The Rural Housing Service (RHS) offers a variety of programs to build or improve housing and essential community facilities in rural areas. RHS offers loans, grants, and loan guarantees for single and multifamily housing, childcare centers, fire and police stations, hospitals, libraries, nursing homes, schools, first responder vehicles and equipment, and housing for farm laborers. RHS also provides technical assistance loans and grants in partnership with non-profit organizations, Indian tribes, state and Federal government agencies, and local communities.

Title V of the Housing Act of 1949 (Act) authorized USDA to make housing loans to farmers to enable them to provide habitable dwellings for themselves or their tenants, lessees, sharecroppers, and laborers. USDA then expanded opportunities in rural areas, making housing loans and grants to rural residents through the Single-Family Housing (SFH) and Multi-Family Housing (MFH) Programs.

RHS operates the MFH direct loan and grant programs by providing direct loans or grants to affordable multi-family rental housing for low income, elderly, disabled individuals and families, or domestic farm workers in eligible rural areas. The programs are covered by the 7 CFR part 3560, Direct Multi-Family Housing Loans and Grants and are: (1) Section 515, Rural Rental Housing loans, which finances multi-family units in rural areas; (2) Section 514 and 516 Farm Labor Housing loans and grants, which finances farm labor housing; and (3) Section 521, Rental Assistance, which finances project-based tenant rent subsidy.

As required by the Agency under the 7 CFR part 3560, borrowers must purchase and maintain property insurance on all buildings included as security for an Agency loan, to avoid a non-monetary loan default. Regulations require borrowers to provide fidelity coverage, liability insurance and various other insurance coverage to protect against losses or damages.

Stakeholder input is vital to the Agency to ensure that the current regulations will support the Agency's mission, while ensuring that new regulations and policies are reasonable and do not overly burden the Agency's lenders and its customers. The Rural Housing Service (RHS) published a proposed rule in the Federal Register on October 25, 2023 (88 FR 73245) where a 60-day comment period was provided for the public to submit comments, which closed on December 26, 2023. Commenters included non-profit housing organizations, entities representing housing providers, and private citizens. The Agency received nine (9) comments from stakeholders and the general public. The Agency's responses to the comments which have been summarized and categorized are noted below:

Comments 1 & 2: Several commenters provided positive support for the proposed considerations of the rule changes.

Agency's response: The Agency acknowledges the commenters' support.

Comment 3: Four commenters expressed concerns with the proposed higher deductible limits adversely affecting smaller properties.

Agency's response: The Agency understands the concerns expressed by the commenters regarding insurance deductible limits. The deductible limits will be listed as not to exceed maximum limit; therefore, a property can choose a deductible limit that is less than the maximum limit specified in the proposed rule change.

Comment 4: Two commenters expressed concern regarding: (1) the difficulty of windstorm deductibles to match the all-peril property deductible limits; (2) the windstorm coverage premium cost being prohibitive in many areas of the country; and, (3) the inclusion of windstorm deductible limits in the same category as hazard coverage. The commenters requested alternative language that would allow owners to opt out of windstorm coverage when the cost is prohibitive. Commenters also flagged that with coverage such as windstorm, which varies widely based on geographical location, the coverage is often based on a percentage of the building and may conflict with the blanket requirements in the Final rule.

Agency's response: Due to the volume of windstorm events that occur on an annual basis nationwide, the Agency concludes that windstorm coverage is necessary to protect the Agency's security asset. The Agency acknowledges the recommendation that the windstorm deductible limit in the proposed rule limit may be cost prohibitive and could vary based on geographical locations, and the deductible is often based on a percentage of the building value. Therefore, the current regulation at 7 CFR 3560.105(f)(9)(iii) which states that when windstorm coverage is excluded from the “All Risk” policy, the deductible must not exceed five percent of the total insured value, will remain unchanged.

Comment 5: One commenter requested that these policies apply to all Rural Housing Service (RHS) programs. They urge RHS to include both the direct and guaranteed loan programs in these updated requirements.

Agency's Response: The Agency appreciates the concern for insurance requirements throughout all RHS programs. This Final rule applies only to the RHS Multi-Family Housing Programs and the insurance requirements in 7 CFR 3560.

Comment 6: One commenter requested that the Agency consider business income loss insurance to be an optional type of insurance. The commenter provided benefits and shortcomings of business income loss insurance.

Agency's Response: The Agency appreciates the commenter's concern. The Final Rule will still require business loss insurance as the Agency believes that requiring business income insurance will provide financial relief to the owners who suffer income loss due to damage or destruction of their rental property.

Comment 7: One commenter expressed concerns about insurance companies declaring bankruptcy and other insurance companies deciding to discontinue offering insurance coverage in some states entirely as the result of a catastrophic event or multiple catastrophic events.

Agency's Response: The Agency acknowledges the concern of the overall lack of insurance companies who will provide coverage and the general difficulty in obtaining insurance in some states where catastrophic events have occurred. At the time of a catastrophic event, when a property has incurred a total loss, and tenants have been relocated under Agency relocation procedures, it may be in the Agency's best interest to apply the insurance proceeds to the Agency's debt rather than rebuilding and facing the difficulty of the property being uninsured. As a result, in addition to the revision in the proposed rule, this Final rule incorporates additional language into 7 CFR 3560.105(f)(7) for instances where the insurance proceeds will be applied to the Agency's loan.

Comment 8: Two commenters urged a larger Federal response to address the underlying issues causing the current vulnerability of the insurance industry.

Agency's Response: The Agency understands this concern and will continue to support a unified solution beyond the scope of this Final rule.

Comment 9: One commenter suggested the RHS implement a waiver of certain insurance deductible limits during times of increased rates by the Federal Reserve to allow owners relief until rates stabilize and fall.

Agency's Response: The Agency acknowledges the commenter's suggestion for this modification. The Agency finds that the implementation of such a waiver will adversely affect the interest of the Federal Government, which is contrary to the Administrator's exception authority noted in § 3560.8.

The Agency has determined that the current regulations set forth at 7 CFR part 3560 contain outdated insurance requirements. Stakeholders and affordable housing industry advocates have stressed the need for changes and updates to the RD multifamily housing insurance requirements. The current insurance coverage amounts, and deductible limits were established in 2004 when the interim Final rule was published on November 26, 2004, in the Federal Register (69 FR 69031). This rule is necessary to update the RD multifamily housing insurance coverage amounts and deductible limits from those established in 2004 to the current dollar value. The rule will modernize the RD multifamily housing insurance coverage requirements, amounts, and deductible limits to align with the affordable housing industry practices.

Insurance premiums, including those for hazard/property insurance required by the Agency, are increasing due to changes in the insurance industry, such as the increasing of insurance rates in part due to increased catastrophic or significant weather related events. Agency stakeholders are expected to benefit from the Final rule changes through lower insurance premiums and more flexibility in choices of coverage and deductibles. The current low-deductible limits result in higher premiums. By allowing higher deductible limits, the Final rule will provide flexibility to the owner to select a deductible that can lower the premium costs.

When a disaster occurred and the coverage was less than the industry standard of 80 percent of replacement cost value, the Agency has seen the loss of needed multifamily housing properties. Due to insufficient coverage amounts, properties have not been able to be rebuilt and the communities in need of affordable housing have lost housing units. For example, an 85-unit property was a total loss as a result of a naturally declared disaster. Insurance proceeds per the current regulation requirement covered the remaining balance of the Agency loan but were insufficient to rebuild, resulting in the total loss of 85 affordable housing units from the community. This Final rule is intended to assist stakeholders by providing the financial capacity to build-back needed affordable housing units. Rural communities will benefit and be able to maintain affordable housing units.

The Agency believes that the changes made by this Final rule will provide a streamlined process and positive customer experience while creating a stronger, more resilient portfolio of properties, improved oversight of critical areas, and a reduction of portfolio financial risk by providing consistent coverage amounts and deductible limits.

The following changes to 7 CFR 3560 as proposed in the published proposed rule, and updated based on public comments received by the Agency during the proposed rule public comment period are as follows:

(1) In § 3560.4(b), the Agency is removing the reference to 7 CFR part 1806, subpart B—National Flood Insurance. The flood insurance requirement for the covered programs is required in § 3560.105.

(2) In § 3560.62 paragraph(d), the Agency is updating the current format to be more reader friendly and adding changes that would require Worker's Compensation insurance and business income insurance. The Worker's Compensation insurance requirement would implement current Agency policy. The business income insurance requirement would provide protection and financial relief to borrowers who suffer income loss due to damage or destruction at their rental property.

(3) The Agency will update the insurance coverages and deductible requirements for the MFH Direct Loan and Farm Labor Housing programs to the current dollar values. The Agency's research for the updates include a review of data from other federal housing agencies such as Housing and Urban Development (HUD) and Freddie Mac, coupled with state agencies and private sector affordable housing data. This data is used by the Agency as an indicator of industry standards for the insurance requirements.

Adding Worker's Compensation insurance and Business Income insurance requirements is consistent with housing industry standards and is consistent with the change for 7 CFR part 3560.62(d), which will require Worker's Compensation insurance and Business Income insurance before loan funds are made available to the borrower in addition to the current insurance requirements.

The Final rule will update § 3560.105 as follows:

(i) Update language in paragraph (b)(1) to state that insurance is required, on or prior to loan or grant closing rather than prior to loan approval. Also, update language to clarify when insurance is required if there is interim financing or the Agency is providing multiple loan advances.

(ii) Update paragraph (b)(4) to state that the Agency must be named as loss co-payee or mortgagee, regardless of lien position, which provides consistency with Agency subordination agreement documents.

(iii) Update paragraph (c)(4) to state that insurance is required on or prior to loan or grant closing rather than prior to loan approval. This is consistent with the final change to § 3560.105(b)(1).

(iv) Include windstorm coverage in the general types of coverage as noted in hazard insurance in paragraph (f)(1)(i). And add a caveat to (f)(2)(i) that windstorm coverage is an other type of insurance the Agency may require when it is specifically excluded from the All-Risk policy. This is consistent with current hazard (or property) insurance industry standard.

(v) Update paragraph (f)(1)(iii) to include the amount of coverage requirement to provide consistency with current Agency policy.

(vi) Add paragraph (f)(1)(v) to include business income loss insurance in the list of minimum property insurance that borrowers must acquire. This change is consistent with the final change for 7 CFR part 3560.62(d).

(vii) Update paragraph (f)(3) from a depreciated replacement value or unpaid loan balance, to a “not less than a percentage of insurable replacement cost value,” which is a percentage that is consistent with affordable housing industry standards for the minimum property insurance coverage.

(viii) Remove paragraph (f)(3)(ii) because its intent is duplicative of paragraph (f)(3)(i). Paragraph (f)(3)(iii) will be redesignated to the new (ii) and revise the minimum flood insurance coverage to the lesser of, not less than a percentage of insurable replacement cost value, or maximum amount of insurance available under the National Flood Insurance Act, which is consistent with affordable housing industry standards.

(ix) Update the language in paragraph (f)(4) to consolidate the relevant content of this paragraph and remove the sub-bullet content that references depreciated replacement value which is no longer relevant.

(x) Update the language in paragraph (f)(7) by adding an additional option for insurance settlement claims to be placed in an other supervised account or applied to Agency debt.

(xi) Update the language in paragraph(f)(9)(i)(A) through (B) and adding a paragraph (C) to the hazard/property insurance deductible limits to a “not to exceed” amount that is based on the coverage amount, instead of the current deductible calculation formula. The current Agency limitations on the deductible limit contribute to rising premium costs for the project. This change will allow for larger deductible limits which in turn will make the project's insurance premiums more affordable.

(xii) Update the language in paragraph (f)(9)(iv) regarding the earthquake deductible limit to allow deductibles that do not exceed 20 percent of the coverage amount. This will increase the deductible limit and align the deductible with affordable housing industry standards.

(xiii) Add new paragraph (f)(11) to include policy requirements for cancellation, standard form of Non-Contribution Mortgage Clause, and loss payee.

(xiv) Revise language in paragraph (h)(2)(ii) by removing the fidelity coverage deductible chart and replacing it with a new deductible limit based on a “not to exceed amount.” Also, revising the fidelity coverage amount to a specific percentage of proposed annual rental income with a minimum limit, instead of the Agency's current policy of a formula based calculation. This change will simplify the coverage calcuation, align the coverage amount and deductible limit with affordable housing industry standard, create consistency among insurance deductibles, and in turn make it easier for the borrower to be in compliance with insurance requirements.

(xv) Update to the definition of worker's compensation insurance based on industry standards will be added and becomes paragraph (i). The current paragraph (i) (Taxes) will become paragraph (j).

Title V the Housing Act of 1949 (42 U.S.C. 1480 et. seq.), as amended, authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title, as implemented under 7 CFR part 3560.

These loans and grants are subject to the provisions of Executive Order 12372, which requires intergovernmental consultation with state and local officials. RHS conducts intergovernmental consultations for each loan and grants in accordance with 2 CFR part 415, subpart C.

This final rule has been determined to be non-significant and, therefore, was not reviewed by the Office of Management and Budget (OMB) under Executive Order 12866.

This final rule has been reviewed under Executive Order 12988. In accordance with this rule: (1) Unless otherwise specifically provided, all state and local laws that conflict with this rulemaking will be preempted; (2) no retroactive effect will be given to this rulemaking except as specifically prescribed in the rule; and (3) administrative proceedings of the National Appeals Division of the Department of Agriculture (7 CFR part 11) must be exhausted before suing in court that challenges action taken under this rulemaking.

The policies contained in this Final rule do not have any substantial direct effect on States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of Government. This Final rule does not impose substantial direct compliance costs on State and local Governments; therefore, consultation with States is not required.

This Final rule has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal and Indian tribes or on the distribution of power and responsibilities between the Federal government and Indian tribes. Consultation is also required for any regulation that preempts tribal law or that imposes substantial direct compliance costs on Indian tribal governments and that is not required by statute.

The Agency has determined that this Final rule does not, to our knowledge, have tribal implications that require formal tribal consultation under Executive Order 13175. If a Tribe requests consultation, the RHS will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified herein are not expressly mandated by Congress.

In accordance with the National Environmental Policy Act of 1969, Public Law 91-190, this Final rule has been reviewed in accordance with 7 CFR part 1b (“National Environmental Policy Act”). The Agency has determined that i) this action meets the criteria established in 7 CFR 1b.4(c)(31) and ii) no extraordinary circumstances exist. Therefore, the Agency has determined that the action does not have a significant effect on the human environment, and therefore neither an Environmental Assessment nor an Environmental Impact Statement is required.

The Regulatory Flexibility Act (5 U.S.C. 601-602) (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act (“APA”) or any other statute. The Administrative Procedures Act exempts from notice and comment requirements rules “relating to agency management or personnel or to public property, loans, grants, benefits, or contracts” (5 U.S.C. 553(a)(2)), so therefore an analysis has not been prepared for this rule.

Title II of the UMRA, Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and on the private sector. Under section 202 of the UMRA, Federal agencies generally must prepare a written statement, including cost-benefit analysis, for proposed and Final rules with “Federal mandates” that may result in expenditures to state, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires a Federal Agency to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule.

This final rule contains no Federal mandates (under the regulatory provisions of title II of the UMRA) for State, local, and tribal Governments or for the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

The information collection requirements contained in this regulation have been approved by OMB and have been assigned OMB control number 0575-0189. This final rule contains no new reporting and recordkeeping requirements that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35).

Rural Development is committed to the E-Government Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible and to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

This final rule was reviewed in accordance with USDA Regulation 4300-004, “Civil Rights Impact Analysis,” to identify any major civil rights impacts the final rule might have on program participants on the basis of age, race, religion, color, national origin, sex, disability, marital status, or familial status. Based on the results of the review and analysis of the proposed rule and all available data, issuance of this final rule is not likely to negatively impact any group identified by protected group status.

It is USDA's intention that the provisions of this rule shall operate independently of each other. In the event that this rule or any portion of this rule is ultimately declared invalid or stayed as to a particular provision, it is USDA's intent that the rule nonetheless be severable and remain valid with respect to those provisions not affected by a declaration of invalidity or stayed. USDA concludes it would separately adopt all of the provisions contained in this final rule.

The programs affected by this regulation are listed in the Assistance Listing Catalog (formerly Catalog of Federal Domestic Assistance) under numbers 10.405 and, 10.415.

In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.

Persons with disabilities who require alternative means of communication for program information ( e.g., Braille, large print, audiotape, American Sign Language, etc.) should contact the State or local Agency that administers the program or contact USDA through the Telecommunications Relay Service at 711 (voice and TTY). Additionally, program information may be made available in languages other than English.

To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at https://www.usda.gov/sites/default/files/documents/ad-3027.pdf and at any USDA office or write a letter addressed to USDA and provide in the letter all of the information requested in the form. To request a copy of the complaint form, call (866) 632-9992. Submit your completed form or letter to USDA by: (1) mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Mail Stop 9410, Washington, DC 20250-9410; (2) fax: (202) 690-7442; or (3) email: program.intake@usda.gov.

For the reasons set forth in the preamble, RHS amends 7 CFR part 3560 as follows:

On May 1, 2024, DOE issued regulations that require certain new Federal buildings and Federal buildings undergoing major renovations to be designed to reduce their fossil fuel-generated energy consumption and provides a process for Federal agencies to petition for a downward adjustment from these requirements if applicable. 1 This rule amended the regulations governing energy efficiency in Federal buildings found in 10 CFR parts 433 and 435. Specifically, the final rule added subpart B that outlines the fossil fuel-generated energy consumption requirement, the methodology for determining a Federal building's fossil fuel-generated energy consumption, and the process for petitioning for a downward adjustment to 10 CFR parts 433 and 435. Also, the final rule added Appendix A to subpart B, which identifies the targets for specific building types and climate zones for Fiscal Year (FY) 2020-2024 and FY 2025-2029.

The final rule became effective on July 15, 2024, and applied the energy performance standards to certain newly constructed or majorly renovated Federal buildings for which design for construction begins on or after May 1, 2025. 89 FR 35384. On January 17, 2025, DOE posted guidance designed to assist Federal agencies to implement the final rule. Shortly after DOE published this implementation guidance document and the petition template, President Trump announced new energy policies, specifically those relating to energy security and reliability. 2

In May 2025, DOE published a notice that delayed the implementation of the final rule for one year. 90 FR 18911 (May 5, 2025). DOE stated that it was reviewing its implementation guidance to ensure that they are consistent with the policies of the current Administration. Accordingly, while DOE reviewed the implementation guidance and associated documents, DOE stayed the provisions of the recent final rule to avoid the regulatory burden to Federal agencies to comply with the rule. Specifically, DOE stayed subpart B, including Appendix A, of 10 CFR part 433 and subpart B, including Appendix A, of 10 CFR part 435. Because DOE stayed these provisions, Federal agencies were not required to comply with the applicable energy performance standards during this time.

As DOE reviews the implementation guidance documents for consistency with the Administration's announced energy policies, the Department is also reviewing the recent final rule to ensure consistency with stated energy policies and guidance relating to agency rulemaking. 3 This review is ongoing. Accordingly, DOE stays the compliance date of the recent final rule that requires certain newly constructed or majorly renovated Federal buildings to meet energy performance standards. Specifically, DOE further stays the compliance date in subpart B of 10 CFR part 433 and subpart B of 10 CFR part 435 until September 1, 2026. Because the compliance date for these provisions is stayed, Federal agencies are not required to comply with these applicable energy performance standards during this time.

This document of the Department of Energy was signed on April 15, 2026, by Mary Sotos, the Director of the Federal Energy Management Program, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends the Class D airspace at the affected airport to support IFR operations.

The FAA published an NPRM for Docket No. FAA-2026-2212 in the Federal Register (91 FR 9208; February 25, 2026) proposing to amend the Class D airspace at Appleton, WI. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. Two (2) comments were received supporting the action, and FAA acknowledges the support.

Class D airspace designations are published in paragraph 6005 of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document amends the current version of that order, FAA Order JO 7400.11K, dated August 4, 2025, and effective September 15, 2025. These amendments will be published in the next update to FAA Order JO 7400.11. FAA Order JO 7400.11K, which lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points, is publicly available as listed in the ADDRESSES section of this document.

This action amends 14 CFR part 71 by modifying the Class D airspace at Appleton, WI, to accommodate revised instrument procedures.

For the Appleton International Airport, Appleton, WI, Class D airspace, the action increases the radius from 4.2 to 4.4 miles.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Order 2100.6B, “Policies and Procedures for Rulemakings” (March 10, 2025); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1G, “FAA National Environmental Policy Act Implementing Procedures,” Paragraph B-2.5(a). This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

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

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

Under section 104(b)(1) of the CPSIA, the Commission published a mandatory standard for infant swings, codified in 16 CFR part 1223, “Safety Standard for Infant Swings.” The rule incorporated by reference the then-current voluntary standard, ASTM F2088-12a, Standard Consumer Safety Specification for Infant Swings, with modifications to make the standard more stringent. 77 FR 66703 (Nov. 7, 2012). After the Commission adopted the mandatory standard in 2012, ASTM subsequently revised the voluntary standard seven times. In accordance with the procedures set out in section 104(b)(4)(B) of the CPSIA, five of these revised standards became the new mandatory standard for infant and cradle swings. 1 In this regard, the Commission published direct final rules to update 16 CFR part 1223, incorporating by reference ASTM F2088-13, ASTM F2088-20, ASTM F2088-21, ASTM F2088-22, and ASTM F2088-24, respectively, without modification. 78 FR 37706 (June 24, 2013), 86 FR 4961 (Jan. 19, 2021), 86 FR 59609 (Oct. 28, 2021), 87 FR 57390 (Sep. 20, 2022), 89 FR 46797 (May 30, 2024).

ASTM F2088-24, Standard Consumer Safety Specification for Infant and Cradle Swings, is the current mandatory standard incorporated by reference in 16 CFR part 1223. In 2024, when the Commission updated 16 CFR part 1223 to incorporate by reference ASTM F2088-24, the Commission included “cradle swings” in the title of the mandatory standard (“Safety Standard for Infant and Cradle Swings”) to align with the voluntary standard. 2 89 FR 46797. ASTM F2088-24 applies to infant swings, which it describes as “a swing that enables an infant in a seated position to swing or glide and is intended for use with infants from birth until infant attempts to climb out of the swing (approximately 9 months),” and cradle swings, which it describes as “a swing which is intended for use by an infant lying flat to swing or glide and is intended for use with infants from birth until infant begins to push up on hands and knees (approximately 5 months).” The mandatory standard includes performance requirements and test methods, as well as requirements for warning labels and instructions, to address hazards to infants associated with infant and cradle swings.

In November 2025, ASTM approved another revision to the voluntary standard for infant and cradle swings, ASTM F2088-25. On January 26, 2026, ASTM notified CPSC of the revision. On January 29, 2026, the Commission published in the Federal Register a notice of availability of the revised voluntary standard and sought comments on the effect of the revisions. 91 FR 3845. CPSC received two comments on the notice of availability.

One of the comments was anonymous, and the other was a joint comment from the Consumer Federation of America, Consumer Reports, and Safe Infant Sleep. Both the anonymous and joint comment stated support for the revisions in ASTM F2088-25. The joint comment further urged the Commission to consider whether it would be feasible to conduct safety testing while the product is in motion, not just in a static position. The commenters explained that infant and cradle swings are intended for continuous motion and may result in unintended infant repositioning during periods of use, and as such, “testing the product in static configurations alone does not adequately capture real-world safety performance under actual use conditions.” The Commission appreciates the Consumer Federation of America, Consumer Reports, and Safe Infant Sleep for sharing this comment, and staff will review and address the comment with the ASTM subcommittee.

Based on staff's review of ASTM F2088-25, as discussed below, and the public comments received, the Commission will allow the revised voluntary standard to become the mandatory standard for infant and cradle swings. Accordingly, by operation of law under section 104(b)(4)(B) of the CPSIA, ASTM F2088-25 will become the mandatory consumer product safety standard for infant and cradle swings on July 25, 2026. 15 U.S.C. 2056a(b)(4)(B). This direct final rule updates part 1223 to incorporate by reference the revised voluntary standard, ASTM F2088-25.

On November 15, 2025, ASTM approved a revised version of the standard, ASTM F2088-25. ASTM F2088-25 contains performance requirements and test methods, as well as requirements for warning labels and instructions, to address hazards to infants associated with infant and cradle swings. ASTM F2088-25 includes several additions and revisions to ASTM F2088-24, including clarifications regarding scope and terminology, a new testing requirement, new and revised marking and labeling requirements, as well as editorial revisions that do not alter substantive requirements in the standard or impact safety. As discussed below, the Commission considers the revisions in ASTM F2088-25 to be an improvement to the safety of infant and cradle swings.

ASTM F2088-25 clarifies in section 1.3 that the voluntary standard does not cover products “in the rest (non-rocking) position” that are intended to provide sleeping accommodations for the occupant. ASTM F2088-25 further adds that these products are addressed in Consumer Safety Specification F2194 for bassinets and cradles. ASTM F2088-24 stated only that the voluntary standard “does not cover products that are intended to provide sleeping accommodations for the occupant[,]” and did not specify that products “in the rest (non-rocking) position” would be out of scope of the voluntary standard.

Particularly, when cradle swings are in the rest (non-rocking) position, they behave similarly to a bassinet or a cradle. This is because a cradle swing, among other things, is designed so that the infant is lying completely or nearly flat on its back. This horizontal positioning for infants is conducive for sleep. In fact, in section 5.11, the voluntary standard already acknowledges that cradle swings in the rest (non-rocking) position behave similarly to a bassinet or cradle, and that they are already in the scope of the voluntary standard for bassinets and cradles (ASTM F2194). Section 5.11 of ASTM F2088 states, “[c]radle swings or combination swings in a cradle swing use, mode, or position while in the rest (non-rocking) position shall comply with the requirements of Consumer Safety Specification F2194.” These clarifying changes in section 1.3, therefore, make clear from the beginning that swings in the rest (non-rocking) position are out of the scope of the voluntary standard for infant and cradle swings, and that they must follow the voluntary standard for bassinets and cradles. As a result, these changes improve safety by ensuring that swings functioning as a bassinet or cradle are evaluated under the correct standard for safe sleep for infants ( i.e., the requirements under ASTM F2194).

ASTM F2088-25 defines “cradle swing” as “a swing which is intended for use by an infant lying flat, with an incline less than or equal to 10° from horizontal while in the rest (non-rocking) position, to swing or glide and is intended for use with infants from birth until infant begins to push up on hands and knees (approximately 5 months).” ASTM F2088-24 did not include the following language in the definition for cradle swing: “with an incline less than or equal to 10° from horizontal while in the rest (non-rocking) position.”

ASTM F2088-25 adds this language to clarify what “flat” means in this context to minimize any ambiguity in the interpretation of the term so to better distinguish cradle swings from infant swings. This change improves safety, because by more clearly distinguishing cradle swings from infant swings, it ensures that products will adhere to the correct performance and testing requirements.

ASTM F2088-25 adds a new test in section 7.17 (Suffocation Hazard Visibility Test) to evaluate the conspicuousness of the new front warning label requirement (discussed in greater detail in the next section). The test consists of placing the infant swing on the floor; placing and securing a newborn dummy in the product with the restraint system engaged according to the manufacturer's instructions; and then standing in front of the product to verify the required warning statements are visible (sections 7.17.1-7.17.3). Products that include any accessory(ies) that could potentially obscure the warnings also must comply with the visibility requirements in this section both with such accessory(ies) in place (in all configurations and combinations) and with the accessory(ies) removed (section 7.17.3.1). It is acceptable if any part of the required warnings is obscured by a toy bar or its attached toys but is visible with a shift of the observer's head position (section 7.17.4). Section 7.17 includes a note that the “placement of the warnings is only applicable to the English language portions of the warning label.”

This new test certifies that the front warning label can be seen and noticed by a caregiver while standing in front of the swing. It also verifies that the label is not blocked by the occupant or by other accessories that may be included with the swing. As such, this new test improves the safety of infant swings because it ensures that the front warning label is visible to a caregiver. This will make it more likely that the caregiver will see and read the important warning statements for the product to avoid the suffocation hazards associated with infant swings, as further discussed below.

ASTM F2088-25 makes several additions and revisions to warning labels concerning suffocation hazards associated with babies falling asleep in infant swings. In particular, ASTM F2088-25 adds new on-product warning statements for infant swings under section 8.6.1.2. One of these new warning statements states, “Babies have suffocated when swings are used as a sleep product.” Another states, “Never use blankets or swaddles when using this product.” In addition to the warning statements above, ASTM F2088-25 also requires a new, separate warning label with the following warning statement under section 8.6.1.4:

This new, separate warning label, which repeats in part the warning statements under section 8.6.1.2, must be on the front surface of the swing to comply with the Suffocation Hazard Visibility Test in section 7.17 discussed above.

Moreover, ASTM F2088-25 revises and moves one of the required on-product warning statements for infant swings to the “SUFFOCATION HAZARDS” category under section 8.6.1.2. ASTM F2088-24 required that infant swings have the following warning statement under “FALL and STANGULATION HAZARDS”: “Stay near and watch baby during use. This product is not safe for sleep or unsupervised use. If baby falls asleep, remove baby as soon as possible and place baby on a firm, flat sleep surface such as a crib or bassinet.” ASTM F2088-25 revises this statement by deleting “as soon as possible” from the statement and moves this statement from the “FALL and STANGULATION HAZARDS” category to the “SUFFOCATION HAZARDS” category on the warning label.

While ASTM F2088-24 provided a warning that infant swings are not safe for sleep, it incorrectly labeled such warning as a fall or strangulation hazard, did not otherwise clearly identify why infant swings are not safe for sleep ( i.e., suffocation hazard), and did not address the suffocation hazard associated with the use of blankets and swaddles with infant swings. When a baby falls asleep in an infant swing, their head and chin point downwards because of the seated, inclined position of the baby. The positioning of their head and chin in this way can block the baby's airways and lead to suffocation. The use of swaddles and blankets with a baby in an infant swing can likewise obstruct a baby's airways, leading to suffocation.

The new warning statements added to ASTM F2088-25 and the movement of the prior warning statement regarding sleep in ASTM F2088-24 make clear that there is a suffocation hazard associated with using an infant swing for sleep and with the use of swaddles and blankets in an infant swing. As a result, the caregiver will be better informed of the dangers associated with sleep and the use of blankets/swaddles, which will increase the likelihood of caregivers following these warnings. In addition, the new requirement of the separate label and placement of that label in the front of the product will make that warning statement more noticeable to the caregiver. Consequently, these changes will more likely alert caregivers of the potential suffocation hazard and to the importance of both not allowing infants to sleep in the swing and not using blankets or swaddles when placing them in the swing. Moreover, deleting the phrase “as soon as possible” in the warning statement regarding sleep in ASTM F2088-24 directs the caregiver to remove the baby from the infant swing as soon as the baby falls asleep. Therefore, this change will more likely minimize the time a baby remains asleep in an infant swing. Based on the foregoing, these changes improve the safety of infant swings.

ASTM F2088-25 revises one of the existing warning statements in ASTM F2088-24 by changing the formatting of two words. ASTM F2088-24 included the warning statement “ ALWAYS use restraints. Adjust to fit snugly.” ASTM F2088-25 revises this statement by adding the following bold font and capitalization: “ ALWAYS USE RESTRAINTS. Adjust to fit snugly.”

ASTM F2088 requires infant swings to have a restraint system to secure an occupant while in the swing (section 6.5). The use of a restraint system prevents infants from falling out of the swing. The additional use of bold and capital lettering in ASTM F2088-25 makes the warning statement about always using restraints more noticeable and conspicuous. Thus, this change improves the safety of infant swings because caregivers are more likely to notice and follow this warning statement to prevent infant falls.

ASTM F2088-25 also includes various minor revisions that are editorial in nature and do not alter any substantive requirements in the standard. These changes include eliminating hyphens in section 2.1 for consistency with the rest of that section; standardizing the spelling of “adapters” so that it is consistent throughout the standard (section 6.1.4); replacing the word “to” with “with” (section 6.7); reformatting text of warning statements (sections 8.4.2.3, 8.6.1.1, 8.6.1.2, 8.6.1.3, 8.6.2, and 8.6.4); renumbering within section 8.6.1 to better organize and reflect the changes in that section; editing Figure 18 (example of warnings for infant swings) to correspond to the changes made to section 8.6.1; adding Figure 20 (example of new sleep warning label for infant swings) to correspond to the addition of section 8.6.1.4; adding appropriate reference to that new figure (Figure 20) in section 8.5.7; adding the word “also” to the text in section 8.6.1.3 to acknowledge the changes made in section 8.6.1; and repositioning the figures throughout the standard so they appear closer to their first reference in the text. Because these revisions do not change any substantive requirements, they do not impact the safety of infant and cradle swings.

Section 1223.2 of the direct final rule incorporates by reference ASTM F2088-25. The Office of the Federal Register (OFR) has regulations regarding incorporation by reference. 1 CFR part 51. Under these regulations, agencies must discuss, in the preamble of the final rule, ways in which the material the agency incorporates by reference is reasonably available to interested parties, and how interested parties can obtain the material. In addition, the preamble to the final rule must summarize the material. 1 CFR 51.5(b).

In accordance with the OFR regulations, section II of this preamble summarizes ASTM F2088-25, which the Commission incorporates by reference into 16 CFR part 1223. The standard is reasonably available to interested parties in several ways. Until the direct final rule takes effect, a read-only copy of ASTM F2088-25 is available for viewing on ASTM's website at: https://www.astm.org/cpsc.htm. Once the rule takes effect, a read-only copy of the standard will be available for viewing on the ASTM website at: www.astm.org/READINGLIBRARY/. Additionally, interested parties can purchase a copy of ASTM F2088-25 from ASTM International, 100 Barr Harbor Drive, P.O. Box C700, West Conshohocken, PA 19428-2959; telephone: (610) 832-9585; www.astm.org. Finally, interested parties can schedule an appointment to inspect a copy of the standard at CPSC's Office of the Secretary, U.S. Consumer Product Safety Commission, 4330 East-West Highway, Bethesda, MD 20814; telephone: (301) 504-7479; email: cpsc-os@cpsc.gov.

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

Because infant and cradle swings are children's products, a CPSC-accepted third party conformity assessment body must test samples of the products. Products subject to part 1223 must also comply with all other applicable CPSC requirements, such as the lead content requirements in section 101 of the CPSIA, 3 the phthalates prohibitions in section 108 of the CPSIA  4 and 16 CFR part 1307, the tracking label requirements in section 14(a)(5) of the CPSA, 5 and the consumer registration form requirements in 16 CFR part 1130. ASTM F2088-25 makes no changes that would impact any of these existing requirements.

In accordance with section 14(a)(3)(B)(vi) of the CPSA (15 U.S.C. 2063(a)(3)(B)(vi)), the Commission previously published a notice of requirements (NOR) for accreditation of third party conformity assessment bodies (third party labs) for testing infant and cradle swings. 78 FR 15836 (Mar. 12, 2013). The NOR provided the criteria and process for CPSC to accept accreditation of third party conformity assessment bodies for testing infant and cradle swings to 16 CFR part 1223. The NORs for all mandatory standards for durable infant or toddler products are listed in the Commission's rule, “Requirements Pertaining to Third Party Conformity Assessment Bodies,” codified in 16 CFR part 1112. The NOR for accreditation of third party labs for testing infant and cradle swings is codified at 16 CFR 1112.15(b)(8).

ASTM F2088-25 includes a new testing requirement (Suffocation Hazard Visibility Test). This new test requires only an infant dummy and the swing product. This equipment is already required for the testing requirements found in ASTM F2088-24. As a result, the new testing requirement in ASTM F2088-25 does not require any new testing equipment or systems. Accordingly, the revisions in ASTM F2088-25 do not significantly change the way that third party conformity assessment bodies test these products for compliance with the safety standard for infant and cradle swings. Testing laboratories that have demonstrated competence for testing in accordance with ASTM F2088-24 will have the competence to test in accordance with the revised standard ASTM F2088-25. Therefore, the Commission considers the existing CPSC-accepted laboratories for testing to ASTM F2088-24 to be capable of testing to ASTM F2088-25 as well. Accordingly, the existing NOR for this standard will remain in place, and CPSC-accepted third party conformity assessment bodies are expected to update the scope of the testing laboratories' accreditations to reflect the revised standard in the normal course of renewing their accreditations.

On January 29, 2026, the Commission published in the Federal Register a notice of availability regarding the 2025 revision to ASTM F2088 and requested comment on whether the revision improves the safety of infant and cradle swings covered by the standard. 91 FR 3845. CPSC received two comments. The Commission is issuing this rule as a direct final rule. Although the Administrative Procedure Act (APA; 5 U.S.C. 551-559) generally requires agencies to provide notice of a rule and an opportunity for interested parties to comment on it, section 553 of the APA provides an exception when the agency “for good cause finds” that notice and comment are “impracticable, unnecessary, or contrary to the public interest.” Id. 553(b)(B). The Commission concludes that when it updates a reference to an ASTM standard that the Commission previously incorporated by reference under section 104(b) of the CPSIA, notice and comment are not necessary.

The purpose of this direct final rule is to update the reference in the Code of Federal Regulations (CFR) so that it reflects the version of the standard that takes effect by statute. This rule updates the reference in the CFR, but under the terms of the CPSIA, ASTM F2088-25 would take effect as the new CPSC standard for infant and cradle swings in the absence of any action by the Commission. Thus, public comments would not lead to substantive changes to the standard or to the effect of the revised standard as a consumer product safety rule under section 104(b) of the CPSIA. Under these circumstances, notice and comment are unnecessary.

In Recommendation 2024-6, the Administrative Conference of the United States (ACUS) endorses direct final rulemaking as an appropriate procedure to expedite rules that are unlikely to elicit any significant adverse comments. See 89 FR 106406 (Dec. 30, 2024). ACUS recommends that agencies use the direct final rule process when they act under the “unnecessary” prong of the good cause exemption in 5 U.S.C. 553(b)(B). Id. at 106409. ACUS also explains that notice and comment may be “unnecessary” when the agency lacks discretion regarding the substance of the rule. Id. at 106408. As noted, this rule updates a reference in the CFR to reflect a change that occurs by operation of law. Consistent with the ACUS recommendation, the Commission is publishing this rule as a direct final rule because CPSC does not expect any significant adverse comments.

Unless CPSC receives a significant adverse comment within 30 days of this notification, the rule will become effective on July 25, 2026. In accordance with ACUS's recommendation, the Commission considers a significant adverse comment to be one where the commenter explains why the rule would be inappropriate, “including challenges to the rule's underlying premise or approach,” or where the commenter explains why the rule would be ineffective or unacceptable without change. Id. at 106409. As noted, this rule updates a reference in the CFR to reflect a change that occurs by statute.

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

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

The current mandatory standard includes requirements for marking, labeling, and instructional literature that constitute a “collection of information,” as defined in the Paperwork Reduction Act (PRA; 44 U.S.C. 3501-3521). While the revised mandatory standard adds marking and labeling requirements for infant and cradle swings, the new requirements would not materially add to the burden hours because the products already require marking and labeling. The Commission took the steps required by the PRA for information collections when it promulgated 16 CFR part 1223, and the marking, labeling, and instructional literature for infant and cradle swings are currently approved under OMB Control Number 3041-0159. Because the information collection burden is essentially unchanged, the revision does not affect the information collection requirements or approval related to the standard. The agency will consider whether OMB Control number 3041-0159 should be revised for infant and cradle swings in the next scheduled update.

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

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

Under the procedure set forth in section 104(b)(4)(B) of the CPSIA, when a voluntary standards organization revises a standard that the Commission adopted as a mandatory standard, the revision becomes the CPSC standard 180 days after notification to the Commission, unless the Commission determines that the revision does not improve the safety of the product, or the Commission sets a later date in the Federal Register . 15 U.S.C. 2056a(b)(4)(B). The Commission is taking neither of those actions with respect to the revised standard for infant and cradle swings. Therefore, ASTM F2088-25 automatically will take effect as the new mandatory standard for infant and cradle swings on July 25, 2026, 180 days after the Commission received notice of the revision. As a direct final rule, unless the Commission receives a significant adverse comment within 30 days of this document, the rule will become effective on July 25, 2026, and will apply to products manufactured after the rule's effective date.

Pursuant to the Congressional Review Act (CRA) and Executive Order (E.O.) 12866, the Office of Management and Budget's Office of Information and Regulatory Affairs has determined that this rule does not qualify as a “major rule,” as defined in 5 U.S.C. 804(2), and is not a significant regulatory action, as defined under section 2(f) of E.O. 12866. To comply with the CRA, CPSC will submit the required information to each House of Congress and the Comptroller General.

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

CME and FICC (“Petitioners”) petitioned the Commission to grant an exemptive order pursuant to section 4(c) of the CEA to provide relief necessary for Petitioners to extend an existing proprietary cross-margining arrangement to certain customers, as described below. 1 On December 17, 2025, the Commission published in the Federal Register a notice and request for public comment regarding the proposed Commission order. 2 In response to its request for public comment, the Commission received five comment letters by the deadline of January 16, 2026. 3 Those comments are addressed below. After consideration of the comments and for the reasons set forth in this release, the Commission is issuing an order granting Petitioners the relief sought, subject to certain conditions discussed below (“Order”).

On January 16, 2024, the SEC promulgated a rule that, when effective, will mandate the central clearing of most U.S. Treasury cash and repurchase transactions (“Treasury Clearing Requirement”). 4 The Treasury Clearing Requirement is designed to reduce risk and increase operational efficiency by requiring clearing of specified U.S. Treasury security transactions through a central counterparty. Centralized clearing reduces the risk of default by imposing a central counterparty between buyers and sellers. A central counterparty can lower the potential for a single market participant's failure to destabilize other market participants or the financial system more broadly by substituting its own creditworthiness and liquidity for the creditworthiness and liquidity of the initial counterparties. 5

Currently, only one central counterparty, FICC, is providing centralized clearing services for cash market transactions in U.S. Treasury securities, and for repurchase and reverse purchase transactions involving U.S. Treasury securities. 6 FICC is registered as a clearing agency with the SEC under the Securities Exchange Act of 1934 (“Exchange Act”)  7 and is subject to regulation under section 17A of the Exchange Act, SEC Rule 17ad-22 (as a “covered clearing agency”), 8 and other SEC rules. FICC is designated by the Financial Stability Oversight Council (“FSOC”) as a systemically important financial market utility (“SIFMU”). 9

Increasing clearing efficiency will decrease the cost to market participants of the Treasury Clearing Requirement. One way to increase clearing efficiency is through cross-margining arrangements that allow for cross-margining of U.S. Treasury security positions with positions in related products with correlated price risks held at another clearing organization. Cross-margining arrangements allow joint members or affiliated members of two clearing organizations to have their initial margin requirements reduced by accounting for risk offsets between positions held at each of the clearing organizations. 10

Petitioners have a cross-margining arrangement for proprietary (non-customer) positions that was originally approved by the Commission in 2004 and last amended in 2024 (hereinafter “the proprietary cross-margining agreement”). 11 CME clears a variety of U.S. Treasury futures contracts and other interest rate futures contracts that have price risks that are correlated with U.S. Treasury security products cleared at FICC. CME is registered as a DCO with the Commission and is subject to regulation under the CEA  12 and Commission regulations. As a DCO, CME clears transactions in futures contracts and options on futures contracts listed for trading on the CME Group exchanges (and transactions in other types of derivatives including interest rate swaps). 13 CME is also designated by the FSOC as a SIFMU.

The proprietary cross-margining arrangement between the Petitioners is offered to their joint clearing members and pairs of affiliated clearing members for proprietary (non-customer) positions. The proprietary cross-margining arrangement permits a participating joint clearing member or pair of affiliated clearing members to have initial margin requirements at FICC and CME reduced in response to risk offsets across positions in futures on U.S. Treasury securities and other interest rate futures cleared at CME and eligible Treasury market transactions cleared at FICC. The Commission and the SEC have approved the original proprietary cross-margining arrangement and the amendments thereto. 14 Under the proprietary cross-margining arrangement, eligible positions of a participating clearing member are identified and treated as a combined portfolio for margin calculation purposes. Both FICC and CME use their own margin models to calculate initial margin requirements for the combined portfolio, then use the more conservative result to determine the margin savings percentage to be applied to the portfolio. Each of FICC and CME then requires the participating clearing member to post initial margin in an amount calculated using its independent margin model reduced by that margin savings percentage. 15

This proprietary cross-margining arrangement is only available for the proprietary positions of clearing members, and not for the positions of customers who clear through an intermediary. Excluding customer positions may increase the costs of central clearing for customers clearing both Treasury securities transactions and certain Treasury and interest rate futures, by setting margin requirements that do not account for the risk offsets of their combined portfolio and are thus higher than those of clearing members who have access to cross-margining.

Industry experts have called for expanded access to cross-margining. The CFTC's Global Markets Advisory Committee (“GMAC”) recommended that the Commission allow CME and FICC to make the benefits of cross-margining available to a broad range of customers, including customers subject to the new Treasury Clearing Requirement. The GMAC's recommendation covered specific topics such as structure, customer protection, and implementation. 16 The Group of Thirty Working Group on Treasury Market Liquidity also highlighted the need for expansion of cross-margining to the customer level. In their report related to Treasury market resilience, they suggested a review be conducted to “examine impediments to the use of the cross-margining service that FICC and [CME] have had in place since 2004” and further opined that “[w]ider use of cross-margining would reduce the risk that increases in initial margin requirements on the futures leg of cash-futures basis trades result in forced sales of Treasury securities . . . .”  17

Accordingly, CME and FICC seek to expand their proprietary cross-margining program to make it available to certain customers. Specifically, the cross-margining program would be available to customers of joint clearing members of FICC and CME that are BD-FCMs. The cross-margined positions and associated margin would be carried in a futures customer account on the books and records of an eligible BD-FCM and generally subject to the regulations and protections of the CEA and Commission regulations, including CEA section 4d and the Commission's regulations for segregation and protection of futures customer funds.

This cross-margining expansion to customers, however, would conflict with applicable legal requirements. Section 4d of the CEA requires that futures customer funds be segregated and prohibits the commingling of futures customer funds and futures customer positions with any other positions and funds. However, section 4d further provides that, “in accordance with such terms and conditions as the Commission may prescribe by rule, regulation, or order,” futures customer funds may be commingled with other customer funds. 18 The expansion of the proprietary cross-margining arrangement to include clearing for customers would require that BD-FCMs hold securities positions and associated funds in their futures customer accounts.

In addition, section 4d requires that futures customer funds be held with a bank or trust company, and section 5b(c)(2)(F) of the CEA requires, in part, that a DCO hold member and participant funds in a manner by which to minimize the risk of loss or of delay in the access by the DCO to the assets and funds. Commission Regulations 1.20 and 1.49(d) implement these statutory requirements in part by limiting the depositories that may hold futures customer funds to a bank or trust company, an FCM, or a DCO. While FICC is an SEC covered clearing agency, it is not a DCO and therefore not a permitted depository for futures customer funds without Commission exemptive relief.

Petitioners consequently petitioned the Commission to grant an exemptive order pursuant to section 4(c) of the CEA to provide relief necessary for them to make their cross-margining arrangement available to certain customers. Specifically, Petitioners sought exemptive relief to:

• Permit BD-FCMs  19 to deposit at FICC, and permit FICC to hold, customer funds and margin associated with futures positions, notwithstanding that FICC is not a permitted depository under section 4d of the CEA and Commission Regulations 1.20 and 1.49(d), and to permit CME to treat FICC as a permissible location to hold customer funds and margin even though FICC is not a permitted depository under section 4d of the CEA and Commission Regulations 1.20 and 1.49(d); and

• Permit BD-FCMs to hold in the futures account, as defined in Commission Regulation 1.3, of the BD-FCM, securities positions and associated funds together with the futures customer positions and funds held by the BD-FCM.

Section 4(c)(1) of the CEA empowers the Commission to “promote responsible economic or financial innovation and fair competition” by exempting any transaction or class of transactions (including any person or class of persons offering, entering into, rendering advice or rendering other services with respect to, the agreement, contract, or transaction), from any of the provisions of the CEA, subject to exceptions not relevant here. 20 In enacting section 4(c), Congress noted that its goal “is to give the Commission a means of providing certainty and stability to existing and emerging markets so that financial innovation and market development can proceed in an effective and competitive manner.”  21 The Commission may grant such an exemption by rule, regulation, or order, after notice and opportunity for hearing, and may do so on application of any person or on its own initiative.

Section 4(c)(2) of the CEA provides that the Commission may grant exemptions to section 4(a) under section 4(c)(1) only when it determines that the requirements for which an exemption is being provided should not be applied to the agreements, contracts, or transactions at issue; that the exemption is consistent with the public interest and the purposes of the CEA; that the agreements, contracts, or transactions will be entered into solely between appropriate persons; and that the exemption will not have a material adverse effect on the ability of the Commission or any contract market or derivatives transaction execution facility to discharge its regulatory or self-regulatory responsibilities under the CEA. 22

The Commission believes that issuing the Order, which grants the exemption sought by Petitioners, is in the public interest and would promote responsible economic and financial innovation and fair competition. 23 Comment letters from AIMA, FIA, ISDA, and SIFMA/SIFMA AMG agreed with this conclusion and expressly supported the issuance of an order permitting CME and FICC to expand their cross-margining program to customers. 24 AIMA, ISDA, and SIFMA/SIFMA AMG stated that the customer cross-margining arrangement will support financial stability, resiliency and/or efficiency. 25 SIFMA/SIFMA AMG stated the arrangement will achieve “broader capital efficiency while maintaining the customer and market resiliency protections of centralized clearing.”  26 ISDA stated the arrangement will “tailor margin requirements with actual portfolio risk.”  27

In addition, FIA, ISDA, and SIFMA/SIFMA AMG agree that the cross-margining arrangement will support the implementation of mandatory Treasury clearing by reducing margin costs and increasing liquidity in the Treasury market. 28 SIFMA/SIFMA AMG stated that cross-margining lowers clearing costs, counterbalancing “potential clearing cost increases Treasury market participants may experience with mandatory clearing of certain U.S. Treasury transactions taking effect later this year and in 2027.”  29 SIFMA/SIFMA AMG also stated the arrangement “generally will enhance liquidity in the Treasury markets.”  30 FIA noted the arrangement “helps to eliminate duplicative margin requirements without diminishing overall risk management standards.”  31 ISDA argued that reducing duplicative margin will “make clearing more efficient and offset some of the additional financial resource requirements that the industry will face. . . .”  32

The Commission believes the Order meets the standards in section 4(c)(1) for an exemption. The discussion below describes why the Commission has reached this conclusion.

The protection of customers—and the safeguarding of money, securities, or other property deposited by customers—is a fundamental component of the regulatory and oversight framework of the futures and swaps markets. Section 4d(a)(2) of the CEA requires an FCM to segregate from its own assets all money, securities, and other property deposited by futures or cleared swaps customers to margin, secure, or guarantee their futures, options on futures, or cleared swaps positions. Section 4d(a)(2) further requires an FCM to treat customer funds as belonging to the customer and prohibits an FCM from using the funds deposited by a customer to margin or extend credit to any person other than the customer that deposited the funds. Similarly, section 4d(b) of the CEA prohibits a DCO and any depository that has received such funds from holding, disposing of, or using such funds as belonging to the depositing FCM or any person other than the customers of such FCM. Customer segregation is an essential protection to ensure funds are held exclusively as the property of customers, even during an FCM insolvency.

CEA section 4d(a)(2) prohibits commingling futures customer positions executed on a contract market, and futures customer funds supporting such positions, with any property not required to be so segregated. Commingling of futures customer funds with other funds may take place only in accordance with such terms as the Commission may provide by rule, regulation, or order. 33 Further, Commission Regulation 1.20 requires FCMs and DCOs to separately account for all futures customer funds and segregate such funds as belonging to futures customers, and it requires FCMs and DCOs to deposit futures customer funds in a manner that identifies them as futures customer funds.

The customer cross-margining arrangement permitted by the Order allows a BD-FCM to commingle cross-margined securities positions and associated margin with cross-margined futures positions and associated margin. Permitting this commingling allows for the provision of risk offsets for customer positions in eligible futures and eligible securities cleared at CME and FICC through BD-FCMs.

CME and FICC detailed in their petition the structure of the arrangement they plan to implement under the Order and the way it is designed to protect customer funds. As explained in more detail below, the Order sets forth conditions in reliance on this structure.

At a high level, a customer wishing to cross-margin its futures positions cleared at CME with its securities positions cleared at FICC will elect to have its FICC-cleared U.S. Treasury securities positions and associated funds held in a commingled futures account at the BD-FCM, to facilitate margining all of the positions as a portfolio. The BD-FCM will post funds to support cross-margined futures positions with CME and funds to support cross-margined securities positions with FICC. FICC will record cross-margined securities positions and associated funds (“XM Securities Customer Property”) in accounts on FICC's books and records, the margin being recorded on FICC's books and records in margin accounts in the name of the BD-FCM for the benefit of its cross-margining customers (“FICC XM Customer Margin Accounts”). FICC will hold the margin in either a Federal Reserve Bank of New York (“FRBNY”) account (the “FICC FRBNY Segregated Account”) or at a commercial bank that is insured by the Federal Deposit Insurance Corporation (a “FICC Segregated Bank Account”).

More specifically, the Order permits, subject to relevant terms and conditions, the following structure:

1. The BD-FCM will be required to carry all of a cross-margining customer's positions and associated margin, including XM Securities Customer Property held at FICC, in a futures account as defined in Commission Regulation 1.3, subject to CEA section 4d(a) and related Commission regulations as modified by the Order. This will apply to both required collateral and any excess collateral.

2. The cross-margining customer will be required to: (a) agree to have its XM Securities Customer Property carried in a futures account; and (b) enter into a subordination agreement pursuant to which it will agree that its claim for the return of XM Securities Customer Property will not receive customer treatment under the Exchange Act or the Securities Investor Protection Act of 1970 (“SIPA”)  34 and that such property will not be treated as “customer property” as defined in section 741, subchapter III (stock broker liquidation) of chapter 7 of the U.S. Bankruptcy Code in a liquidation of the BD-FCM.

3. FICC will record a cross-margining customer's cross-margined securities positions in an account on its books and records for recording a BD-FCM's cross-margining customers' transactions (“FICC XM Customer Position Account”).

4. FICC will credit margin it collects from a BD-FCM for the BD-FCM's cross-margining customers to an account on its books and records in the name of the BD-FCM for the benefit of its customers (“FICC XM Customer Margin Account”). FICC will hold all funds credited to the FICC XM Customer Margin Accounts either in: (a) the FICC FRBNY Segregated Account;  35 or (b) a FICC Segregated Bank Account, each of which will be opened in the name of FICC and clearly labeled, and for accounts at a commercial bank, acknowledged as held for the benefit of cross-margining customers.

5. FICC's accounts referred to in A.4 above will be separate accounts from the accounts holding (a) FICC's own assets, (b) margin for the BD-FCM's proprietary positions, and (c) except as discussed in footnote 35 above, margin for positions of the BD-FCM's customers that do not participate in cross-margining. Although FICC itself is not a registered DCO and is not a permitted depository under Commission Regulation 1.49(d), as discussed in more detail below, FICC will hold cross-margining customer margin (“XM Customer Margin”) consistently with all requirements under Commission Regulations 1.20 and 1.49 as applicable to DCOs  36 as well as with the requirements of Commission Regulations 39.15(b)(1) and (c) and 39.36(g).

6. FICC will have amended its rules  37 so that: (a) all assets credited to the FICC XM Customer Margin Accounts will be treated as “financial assets”  38 credited to a “securities account;” (b) FICC will be a “securities intermediary” for that margin account and each BD-FCM, acting on behalf of its customers, will be an “entitlement holder” and have a “security entitlement” with respect to assets it deposits in such margin account; (c) the FICC XM Customer Margin Accounts and the account(s) holding Treasury Securities Segregated Margin discussed in footnote 35 above will be the only types of securities accounts, as that term is defined in section 8-501(a) of the NYUCC, that FICC maintains, and FICC will not establish any additional such securities accounts without obtaining the permission of both the CFTC and the SEC.

7. CME will continue to hold margin posted to CME as required by CEA section 4d and Commission Regulations 1.20, 1.49, 39.15(b)(1) and (c), and 39.36(g) in the same manner as it treats all other futures customer margin.

The cross-margining framework under the Order will protect cross-margined customer funds in the event of the bankruptcy of a participating BD-FCM. Participating customers' funds will be protected by ensuring that claims for cross-margined positions and related collateral are treated as customer claims under subchapter IV of chapter 7 of the Bankruptcy Code and Part 190 of the Commission's regulations (“Part 190”) regarding bankruptcy. For the reasons discussed below, the Commission concludes that the cross-margining customers would thus have the same priority right to receive distribution on their allowed claims against the customer property as other customers of the insolvent BD-FCM in the futures account class.

Futures customers of each participating BD-FCM are protected as a group by ensuring, consistent with the Order, that commingled customer funds, including those held by FICC, are treated as “customer property” held by the BD-FCM in its capacity as an FCM, thus supporting the goal that all claims for customer property are paid in full.

Three points support the treatment of FICC-held customer property as futures customer property under Part 190. First, Part 190 includes within the scope of customer property any property held by or for the account of the debtor, from or for the account of a customer, including property received, acquired, or held to margin, guarantee, secure, purchase or sell a commodity contract. 40 As discussed above, and required by the Order, FICC will credit margin it collects in connection with a cross-margining customer's positions to a FICC XM Customer Margin Account in the name of the BD-FCM for the benefit of its cross-margining customers, which are futures customers. Similarly, FICC will record a cross-margining customer's positions in a FICC XM Customer Position Account, which will be an account of the BD-FCM that is established for the purpose of recording the transactions of cross-margining customers. The BD-FCM will also record on its books and records the XM Securities Customer Property as being held in the BD-FCM's futures customer account, and such property will be intended to serve as collateral for futures positions.

Moreover, pursuant to section 7 of the FICC-CME XM Agreement (“Agreement”), if the BD-FCM defaults, and its cross-margined customer positions at both CME and FICC are liquidated, under circumstances where CME is “worse-off” (as such term is defined in the Agreement) than FICC, some or all of the margin at FICC will be payable to CME. Thus, the collateral in a FICC XM Customer Margin Account in fact is held by or for the account of the BD-FCM, from or for the account of the BD-FCM's cross-margining customers as property received, acquired, or held to margin, guarantee, secure, purchase or sell the commodity contracts in the BD-FCM's cross-margining customer accounts at CME. 41

For these reasons, the Commission concludes that, because of this structure, the XM Securities Customer Property would be appropriately viewed as customer property pursuant to Commission Regulation 190.09(a)(1)(i)(A).

Second, pursuant to paragraph (2)(ii) of Commission Regulation 190.01's definition of “account class,” the securities positions and associated collateral held in a BD-FCM's futures account pursuant to this Commission-approved customer cross-margining program will be treated as being held in the futures account class. 42 Moreover, the XM Securities Customer Property would also constitute “customer property” under Part 190 to the extent it consists of securities held in a portfolio margining account carried as a futures account. 43

Third, XM Securities Customer Property held at FICC will also qualify as “customer property” under Part 190 by virtue of being cash, securities, or other property that would be segregated for customers on the filing date. 44 As described above, FICC will credit margin posted for cross-margining customers' positions to a FICC XM Customer Margin Account on its books and records. This account will exclusively hold margin for cross-margining customers, and (as noted above) will also serve as collateral for associated futures positions at CME. All XM Customer Margin will also be segregated in terms of its custody. Lastly, the BD-FCM will be required, consistent with Commission Regulation 1.20, to separately account for all cross-margining customers' margin and positions. As a result of this consistent segregation, the Commission concludes that XM Securities Customer Property will be appropriately segregated for customers on the filing date and therefore “customer property” under Part 190.

In the event of an FCM bankruptcy, property is allocated to the FCM's customers based on account and customer class as well as on net equity claims. 45 For the reasons discussed below, the Commission concludes that a cross-margining customer's claims for XM Securities Customer Property would be allowable claims under Part 190 against customer property in the futures account class because they would be within the scope of the “net equity” definition of the Bankruptcy Code, and also because they would be incorporated into “Step 1” of the “net equity” calculation set out in Commission Regulation 190.08(b).

A customer's “net equity” is defined in the Bankruptcy Code to include the balance remaining in the customer's accounts immediately after (i) the transfer, liquidation, or identification for delivery of the customer's positions and (ii) offset of the customer's obligations. 46 Under the cross-margining framework permitted by the Order, the BD-FCM will be required to credit XM Securities Customer Property to a futures customer account within the meaning of Commission Regulation 1.3. Accordingly, the Commission concludes that, independent of Part 190 of the Commission's regulations, such amounts would give rise to cross-margining customer net equity claims under section 761(17) of the Bankruptcy Code, since such amounts would constitute part of the balance remaining in the customers' accounts.

In addition, the definition of “net equity” in section 761(17) of the Bankruptcy Code states that it is subject to such rules and regulations as the Commission promulgates under the CEA. Moreover, section 20(a)(5) of the CEA  47 provides that, notwithstanding the Bankruptcy Code, the Commission may provide by rule or regulation, with respect to a commodity broker that is a debtor under chapter 7 of the Bankruptcy Code, how the net equity of a customer is to be determined.

Commission Regulation 190.08 prescribes a five-step process for calculating a customer's net equity based on the customer property, including any commodity contracts, held by the debtor for or on behalf of the customer less any indebtedness of the customer to the debtor. Step 1 of that process, set out in Commission Regulation 190.08(b)(1), requires consideration of the sum of: (A) the ledger balance; (B) the open trade balance; and (C) the realizable market value, determined as of the close of the market on the last preceding market day, of any securities or other property held by or for the debtor from or for such account, plus accrued interest, if any.

The “ledger balance” is calculated by: (A) adding, among other things, (1) cash deposited to purchase, margin, guarantee, secure, or settle a commodity contract, (2) cash proceeds of liquidations of any securities or other property held by or for the debtor from or for the futures account plus accrued interest, and (3) gains realized on trades; and (B) subtracting, among other things, losses realized on trades. 48 The “open trade balance” is calculated by subtracting the unrealized loss in value of the open commodity contracts held by or for the customer's futures account from the unrealized gain in value of the open commodity contracts held by or for such account. 49

For purposes of these calculations, securities positions and associated collateral held in a futures account pursuant to a Commission-approved cross-margining program are treated as customer property held in a futures account class. 50 Accordingly, under Part 190, cross-margining customers' claims with respect to cash margin held at FICC would form part of the ledger balance because they are for cash deposited to margin and secure commodity contracts, 51 while the securities margin and in-the-money securities positions would be property held by the insolvent BD-FCM for the cross-margining customers' futures account. “Securities positions” ( i.e., open repo positions) and associated payment amounts constitute “securities or other property” under Regulation 190.08(b)(1)(i)(C). To the extent open securities transactions had been liquidated or otherwise resulted in realized gains, those amounts would form part of the ledger balance. Therefore, under both section 761 of the Bankruptcy Code and Part 190, cross-margining customers will have allowable net equity claims for XM Securities Customer Property, and the Commission concludes that they will receive adequate protection in bankruptcy.

FIA commented that the Commission needs to clarify how the net equity calculation under Part 190 applies to customer collateral. In particular, FIA requested further clarification or examples of the net equity calculation with respect to a customer's claim for repurchase agreement positions. FIA questioned how unrealized gains/losses in the value of open securities transactions like repurchase agreements would be calculated. Specifically, FIA asked whether unrealized gains in the value of securities positions would be included in open trade balances under Commission Regulation 190.08(b)(1)(i)(B) or as “realizable market value . . . of any securities or other property” under Regulation 190.08(b)(1)(C) and whether unrealized losses in value of securities positions would be included in open trade balances under Commission Regulation 190.08(b)(1)(i)(B) or, even though a loss would constitute a negative value, as “realizable market value . . . of any securities or other property” under Commission Regulation 190.08(b)(1)(C). 52

As discussed in the footnote, these unrealized gains or losses in the value of securities positions are not part of the ledger balance. 53

Commission Regulation 190.08(b)(1)(iii) provides that “[f]or purposes of this paragraph (b)(1), the open trade balance of a customer's account shall be computed by subtracting the unrealized loss in value of the open commodity contracts for such account from the unrealized gain in value of the open commodity contracts held by or for such account” (emphasis supplied). Thus, gains or losses in the value of securities positions would not be part of the calculation of the “open trade balance.”

Rather, as noted above, unrealized gains (or losses) in the value of securities positions ( i.e., open repo positions) would appear to fit more comfortably under Commission Regulation 190.08(b)(1)(i)(C): realizable market value of any securities or other property. The “realizable market value” of these securities positions can be established upon liquidation. Such value may also be based in part on associated payment amounts that can be determined but have not yet been settled. If not liquidated, those securities positions “may be valued by the trustee using such professional assistance as the trustee deems necessary in its sole discretion under the circumstances” pursuant to Commission Regulation 190.08(d)(5).

Commission Regulation 190.07(a) provides, inter alia, that a DCO may not have rules that interfere with the acceptance by its clearing members of transfers of commodity contracts, and the property margining or securing such contracts, from an FCM that is a debtor, if such transfers have been approved by the Commission, subject to certain provisos. FICC will amend its current rules to expressly allow the porting of cleared positions and associated margin at FICC in the event a clearing member becomes insolvent. 54 Pursuant to section (e)(viii) of the Order, FICC will be required to amend its rules to provide that, as required under Commission Regulation 190.07(a), FICC will not interfere with transfers of XM Securities Customer Property that are approved by the Commission pursuant to Part 190 (subject to FICC's right to liquidate positions and manage risk).

Better Markets commented that cross-margining could make clearing member default management more complex by increasing systemic interconnections and reducing the room for error due to collateral reduction. 55 SIFMA/SIFMA AMG suggested that the Commission act to ensure that FICC and CME's default management and customer protection procedures are adequate before approving the exemption. 56

With respect to default management, the FICC-CME XM Agreement, section 7, sets forth a detailed procedure governing default management protocols. Commission Regulation 39.16(b) requires CME to “maintain a current written default management plan that . . . include[es] any necessary coordination with . . . other entities . . .” as well as testing of that plan “on at least an annual basis.” This requirement includes default management under a cross-margining program. 57

As discussed above, the Commission crafted the Order to include conditions designed to include customer protection arrangements that are well supported legally. Further, the Order conditions the exemptive relief on CME, FICC, and the participating BD-FCMs complying with those conditions.

Given the default management requirements under CFTC and SEC regulations of CME and FICC, respectively, and with the inclusion of the conditions specified in the Order, the Commission concludes that the cross-margining program is well designed to meet the goals of the CEA for default management and customer protection. The Commission does not view the complexity of the cross-margining program to be such that permitting its expansion to customers would undermine compliance with the standards of the CEA and the Commission's regulations.

FCM customer funds that are held at a registered DCO, such as CME, will be protected in the unlikely event of the bankruptcy of that DCO under subchapter IV of chapter 7 of the Bankruptcy Code, pertaining to commodity brokers. 58 The term “commodity broker” includes both FCMs and DCOs. 59 Subchapter IV of chapter 7 of the Bankruptcy Code, and Part 190, which implements those statutory provisions, provide a reticulated and comprehensive set of protections for customer funds in the context of futures accounts, cleared swaps accounts, and foreign futures accounts, each of which falls under an account class. However, FICC is not a DCO, and so customer funds held at FICC will not be protected under subchapter IV in the event of FICC's bankruptcy. Nor are funds held at FICC protected under the Securities Investor Protection Act  60 or subchapter III of chapter 7 of the Bankruptcy Code, 61 both of which apply only to broker-dealers, and not to securities clearing agencies.

For the reasons discussed below, the Commission is of the view that cross-margining customers' margin held at FICC would nonetheless be protected and not be available to creditors in the unlikely event of a FICC bankruptcy, except for margining or settling eligible customer positions, and would not form part of FICC's estate.

This protection will be implemented using NYUCC  62 Article 8, as applied to FICC's rulebook as it will be amended. Specifically, the Order requires FICC to take steps that the Commission believes ensure that participating BD-FCMs, on behalf of their customers, would be “entitlement holders” within the meaning of Article 8, with respect to all components of the cross-margining margin. Moreover, the only other entitlement holders would be BD-FCM members of FICC with respect to (non-cross-margined) segregated customer margin deposited by a BD-FCM (on behalf of securities customers). As explained further below, entitlement holders with respect to a particular type ( e.g., issue) of financial asset have priority claims with respect to all interests in that financial asset held by FICC.

As an SEC-registered clearing agency, FICC is a “clearing corporation,” and thus falls within the definition of a “securities intermediary” in the NYUCC. 63

Under the NYUCC, a “securities account” means an account to which a financial asset is or may be credited in accordance with an agreement under which the person maintaining the account undertakes to treat the person for whom the account is maintained as entitled to exercise the rights that comprise the financial asset. Section (e)(v) of the Order requires that FICC shall, consistent with section 19(b) of the Securities Exchange Act, 64 amend FICC's rules to provide that any assets credited to a FICC XM Customer Margin Account will be used exclusively to settle and margin the customer positions and for no other purpose. 65 Further, section (e)(iv) requires FICC to amend FICC's rules  66 to provide that all assets credited to a FICC XM Customer Margin Account would be treated as “financial assets”  67 credited to a “securities account.”  68

The McKinney-Vento Homeless Assistance Act (McKinney-Vento) contains emergency relief programs, preventive measures, and long-term solutions to address homelessness (Pub. L. 100-77, 101 Stat. 482, codified at 42 U.S.C. 11301 et seq ). McKinney-Vento authorized the Shelter Plus Care Program and Supportive Housing Program. 1 HUD promulgated numerous regulations governing the Shelter Plus Care Program and Supportive Housing Program. In 2009, the HEARTH Act (Division B, Pub. L. 111-22, 123 Stat. 1632), reformed McKinney-Vento and consolidated two homeless assistance programs administered by HUD, specifically the Shelter Plus Care Program and Supportive Housing Program, into the Continuum of Care (CoC) Program. HUD published an interim rule on July 31, 2012, implementing the CoC program regulations and the CoC regulatory framework at 24 CFR part 578 (77 FR 45422). HUD published the CoC interim rule, incorporating public comments in the Federal Register , on June 14, 2016 (81 FR 38581).

This rule removes the Shelter Plus Care program and the Supportive Housing Program regulations located at 24 CFR parts 582 and 583, respectively, because they have been replaced by the CoC program following the enactment of the HEARTH Act and subsequent CoC regulations. For the Shelter Plus Care program, this rule removes 24 CFR part 582 because the program has been consolidated into the CoC Program, and specific Shelter Plus Care funds are no longer available and all renewals have been renewed through the CoC program. For the Supportive Housing Program, this rule removes 24 CFR part 583 because the program has been consolidated into the CoC Program, and specific Supportive Housing Program funds are no longer available, and all renewals have been renewed through the CoC program. HUD is making a conforming amendment to 24 CFR 578.33(d)(1) to remove cross-references to parts 582 and 583.

In accordance with regulations at 24 CFR part 10, it is the practice of the Department to offer interested parties an opportunity to comment on proposed regulations. 24 CFR part 10 provides narrow exceptions to the notice and comment requirements if the Department finds good cause to omit notice and public participation. The good cause requirement under 24 CFR 10.1 may be satisfied when notice and public comment are impracticable, unnecessary, or contrary to the public interest. To publish a rule prior to receiving and responding to public comments, the agency must find that at least one good cause exceptions is applicable.

HUD has determined that good cause exists to promulgate this final rule without prior notice and comment. Specifically, the Department has concluded that it is impractical and unnecessary to solicit and respond to public comments on the deletion of regulations that were consolidated in part 578 as a result of statutory changes. Accordingly, HUD has concluded there is good cause to publish this rule prior to receiving and responding to public comments.

Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether regulatory action is significant and, therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the Executive Order. Executive Order 13563 (Improving Regulations and Regulatory Review) directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. This rule eliminates language that is no longer in use. Accordingly, this rule has been determined not to be a “significant regulatory action” as defined in section 3(f) of Executive Order 12866.

Executive Order 14192, entitled “Unleashing Prosperity Through Deregulation,” was issued on January 31, 2025. Section 3(c) of Executive Order 14192 requires that any new incremental costs associated with new regulations shall, to the extent permitted by law, be offset by the elimination of existing costs associated with at least 10 prior regulations. OMB has determined that this final rule does not impose any regulatory costs as HUD already consolidated the regulations in 24 CFR part 578 and this action is a repeal of a regulation for purposes of Executive Order 14192.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq. ) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Because HUD has determined that good cause exists to issue this rule without prior public comment, this rule is not subject to the requirement to publish an initial or final regulatory flexibility analysis under the RFA as part of such action.

This rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate, real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction, or establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either: (i) imposes substantial direct compliance costs on State and local governments and is not required by statute, or (ii) preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This 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.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531 et seq. ) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. This rule does not impose any Federal mandates on any State, local, or Tribal governments or the private sector within the meaning of the UMRA.

This document contains interim final amendments to 26 CFR part 300 regarding user fees for the EA SEE.

The Independent Offices Appropriation Act of 1952 (IOAA), which is codified at 31 U.S.C. 9701, authorizes agencies to prescribe regulations that establish user fees for services provided by the agency. The IOAA provides that regulations implementing user fees are subject to policies prescribed by the President; these policies are set forth in the Office of Management and Budget Circular A-25, 58 FR 38142 (July 15, 1993) (OMB Circular A-25).

Under OMB Circular A-25, Federal agencies that provide services that confer benefits on identifiable recipients are to establish user fees that recover the full cost of providing the service. An agency that seeks to impose a user fee for government-provided services must calculate the full cost of providing those services. In general, a user fee should be set at an amount that allows the agency to recover the direct and indirect costs of providing the service, unless the Office of Management and Budget (OMB) grants an exception. OMB Circular A-25 provides that agencies are to review user fees biennially and update them as necessary.

Section 330 of Title 31 of the United States Code authorizes the Secretary of the Treasury or the Secretary's delegate (Secretary) to regulate the practice of representatives before the Department of the Treasury (Treasury Department) and to require that an individual seeking to practice demonstrate the necessary qualifications, competency, and good character and reputation. The rules governing practice before the IRS are published in 31 CFR, Subtitle A, part 10, and reprinted as Treasury Department Circular No. 230 (Circular 230).

Section 10.4(a) of Circular 230 authorizes the IRS to grant status as enrolled agents to individuals who demonstrate special competence in tax matters by passing a written examination, the EA SEE, and who have not engaged in any conduct that would justify suspension or disbarment under Circular 230.

The EA SEE is comprised of three parts, and an applicant generally must pass all three parts within three years to be granted enrolled agent status through written examination. The EA SEE testing period generally begins on May 1 each year and ends the last day of the following February. The EA SEE is not offered during March and April when it is updated to reflect recent changes in the relevant law. More information on the EA SEE, including content, scoring, and how to register, can be found on the IRS website at https://www.irs.gov/tax-professionals/enrolled-agents. Since 2006, the IRS has engaged the services of a third-party contractor to develop and administer the EA SEE. The IRS Return Preparer Office (RPO) oversees the development and administration of the EA SEE. As of January 31, 2026, there were 75,304 enrolled agents.

Section 10.4(a) of Circular 230 provides that the IRS will grant enrolled agent status to an applicant who, among other things, demonstrates special competence in tax matters by written examination. The EA SEE is the written examination by which applicants can demonstrate special competence in tax matters, and an applicant must pass all three parts of the EA SEE to be granted enrolled agent status through written examination. The IRS confers a benefit on individuals who take the EA SEE beyond those that accrue to the general public by providing them with an opportunity to demonstrate special competence in tax matters by passing a written examination and thereby satisfy one of the requirements for becoming an enrolled agent under section 10.4(a) of Circular 230. Because the EA SEE is a service that provides a special benefit to test takers, the IRS charges a user fee to take the examination.

Final regulations (TD 9962) published in the Federal Register (87 FR 11295-02) on March 1, 2022, established the current $99 user fee (per part) of the EA SEE. At that time the Treasury Department and the IRS determined that a $99 user fee per part would recover the full direct and indirect costs the government would incur to oversee the EA SEE. The 2023 biennial review determined the full cost of the EA SEE was $121 per part. The IRS requested and obtained a waiver from OMB to postpone this increase to the EA SEE user fee until the 2025 biennial review. As a result, the user fee is currently still $99 per part. The contractor who administers the EA SEE also charges individuals taking the EA SEE an additional fee for its services. For the May 2025 to February 2026 testing period, the contractor's fee was $168 for each part of the EA SEE. This contract expired at the end of the February 2026 testing period and a new contract was obtained, subject to public procurement procedures. For the May 2026 to February 2027 testing period, the contractor's fee is $251 for each part of the EA SEE.

As required by OMB Circular A-25, in 2025 the IRS conducted a biennial review of the EA SEE user fee and calculated its costs for overseeing the examination. As a result of the review, the IRS determined that its full cost for overseeing the EA SEE is now $66 per part. Therefore, these regulations decrease the amount of the user fee for taking the EA SEE from $99 per part to $66 per part. This amount is in addition to the amount payable directly to the third-party contractor for each part. The IRS does not intend to subsidize any of the cost of making the EA SEE available to examinees and is not applying for an exception to the full-cost requirement in OMB Circular A-25.

The decrease in the user fee is primarily attributable to a change in timekeeping methodology, which resulted in a smaller estimated expense for administering the EA SEE program. Additionally, there has been an increase in the number of exam takers, further distributing the fixed costs related to administering the exam. The proposed user fee accounts for the time and personnel necessary to oversee the development and administration of the EA SEE and to ensure that the contractor complies with the terms of its contract. The IRS's oversight costs include costs associated with: (1) review and approval of materials used by the contractor in developing the EA SEE; (2) review of surveys of existing enrolled agents, which help to determine the topics to be covered in the EA SEE; (3) composition of potential EA SEE questions in coordination with the contractor's external tax law experts; and (4) analysis of the answers and raw scores of a testing population to determine a passing score.

In addition, IRS personnel ensure the contractor's compliance with its contract by reviewing the work of the contractor using an annual Work Breakdown Structure—a project management tool—and reviewing and verifying that the contractor is in compliance with a Quality Assurance Plan measuring customer satisfaction and accuracy. The IRS incurs additional costs associated with enforcing compliance with the Treasury contractor personnel security and training policies, Federal Information Security Modernization Act (FISMA), Section 508 of the Rehabilitation Act of 1973 and other laws, regulations and policies in the scope of the EA SEE contract; monitoring the contractor's help desk; and the resolution of test-related issues such as cheating incidents, appeals regarding test scores, refund requests, and customer service complaints that are not resolved by the contractor.

The government is authorized to charge an EA SEE user fee under the IOAA because, in exchange for the fee, it provides a service by developing and administering the EA SEE, which allows individuals to become enrolled agents and gain the ability to practice before the IRS under Circular 230. OMB Circular A-25 states that user fees should be collected in advance of or simultaneously with the provision of a service. The EA SEE user fee is collected when potential enrolled agents apply to take the examination during the examination season, which begins annually in May.

The IRS follows generally accepted accounting principles (GAAP) in calculating the full cost of overseeing the EA SEE. The Federal Accounting Standards Advisory Board (FASAB) is the body that establishes GAAP that apply for Federal reporting entities, such as the IRS. FASAB publishes the FASAB Handbook of Accounting Standards and Other Pronouncements, as Amended (Current Handbook), which is available at https://files.fasab.gov/pdffiles/2025_FASAB_Handbook.pdf. The Current Handbook includes the Statement of Federal Financial Accounting Standards (SFFAS) No. 4: Managerial Cost Accounting Standards and Concepts. SFFAS No. 4 establishes internal costing standards under GAAP to accurately measure and manage the full cost of Federal programs, and the methodology below is in accordance with SFFAS No. 4.

The IRS uses various cost-measurement techniques to estimate the cost attributable to the program. These techniques include using various timekeeping systems to measure the time required to accomplish activities, or using information provided by subject-matter experts on the time devoted to a program. To determine the labor and benefits cost attributable to oversight of the EA SEE, the IRS estimated the number of full-time employees required to conduct activities related to the costs of overseeing the EA SEE. The number of full-time employees is based on both current employment numbers and future hiring estimates. Other direct costs associated with overseeing the EA SEE include travel, training, and supplies. When the indirect cost of a service or activity is not specifically identified from the cost accounting system, an overhead rate is added to the identifiable direct cost to arrive at full cost.

Overhead is an indirect cost of operating an organization that is not specifically identifiable with an activity. Overhead includes costs of resources that are jointly or commonly consumed by one or more organizational unit's activities but are not specifically identifiable to a single activity. These costs can include:

To calculate the overhead allocable to a service, the IRS applies an overhead rate to the identified direct labor and benefits and other direct costs. The overhead rate is the ratio of the IRS's indirect labor, benefits, and non-labor costs of business divisions that do not interact with taxpayers to the labor and benefits costs of business divisions that interact with taxpayers. The IRS calculates an overhead rate annually. For the FY 2025 user fee review, an overhead rate of 62.92 percent was used.

The IRS used projections for FYs 2026 through 2028 to determine the direct and indirect costs associated with overseeing the EA SEE that are includible in the EA SEE user fee calculation. Direct costs are incurred by the RPO and include staffing and contract-related costs for activities, processes, and procedures related to overseeing the EA SEE.

The labor and benefits for the work performed related to overseeing the EA SEE is projected to be $3,505,101 in total over FYs 2026 through 2028. In addition to labor and benefits and overhead expenses, the IRS projects incurring travel, training, and supplies costs of $16,182.82 in each of FYs 2026 through 2028. The total labor and benefits, travel, training, and supplies, and overhead expenses projected are shown below:

The total cost for FYs 2026 through 2028 are therefore projected to be $5,759,058. The number of examination parts provided during FYs 2022, 2023, and 2024 were 27,313; 29,797; 29,584, respectively. The total number of examination parts provided during the three years was 86,694. The IRS used this historical three-year volume to estimate the number of examination parts it expects to provide in FYs 2026, 2027, and 2028. Dividing this total cost by the projected examinations for FYs 2026 through 2028 results in a cost per examination of $66 as shown below:

Taking into account the full amount of these costs, the amount of the EA SEE user fee per part is $66.

As noted in section B, the contractor who administers the EA SEE also charges individuals taking the EA SEE an additional fee for its services. For the May 2026 to February 2027, May 2027 to February 2028, May 2028 to February 2029 testing periods, the contractor's fee is $251 for each part of the EA SEE. For the May 2029 to February 2030 testing period, the contractor's fee is $211 for each part of the EA SEE. The fee charged by the contractor is fixed by the current contract terms and therefore cannot be reduced or renegotiated at this time. The contract was subject to public procurement procedures, and there were no tenders that were more competitive. The contract will expire on February 28, 2030. The fee charged by the contractor may change when the contract expires. Any future contract will be subject to the public procurement procedures.

These interim final regulations are not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (July 4, 2025) between the Treasury Department and OMB regarding review of tax regulations.

Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that these interim final regulations will not have a significant economic impact on a substantial number of small entities. The EA SEE user fee primarily affects individuals who take the EA SEE. Only individuals, not businesses, can be enrolled agents. Thus, the economic impact of these regulations on any small entity would be a result of an individual enrolled agent owning a small entity or a small entity employing an enrolled agent who must take the EA SEE. The Treasury Department and the IRS estimate that an average of 28,898 EA SEE examination parts will be taken by individuals annually. Therefore, a substantial number of small entities is not likely to be affected. Additionally, the economic impact on those entities is not significant. These regulations will establish a $66 fee per examination part (plus $251 payable directly to the third-party contractor), and will not have a significant economic impact on a small entity. Accordingly, the rule is not expected to have a significant economic impact on a substantial number of small entities, and a regulatory flexibility analysis is not required.

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 Tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. This rule does not include any Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of that threshold.

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. These interim final regulations do not have federalism implications and do not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive order.

The annual EA SEE testing period for May 2026-February 2027 will begin shortly. It would be unnecessary and contrary to the public interest for the IRS to continue to charge the current, higher user fee pending public comment after the IRS has determined pursuant to the biennial review conducted under OMB Circular A-25 that the EA SEE user fee should be reduced going forward. To enable the reduced fee amount to be in effect for the upcoming EA SEE test period beginning in May 2026, the Treasury Department and the IRS find that there is good cause to dispense with (1) notice and public comment pursuant to 5 U.S.C. 553(b) and (c) and (2) a delayed effective date pursuant to 5 U.S.C. 553(d). The Treasury Department and the IRS will consider public comments submitted in response to the cross-referenced notice of proposed rulemaking published in the Proposed Rules section of this issue of the Federal Register and will promulgate a final rule after considering those comments.

Pursuant to section 7805(f) of the Code, this Treasury decision has been submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq. ), the Office of Information and Regulatory Affairs designated this rule as not a major rule, as defined by 5 U.S.C. 804(2).

The principal author of these regulations is Sean Dix, Office of the Associate Chief Counsel (Procedure and Administration). Other personnel from the Treasury Department and the IRS participated in the development of the regulations.

Accordingly, the Treasury Department and the IRS amend 26 CFR part 300 as follows:

The ADA protects the rights of individuals with disabilities in everyday activities, including employment, access to State and local government services, access to businesses and nonprofits that are open to the public, and other important areas of American life. This IFR addresses title II of the ADA, which applies to State and local government entities. 1 Part A of title II protects qualified individuals with disabilities from disability-based discrimination in the services, programs, and activities of State and local government entities. 2 Section 204(a) of the ADA directs the Attorney General to issue regulations implementing part A of title II. 3 The Department is the only Federal agency with authority to issue regulations under part A of title II regarding the accessibility of State and local government entities' web content and mobile apps.

On April 24, 2024, the Department published a final rule revising its title II regulations, titled “Nondiscrimination on the Basis of Disability; Accessibility of Web Information and Services of State and Local Government Entities.”  4 The rule set forth technical requirements for the web content and mobile apps that State and local government entities “provide or make available, directly or through contractual, licensing, or other arrangements.”  5 In particular, the rule adopted the Web Content Accessibility Guidelines (“WCAG”) version 2.1 Level AA (hereinafter referred to as “WCAG 2.1”), published in June 2018, 6 as the technical standard for web content and mobile app accessibility under title II. 7 The rule included provisions describing how WCAG 2.1 applies to State and local governments' web content and mobile apps, as well as provisions identifying circumstances in which certain web content and content in mobile apps may not need to meet the technical standard. 8 The rule's effective date was June 24, 2024, 9 but State and local government entities were not required to begin complying with the rule immediately. Rather, the rule provided that public entities with a total population of 50,000 or more must begin complying with the rule starting on April 24, 2026, 10 and that public entities with a total population of less than 50,000 or any public entity that is a special district government must begin complying with the rule starting on April 26, 2027. 11 The rule added definitions of “total population” and “special district government” to 28 CFR 35.104, and the Department provided additional information about calculating total population and identifying special district governments in Appendix D to 28 CFR part 35 and in resources published on the Department's website. 12

The 2024 final rule was the culmination of various rulemaking efforts by the Department related to web and mobile app accessibility under title II. Throughout these efforts, the Department considered a wide variety of issues related to developing a final rule, including the appropriate compliance dates for adopting web and mobile app accessibility requirements.

In 2010, the Department published an advance notice of proposed rulemaking (“ANPRM”), titled “Nondiscrimination on the Basis of Disability; Accessibility of Web Information and Services of State and Local Government Entities and Public Accommodations,” which addressed web accessibility under both title II and title III of the ADA. 13 In the ANPRM, the Department suggested potential compliance dates ranging from six months to two years after the publication of a final rule, depending on the type of web content. 14 The Department also requested public comment about when any web accessibility requirements adopted by the Department should become effective, including whether the Department should adopt a different compliance date for small public entities. 15 The Department received approximately 400 public comments in response to the ANPRM.

In 2015, the Department announced that it would pursue separate rulemakings addressing web accessibility under titles II and III. 16 And in 2016, the Department published a supplemental advance notice of proposed rulemaking (“SANPRM”) solely focused on title II, titled “Nondiscrimination on the Basis of Disability; Accessibility of Web Information and Services of State and Local Government Entities.”  17 In the SANPRM, the Department stated that comments submitted in response to the 2010 ANPRM about the suggested compliance dates were “extremely varied,” with recommendations ranging from requiring compliance upon publication of a final rule to allowing a five-year window for compliance, and there was no public consensus. 18 Based on its review of the comments, the Department suggested new potential compliance dates. 19 The potential compliance dates included in the SANPRM ranged from two to three years after the publication of a final rule, depending on the type of web content and the type and size of the public entity. 20 The Department again requested public comment about when any web accessibility requirements adopted by the Department should become effective. The Department received approximately 200 public comments in response to the SANPRM. Commenters suggested a range of compliance dates, from immediate implementation to 10 years. 21

In 2017, the Department withdrew several rulemaking actions, including the 2010 ANPRM and 2016 SANPRM, stating that it was evaluating whether promulgating specific web accessibility standards through regulations was “necessary and appropriate” to ensure compliance with the ADA. 22 The Department subsequently reopened the title II rulemaking process in 2023 when it published a notice of proposed rulemaking (“NPRM”), titled “Nondiscrimination on the Basis of Disability; Accessibility of Web Information and Services of State and Local Government Entities.”  23 The compliance dates proposed in the NPRM were the same as the dates that would ultimately be included in the final rule. Namely, public entities with a total population of 50,000 or more would have two years to begin complying with a final rule after it was published;  24 public entities with a total population of less than 50,000 or any public entity that is a special district government would have three years to begin complying. 25 Other alternative compliance time frames the Department considered included: a one-year time frame for all covered entities; a one-year time frame for public entities with a population of 50,000 or more and a three-year time frame for small public entities; and a three-year time frame for public entities with a population of 50,000 or more and a four-year time frame for small public entities. 26 In the NPRM, the Department emphasized that the public had previously provided “varied feedback” about the appropriate compliance dates for a final rule. 27 For example, the Department stated that individuals with disabilities and disability advocacy organizations preferred shorter time frames, often arguing that web accessibility has long been required under title II. 28 The Department stated that some covered entities, in contrast, had requested more time to come into compliance with a final rule, citing resource considerations including budget and staffing limitations. 29 The Department decided on the compliance dates proposed in the NPRM after considering the arguments raised by commenters and observing that “over a decade has passed since the Department started receiving such feedback and there is more available technology to make web content and mobile apps accessible.”  30 The Department stated that it believed the proposed compliance dates would appropriately “balance[ ] the resource challenges reported by public entities with the interests of individuals with disabilities in accessing the multitude of services, programs, and activities” offered by public entities through the web and mobile apps. 31 The Department explained that it proposed to apply the same technical standard to all covered entities, but small public entities and special district governments would be given an extra year to begin complying with a final rule to account for those entities' limited resources and unique circumstances. 32 The Department requested feedback from members of the public about the NPRM, including about the proposed compliance dates, and it received approximately 345 comments in response.

In 2024, the Department published the final rule that is the subject of this IFR. 33 As discussed, the 2024 final rule included the same compliance dates that were proposed in the 2023 NPRM. The Department also considered, but did not adopt, the alternative time frames that it considered for the 2023 NPRM. 34 The Department stated that comments submitted in response to the 2023 NPRM expressed a “wide range of views” about the rule's compliance dates, and commenters suggested time frames ranging from six months to six years. 35 After reviewing the comments,

The Coast Guard received notification of dangerous flood waters on the Cheboygan River from the Cheboygan Lock and Dam Complex to the Cheboygan River's outlet from Mullett Lake and the Black River from its confluence with the Cheboygan River to Alverno Dam. The Captain of the Port (COTP) Northern Great Lakes has determined that potential hazards associated with flood waters are a safety concern for any vessels south of the Cheboygan Lock and Dam Complex to the Cheboygan River's outlet from Mullett Lake and the Black River from its confluence with the Cheboygan River to Alverno Dam.

Because of these potential hazards, the Coast Guard is issuing this rule without prior notice and comment. As is authorized by 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard was notified of the dangers to vessels on April 14, 2026, and we must establish this safety zone by April 15, 2026, to protect personnel, vessels, and the marine environment. Therefore, we do not have enough time to solicit and respond to comments.

For the same reasons, the Coast Guard finds that under 5 U.S.C. 553(d)(3), good cause exists for making this rule effective less than 30 days after publication in the Federal Register .

This rule establishes a safety zone from April 15, 2026 through April 24, 2026. The safety zone will cover all navigable waters in the Cheboygan River from the Cheboygan Lock and Dam Complex to the Cheboygan River's outlet from Mullett Lake and the Black River from its confluence with the Cheboygan River to Alverno Dam. Vessels and persons will not be allowed to enter the zone during this time, unless authorized by the Captain of the Port.

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.

The regulatory flexibility analysis provisions of the Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, do not apply to rules that are not subject to notice and comment. Because the Coast Guard has, for good cause, waived the notice and comment requirement that would otherwise apply to this rulemaking, the Regulatory Flexibility Act's flexibility analysis provisions do not apply here.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), if this rule will affect your small business, organization, or governmental jurisdiction and you have questions, contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards by calling 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

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

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.

As required by The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538), the Coast Guard certifies that this rule will not result in an annual expenditure of $100,000,000 or more (adjusted for inflation) by a State, local, or tribal government, in the aggregate, or by the private sector.

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 et seq. ), 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 is a safety zone. It is categorically excluded from further review under paragraph L60(d) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination will be available in the docket.

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

This is a summary of the Commission's Report and Order in WC Docket Nos. 25-208, 25-209; FCC 26-19, adopted on March 26, 2026, and released on March 27, 2026. The full text of this document is available for public inspection at the following internet address: https://docs.fcc.gov/public/attachments/FCC-26-19A1.pdf.

1. We adopt our proposal in the Network and Services Modernization Notice (90 FR 41490 (8/28/2025)) to encourage rapid deployment of high-speed, more resilient infrastructure by eliminating all filing requirements in the Commission's network change disclosure rules and the Commission's process of issuing public notices for short-term network changes and copper retirements and the associated objection process for interconnected service providers. (We note that, while not required by the existing rules, the Bureau typically released Public Notices of long-term network changes as well. However, the objection process set forth in § 51.333 did not apply to such network change notices.) These actions effectively codify the relief granted by the Bureau in the Network Change Disclosure Waiver Order ( NCD Waiver Order ). Incumbent local exchange carriers (LECs) will continue to be required to post public notice of planned network changes through industry fora, industry publications, or on the carrier's publicly accessible internet site without the obligation to file duplicative information with the Commission. To ensure clear notice specifically to interconnecting carriers, incumbent LECs must continue to (1) provide direct notice of copper retirements and short-term network changes to directly interconnected telephone exchange service providers, 911 service providers (defined as an entity that provides 911, E911, or NG911 capabilities such as call routing, automatic location information (ALI), automatic number identification (ANI), or the functional equivalent of those capabilities, directly to a public safety answering point (PSAP), statewide default answering point, or appropriate local emergency authority as defined in § 9.3; and/or operates one or more central offices that directly serve a PSAP), and directly interconnecting local exchange service providers that support essential functions within 911 networks, including delivering 911 traffic to selective routers for transmission to public safety answering points (PSAPs), and (2) provide public notice and communicate directly with interconnected telephone exchange service providers about network changes resulting from force majeure events and other events outside of the incumbent LEC's control. (As previously noted by the Commission, our network change disclosure rules do not negate any specific notice obligations contained in privately negotiated contracts.) We note that the action we take today does not absolve incumbent LECs of their obligation under Section 214(a) to obtain Commission authorization for a copper retirement or other network change as defined in § 51.325(a) of our rules that also results in a service discontinuance and, indeed, works hand-in-hand with our actions taken below to ensure continued 911 connectivity when a carrier seeks to discontinue a service supporting interconnection trunks or the exchange of traffic, including but not limited to 911 trunks and 911 traffic. (We note that INCOMPAS has asked that “copper retirement must not be permitted in areas where competitive providers rely on legacy loops to reach end-user customers and where no viable wholesale replacement exists.” And CWA has asserted that the actions we take today “fail[ ] to account for the significant workforce implications associated with accelerated copper retirement.” However, as the Commission has previously noted, section 251(c)(5) established a notice-based network change disclosure process, and the Commission thus has no authority to prohibit copper retirements. And impacts of our actions on the workforce are similarly outside the scope of the purpose of Section 251(c)(5)'s public notice requirement, which pertains to impacts on interoperability of the communications networks.)

2. Excessive regulatory burdens prevent carriers from investing in and deploying next-generation networks that are needed to support modern communication services. Various commenters have noted that eliminating all filing requirements while maintaining the public notice requirements will streamline the transition from legacy networks while still ensuring interconnecting entities receive adequate notice. We agree with NTCA that this approach “strike[s] the appropriate balance between reducing regulatory burden and ensuring stakeholders remain informed of network changes.”

3. We find that adopting the change in filing and notice requirements proposed in the Network and Services Modernization Notice will not have any impact on the notices end users receive of planned network changes. Neither Section 251(c)(5) nor our implementing rules impose end-user notice obligations. Rather, carriers provide such notices to end users as a matter of practice. In the NCD Waiver Order, the Bureau noted that it received no comments in opposition to the more than 400 network change disclosure filings it processed and for which it released public notices over the preceding two years. And since issuing that Order, the Bureau has received no request or objection indicating that the lack of a filing or agency-issued Public Notice has resulted in disruption to the transmission or routing of services over an incumbent LEC's facilities. In response to our requests for comment in the Network and Services Modernization Notice on whether any public benefit exists from requiring incumbent LECs to file network change disclosures with the Commission and whether publishing notices of network changes on carriers' websites provides reasonable public notice of network changes, commenters suggest the lack of objections submitted in response to Commission network change Public Notices indicates that filing network change disclosures has become a purely administrative task that does not provide any value. Interconnected telephone exchange service providers may still raise concerns regarding short-term network changes and copper retirements through less formal Commission processes.

4. We conclude that eliminating all filing requirements and publication of Commission-issued public notices will reduce delays and encourage development and deployment of modernized networks. Reducing regulatory costs and obligations encourages investment in modern networks and advanced communications services in all areas, especially those that are expensive to serve due to low population density or challenging topography. Carriers will not need to divert funds and resources to complying with burdensome regulations, allowing them to devote these resources elsewhere. (While the Commission cannot direct how incumbent LECs spend money gained from the reduction in regulatory costs and obligations, reducing costs associated with deployment of networks generally makes all service areas attractive for investment.)

5. We are not persuaded by the Alarm Industry Communications Committee's assertion that having network change notices only posted on incumbent LECs' publicly accessible websites “significantly reduces public visibility of critical infrastructure changes.” The purpose of Section 251(c)(5)'s public notice requirement was to promote competition. When the Commission adopted its regulations implementing Section 251(c)(5), it noted the limited resources available to smaller carriers that might not participate in industry fora and publications. It thus included the filing requirement to ensure that “all carriers, competing service providers, and potential competitors . . . have equal opportunities to provide and to receive change information on a national scale.” And when the Commission expressly added copper retirements to its network change disclosure scheme, it required that incumbent LECs provide direct notice of such network changes to interconnecting telephone exchange service providers, ensured that those interconnecting carriers received at least 90-days advance notice of the planned copper retirement, afforded those providers the opportunity to object, and noted that objections would be deemed denied “[u]nless the copper retirement scenario suggests that competitors will be denied access to the loop facilities required under our rules” absent Commission action on the objection within the 90-day advance notice period. Thus, the purpose of the filing requirement was never about “public visibility of critical infrastructure changes.” However, we require that the method of notice the incumbent LEC uses be publicly accessible— i.e., not behind a paywall.

6. We do not take the alternative approach of forbearing from all public notice requirements imposed by Section 251(c)(5) and our implementing rules because we find that forbearance is not justified at this time. Section 10 of the Act requires the Commission to forbear from applying any requirement of the Act or of its regulations to a telecommunications carrier or telecommunications service if the Commission determines that (1) enforcement of the requirement “is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that telecommunications carrier or telecommunications service are just and reasonable and are not unjustly or unreasonably discriminatory,” (2) enforcement of that requirement “is not necessary for the protection of consumers,” and (3) “forbearance from applying such provision or regulation is consistent with the public interest.” All three conditions must be met to support forbearance relief. (We disagree with Wired Broadband et al.'s assertion that Section 251(c)(5)'s public notice requirement “is part of Americans' procedural due process rights” under the Fifth Amendment. This requirement is not subject to the Fifth Amendment's due process clause as the public notice required under that statutory provision is issued by a private company, not a government entity.) Thus, while we decline to forbear from these public notice requirements at this time, we note that future forbearance from these requirements would not violate the Constitution as the public notice is issued by a private company not a government entity.

7. Based on the record in this proceeding, we conclude that the conditions for granting forbearance relief from all network change disclosure requirements do not exist at this time and that any framework or guidance regarding interconnection with incumbent LEC networks during and after the transition to internet protocol (IP) is more appropriately addressed in the context of the proposed forbearance from the incumbent LEC-specific interconnection and related obligations in the October 2025 IP Interconnection Notice (90 FR 54266 (11/26/2025)). The rule we adopt today eliminating network change disclosure filing requirements achieves the appropriate balance between providing reasonable public notice of planned network changes and relieving incumbent LECs of unnecessary regulatory burdens.

8. Ensuring practices are just and reasonable (Section 10(a)(1)). We conclude that enforcement of the public notice requirements imposed by Section 251(c)(5) and our implementing rules is necessary to ensure incumbent LECs' practices are just and reasonable. Forbearance from all requirements in Section 251(c)(5) and our implementing rules would allow incumbent LECs to make network changes or copper retirements without public notice, which might affect interoperability with interconnecting providers and may result in unintended service disruptions. Public notice of network changes generally and copper retirement notices specifically ensures that incumbent LECs' practices are “just and reasonable and are not unjustly or unreasonably discriminatory” by requiring that interconnecting carriers receive timely notice regarding changes that may inhibit their ability to provide services to their end-user customers.

9. Ensuring protection of consumers (Section 10(a)(2)). We find that enforcement of the public notice requirements imposed by Section 251(c)(5) and our implementing rules is necessary for the protection of consumers. The requirement that incumbent LECs provide reasonable public notice of network changes is meant to alert interconnecting carriers to changes that might affect their interoperability with the incumbent LEC's network. Lack of such notice and the opportunity to ensure interoperability might cause unintentional disruption of services, ultimately harming consumers.

10. Consistent with the public interest (Section 10(a)(3)). We conclude that forbearance from the public notice requirements imposed by Section 251(c)(5) and our implementing rules would not be consistent with the public interest. As shown overwhelmingly in the record, lack of notice at this time could significantly impact the provision of 911 services. While the transition to Next-Generation 911 (NG911) is progressing alongside broader IP modernization, the NG911 transition faces unique challenges and may not be complete for some time. As we noted in the Network and Services Modernization Notice, “network transitions subject to Section 251(c)(5) may occur in areas where 911 authorities and originating service providers (OSPs) have not yet transitioned to . . . [NG911] and will therefore continue for some time to rely on legacy selective routers and other TDM (time-division multiplexing)-based infrastructure for delivery of 911 calls to public safety answering points (PSAPs)” during this period of overlap. Until the NG911 transition is complete, it is imperative that carriers coordinate with state and local 911. Authorities and 911 service providers, as defined above, and directly interconnecting local exchange service providers that support essential functions within 911 networks so that they are aware of network changes that could impact their ability to provide these critical services.

11. We next revise our rules implementing Section 214(a) of the Act to bring them in line with the realities of today's communications marketplace. First, we adopt our proposal to simplify our rules applicable to technology transitions discontinuances by establishing one consolidated rule applicable to all technology transitions discontinuance applications. (Our technology transitions discontinuance rules apply only to discontinuance of a retail wireline voice service— i.e., loop-side services. It does not apply to trunk-side services provided to another carrier, such as interconnection trunks.) Second, we adopt our proposal to grant blanket authorization for carriers to grandfather any legacy voice service, data telecommunications services operating at speeds below 25/3 Mbps, and interconnected VoIP service provisioned over copper facilities. Third, we establish requirements for applications to discontinue a service supporting interconnection trunks or the exchange of traffic, to ensure continued support for 911 service and also to ensure access for interconnecting providers on non-TDM services. Fourth, we forbear from Section 214(a) requirements in certain circumstances for resold service. Fifth, we adopt our proposal to apply a 31-day automatic grant period to all discontinuance applications regardless of the applicant's status as dominant or non-dominant. Sixth, we clarify the required contents of discontinuance applications. Seventh, we adopt our proposal to revise our rules applicable to emergency discontinuances to address specific situations where a carrier may wish to permanently discontinue a service after the Commission has granted emergency discontinuance authority. Finally, we clear from the books outdated and irrelevant discontinuance rules. We do not act at this time on our proposal to forbear from the requirement that carriers provide notice of planned discontinuances to State Governors and the Secretary of Defense, as required by Section 214(b).

12. As part of the Commission's ongoing efforts to reduce regulatory burdens and thus allow providers to invest more resources toward modernizing their networks and developing and deploying newer, more advanced services, we adopt our proposal in the Network and Services Modernization Notice to revise the rules applicable to technology transitions discontinuances by replacing the Adequate Replacement Test and the Alternative Options Test with a single consolidated technology transitions discontinuance rule. (The provisions of Section 63.71(f)(2) pertain to last-mile, end-user legacy voice service.) In conjunction with this revision, we also eliminate § 63.602 and amend § 63.71 of our rules to set forth content requirements applicable to all discontinuance applications, including certain information set forth in § 63.505. With respect to technology transitions discontinuance applications, we continue to require that applications contain a statement identifying the application as involving a technology transition. This consolidated rule stipulates that an application to discontinue a currently offered retail voice service as part of a technology transition is eligible for streamlined processing if the applicant certifies that one or more of the following replacement services is available in every location throughout the affected service area: (1) a facilities-based interconnected VoIP service; (2) a facilities-based mobile wireless service; (3) a voice service offered pursuant to an obligation from one of the Commission's modernized high-cost support programs; (4) a voice service that has been available from the applicant throughout the affected service area for the previous six months and for which the carrier has at least a certain number of existing subscribers and which supports access to 911; or (5) a widely available alternative voice service that supports access to 911. (In adopting the Adequate Replacement Test, the Commission stated that “in order to meet [the network coverage] prong and thus be eligible for streamlined processing, a replacement service must be available to all affected customers covering the entire geographic scope of the service area subject to the application and actually function as intended for affected customers, or else it cannot be certified as a replacement service for those customers,” thus “promot[ing] the core value established by the Act, including that of ensuring universal access.” Commenter concerns regarding “reliance on facilities not yet built and technologies not yet deployed,” are obviated by the requirement that the replacement service must be available in all locations throughout the affected service area in order to be eligible for streamlined processing. A facilities-based service is any service that is offered using (1) physical facilities that the provider owns and that terminate at the end-user premises; (2) facilities that the provider has obtained the right to use from other entities, such as dark fiber or satellite transponder capacity as part of its own network, or has obtained; (3) unbundled network element (UNE) loops, special access lines, or other leased facilities that the entity uses to complete terminations to the end-user premises; (4) wireless spectrum for which the provider holds a license or that the provider manages or has obtained the right to use via a spectrum leasing arrangement or comparable arrangement pursuant to 47 CFR 1.9001-1.9080; or (5) unlicensed spectrum.) Upon due consideration of the record in this proceeding and the ample support for this approach reflected therein, we find that this rule will accelerate the application process while simultaneously protecting legacy service customers by ensuring that they have replacement service options available to them when their legacy service is discontinued. This in turn will ensure that consumers receive the benefits of technology transitions with “all reasonable efficiency.”

14. We find that replacing both the Adequate Replacement Test and the Alternative Options Test with the single consolidated rule we adopt today, along with the application content requirements discussed below, will more effectively accelerate and streamline the technology transitions discontinuance process while still providing adequate protection to consumers. We find that, rather than minimizing uncertainty and confusion, the Adequate Replacement Test actually caused widespread confusion that may have prevented carriers from pursuing technology transition discontinuances under the test, as evidenced by the fact that the Commission did not receive its first technology transitions discontinuance application pursuant to the Adequate Replacement Test until nearly eight years after the rule was adopted and six years after its effective date. (The filing of that application was itself delayed by several months while AT&T conducted the performance testing delineated in the Technical Appendix to the 2016 Technology Transitions Order (81 FR 62632 (09/12/2016)). This extended timeline is contrary to a streamlined process.) We further find that the Alternative Options Test has failed to align with competitive marketplace options and has hampered investment and innovation in modern services by effectively discouraging applicants from filing to discontinue legacy voice services under that test. Indeed, in the nearly seven years since the Alternative Options Test was adopted, the Bureau has found that presumptive streamlined treatment under the test was utilized only eight times. We agree with the International Center for Law & Economics that making it costly and time-consuming for carriers to exit obsolete and inefficient copper-based services slows the flow of capital toward the deployment of next-generation networks, where it is needed. Creating one straightforward, consolidated rule that applies to all technology transitions discontinuance applications will more effectively accelerate and streamline the technology transitions discontinuance process while still providing adequate protection to consumers than revising the Adequate Replacement Test and the Alternative Options Test.

15. A discontinuance application can rely on the availability of multiple replacement services, particularly when the application encompasses multiple wire centers covering large geographic areas. We decline to adopt Public Knowledge's proposal to require applicants to identify the replacement service they are relying on for each subscriber address. Requiring such a level of granularity would impose an unreasonable burden on carriers and is not always necessary to confirm the availability of the replacement service(s) across the geographic area subject to discontinuance. However, we do find merit in requiring applicants to provide a greater level of detail than simply providing a high-level aggregate list of which replacement services it relies on for any given large geographic area covered by the application. In order to minimize the burden on carriers while still providing Bureau staff with sufficient information to evaluate the availability of the replacement services and thus the impact on the public convenience and necessity, we afford carriers flexibility in how they break down the available replacement services in the various affected service areas. We thus require carriers to identify the available replacement services using the smallest practicable geographic unit depending on the geographic areas implicated by the specific application at issue, which could consist of, among other things, census blocks, census block groups, or ZIP codes. If the information regarding the geographic availability of the replacement service(s) is insufficient or incomplete, the Bureau may require additional information as necessary for its review.

16. As delineated above, the consolidated rule we adopt today sets forth five categories of replacement services that an application to discontinue a currently offered retail voice service as part of a technology transition can rely on to be eligible for streamlined processing. We now address each of these categories in turn.

17. The Commission has previously declined to adopt presumptions or exclusions regarding specific types of replacement services, stating that the “public interest analysis demands that applicants provide objective evidence showing a replacement service will provide quality service and access to needed applications and functionalities.” Given the rapid developments in the communications marketplace since the Commission adopted the Adequate Replacement and Alternative Options Tests, we find the Commission's concerns in 2016 and 2018 have been obviated. While some commenters contend that replacing the Adequate Replacement Test and the Alternative Options Test with the consolidated rule we adopt today will harm consumers and leave them with substandard alternative connections, we find that these concerns, too, are unfounded.

18. Since 2018, communications technology has improved, and the marketplace for voice services, including interconnected VoIP and mobile voice, has vastly expanded and spurred the creation of new and innovative communications technologies that benefit consumers and whose usage has far surpassed that of legacy voice service. Indeed, interconnected VoIP lines have jumped from 58% of all retail fixed voice service connections in 2018 to over 79% by December of 2024. The number of legacy switched access connections has dropped precipitously since 2018 while the number of fixed broadband connections that support over-the-top interconnected VoIP service rose to 91 residential fixed broadband connections per 100 households with speeds of at least 25 Mbps/3 Mbps by the end of 2024. These rapid changes in the marketplace demonstrate that consumers now have access to a wide array of voice services provisioned over a variety of technologies. And this disparity between legacy voice service and interconnected VoIP connections will only increase as fiber deployments around the country continue. (The latest report issued by the Fiber Broadband Association indicates that the number of homes with access to fiber increased by 11% in 2025, despite rising costs associated with rising labor costs, tariffs on imported materials, and inflation. According to this report, more than 60% of American homes are now passed by fiber. And the majority of eligible locations in 2025 in the BEAD program will use fiber.)

19. We conclude that, rather than allowing legacy voice services to be discontinued and replaced with inferior options, specifying explicit categories of adequate replacement services will implement a baseline of quality and availability for replacement services in the event of a discontinuance, thus ensuring that no consumer receives replacement services that fall beneath a certain level of service. (As the Commission noted in the 2016 Technology Transitions Order, “[t]he Bureau will normally authorize the discontinuance `unless it is shown that customers would be unable to receive service or a reasonable substitute from another carrier or that the public convenience or necessity is otherwise adversely affected.' ”) Moreover, we find that specifying categories of adequate replacement services will provide greater certainty for carriers regarding the kinds of replacement services that could result in the Commission removing a technology transitions discontinuance application from streamlined processing. We also find that the federal government's interest in having a coherent national policy on these matters outweighs state governments' interests in the types of service that may qualify as adequate replacements for purposes of streamlined discontinuance applications. As observed by the Telecommunications Industry Association, clear guidance on what qualifies as a replacement service will allow providers to know what attributes a potential successor service must possess as they work to improve their community's services. The categories of adequate replacement services we adopt today will furnish providers with sufficient criteria to provide certainty in planning transitions, and ensure that consumers in geographically rural, insular communities, including Tribal communities, the disability community, and other vulnerable communities have access to advanced service options.

20. We conclude that the approach we adopt today will not impede access to critical applications such as home security alarms and medical monitoring devices given the wide array of IP-based devices and over-the-top services that perform similar functions available on the market today. Our streamlined processing rules still require carriers to notify customers of their applications to discontinue service, which must be done no later than the date they file their applications, and provide information regarding replacement service options. Thus, even in instances where a carrier may seek to avail itself of streamlined processing of its discontinuance application, any customers or other interested stakeholders with concerns—including about the technical and interoperability information for a specific replacement service—have the opportunity to file comments or objections to that application with the Commission. Should the Bureau have any concerns about whether a particular request to discontinue service could adversely affect the public interest, it will remove the application from streamlined processing for closer review, thus mitigating the risk that a replacement service of inferior quality or availability will be imposed upon consumers in the event of a discontinuance. (In light of the opportunities to identify instances where a proposed discontinuance may result in a loss of service to a customer without an adequate replacement, we decline to adopt additional remediation requirements after the approval of the discontinuance.) Meanwhile, the streamlined process will more efficiently deliver access to modernized services that better support functions like home security and telehealth, as compared to the legacy networks in place today. And the providers of these devices and services have been on notice for almost a decade that the list of “key applications” contained in the 2016 Technology Transitions Order as part of the Adequate Replacement Test was temporary. Indeed, under the rules adopted in 2016, the requirement that “replacement services [ ] be compatible with these devices” sunset in 2025.

21. We decline to impose on technology transitions discontinuance authorizations a condition that “the replacement service support G.711 codec handshake with RFC 2833 disabled on calls to telephone numbers serving life safety alarm monitoring receivers, end-to-end through all carrier handoffs,” as recommend by AICC. Introducing a new compatibility requirement for legacy devices, ten years after the 2016 Technology Transitions Order established a sunset date for compatibility for alarms using low-speed modem devices, would introduce unnecessary delay from the transition to modern, reliable services. Such a requirement is also impracticable if the discontinuing carrier relies on the availability of one or more replacement services offered by third parties. In such instances, the discontinuing carrier has no control over the configuration of the network over which the replacement service is provisioned. However, we encourage carriers to ensure their IP networks are appropriately configured so as to prevent alarm signaling failures.

22. Facilities-based interconnected VoIP service. We find that facilities-based interconnected VoIP service is an adequate replacement for purposes of determining eligibility for streamlined processing. (There is also evidence that facilities-based interconnected VoIP service compares favorably in price on average to legacy voice services. Interconnected VoIP providers must meet applicable E911 service requirements as a condition of providing service to consumers and must support NG911 service upon the request of a 911 Authority.) As the Commission recently found, interconnected VoIP service benefits consumers by providing access to networks that can support advanced protocols and technologies, such as STIR/SHAKEN, which helps protect consumers from illegally spoofed robocalls, and NG911, which will help save lives by ensuring faster call delivery to 911 call centers through improved reliability and resiliency, enhanced information about the caller's location and the nature of the emergency, and the ability to receive additional multimedia, including video.

23. The only specific opposition in the record does not dispute the quality of facilities-based interconnected VoIP service but instead raises competition concerns. NASUCA et al. broadly oppose all of the specific categories of replacement services proposed in the Network and Services Modernization Notice but do not raise arguments specific to facilities-based interconnected VoIP services. Other commenters object to our finding that VoIP need not be offered on a stand-alone basis to be considered an adequate replacement. We address those arguments below. We find AARP's claim that there is not sufficient competition in the interconnected VoIP market to be overstated in light of the current state of competition and our continuing ability to remove applications from streamlined processing should the need arise. We agree that in the context of wireline voice services, the availability of service from another provider may provide competitive benefits for consumers. As of December 2023, at least 95% of the U.S. population had 4G LTE coverage from at least three service providers. And to the extent that the affected customers will have access to a facilities-based interconnected VoIP service, they will have the option to purchase broadband access, giving them access to a multitude of communications applications, including over-the-top VoIP service. Moreover, the Commission's standards for streamlined and non-streamlined processing of discontinuance applications continue to apply. If the Bureau has concerns regarding whether it is in the public interest to grant a particular request to discontinue service—including relevant considerations of competition in a given service area—it can remove that application from streamlined processing and engage in a further review. Other than AARP, no commenters weighed in specifically on the appropriateness of facilities-based interconnected VoIP service as an adequate replacement for purposes of eligibility for streamlined processing.

24. Facilities-based mobile wireless service. We find facilities-based mobile wireless service operating at speeds of at least 5/1 Mbps, as reflected on the National Broadband Map, to be an adequate replacement for purposes of eligibility for streamlined processing. (The 5/1 Mbps broadband speed is a proxy for services with sufficient quality to be adequate replacement services.) Mobile telephony (mobile voice) service is a real-time, two-way voice service that is interconnected with the public switched network using an in-network switching facility that enables the provider to reuse frequencies and accomplish seamless handoff of subscriber calls. As of December 2024, there were approximately 390.9 million mobile voice subscriptions in the United States; and according to preliminary data from the Centers for Disease Control and Prevention, as of December 2023, approximately 76% of adults were living in and relying on a wireless-only household, with adults in lower age-groups more likely to live in wireless-only households. As the market has thus spoken on the adequacy of mobile wireless service, we disagree with Public Knowledge's argument that a facilities-based mobile wireless service is not a suitable replacement for a wireline voice service in the context of a Section 214(a) discontinuance review. (In addition to these objections, multiple parties filed comments asserting concerns about the potential negative health impact of increased electromagnetic radiation as a result of the retirement of legacy copper networks and the increased use of wireless alternatives. Commission-regulated equipment is subject to our rules limiting human exposure to radio frequency (RF) emissions from such equipment, as applicable. The Commission's rules limiting human exposure to RF emissions are outside the scope of this proceeding. As of December 31, 2024, we note that 4G LTE is available at 99% of locations and 5G-NR at speeds of at least 7/1 Mbps is available at 96% of locations nationwide.) As the Commission recently noted, “consumers continue to rely more heavily on mobile wireless services,” and that these services have thus “become an essential part of everyday life.” (As of December 31, 2024, we note that 4G LTE is available at 99% of locations and 5G-NR at speeds of at least 7/1 Mbps is available at 96% of locations nationwide. Multiple parties filed comments asserting concerns about the potential negative health impact of increased electromagnetic radiation as a result of the retirement of legacy copper networks and the increased use of wireless alternatives. Commission-regulated equipment is subject to our rules limiting human exposure to radio frequency (RF) emissions from such equipment, as applicable. The Commission's rules limiting human exposure to RF emissions are outside the scope of this proceeding.)

25. We decline to adopt additional verification requirements for the availability of mobile wireless service beyond the data reflected in the National Broadband Map, as suggested by some commenters. While NTCA contends that despite broadband mapping improvement over time, it “remains unreliable on a granular level in many rural areas” and thus that the Commission should proceed with caution, we find that there are already sufficient safeguards in place to account for discrepancies, including in rural areas, without the need to adopt more stringent, mobile-specific verification requirements at this time. As compared to the initial months following the launch of the National Broadband Map, the data reflected in the map has become much less susceptible to correction through the challenge process, resulting in a more stable dataset to inform the agency's work. Based on internal staff analysis, the total number of challenges to the National Broadband Map in 2025 as of June 30 equaled one-half of one percent of the total number of challenges filed in the same period in 2022. And approximately nine percent of the challenges filed in that period in 2025 were conceded or upheld, whereas almost 81 percent of the challenges filed during the equivalent time period in 2022 were conceded or upheld. Nevertheless, if consumers or stakeholders have concerns regarding a provider's reported mobile coverage data as reflected on the National Broadband Map, they may file a mapping challenge and initiate a review of the reported coverage data in the specified location. To file a challenge to the availability data in the National Broadband Map, go to https://broadbandmap.fcc.gov/home, type the relevant location into the search bar, select the `Mobile Broadband' tab, and click on the `Mobile Challenge' link.) Indeed, affected customers faced with a planned technology transitions discontinuance relying on the availability of a facilities-based mobile wireless service, as well as other interested stakeholders such as public interest groups and state public utility commissions, may also file objections and seek to have the Bureau remove the application from streamlined processing for further review of the availability of mobile wireless service in the affected service area. Given the existence of these guardrails, we find it unnecessary and redundant to implement additional mobile-specific verification requirements as part of this current rulemaking. Such a requirement would negate the primary purpose of this rulemaking—to make technology transitions more efficient and encourage the deployment of advanced, next-generation networks—while providing no material benefit that is not already available to consumers via the two review mechanisms enumerated above.

26. Voice service funded by Commission modernized high-cost mechanisms. We find facilities-based voice services provided via funding from one of the Commission's modernized high-cost support mechanisms to be an adequate replacement for the purposes of eligibility for streamlined processing. We exclude from the purview of this rule any legacy high-cost support mechanisms that do not contain the same deployment reporting obligations as the modernized mechanisms. The Commission began modernizing its universal service high-cost support mechanisms in 2011 with the USF/ICC Transformation Order (76 FR 76623 (12/08/2011)), which established the Connect America Fund (CAF). In that Order, the Commission required support recipients to offer broadband service in addition to the supported “voice telephony” service. (The Commission requires recipients of CAF Phase II support “to offer broadband service with latency suitable for real-time applications, including Voice over internet Protocol [VoIP], and usage capacity that is reasonably comparable to comparable offerings in urban areas, at rates that are reasonably comparable to rates for comparable offerings in urban areas.”) In the years since, the Commission has established additional mechanisms to support voice- and broadband-capable networks. Recipients of these mechanisms must offer voice telephony at rates that are reasonably comparable to urban rates and must report compliance with their deployment obligations showing where they have built out the required facilities and offer voice and broadband service. They also must provide access to emergency services via 911 and provide E911 capabilities wherever local governments have implemented those systems. No commenters disputed the appropriateness of voice service provided via funding from one of the Commission's modernized high-cost support mechanisms as an adequate replacement for purposes of eligibility for streamlined processing, and we find it reasonable to accept such service as an adequate replacement.

27. Carrier's already available alternative voice service. We find that, where a carrier has already made available its own alternative voice service throughout the affected service area, the service is an adequate replacement for the service being discontinued in that area for purposes of eligibility for streamlined processing if that service has been available for at least the immediately preceding 60 days and the carrier certifies that based on the results of its own internal network testing routinely undertaken to measure performance in rolling out a new product or service, the service offers substantially similar levels of network performance and availability—for example, that it is provisioned over a network with speeds of at least 25/3 Mbps and that it offers mouth-to-ear latency of no more than 200 ms—and permits users generally to receive calls that originate on the public switched telephone network and to terminate calls to the public switched telephone network or any successor network that utilizes numbers issued pursuant to the North American Numbering Plan. We find that these standards better accomplish our goal of encouraging the development of modern communications service offerings than the proposed standards on which we sought comment— i.e., that the replacement service in question must have been available for a minimum time period of the immediately preceding six months throughout the affected service area, and that at least 50 percent of the carrier's total voice service customer base in the affected service area must be subscribed to the alternative voice service (this analysis is not limited to residential subscribers alone, and should include enterprise subscribers.)—without undue delay while still ensuring that consumers have available to them an adequate replacement service. Finally, the service must provide access to 911 and comply fully with our 911 requirements applicable to that service. We require carriers to describe any such replacement service and to certify that it meets these temporal, subscriber percentage, and public safety requirements. As a whole, we find that these requirements adequately balance the need to ensure a service is stable and satisfies the Commission's goal of ensuring that carriers can rapidly transition their resources and investments toward next-generation services. No commenters disputed the appropriateness of such service as an adequate replacement for purposes of eligibility for streamlined processing, and we find it reasonable to accept such service as an adequate replacement.

28. Widely available alternative voice service. We find a widely available alternative voice service offered by a third party that is available in all locations throughout an affected service area and provides access to 911 and complies fully with applicable 911 requirements, to be an adequate replacement for purposes of being eligible for streamlined processing if the carrier certifies that based on publicly available information, the service offers substantially similar levels of network performance and availability and permits users generally to receive calls that originate on the public switched telephone network and to terminate calls to the public switched telephone network or any successor network that utilizes numbers issued pursuant to the North American Numbering Plan. Permitting a discontinuing carrier to rely on the availability of an adequate replacement service offered by a third party to support a technology transitions discontinuance application and to rely on publicly available information to make the requisite showing is consistent with previous Commission action. We find that this flexible approach will minimize burdens on carriers while safeguarding consumers' need for an adequate replacement service.

29. Permitting third-party alternative voice service with access to 911 and substantially similar levels of network performance and availability as the service being discontinued to serve as a replacement service will enable innovative new service offerings, such as low-earth orbit satellite-based services, to qualify as replacement services without requiring the Commission to engage in additional time-consuming rulemaking proceedings and is consistent with both our standards applicable to voice services funded by our modernized high-cost universal service support mechanisms discussed earlier in this section and the standards the Commission previously adopted in connection with the Adequate Replacement Test.

30. We find that the standards we adopt for eligibility of a widely available alternative voice service for streamlined processing obviate NTCA's concerns regarding that the proposed widely adopted alternative voice service category as set forth in the Network and Services Modernization Notice is a “highly detailed and fact-specific view of a particular market/geographic area,” and that such a “fact-specific inquiry is more suited to a waiver proceeding under which the Commission can analyze data brought forth by a petitioning provider as opposed to utilizing a certification that fails to analyze such data across the market in question.” We further find that these standards address the concerns raised by Public Knowledge after release of the public draft of this Order that this replacement service category would not afford sufficient safeguards for consumers and thus might incentivize discontinuing carriers to rely on third-party services for which they do not need to make the showings required when relying on the carrier's own already-available alternative voice service. The standards we adopt today for this alternative service option provide sufficient backstops to provide predictability and protect consumers. Moreover, as we have noted above, our streamlined processing rules still require carriers to notify customers of their applications to discontinue service and provide information regarding replacement service options. Customers with concerns about the adequacy of the purportedly “widely available” alternative service, as well as other interested parties, can file comments or objections to an application for streamlined processing with the Commission, and the Bureau has the discretion to remove the application from streamlined processing for further review, including the ability to request supplemental information from the applicant. We further expressly delegate to the Bureau the authority to remove from streamlined processing an application relying on this category of replacement service if the service has little to no customers. Bureau staff may consider the extent to which the widely available service has been adopted outside the affected service area. We find that these safeguards address commenter concerns raised in the record and obviate the need for staff to conduct such time-consuming reviews of every application filed relying on this category of replacement service.

31. We affirm the Bureau's finding in the Stand-Alone and Single-Service Waiver Order that VoIP need not be offered on a stand-alone basis to be considered an adequate replacement and thus decline to impose such a requirement in the consolidated technology transitions rule we adopt today. (We note that while bundled services that include VoIP may still be considered an adequate replacement, broadband-only service would not qualify under this rule as an acceptable replacement service. Broadband provides fundamentally different functionality from traditional voice telephony, and while it does enable users to engage in activities such as email and messaging, it is not an adequate replacement for voice telephony service for the purposes of our discontinuance rules. With that said, broadband facilities may be used to provision a qualifying voice replacement service.) In doing so, we conclude that the record in this proceeding supports both the Bureau's finding in that Order that the elimination of the stand-alone requirement is warranted due to rapid developments in the communications marketplace since the adoption of the Alternative Options Test and extending that finding to apply to each of the categories of replacement service delineated in the consolidated technology transitions discontinuance rule we adopt today.

32. Since the Commission adopted its Alternative Options Test with its stand-alone requirement, the technologies associated with voice services have improved and the marketplace for voice services, such as interconnected VoIP and mobile voice, has vastly expanded and spurred the creation of new and innovative communications technologies and bundled service offerings that benefit consumers. While interconnected VoIP lines accounted for just 60% of all wireline retail voice service connections in December 2018, that number had already risen to almost 80% by the end of 2024. The number of legacy switched access connections has also dropped precipitously since the adoption of the Alternative Options Test, and the number of fixed broadband connections that support over-the-top interconnected VoIP service has risen from 61 residential fixed broadband connections per 100 households with speeds of at least 25 Mbps/3 Mbps in 2018 to 91 by December 2024.

33. The proliferation of interconnected VoIP providers has “brought advanced communications services to the marketplace to the benefit of consumers,” and ensures that strong competition for IP-based voice service exists in every locality with broadband access. As of December 2023, more than three-quarters of adults in this country had gone fully wireless for their voice service. As the Commission recently noted, “there are many other types of telecommunications offerings, including apps running solely on data networks that are nearly indistinguishable to the consumer from the core communications functionality of the public switched telephone network . . . [that] combine the benefits of voice, video, and text communications into one data-based service,” obviating the need or desire for stand-alone voice service. These rapid changes in the marketplace have granted consumers access to a wide array of voice services with many capabilities, and in response few providers now offer stand-alone interconnected VoIP service. Indeed, as the Commission recently noted, “there are many other types of telecommunications offerings, including apps running solely on data networks that are nearly indistinguishable to the consumer from the core communications functionality of the public switched telephone network . . . [that] combine the benefits of voice, video, and text communications into one data-based service.”

34. We disagree with commenters who contend that consumers must retain access to stand-alone voice service separate from a bundled broadband service simply to obtain and maintain access to voice communications. The fact that technologically advanced VoIP services may only be available in certain areas and from certain providers bundled with broadband, text messaging, or some other service should not preclude it being considered an adequate replacement if the price the consumer would pay for the bundle is comparable to the price the consumer pays for the legacy voice service or is otherwise affordable.

35. We agree with the Bureau that the Commission's findings in the 2024 Communications Marketplace Report about the variety of services now available to consumers obviates the need for stand-alone voice service. We require applicants to provide pricing information so that the Bureau can compare the price of the legacy voice service to post-promotional and non-sale pricing of any bundled options carriers might rely on as a replacement service in order to consider the likelihood of any unreasonable price increases for consumers. When it adopted the Adequate Replacement Test, the Commission required that a technology transitions discontinuance application include, among other things, the information set forth in § 63.505. Among other things, § 63.505 requires that a discontinuance application include the “difference, if any, between present charges to the public and charges for the service to be substituted.” We conclude that maintaining the requirement to provide this information will ensure that Bureau staff have this important information when evaluating such applications.

36. Carriers are still required under our streamlined processing rules to notify their customers of their applications to discontinue service and provide information regarding replacement service options and the customers' ability to object to the proposed discontinuance, and we note that this broad requirement encompasses particular demographics raised in the record, such as customers in rural areas or older customers. While an application may be eligible for streamlined treatment under the rule we adopt today by the applicant demonstrating the availability of its own or another voice service throughout the affected area that may only be available on a bundled basis, customers with concerns about the adequacy or affordability of a replacement service, as well as other interested parties, may file comments or objections to that carrier's discontinuance application with the Commission. (More generally, when evaluating discontinuance applications, the Bureau will continue to evaluate the cost of alternative services in a manner appropriate to the circumstances, and we therefore need not go further in adopting specific requirements governing pricing or pricing information as some have proposed.)

37. The Commission's standards for processing streamlined and non-streamlined applications for discontinuance continue to apply regardless of whether the replacement service is available on a stand-alone or bundled basis. If the Bureau has concerns regarding whether it is in the public interest to grant a particular request to discontinue service, it can remove that application from streamlined processing and engage in a further review, which may include looking at whether bundled services that include interconnected VoIP could result in raised consumer prices or reduced voice service quality. With the added safeguard of the requirement that an application disclose pricing differential information, we thus reject AARP's request and affirm the finding in the Stand-Alone and Single-Service Waiver Order that interconnected VoIP need not be offered on a stand-alone basis to be considered an adequate replacement.

38. We find that the rules we adopt today are sufficient to safeguard access to emergency services. In the record, several commenters urged the Commission to take steps to ensure that any revisions to our discontinuance rules not reduce or otherwise impair access to 911 service to any part of the affected community. We agree with these commenters that modernizing our discontinuance rules cannot come at the expense of legitimate safety concerns and that consumers must be able to rely on swift and accurate access to emergency services. We add certain safeguards for discontinuances related to trunk lines, 911 TDM circuits, TDM private line circuits, and transport services that provide 911 connectivity as one way to address this concern, as explained below. Providers of voice service remain subject to our 911 and outage reporting requirements, and it is our expectation that the speedy implementation of NG911 will greatly improve the success, reliability, and accessibility of 911. At the same time, we must facilitate the transition away from deteriorating, outdated networks that could ultimately jeopardize access to emergency services.

39. While some commenters are concerned that replacing plain old telephone service (POTS) provided over copper lines with IP-based service over fiber, wireless, or satellite networks could jeopardize communications during emergencies, the experiences of rural commenters demonstrate that such concerns, while certainly well intentioned, may be misplaced. Deteriorating copper is more susceptible to adverse weather events than fiber and requires more time to restore than alternative services like mobile wireless. And alternative voice services can still work during outages or emergencies. For example, mobile wireless services are designed to work during cellular network outages through built-in redundancies such as cellular failover and satellite connectivity. Additionally, interconnected VoIP service will continue to work during a power outage if internet service is operational and the end user maintains a backup power supply. And despite commenter arguments that phone service provisioned over copper lines always works during a power outage, this is not true. Utility poles that carry copper can and do go down during severe weather events and natural disasters, cutting off both service and power to residents and businesses, while not all alternative services are vulnerable to the same type of disruption.

40. As we clear the way for providers to replace legacy networks and services with modern technologies, we expect that the technology transitions expedited by today's Order will speed the availability of advanced internet-based accessibility solutions. With regard to telecommunications relay services (TRS) specifically, the Commission has recently initiated proceedings to modernize TRS to ensure that those services remain effective, accessible, and sustainable for the individuals who use them. We believe that the Commission's comprehensive review in that proceeding is the appropriate avenue to address the needs of relay users in the transition to internet-based alternatives from analog relay services. Significantly, carriers remain obligated to comply with all accessibility requirements applicable to the services they offer and provide, and Bureau staff may remove applications from streamlined processing, if necessary, to review any concerns regarding the accessibility of the proffered replacement service. We thus decline to adopt an accessibility-specific requirement as part of the service discontinuance review under Section 214 in this Order.

41. In their comments, the Accessibility Organizations argue that “any replacement test the FCC adopts should require carriers to explain, with specific examples, how at least one replacement service offered permits [individuals who are deaf, deafblind, hard-of-hearing, or who have speech disabilities] to access TRS and effectively engage in other telephone communications.”

42. In the TRS Modernization Notice (91 FR 104 (01/02/2026) adopted in November 2025, the Commission, in light of technological advances and declining use of analog relay services, sought to ensure that “relay services remain effective, accessible, and sustainable for individuals who are deaf, hard of hearing, deafblind, or have speech disabilities, by proposing a series of reforms to transition users to internet-based alternatives.” We agree with Hamilton Relay that the TRS Modernization proceeding—which focuses on reforms designed to ensure that relay services remain effective, accessible, and sustainable as technology advances and networks transition—is the best venue in which to address any TRS issues related to technology transitions. However, we find that expanding IP-based services through streamlined technology transitions will work hand-in-hand with the TRS Modernization proceeding to ensure that no individuals who are deaf, deafblind, deafdisabled, hard of hearing, or who have speech disabilities are left without access to services that are functionally equivalent to those provided to voice telephony users. (As Chairman Carr noted when the Commission adopted the IP TRS Modernization Notice, “this action supports our broader effort to encourage the IP transition. As we make the transition, we are mindful of consumer protection provisions and necessary updates to them like those we propose today.”) Concerns regarding the accessibility features of the five categories of replacement services contained in the consolidated technology transitions discontinuance rule we adopt today should be addressed in that proceeding.

43. Technology transition definition. In the Network and Services Modernization Notice, we sought comment on whether we should retain the definition of “technology transition” in § 64.60(i) of our rules or whether we should adopt a different definition. Section 64.60(i) currently defines a “technology transition” as “any change in service that would result in the replacement of a wireline TDM-based voice service with a service using a different technology or medium for transmission to the end user, whether internet Protocol (IP), wireless, or another type . . . .” We received no comments on this proposal. Because we still consider the existing language to be an accurate and comprehensive definition of the term “technology transition” for purposes of our discontinuance rules, we retain it at this time.

44. Edge cases requiring additional time. We recognize that there are some instances—as in the case of isolated rural facilities, critical access hospitals, or customers with unique accessibility issues—in which discontinuances may require more time than is provided for by our streamlined processing to avoid stranding consumers without access to voice services. Carriers seeking to avail themselves of our streamlined processing rules for a technology transitions discontinuance are required to notify customers of their plan to discontinue a service and must show the availability of at least one of the replacement services enumerated above. Any customers with concerns, as well as other interested parties, can file comments or objections to specific applications with the Commission. Should the Bureau have any concerns about whether it is in the public interest to grant a particular request to discontinue service, it will remove the application from streamlined processing for further review, thus mitigating the risk that customers will be left without voice services in the wake of a discontinuance. In cases where a party submits plausible objections to a specific discontinuance application based on critical access needs, the Bureau may determine that it is appropriate to remove the application from streamlined processing so that it may work with the discontinuing carrier to ensure that no at-risk customers are left stranded.

45. To ensure that this process operates as intended, we direct the Wireline Competition Bureau to (1) create a master docket number for consumer Section 214 discontinuance objections or comments, (2) work with the Office of the Managing Director to make any necessary changes to the Electronic Comment Filing System to accommodate such consumer objections, and (3) release a Public Notice announcing the opening of the master docket and providing instructions for discontinuing carriers. Additionally, we require carriers seeking Commission authorization for a technology transitions discontinuance application to include in their notice to customers of such planned discontinuances specific information as to how a customer who wants to object to a specific proposed discontinuance of service will be able to do so, including but not limited to providing the master docket number for such objections and the web page(s) identified by the Bureau for further guidance and resources to file an objection or comment.

46. Consumer outreach and education. We decline to adopt any specific consumer outreach and education requirements in connection with the discontinuance rules we adopt today. While some commenters assert that comprehensive consumer outreach and education are essential to minimizing the potential for consumer harm during any technology transition, we find, consistent with prior Commission action in this regard, that any such requirements would be unduly burdensome in light of current marketplace incentives for carriers to provide customers with timely and necessary information regarding replacement voice services when those carriers seek to cease offering legacy TDM voice service. As noted previously, the Commission also puts discontinuance applications on public notice, which triggers the discontinuance review process and gives affected customers and other interested parties an opportunity to comment on or object to an application. If customers facing a discontinuance of their legacy voice service do not believe they have sufficient data regarding a replacement service from a carrier seeking Commission approval to discontinue a legacy voice service, they can raise these objections with the Commission and ask the Commission to remove the application from streamlined processing for further review.

47. There are strong marketplace incentives for providers to communicate with and educate customers regarding replacement services related to their technology transitions. As the Commission has previously found, competition among carriers and differing technologies encourages carriers to communicate with customers to retain them and remain competitive. Carriers' ongoing customer relationship experience best positions them to understand and implement effective customer education and communication strategies. Our existing rules ensure that carriers make available necessary information to consumers regarding replacement voice services when those carriers seek to discontinue legacy voice services. We thus decline to adopt specific consumer outreach and education requirements in connection with the discontinuance rules we adopt today, requirements that would be redundant in light of our existing regulatory framework and notice requirements.

48. Additional commenter proposals. We decline to adopt USTelecom's proposal that we begin the 31-day period before streamlined applications are automatically granted when the provider submits its application to the Bureau, instead of the date the Bureau issues a Public Notice of the proposed discontinuance. While existing customers who would potentially be affected by a discontinuance will have received notice no later than when the carrier files its application, other interested parties in an affected area are only made aware of the discontinuance application and given time to comment after the Bureau releases a Public Notice of the discontinuance application. The process also enables the Bureau to confirm that an application is complete before letting the “clock” begin for a streamlined approval, consistent with Section 214(a)'s mandate that the Commission consider whether a discontinuance will adversely affect the future public convenience and necessity. This benefit outweighs any short potential delays experienced by providers as a result of this requirement. We note Bureau staff's diligence in releasing Public Notices once applications are posted to the Commission's Electronic Comment Filing System (ECFS) and their speed in processing applications once they are complete. However, to ensure that application processing is not unreasonably delayed, we direct the Bureau to release a Public Notice of a complete discontinuance application filing as soon as practicable but not later than ten business days of when the application is posted to the Commission's ECFS or, if the application is not complete, to communicate deficiencies in the application to the applicant within that timeframe.

49. We also decline to adopt USTelecom's proposal that we establish specific restrictions governing when the Commission can remove discontinuance applications from streamlined processing, and a timeline for the Bureau to act on an application after removing it from streamlined processing. In light of the above-discussed changes consolidating the applicable tests for technology transitions discontinuances and expanding the range of applications eligible for a 31-day streamlined review, it is not necessary to adopt additional rules restricting the Bureau's application review or creating additional time periods for objections and responses. USTelecom does not point to specific applications that have previously been subject to unnecessary discretionary delay under the current rules. Indeed, over the last five years, Bureau staff have removed only 11 discontinuance applications from streamlined processing, nine of which were in 2025 and were the result of a shutdown of certain agency operations due to a lapse in federal appropriations. In all 11 instances, staff released Public Notices granting all of those applications 51 days after such removal. And we believe that the rule changes we adopt today will make delay even less likely, because this Order broadens and clarifies the circumstances in which an alternative service is to be considered an adequate replacement for the service being discontinued. The Commission therefore maintains the necessary flexibility to address proposed discontinuances that would otherwise result in the loss of service altogether, while the treatment of discontinuances that include an adequate replacement for customers is clarified and expedited.

50. We revise our rules to grant blanket Section 214(a) authority for carriers to grandfather the following services to the extent they come within the purview of Section 214(a): (1) any legacy voice service; (2) any lower-speed data telecommunications service; and (3) any interconnected VoIP service provisioned over copper wire. We define low-speed data telecommunications services as those operating at speeds below 25/3 Mbps while we consider forbearance from the incumbent LEC-specific interconnection and related obligations as proposed in the IP Interconnection Notice, after which we will revisit this definition. (This definition is consistent with § 63.71(k) and l) of our current rules.) This blanket grant of authority eliminates the need for carriers to file a Section 214(a) application when grandfathering these services, allowing carriers to focus their resources on the development and deployment of next-generation networks while still providing service to current customers.

51. In the Network and Services Modernization Notice, we proposed to codify the relief granted in the Bureau's March 2025 Grandfathering Order and May 2025 Grandfathering and Technical Appendix Order. In the March 2025 Grandfathering Order, the Bureau granted Section 214(a) authority for carriers to grandfather any legacy voice or telecommunications data service covered by § 63.71(k) and (1) of the Commission's rules and waived the requirement that carriers file a Section 214(a) application seeking Commission authorization in that instance. The May 2025 Grandfathering and Technical Appendix Order extended the relief granted in the March 2025 Grandfathering Order to interconnected VoIP service provisioned over copper lines. The Bureau determined in both Orders that granting blanket Section 214(a) authority was warranted due to developments in communications technologies that allow consumers to be less dependent on these legacy services.

52. We agree with commenters that eliminating unnecessary grandfathering requirements reduces carriers' burdens while not affecting existing subscribers, as current customers are entitled to keep the grandfathered service. A carrier still must file a discontinuance application seeking authority to permanently discontinue one of these services, and affected customers will be notified of the planned discontinuance and have the opportunity to comment. In the March 2025 Grandfathering Order, the Bureau noted that “carriers grandfathering these services will necessarily need to communicate to customers the grandfathering status of their service beforehand.” (Indeed, to the extent that an incumbent LEC has already retired its copper facilities before grandfathering or seeking to permanently discontinue any of the services covered by our actions today, it will have already engaged with its customers.) We take the next step and require that carriers continue to notify current customers before grandfathering a service, including TDM-based transport services and services reliant on TDM-based trunk lines, 911 TDM circuits, and TDM private line circuits, which shall include (1) a “no earlier than” date, by which it intends to seek to permanently discontinue the service, and (2) a statement regarding alternative services available in the affected service area.

53. We retain a notification requirement because this relatively low burden on carriers will help ensure that customers learn as soon as possible that their service is likely to be discontinued at some point in the future, so they can make informed decisions about what services to purchase even before a discontinuance is imminent. And any customers that still subscribe to the grandfathered service when the carrier later seeks permanent discontinuance authority will have the ability to object and ask to have the application removed from streamlined processing. These requirements alleviate concerns raised in the record that eliminating the need to file grandfathering applications in the above scenarios will allow carriers to eliminate services without any notice.

54. We define “lower-speed” data telecommunications service for purposes of this blanket grant of authority consistent with our existing grandfathering rules— i.e., encompassing the data telecommunications services currently subject to § 63.71(k) and (l) of our rules. We proposed in the Network and Services Modernization Notice to define lower-speed data telecommunications service as a data telecommunications service operating at speeds below 25/3 Mbps. When the Commission adopted § 63.71(k), which allows streamlined treatment of applications to grandfather low-speed services, it defined that term as those operating at speeds below 1.544 Mbps. The Commission accounted for rising network speeds in the Second Wireline Infrastructure Order (83 FR 31659 (07/09/2018)) by extending the streamlined treatment of grandfathering applications to services operating at speeds below 25/3 Mbps if replaced with services operating at 25/3 Mbps or higher.

55. In connection with our proposed definition, we sought comment on whether we should define lower-speed service as services operating below 45 Mbps symmetrical “given the rapidly increasing bandwidths of networks today.” As discussed below, we agree with commenters' concerns regarding potential unintended impacts, particularly for emergency services, if we raise the speed threshold for blanket grandfathering authority too soon. We thus find it appropriate to defer consideration of such action until after the Commission acts on the proposed forbearance from the incumbent LEC-specific interconnection and related obligations. Defining lower-speed data telecommunications service as those services operating under 25/3 Mbps strikes the appropriate balance between acknowledging the increased bandwidth capabilities of modern networks and minimizing any unintended impacts on emergency services.

56. Finally, we decline to extend the scope of the blanket grandfathering authority we grant today to all interconnected VoIP services, regardless of transmission medium. While we agree with USTelecom that many consumers use interconnected VoIP lines provisioned over a variety of transmission mediums, we limit the blanket Section 214(a) authority we grant today to interconnected VoIP services provisioned over copper lines to promote the ongoing transition from legacy and copper-based networks to IP networks. Many consumers use interconnected VoIP service as a replacement service and have expectations about its availability, and we continue to find that the Section 214(a) discontinuance requirements applicable to grandfathering for the majority of interconnected VoIP services is an important safeguard. (Interconnected VoIP lines accounted for 79% of all retail voice service connections by June of 2024, the last time the Commission reported such data.)

57. As part of the rules we adopt today, we require carriers seeking authority to discontinue a service supporting interconnection trunks or the exchange of traffic, including but not limited to 911 trunks and 911 traffic— e.g., a discontinuance resulting from the decommissioning of one or more trunk lines, TDM lines directly connected to 911 selective routers, dedicated 911 TDM circuits, or TDM private line circuits, or the discontinuance of a TDM-based transport service—to specifically identify the service to be discontinued, not just the branded name of the service being discontinued. Carriers must also include in such discontinuance applications, in addition to the information required by §§ 63.500 and 63.501, (1) a statement that at least 90 days prior to the planned discontinuance filing, the carrier provided a designated point of contact with authority to facilitate the orderly transition from legacy facilities that support 911 to the 911 Authorities, 911 service providers as defined above, and directly interconnecting local exchange service providers that support essential functions within 911 networks, including delivering 911 traffic to selective routers for transmission to public safety answering points (PSAPs) in the affected service area for coordination of the transition to ensure continued 911 connectivity, and (2) a list of providers that received notice as described above in the affected service area with which the carrier has coordinated and the date(s) of that coordination. (We note that because our rules require carriers to send copies of their discontinuance applications to state public utility commissions, we do not need to amend our rules to include such notice, as proposed by certain commenters.)

58. We expect the carrier's designated point of contact for facilitating the orderly transition to know whether to file either an application to dismantle or remove trunk lines, or an application to sever physical connections or to terminate or suspend interchange of traffic with another carrier. We find that a pre-filing notice and coordination period of at least 90 days is sufficient and decline to adopt either a shorter or longer period. We similarly decline to adopt Intrado's request that we do not streamline discontinuance authorization requests “to dismantle circuits that carry 9-1-1 traffic” or to adopt a presumption that initial extension requests of up to 90 days should be presumed reasonable “if the circuit customer certifies to the circuit provider that the circuit in question is carrying live 9-1-1 traffic and there is no alternative available within the time frame of the notice.” Rather, we expect the parties to work cooperatively during this pre-filing coordination period, including the granting of good faith requests from 911 service providers for reasonable extensions upon a showing of both continued live 911 traffic over the affected facilities and the lack of an alternative available within the timeframe of the planned discontinuance, to ensure that 911 continuity is not disrupted.

59. To comply with this certification requirement, we expect that carriers and service providers will engage in a planned and managed process for the orderly shutdown or reduction of services to customers, including 911 Authorities handling live traffic, while ensuring compliance with regulatory requirements and a smooth transition to alternative providers. (The discontinuing carrier is responsible in the first instance to ensure it is complying with the proper discontinuance application requirements and that it is taking the steps necessary to fulfil its role in a managed and orderly shutdown of service. Where a carrier falls short in any of those respects, the Bureau is empowered to more closely scrutinize, remove from streamlining, or condition future discontinuance requests by that carrier. Given this, we are not persuaded of the need to go further to ensure that discontinuing carriers, like 911 authorities and other service providers, do their part to ensure a smooth and orderly transition process, as some suggest.) While we agree with USTelecom that “an email account for a centralized team ( e.g., “ publicsafety@provider.com ”) that is available to address any customer concerns if a vendor learns from a PSAP that a circuit is being disconnected is sufficient for purposes of this requirement,” we expect that inquiries sent to that account would be timely addressed by a person with decision-making authority to ensure a timely, good faith response to such communications. We believe this modification, in conjunction with the existing requirement that an application to sever a physical connection or terminate or suspend the interchange of traffic with another carrier include a “statement as to whether severance of physical connection or termination or suspension of interchange of traffic is being made with consent of other carrier,” strikes the correct balance to promote the Commission's goals of encouraging the development and deployment of advanced, next-generation networks and services and supporting the parallel adoption of NG911 emergency services networks, while ensuring seamless 911 connectivity.

60. We decline Bandwidth's proposals to include an explicit requirement that carriers “perform pre-filing diligence to determine whether an application under rule 63.500 or 63.501 is required” and to require a discontinuing carrier to include in all other discontinuance applications that the discontinuance will not impact 911. We find that the coordination requirement we adopt today, together with our short-term network change and copper retirement disclosure requirements and the certification requirement for all discontinuance applications, is transparent and sufficient to ensure that carriers seeking to discontinue a service supporting interconnection trunks or the exchange of traffic, including but not limited to 911 trunks and 911 traffic, will engage in the requisite coordination and comply with all applicable discontinuance application content requirements. We also find that the guardrails we adopt today obviate the concerns raised by Allerium regarding the service quality of available replacement services.

61. While we find that forbearance relief is not appropriate for lower-speed data telecommunications services as defined in this Order, we decline to adopt NTCA's proposal to specifically disallow the discontinuance of DS1 and DS3 circuits “absent a showing by the provider . . . that the carrier has an alternative IP offering available for the same route pathway as the discontinued service on reasonable rates, terms, and conditions.” NTCA contends that many of its members rely in part on DS1 and DS3 connections provided by larger providers for the exchange of voice traffic through subtended tandems, and that price cap carriers have been increasing pricing on these transmission circuits. It further asserts that in some instances, price cap carriers suggested discontinuance altogether despite the purported lack of meaningful alternative facilities or services, whether in IP or TDM.

62. We agree with NTCA that these circuits are critical infrastructure for many rural providers and that price cap carriers' ability to discontinue DS1s and DS3s without adequate replacement services could harm rural communities. However, our rules already require that carriers obtain Commission authorization before dismantling or removing a trunk line or severing a physical connection or terminating or suspending the interchange of traffic with another carrier, and the availability of an adequate replacement service is already factored into Bureau staff's consideration of whether to grant discontinuance authorization. (In evaluating whether “the public convenience and necessity is otherwise adversely affected” by the discontinuance, the Commission has long considered: (1) the financial impact on the common carrier of continuing to provide the service; (2) the need for the service in general; (3) the need for the particular facilities in question; (4) increased charges for alternative services; and (5) the existence, availability, and adequacy of alternatives.) We find that any further requirements relating to such situations are more appropriately addressed in our IP Interconnection proceeding in which we will examine the regulatory framework for TDM and IP interconnection for voice services. In the interim, incumbent LECs remain obligated to provide direct notice to interconnected telephone exchange service providers, 911 service providers, and directly interconnecting local exchange service providers that support essential functions within 911 networks, of planned network changes and copper retirements, and to obtain Commission authorization should any planned network change or copper retirement result in a discontinuance of service, including complying with the pre-application filing coordination requirement we adopt today. The additional requirements we adopt here for discontinuances involving dismantling or removing a trunk line or severing a physical connection or terminating or suspending the interchange of traffic with another carrier ensure collaboration between the respective parties and provide safeguards to avoid unintended disruptions of 911 connectivity. And wholesale customers that use circuits for 911 purposes may request priority designation from their wholesale provider so that the circuits are identified as 911 circuits.

63. Finally, as discussed further below, we retain at this time our rules setting forth the content requirements for applications seeking to dismantle or remove a trunk line, to sever physical connections, or to terminate or suspend interchange of traffic with another carrier. We find that these backstops should be sufficient to address 911 service provider concerns. Regardless, the Commission can deny individual applications to discontinue TDM services if the backstops prove insufficient and discontinuance would adversely affect the public convenience or necessity.

64. We grant forbearance relief to resellers “for resold services that are the subject of a technology transition discontinuance by the reseller's wholesale provider,” conditioned on appropriate notice to customers. However, we do not grant broader forbearance relief from any Section 214(a) discontinuance requirements or associated regulations at this time. Based on the record in this proceeding, we conclude that the conditions for granting forbearance relief from discontinuance requirements beyond that described above do not exist at this time. Rather, the subject of broader forbearance relief is more appropriately addressed after any forbearance from the incumbent LEC-specific interconnection and related obligations as proposed in the October 2025 IP Interconnection Notice of Proposed Rulemaking.

65. In this Order, we determine that it is appropriate to forbear from all Section 214(a) discontinuance requirements for resellers discontinuing resold services where the reseller's wholesale provider is engaging in a technology transitions discontinuance, with the condition that the discontinuing resellers provide reasonable notice to their customers. We sought comment on such forbearance relief in the Network and Services Modernization Notice, and no commenters objected to this relief.

66. Ensuring practices are just and reasonable (Section 10(a)(1)). We find that enforcement of Section 214(a)'s discontinuance requirements, as well as the requirements of the Commission's implementing rules, where a resold service is being discontinued as a result of the wholesale provider's technology transitions discontinuance is not necessary to ensure that the charges, practices, classifications, or regulations by, for, or in connection with that carrier or service are just and reasonable and are not unjustly or unreasonably discriminatory. We agree with INCOMPAS that “[a] review of the consequences of the reseller's `charges, practices, classifications, or regulations by, for, or in connection with' those services is an empty formalism.” In these situations, the discontinuance is due to circumstances beyond the reseller's control. Moreover, the discontinuance of the resold service at issue will be subject to Commission consideration in the context of the wholesale provider's technology transitions discontinuance application, including consideration of any objections filed in response to such application. Thus, there is no need to engage in a redundant review when the reseller then seeks to discontinue the resold service.

67. Protection of consumers (Section 10(a)(2)). We also find that enforcement of Section 214(a)'s requirements, as well as the requirements of the Commission's implementing rules, is not necessary in this context to protect consumers. When a wholesale provider discontinues a legacy voice service, the reseller in nearly all cases has no available alternative sources from which to obtain replacement TDM-based services to resell to its end-user customers. The only requirement needed to ensure that consumers are protected in such situations is notice from the reseller to its customers. We thus impose on any reseller availing itself of this forbearance relief the condition that it provide such notice to its affected customers as soon as practicable after the reseller receives notice from its wholesale provider of the planned technology transitions discontinuance that it will no longer be able to provide the relevant legacy voice service. Such notice is to be provided to customers as soon as practicable via any method for which the customer has previously provided express, verifiable approval, and it must set forth the following: (1) the name and address of the carrier; (2) the date of the planned service discontinuance; (3) the points of geographic areas of service affected; (4) a brief description of type of service affected; and (5) a statement regarding the availability of alternative services in the affected service area. We find that this condition will sufficiently protect consumers when a reseller discontinues a resold service because it will no longer be available from the wholesale provider.

68. Consistent with the public interest (Section 10(a)(3)). Finally, we hold that forbearance from applying the discontinuance requirements in the circumstances described above is consistent with the public interest. The discontinuance of the resold service at issue will be subject to Commission consideration in the context of the wholesale provider's technology transitions discontinuance application, and the Commission will not grant that underlying discontinuance application if the discontinuance would adversely impact the public interest, including with respect to the provision of 911 service. Moreover, forbearance in this limited situation is consistent with the public interest because it will conserve carrier resources that might otherwise be spent on regulatory compliance, and we expect carriers to make those resources available for better bundling of services, better tailoring of packages to businesses and consumers, and by providing support to customers. This could include managing first-level technical support, billing, and customer service, and acting as the primary contact for customers, and offering value-added services, including specialized expertise, customized solutions, and bundled IT services.

69. We find that broader forbearance from discontinuance requirements, whether limited to legacy voice service in specific instances or with respect to all applications to discontinue any type of service, without qualification, is not warranted at this time. The streamlined approach we adopt above speeds transitions where acceptable marketplace alternatives exist. Broader forbearance risks unintended disruptions to public safety and the proper operation of, among other things, security and medical monitoring services, and thus is not consistent with the public interest.

70. Ensuring practices are just and reasonable (Section 10(a)(1)). We conclude that the requirements of Sections 214(a) of the Act and 63.71 of our rules are still necessary at this time to ensure that charges, practices, classifications, or regulations are just and reasonable and are not unjustly or unreasonably discriminatory. Areas still exist in this country where, despite the broad scope of wireless and satellite service offerings, no alternative services exist. The record reflects concerns regarding price increases, whether real or potential, that could negatively impact customers. The filing of discontinuance applications allows the Commission and all stakeholders to receive notice and review in real time service transitions as carriers plan them.

71. Ensuring protection of consumers (Section 10(a)(2)). We find that enforcement of the requirements at issue are necessary for the protection of consumers. As illustrated in the record, locations exist where fiber has not yet been deployed and where wireless service may not reach or be sufficiently robust to support reliable voice service. By retaining the requirement that a carrier must seek Commission authorization to discontinue the service at issue, we ensure that customers and other interested parties, including state regulators, will have the opportunity to raise such concerns in objections to the discontinuance application, thereby allowing the Commission to more fully examine the merits of such claims and work with carriers to ensure that no consumers lose access to vital communications capabilities. This concern applies with equal force to the type of conditional forbearance proposed by USTelecom and supported by the Ohio Telecom Association and the Texas Association of Business.

72. Consistent with the public interest (Section 10(a)(3)). In the Network and Services Modernization Notice, we proposed that forbearance in certain circumstances would “promote competitive market conditions by eliminating superfluous regulations that slow the transition to next-generation IP-based services and by enabling carriers to redirect resources away from legacy voice services—which are no longer competitive and are not in high demand—and toward maintaining and building out the next-generation IP-based services that consumers not only desire but have come to expect.”

73. Based on the record, we do not adopt this proposal and determine that forbearance from Section 214(a) discontinuance requirements as a general matter is not consistent with the public interest at this time. Without the backstop of customer objections and Commission review of an application and those objections, the Commission would not be able to confirm the availability of an adequate replacement service for the affected customers, including in instances where a provider may be relying on “not-yet-deployed technologies,” particularly in less economically attractive locations. Moreover, we find that forbearance from Section 214(a) discontinuance requirements would remove the safeguard of the objection process that might reveal the potential for unintended impacts on, among other things, continued 911 connectivity. Our streamlined application of Section 214(a)'s requirements with less burdensome non-dominant procedures in place is predictable and functions as a backstop that allows the Commission to promote competitive market conditions.

74. We also specifically find that granting forbearance relief from the Section 214 requirements for discontinuance of lower-speed data telecommunications services is not in the public interest because of potential impacts on, among other things, the provision of 911 service.

75. We adopt our proposal to revise § 63.71 of our rules to extend the 31-day automatic grant period applicable to applications to discontinue a service for which a carrier is non-dominant to all instances in which a domestic carrier submits a request to discontinue a service, along with the corresponding 15-day objection period. Section 63.71(f)(1) of the Commission's rules allows a discontinuance application filed by a domestic, non-dominant carrier to be automatically granted on the 31st day after it is filed with the Commission, unless the Commission notifies the applicant otherwise. (An application is deemed filed on the date the Commission releases a Public Notice of the filing. The 31-day period thus only begins to run once the Commission releases the Public Notice of the filing of the discontinuance application.) If a carrier is dominant, however, the current automatic grant period is 60 days after filing. (The Commission first established the dominant/non-dominant distinction in 1980 to “reduce barriers to entry” caused by dominant carriers' “substantial opportunity and incentive to subsidize the rates for [their] more competitive services with revenues obtained from [their] monopoly or near-monopoly services.”) Expanding the applicability of the 31-day automatic grant period to include dominant carrier discontinuance applications will speed up the processing of those applications and further the critical goal of transitioning to modern networks for all consumers. And because the Commission retains the authority to remove applications from streamlined processing, the public interest will still be protected as required by Section 214(a).

76. We conclude that 31 days is sufficient time for the Commission to determine whether to remove a dominant carrier's discontinuance application from streamlined processing or to allow automatic grant of the discontinuance. Some commenters suggest that the 31-day auto-grant period, which provides a 15-day window for customers and other interested parties to file objections, is not enough time for consumers to learn about adequate replacements and ensure there are no unintended consequences of the discontinuance, such as loss of 911 services. However, 31 days has proven to be sufficient for the public to review recent non-dominant carrier applications, including technology transitions discontinuance applications, and assess any changes or disruptions that may occur due to the discontinuance. (AICC asks the Commission to “ensure that any streamlining measures preserve adequate time for public safety evaluation and stakeholder response.”) And since 2013, the Commission has received, on average, only 12 dominant carrier discontinuance applications each year, with objections filed with respect to only approximately 10 percent of those applications and only three being removed from streamlined processing and subsequently granted.

77. We thus determine that 31 days will be sufficient time to review dominant carriers' applications as well. Additionally, the Commission retains discretion to remove an application from streamlined processing at any point during the 31-day period should the discontinuance raise concerns. This notice requirement and the backstop retained by the Commission ensure adequate review of applications by dominant carriers as the public and carriers are notified of the discontinuance application and have the ability to raise concerns about applications with the Commission before the automatic grant.

78. We decline to adopt USTelecom's request to amend § 63.71(f)(1) to allow the automatic grant period to begin to run upon the carrier's filing of an application rather than after the Commission releases the Public Notice. Without the Public Notice, affected customers and other interested parties, such as state regulators, public safety organizations, and public interest groups, would not be able to submit objections in the docket ultimately assigned to the relevant application, thus delaying staff's receipt of those objections. This would have the effect of reducing the amount of time available to Bureau staff to review an application for completeness or to determine, as required by statute, whether the application raises concerns regarding the potential impact of the requested discontinuance authorization on the public interest, regardless of whether it receives objections. We find such a potential effect to be unacceptable. However, as discussed above, we direct the Bureau, within ten business days of posting of an application in ECFS, to either contact the applicant to identify deficiencies and request any additional information necessary to make the application complete or to issue a Public Notice of filing of the complete application to ensure timely processing that will support our modernization efforts.

79. We disagree with Bandwidth's assertion that § 63.71 and its automatic grant provisions apply only to retail, loop-side services and not to trunk-side services. In support of its assertion, Bandwidth points to §§ 63.500 and 63.501 as the purportedly governing provisions for such services. However, those provisions simply set forth the content requirements for the formal applications required for the specified types of discontinuances. The discontinuance application procedures, on the other hand, are set forth in § 63.71, and those procedures apply to all formal discontinuance applications other than emergency discontinuance applications, which are specifically covered by § 63.63.

80. We revise § 63.71(c) of our rules to consolidate the following content requirements applicable to all discontinuance applications, unless otherwise provided for or otherwise stated herein (for example, the contents of emergency discontinuance applications are set forth in § 63.63, and applications to dismantle or remove a trunk line or to sever physical connection or to terminate or suspend interchange of traffic with another carrier must comply with §§ 63.500 and 63.501, respectively, of our rules), to ensure that Bureau staff have sufficient information before them when evaluating discontinuance applications: (1) for technology transitions discontinuance applications only, the difference in price, if any, between the service being discontinued and replacement services available in the affected service area; (2) for technology transitions discontinuance applications only, description of the affected community or part of a community, including the population size and demographics and general characteristics of customers affected; (3) description of replacement services, whether available from the applicant or third parties, that would remain in the affected community or part of the community in the event the application is granted, including the name of any other carrier(s) providing replacement services to the affected community; and (4) statement of the factors otherwise showing that neither the present nor future public convenience and necessity would be adversely affected by the granting of the applications. (These content requirements are in addition to those we adopt elsewhere in this Order.) And carriers will be required to include in their discontinuance applications a certification, executed by an officer or other authorized representative of the applicant, that the information required by our rules is true and accurate. Our current rules already explicitly require this information for technology transitions discontinuance applications. We conclude that this information is necessary for evaluating all discontinuance applications, particularly in this rapidly changing technological environment.

81. As discussed above, pricing differentials between services being discontinued and available replacement services is important for evaluating the affordability of the replacement service. And information regarding the affected community, a description of the replacement services that would remain available, and other information relevant to the determination of whether the discontinuance would not adversely affect the public convenience and necessity, the statutory standard, are also important to staff evaluation of discontinuance applications. Our rules already require that specific types of discontinuance applications, including technology transitions discontinuance applications, include this information. In conjunction with our elimination of § 63.602, which currently sets forth the content requirements for technology transitions discontinuance applications, including the elements of the Adequate Replacement Test, we incorporate these existing requirements for technology transitions discontinuance applications in § 63.71. (Because we are eliminating this provision, we are revising the cross-references to it in § 63.19(a) and (b).) And the content requirements of §§ 63.500, 63.501, and 63.505 remain unchanged. For other types of discontinuances that do not fall within any of these categories, we do not expressly require pricing differential and affected community information. (We note that applications to discontinue a business data service that supports interconnection trunks or the exchange of traffic remain subject to the content requirements set forth in §§ 63.500 and 63.501.) However, in this rapidly changing communications environment, we do extend the requirement that applications to discontinue such services— i.e., not involving “technology transitions” and not covered by §§ 63.500, 63.501, and 63.505—include a description of the replacement services that would remain available, other information relevant to the determination of whether the discontinuance would not adversely affect the public convenience and necessity, the statutory standard, and the certification described in the preceding paragraph. (For example, a competitive LEC application to discontinue a legacy voice service in a service area where that legacy voice service is still available from the incumbent LEC does not qualify as a technology transitions discontinuance and thus need not comply with the requirements specific to that category of discontinuances. However, competitive LEC applications seeking discontinuance authorization for a legacy voice service still must demonstrate the existence of an adequate replacement service, which in this case would include the legacy voice service available from the incumbent LEC.) As the Commission has repeatedly noted, the adequacy and availability of replacement services is one of the traditional five factors the Commission considers when determining whether discontinuance of a service to a community or part of a community would adversely affect the current or future public convenience and necessity. Expressly requiring this information will minimize the need for Bureau staff to request from the applicant additional information necessary for their evaluation of applications to discontinue those services, thus making the process more efficient and predictable and, combined with the overall regulatory relief we grant today, should not result in burdensome filing requirements that delay service transitions for consumers. (§ 63.71 requires applicants to provide “[a]ny other information the Commission may require.” Many carriers already provide the types of information required by our revised requirements in their discontinuance applications in order to paint a fuller picture for Bureau staff and avoid further questions from staff about the proposed discontinuance(s).)

82. We adopt our proposal to revise our emergency discontinuance rules to explicitly provide that a carrier may permanently discontinue a service a showing that: (1) the carrier has previously obtained emergency discontinuance authority for the service in question, (2) the service is one for which the requesting carrier has had no customers or reasonable requests for service during the 60-day period immediately preceding the permanent discontinuance, and (3) an adequate replacement service is available throughout the affected service area. We decline at this time to allow for streamlined processing of requests to permanently discontinue a service that is contained in an initial emergency discontinuance application.

83. Section 63.63 of our rules sets forth procedures carriers must follow when seeking authority for an emergency discontinuance. (Our rules define an emergency discontinuance as “any discontinuance, reduction, or impairment of the service of a carrier occasioned by conditions beyond the control of such carrier where the original service is not restored or comparable service is not established within a reasonable time.” Providers must submit an application for authority for an emergency discontinuance of service as soon as practicable but not later than 65 days following the occurrence of the conditions which occasion the discontinuance. Authority is deemed granted as of the date the request is filed unless the Commission notifies the carrier otherwise on or before the 15th day after the date of filing, and a carrier may request to have the authorization renewed if the conditions leading to the emergency discontinuance “may reasonably be expected to continue for a further period and what efforts the applicant has made to restore the original or establish comparable service of such authority.” The carrier must notify the Commission if “the same or comparable service is reestablished before the termination of the emergency authorization.”) We now revise that rule to allow carriers to permanently discontinue a service for which the carrier has previously obtained emergency discontinuance authority upon a showing that (1) the service is one for which the requesting carrier has had no customers or reasonable requests for service during the 60 days immediately preceding the permanent discontinuance, and (2) an adequate replacement service is available throughout the affected service area. While our proposal in the Network and Services Modernization Notice referred to “comparable service,” we find it more appropriate to use the phrase “adequate replacement service” in this instance to confirm that the standards for replacement services are the same for all permanent discontinuances, whether the provider proceeds under § 63.63(b) or § 63.71(g) of our rules.

84. Under our existing rules, carriers may submit an informal request to permanently discontinue a service for which the carrier has already received emergency discontinuance authority, which the Commission may authorize “upon a proper showing.” Our rules do not define what constitutes a “proper showing.” We conclude that the amendment we adopt today, which addresses a narrow set of circumstances, strikes the appropriate balance between safeguarding consumers and enabling carriers to be more deft and responsive in reacting to natural disasters and other emergencies. The amendment also allows carriers to focus their rebuilding efforts on modernized, more resilient networks rather than restoring deteriorating, obsolete legacy networks and services. We find that there is little risk that a permanent discontinuance of the affected service will adversely affect any existing or potential customers in instances where a carrier has previously filed for emergency discontinuance authority, has had no customers nor reasonable requests for service for a minimum of 60 days, and an adequate replacement service is available. (Contrary to USTelecom's assertion, when the Commission forbore in the Second Wireline Infrastructure Order from applying the discontinuance approval obligations set forth in Section 214(a) of the Act and our implementing rules to carriers choosing to discontinue services for which the carrier has had no customers and no reasonable requests for service for at least the immediately preceding 30 days it excluded from this forbearance the requirements associated with emergency discontinuances where a carrier's existing customers are without service for a period of time exceeding 30 days. By extending the period in which the carrier has had no customers or reasonable requests for the affected service to 60 days and limiting the application of the rule we adopt today to only those areas where an adequate replacement service is available in the affected service area, we believe we have adequately addressed the concerns that prompted this carve-out in the Second Wireline Infrastructure Order. )

85. When legacy voice service facilities are damaged or destroyed during a natural disaster or other event outside the carrier's control, it may be costly as well as inefficient to require the carriers to restore these legacy facilities, especially in areas where the requesting carrier has had no customers or reasonable requests for service for 60 days prior to the request for permanent discontinuance and where an adequate replacement service is already available. Such an approach also mitigates the risk that consumers in an affected area will be stranded without service. Indeed, the increasing incidences of copper thefts have resulted in emergency discontinuances that leave affected customers without service, sometimes repeatedly. (Incumbent LECs filed 11 emergency discontinuance applications in 2024 caused by copper thefts, and another 19 in 2025. And the repair processes during the pendency of certain of these emergency discontinuance applications have been impeded by continued copper thefts.) Consumers will also benefit in the long term as this amendment to our rules will allow carriers to begin building out more reliable and more robust next-generation networks sooner by redirecting money and time that would otherwise be spent making lengthy and costly repairs to vulnerable legacy facilities serving fewer and fewer customers.

86. We decline to adopt a commenter's proposal to extend the relevant time period for an emergency discontinuance from 60 days to six months and to require carriers to affirmatively contact each customer during that time to obtain explicit consent prior to any permanent discontinuance. Such requirements would impose burdensome requirements where a comparable service is already available across the affected service area. Additionally, this proposal would require carriers to make repeated attempts to contact consumers who may choose not to respond or who may have permanently relocated during the emergency discontinuance period, and would completely negate any added efficiencies and benefits of this amendment to our rules. The rule we adopt today strikes an appropriate balance between increasing market efficiency and allowing carriers to refocus their efforts away from maintaining vulnerable and unreliable legacy networks. It would also encourage carriers to deploy higher-quality and more resilient next-generation networks and safeguard consumers by ensuring that they are not left stranded without voice service.

87. To ensure the efficacy of the consumer safeguards we adopt in this Order, we decline to allow the streamlined processing of requests in an initial emergency discontinuance application to permanently discontinue the affected service. While we are constantly seeking ways to increase efficiency and speed the transition to next-generation networks and services, we find that streamlined processing of a discontinuance request as the result of a natural disaster or other emergency would not allow sufficient time for the Commission to conduct its review, nor for affected consumers and other stakeholders to lodge comments or objections. Instead, we find that the existing procedures for processing requests to permanently discontinue services, as well as the requirements we adopt today where the emergency discontinuance leads to the carrier no longer having customers for the affected service, strike the correct balance between allowing providers to phase out damaged legacy networks and affording customers and other stakeholders sufficient time to be made aware of such discontinuances and to raise objections with the Commission. We reserve the right to revisit this conclusion at a later date, if future circumstances warrant a reconsideration of this finding.

88. We next adopt our proposal in the Network and Services Modernization Notice to eliminate a number of outdated discontinuance rules that have outlived their usefulness. As proposed in the Network and Services Modernization Notice, we conclude that these discontinuance rules are outdated, obsolete, or redundant and are no longer relevant or necessary in today's communications marketplace, with certain exceptions. Commenters support these streamlining efforts. Specifically, we eliminate all of the outdated discontinuance rules discussed in the Network and Services Modernization Notice, except for §§ 63.60(f), 63.500, and 63.501.

89. Public toll stations. We eliminate § 63.504 of the Commission's rules, which details the contents of an application to close a public toll station where no other such toll station of the applicant will continue service in the community and where telephone toll service is not otherwise available to the public through a telephone exchange connected with the toll lines of a carrier. (§ 63.60(f) of the Commission's rules defines “public toll station” as “a public telephone station, located in a community, through which a carrier provides service to the public, and which is connected directly to a toll line operated by such carrier.”) Commenters support this deletion. (One commenter, however, appears to have misunderstood our proposal to eliminate § 63.504. Discontinuances of public toll stations remain subject to our general discontinuance rules.) As we stated in the Network and Services Modernization Notice, “[t]hese rules were created more than six decades ago, at a time when public toll stations were far more prevalent . . . [and] it no longer makes sense to treat applications to discontinue this service distinctly from other types of service.” In order to ensure that a carrier seeks Commission authorization to close a public toll station in a location where telephone toll service is not otherwise available, as contemplated by § 63.62(b) of our rules, we now make applications for the closures of such public toll stations subject to the general application content requirements set forth in § 63.505. We thus decline at this time to eliminate § 63.60(f), defining public toll stations for purposes of discontinuance applications. For these same reasons, we retain the references to public toll stations in § 63.60(b), addressing the types of actions encompassed within the term “discontinuance, reduction, or impairment of service.”

90. Telephone exchanges at military establishments. We eliminate § 63.66 of the Commission's rules, which requires that carriers file an informal request, in quintuplicate, with the Commission before altering service hours at telephone exchanges at deactivated military establishments. When Congress amended Section 214 of the Act, it was concerned about “loss or impairment of service during” wartime, particularly with respect to military establishments and industries. That was a very real concern at that time, when POTS was the only voice service widely available. However, this is no longer the case. The nation at large and the military specifically have at their disposal voice, email, text, and video communications services provisioned over a variety of mediums, including fiber, wireless, and satellite. Commenters support these streamlining efforts. We thus conclude that § 63.66 no longer serves any purpose and should be eliminated.

91. Publication and posting of notices. We eliminate § 63.90 of the Commission's rules, imposing extensive requirements regarding the publication and physical posting of notices of discontinuances or reduced hours. While the specific requirements of this rule have changed over the years since this rule was adopted to accommodate the evolution of the communications marketplace and consumers' access to a variety of modes of communication, we agree with commenters that the physical posting of notices of discontinuances or reduced hours is no longer necessary and that posting the information on a carrier's website is now sufficient notice for network changes.

92. Notification of service outage. We eliminate § 63.100 of our rules, which directs providers to part 4 of the Commission's rules for the requirements concerning notifications of service outages. The outage notification requirements originally listed in § 63.100 are now found in part 4 of the Commission's rules. Commenters support these streamlining efforts. As § 63.100 itself no longer contains any substantive regulations, we conclude that it is no longer relevant or necessary.

93. Public coast stations. We eliminate § 63.601, pertaining to public coast stations, and remove the references to public coast stations in § 63.60(b), 63.60(c), and 63.63(a) of our rules. (Public coast stations are “land station[s] in the maritime mobile service” that “offer[ ]radio communication common carrier services to ship radio stations.”) As we noted in the Network and Services Modernization Notice, the Commission classified public coast stations as part of commercial mobile radio service (CMRS) in 1994, rendering it subject to the forbearance simultaneously granted from Section 214 discontinuance requirements for CMRS stations. Commenters support these streamlining efforts. Any remaining discontinuance obligations pertaining to public coast stations are addressed exclusively elsewhere in our rules. We thus find that these rules no longer serve any useful purpose.

94. We decline to eliminate §§ 63.500 and 63.501 of the Commission's rules at this time. (We thus also retain the references to these rules in §§ 63.19 and 63.62(a) and (b).) Section 63.500 sets forth the required contents of applications to dismantle or remove a trunk line. Section 63.501 does the same for applications to sever physical connection or to terminate or suspend interchange of traffic with another carrier. Given the ongoing network evolution and the ever-decreasing reliance on copper lines, we sought comment in the Network and Services Modernization Notice on whether eliminating these rules would better serve the public interest.

95. Based on the record in this proceeding, we determine that eliminating §§ 63.500 and 63.501 of the Commission's rules is not consistent with the public interest at this time. More specifically, we conclude that eliminating these rules at this time may cause unintended public safety consequences on the provision of 911 service. While copper is no longer the dominant transmission medium, it remains necessary for local exchange service provider interconnection with incumbent LECs for the provision of 911 service where IP interconnection is unavailable between the incumbent LEC and the local exchange service provider. We thus defer any potential elimination of these provisions until after we act on the proposed forbearance from the incumbent LEC-specific interconnection and related obligations.

96. We determine below that existing legacy voice services can be jurisdictionally mixed. We then discuss the scope of the Commission's and the states' respective authority with respect to regulating the discontinuance of jurisdictionally mixed services. Finally, we determine that, where the Commission has authorized discontinuance of interstate or jurisdictionally mixed legacy voice services, state requirements that make it impossible or impracticable for carriers to discontinue those services—and so in effect require carriers to continue providing interstate or jurisdictionally mixed telecommunications services—conflict with federal law, and the important federal policy represented by our modernized regulatory framework established in this Order for network changes and service discontinuances and are subject to preemption.

97. Jurisdictional nature of legacy voice service. Legacy voice service is the transmission of voice communications, usually over copper wires, using circuit-switched technology known as “time-division multiplexing” (TDM). Legacy voice service generally includes what is sometimes colloquially described as “local telephone service,” although that term does not accurately reflect the jurisdictional nature of the service as a practical matter in today's networks. Few, if any, networks today operate on a purely local or even intrastate level. Local exchange service and local toll service, while typically occurring within a single state, do in certain instances cross state lines. And the vast majority of consumers use the same provider for both their local and long distance service, with some customers purchasing bundled access that includes local exchange service, local toll calling, and interstate long distance toll service. (In the past, local exchange carriers were required to provide “equal access” service to long-distance carriers. “Equal access” refers to a class of service whereby all long-distance service providers receive equivalent connections to the local exchange carrier's network. Recognizing transformations in the market for voice telephone services, the Commission in 2019 forbore from “the requirement that independent rate-of-return carriers offer long-distance telephone service through a separate affiliate.”) However, these services are provisioned over the same network using the same technology. (To the extent that USTelecom argues that all POTS offerings are jurisdictionally mixed services, we reject that conclusion. The Commission will consider on a case-by-case basis whether certain legacy voice services are interstate or jurisdictionally mixed.) We acknowledge that, in the 2016 Technology Transitions Order, the Commission stated that “wholly intrastate services such as local telephone service are excluded from [the] reach” of the Commission's Section 214 discontinuance authority. Insofar as that statement might be understood to suggest that legacy voice service is a purely intrastate service, we find that the Commission in 2016 did not consider how state requirements might, on a practical level, prevent or conflict with the discontinuance of interstate or jurisdictionally mixed services.

98. Federal discontinuance authority under Section 214. Section 214 authorizes the Commission to determine when interstate or jurisdictionally mixed telecommunications services may be discontinued. The Commission has recognized that Congress enacted Section 214 to “protect Americans' continued access to the nation's communications networks while also preserving carriers' ability to upgrade their services without the interruption of federal micromanaging.” Section 214 thus does not guarantee that a particular service, such as legacy voice service, remains available to consumers or that consumers can purchase a particular service from a particular carrier. Rather, Section 214 seeks to ensure that consumers retain access to vital communications services, regardless of the identity of the service provider. Under Section 214(a), except on a temporary or emergency basis, “[n]o carrier shall discontinue, reduce, or impair service to a community, or part of a community,” without first “obtain[ing] from the Commission a certificate that neither the present nor future public convenience and necessity will be adversely affected thereby,” and Section 214(c) allows the Commission to tailor the scope of the discontinuance it authorizes “as in its judgment the public convenience and necessity may require.” Once the Commission authorizes discontinuance, a carrier may discontinue the covered service “without securing [other] approval.” Section 214 thus creates an exclusively federal discontinuance regime for interstate or jurisdictionally mixed telecommunications services.

99. The federal discontinuance regime established in Section 214(a) through (c) is consistent with the framework for the designation and relinquishment of eligible telecommunications carrier (ETC) status set out in Section 214(e), including Section 214(e)(4)'s mandate that a state commission permit an ETC to relinquish its designation if the area is served by at least one other ETC. Section 214(e) governs the approval and relinquishment of designations for common carriers that are eligible for universal service support pursuant to Section 254(e). There is nothing in the language of Section 214(e) that supersedes or limits the federal processes established pursuant to Section 214(a) through (c) with regard to service discontinuance. Thus, while a carrier's ETC status determines whether that carrier may receive universal service support for the provisioning, maintenance, and upgrading of particular facilities or services under Section 254(e), the question of whether a carrier may discontinue a specific interstate service is wholly governed by Section 214(a) through (c) and the carrier need only show in its advance notice to the relevant state commission that the affected service area is “served by more than one eligible telecommunications carrier.”

100. State authority. Section 214 provides states with a limited role in the federal discontinuance regime, but that role does not provide states with additional authority over services for which a provider has obtained Commission approval for discontinuance. Section 214(b) requires a carrier to notify each state in which the carrier proposes to construct, acquire, or operate a line or proposes to discontinue, reduce, or impair a service, and grants those states “the right . . . to be heard.” This provision allows states to object to any federal discontinuance application prior to any Commission authorization. (Such a grant of an “explicit consultative role . . . works against, rather than for, [any] claim of other powers” by states in the context of service discontinuance.) But it is the Commission that has sole jurisdiction to decide whether a carrier's proposed discontinuance adversely affects the public convenience and necessity and whether it should be approved or rejected. In Section 214(c), Congress gave both states and state public utility commissions (PUCs) the right to bring a federal court action to enjoin any discontinuance of service that occurs “contrary to the provisions of” Section 214. This provision allows states to bring suit in federal court to enjoin discontinuance if discontinuing a service would be in violation of, or without, a Commission authorization. (Even if a state has obtained an injunction in federal court to prevent a carrier from discontinuing service, the basis for that injunction is “evaporated” once the carrier obtains Commission authorization for the discontinuance.) But Section 214(c) does not grant states the right to obtain federal court injunctions against discontinuances that are lawfully granted by the Commission. Accordingly, neither Section 214(b) nor Section 214(c) provides states with the power to decide whether a carrier may discontinue interstate or jurisdictionally mixed service, or empowers states to impose requirements that frustrate or add extra conditions to Commission decisions allowing discontinuance. Instead, Congress provided that, after obtaining the Commission's approval, carriers could “without securing approval other than such certificate . . . proceed with the discontinuance . . . of service.”

101. We find that Section 253(b) of the Act similarly does not provide states with additional authority over services for which a provider has obtained discontinuance approval at the federal level. Section 253(b) provides a safe harbor from preemption under Section 253(a) when states “impose, on a competitively neutral basis . . . , requirements necessary to preserve and advance universal service, protect the public safety and welfare, ensure the continued quality of telecommunications services, and safeguard the rights of consumers.” Two commenters argue that Section 253(b) thus preserves several COLR obligations. To the extent these commenters suggest that Section 253(b) gives states discontinuance authority over interstate services or jurisdictionally mixed services, we disagree. While Section 253(b) does offer states a safe harbor from the reach of the Commission's Section 253 preemption authority, the safe harbor is limited on its face to the provisions of Section 253 itself. As stated in Section 253(b), “[n]othing in this section”— i.e., in Section 253—“shall affect the ability of states” to exercise the rights enumerated therein. We find the safe harbor for the states in Section 253 does not confer authority over services that have received federal approval for discontinuance under Section 214.

102. State requirements subject to preemption. As explained below, once the Commission has authorized a carrier to discontinue an interstate or jurisdictionally mixed telecommunications service, states may not enforce any law, regulation, or other requirement that on its face or in practical terms requires the carrier to continue providing the interstate or jurisdictionally mixed service the Commission has authorized the carrier to discontinue. States may not, consistent with federal law, impose any additional conditions on the Commission's authorization of discontinuance, including conditions that purport to be technology neutral, but that have the practical effect of requiring the carrier to continue providing an interstate or jurisdictionally mixed telecommunications service. (Since we do not have the record before us to, in this Order, opine on the application of this preemption to any specific state law, we decline to do so—including to exempt any specific state law or category of state law from the reach of this Order.)

103. It is well established that, under the “impossibility exception” to state jurisdiction, the Commission may preempt state law when (1) it is impossible or impracticable to regulate the intrastate aspects of a service without affecting interstate communications and (2) the Commission determines that such regulation would interfere with federal regulatory objectives. More generally, under the U.S. Constitution, federal law is the “supreme Law of the Land.” As relevant here, state law is subject to conflict preemption if it “prevent[s] or frustrate[s] the accomplishment of a federal objective,” and Commission actions taken under statutory authority will preempt state law. (We disagree with the California Public Utilities Commission's (California PUC) assertion that only an “unmistakably clear” statement in the Act could allow the Commission to preempt state statutes, regulations, and other legal requirements that require a carrier to continue providing a service for which the Commission has already granted discontinuance authorization. As stated above, we find that the clear language of Section 214 creates a federal regime for determining when a carrier may discontinue an interstate or jurisdictionally mixed telecommunications service.) The doctrine of “conflict preemption—true to its name—[applies] when the operation of federal and state law clash in a way that makes `compliance with both state and federal law . . . impossible,' or when `state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.' ”

104. We determine that certain state and local statutes, regulations, and requirements are subject to federal preemption. We sought comment in the Network and Services Modernization Notice on state or local requirements that would inhibit or impede the transition to next-generation networks and services, and asked whether such requirements would conflict with this critical goal by, for example, compelling carriers to continue providing legacy voice service or preventing carriers from discontinuing service. The record indicates that some states have adopted requirements that carriers assert operate to prevent them from discontinuing legacy voice service—whether as a matter of law or in practical effect. The record also includes assertions that certain state or local statutes, regulations, or requirements have the effect of preventing carriers from seeking to retire deteriorating legacy networks and discontinuing outdated TDM-based services taken by ever-fewer customers for undetermined periods of time, leaving these providers unable to redirect time and resources away from the development and deployment of next-generation networks and technologies. We agree with USTelecom that, where the Commission has exercised its Section 214 discontinuance authority over interstate and/or jurisdictionally mixed services to allow a carrier to discontinue legacy voice service, state requirements that operate to require the carrier to continue providing those services conflict with federal law. Such state or local statutes, regulations, or legal requirements effectively “negate the Commission's exercise of its lawful authority because regulation of the interstate aspects of the matter cannot be severed from regulation of the intrastate aspects.” We conclude that if state and local requirements prevent a provider from discontinuing the interstate portion of a legacy voice service for which the Commission has already granted discontinuance authorization pursuant to Section 214, then the requirements negate a valid federal regulatory objective because the interstate impacts of the state or local requirements cannot be unbundled from the intrastate aspects of those requirements. We stress that states lack authority to regulate interstate services. And, moreover, where the Commission has lawfully exercised its Section 214 authority to allow discontinuance of a service within its regulatory sphere, Section 214(c) expressly provides that carriers do not require any other “approval” to discontinue the covered service, including any state commission or Commission approval that might otherwise be required under Section 214(e)(4) for relinquishment of the carrier's ETC status, if there is another ETC throughout the relevant service area. (As discussed elsewhere in this Order, the Commission will deny a discontinuance application if it finds that the discontinuance will adversely affect the present or future public convenience and necessity, as required by Section 214(a) of the Act. If a state commission believes that a carrier's discontinuance of a service for which it has requested Commission authorization would have such an adverse effect, the state may file an objection with the Commission. Moreover, after a carrier receives a discontinuance grant from the Commission and makes a showing to the relevant state commission that another ETC serves the affected service area, Section 214(e)(4) requires the state to allow the carrier to relinquish its ETC designation without erecting additional hurdles.) We determine here that any such state requirements, to the degree they regulate services shown to be jurisdictionally mixed, are subject to preemption pursuant to both the impossibility exception and general principles of conflict preemption. (Similarly, where the Commission has exercised its Section 214(a) authority over interstate and/or jurisdictionally mixed service to allow a carrier to grandfather legacy voice service, see supra Section III.B.2, federal law preempts state requirements that operate to require the carrier to continue offering that interstate or jurisdictionally mixed grandfathered service to new customers.)

105. It is beyond the scope of this proceeding to evaluate individual state requirements in their particulars, or to determine whether they conflict with federal law. We accordingly do not, in this Order, make any preemption determination as to any specific state or local law or requirement. If, however, the Commission has authorized a carrier to discontinue legacy voice service and any state requirement conflicts with that authorization, or if a carrier wants to seek Commission discontinuance authorization for a legacy voice service but that carrier believes that a state requirement prevents it from doing so, the carrier may opt to seek a determination from the Commission that the state requirement is preempted.

106. As required by the Regulatory Flexibility Act of 1980, as amended (RFA) the Federal Communications Commission (Commission) incorporated an Initial Regulatory Flexibility Analysis (IRFA) in the Network and Services Modernization Notice ( Notice ) released in 2025. The Commission sought written public comment on the proposals in the Notice, including comment on the IRFA. No comments were filed addressing the IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the RFA and it (or summaries thereof) will be published in the Federal Register .

107. In the Report and Order ( Order ), the Commission takes important steps aimed at bringing the existing regulatory environment in line with today's communications marketplace by overhauling the Commission's rules applicable to technology transitions discontinuance applications under Section 214 of the Communications Act of 1934, as amended (the Act), and reforming and updating the filing requirements associated with its rules implementing Section 251(c)(5)'s network change disclosure mandate. Specifically, within the Order, the Commission: (1) eliminates the filing requirements associated with our rules implementing Section 251(c)(5)'s network change disclosure mandate; (2) adopts one consolidated rule applicable to all technology transitions discontinuance applications and eliminates rule provisions thereby rendered irrelevant; (3) grants blanket Section 214(a) authority for carriers to grandfather legacy voice services, lower-speed data telecommunications services, and interconnected VoIP service provisioned over copper wire; (4) grants forbearance relief to resellers when the wholesale provider of their resold service engages in a technology transitions discontinuance; (5) revises § 63.71 of its rules to apply the 31-day automatic grant period to all discontinuance applications regardless of the applicants' status as dominant or non-dominant; (5) adopts discontinuance application content requirements; (6) revises its rules applicable to emergency discontinuances to permit permanent discontinuance of a service under specific circumstances; (7) eliminates a number of outdated discontinuance rules rendered irrelevant or redundant by today's communications marketplace; and (8) finds any state or local statute, regulation, or other legal requirement that—either by law or in practice—has the effect of continuing to require carriers to provide POTS or other legacy services in an area where carriers have obtained Commission authorization under Section 214(a) of the Act to discontinue the legacy service in question or where carriers havebeen discouraged from seeking such Commission authorization are subject to preemption.

108. There were no comments raised that specifically addressed the proposed rules and policies presented in the Notice. However, the Commission considered the potential impact of the rules proposed in the IRFA on small entities and took steps where appropriate and feasible to reduce the compliance burden for small entities in order to reduce the economic impact of the rules enacted herein on such entities.

109. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel for the Small Business Administration (SBA) Office of Advocacy, and to provide a detailed statement of any change made to the proposed rules as a result of those comments. The Chief Counsel did not file any comments in response to the proposed rules in this proceeding.

110. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the adopted rules. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act (SBA). (Pursuant to 5 U.S.C. 601(3), the statutory definition of a small business applies “unless an agency, after consultation with the Office of Advocacy of the Small Business Administration and after opportunity for public comment, establishes one or more definitions of such term which are appropriate to the activities of the agency and publishes such definition(s) in the Federal Register .”) A “small business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA. The SBA establishes small business size standards that agencies are required to use when promulgating regulations relating to small businesses; agencies may establish alternative size standards for use in such programs, but must consult and obtain approval from SBA before doing so.

111. These actions, over time, may affect small entities that are not easily categorized at present. We therefore describe three broad groups of small entities that could be directly affected by these actions. In general, a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States, which translates to 34.75 million businesses. Next, “small organizations” are not-for-profit enterprises that are independently owned and operated and are not dominant in their field.

112. While we do not have data regarding the number of non-profits that meet that criteria, over 99 percent of nonprofits have fewer than 500 employees. Finally, “small governmental jurisdictions” are defined as cities, counties, towns, townships, villages, school districts, or special districts with populations of less than fifty thousand. Based on the 2022 U.S. Census of Governments data, we estimate that at least 48,724 out of 90,835 local government jurisdictions have a population of less than 50,000.

113. The rule reforms and modifications adopted in the Order will apply to small entities in the industries identified in the chart below by their six-digit North American Industry Classification System (NAICS) codes and corresponding SBA size standard. (The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy. The size standards in this chart are set forth in 13 CFR 121.201, by six digit NAICS code.) Based on currently available U.S. Census data regarding the estimated number of small firms in each identified industry, we conclude that the adopted rules will impact a substantial number of small entities. Where available, we also provide additional information regarding the number of potentially affected entities in the identified industries below.