 601.601 of this chapter. A taxpayer may not request an emissions value from DOE for a facility for which an emissions value can be determined using the most recent version of an LCA model or models designated for such use under paragraph (g)(6) of this section.
(4) PER determination. Upon the IRS's acceptance of the taxpayer's return to which a PER petition is attached, the emissions value of the facility specified on such petition is deemed accepted. A taxpayer can rely upon an emissions value provided by DOE for purposes of claiming a section 48E credit, provided that any information, representations, or other data provided to DOE in support of the request for an emissions value are accurate. If applicable, a taxpayer may rely upon an emissions value determined for a facility using the LCA model designated under paragraph (g)(6) of this section, provided that any information, representations, or other data used to obtain such emissions value are accurate. The IRS's deemed acceptance of an emissions value is the Secretary's determination of the PER. However, the taxpayer must also comply with all applicable requirements for the section 48E credit and any information, representations, or other data supporting an emissions value are subject to later examination by the IRS.
(5) Emissions value request process. An applicant that submits a request for an emissions value must follow the procedures specified by DOE to request and obtain such emissions value. Emissions values will be determined consistent with the rules provided in this section. An applicant can request an emissions value from DOE only after a front-end engineering and design (FEED) study or similar indication of project maturity, as determined by DOE, such as the completion of a project specification and cost estimation sufficient to inform a final investment decision for the facility. DOE may decline to review applications that are not responsive, including those applications that relate to a facility described in the Annual Table (consistent with paragraph (g)(2) of this section) or a facility for which an emissions value can be determined by an LCA model under paragraph (g)(6) of this section (consistent with paragraph (g)(3) of this section), or applications that are incomplete. Applicants must follow DOE's guidance and procedures for requesting and obtaining an emissions value from DOE. DOE will publish this guidance and procedures, including a process for, under limited circumstances, a revision to DOE's initial assessment of an emissions value on the basis of revised technical information or facility design and operation.
(6) LCA model for determining an emissions value for C&G Facilities. The rules provided in § 1.45Y-5(g)(6) regarding the designation of an LCA model or models for determining an emissions value for C&G Facilities apply for purposes of section 48E and this section.
(7) Effect of PER. A taxpayer who files for a PER must use a PER determined by the Secretary to determine eligibility for the section 48E credit, provided all other requirements of section 48E are met. The Secretary's PER determination is not an examination or inspection of books of account for purposes of section 7605(b) of the Code and does not preclude or impede the IRS (under section 7605(b) or any administrative provisions adopted by the IRS) from later examining a return or inspecting books or records with respect to any taxable year for which the section 48E credit is claimed. Further, a PER determination does not signify that the IRS has determined that the requirements of section 48E have been satisfied for any taxable year.
(h) Determining anticipated greenhouse gas emissions rate —(1) In general. A facility's anticipated greenhouse gas emissions rate must be objectively determined based on an examination of all the facts and circumstances. Certain Non-C&G Facilities, such as the facilities described in § 1.45Y-5(c)(2), may have an anticipated greenhouse gas emissions rate that is not greater than zero based on the technology and practices they rely upon to generate electricity. For facilities that require the use of certain feedstocks or carbon capture and sequestration, which may vary, to generate electricity with a greenhouse gas emissions rate that is not greater than zero, objective indicia that such facilities will operate with a greenhouse gas emissions rate that is not greater than zero for at least 10 years beginning from the date the facility is placed in service are required to establish that its anticipated greenhouse gas emissions rate is not greater than zero.
(2) Examples of objective indicia. Examples of objective indicia that may establish an anticipated greenhouse gas emissions rate that is not greater than zero include, but are not limited to, the following:
(i) Co-location of the facility with a fuel source (for example, an anaerobic digester) for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero;
(ii) A 10-year contract to purchase fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero;
(iii) A facility type that only accommodates one type of fuel or a small range of fuels for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero; or
(iv) A 10-year contract for the capture, disposal, or utilization of qualified carbon dioxide from the facility for which the combination of fuel, type of facility, and practice is reasonably expected to result in a greenhouse gas emissions rate that is not greater than zero.
(i) Reliance on Annual Table or Provisional Emissions Rate. Taxpayers may rely on the Annual Table in effect as of the date a facility began construction or the provisional emissions rate determined by the Secretary for the taxpayer's facility under paragraph (g)(4) of this section to determine the facility's greenhouse gas emissions rate, provided that the facility continues to operate as a type of facility that is described in the Annual Table or the facility's emissions value request, as applicable, for the entire taxable year.
(j) Substantiation —(1) In general. A taxpayer must maintain in its books and records documentation regarding the design and operation of a facility that establishes that such facility had an anticipated greenhouse gas emissions rate that is not greater than zero in the year in which the section 48E credit is determined and operated with a greenhouse gas emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period that applies for purposes of section 48E(g).
(2) Sufficient substantiation. Documentation sufficient to substantiate that a facility had a greenhouse gas emissions rate, as determined under this section, not greater than 10 grams of CO 2 e per kWh during each year of the recapture period that applies for purposes of section 48E(g) includes documentation or a report prepared by an unrelated party that verifies the facility's actual emissions rate. A facility described in § 1.45Y-5(c)(2) can maintain sufficient documentation to demonstrate a greenhouse gas emissions rate that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period that applies for purposes of section 48E(g) by showing that it is the type of facility described in § 1.45Y-5(c)(2). The Secretary may determine that other types of facilities can sufficiently substantiate a greenhouse gas emissions rate, as determined under this section, that is not greater than 10 grams of CO 2 e per kWh during each year of the recapture period that applies for purposes of section 48E(g) with certain documentation and will describe such facilities and documentation in IRS forms or instructions or in publications or guidance published in the Internal Revenue Bulletin. See § 601.601 of this chapter.
(k) Applicability date. This section applies to qualified facilities placed in service after December 31, 2024, and during a taxable year ending on or after [DATE OF PUBLICATION OF THE FINAL REGULATIONS IN THE FEDERAL REGISTER ].
Douglas W. O'Donnell,

Deputy Commissioner.