| Page Range | 34241-34857 | |
| FR Document |
| Page and Subject | |
|---|---|
| 81 FR 34379 - Annual Board of Directors Meeting; Sunshine Act Meeting | |
| 81 FR 34337 - Sunshine Act Meetings | |
| 81 FR 34429 - Environmental Impact Statement for the Link Union Station Project, Los Angeles, CA | |
| 81 FR 34334 - Intent To Disclose Confidential Business Information Contained in Vehicle Sales Data for Model Years 2009-2014 to the U.S. Energy Information Administration for Use in Modeling and Projecting Energy Demand in the Light-Duty Vehicle Sector | |
| 81 FR 34357 - Findings of Research Misconduct | |
| 81 FR 34363 - Notice of Issuance of Final Determination Concerning Certain Network Cables and Transceivers | |
| 81 FR 34435 - Agency Information Collection Activities: Information Collection Renewal; Comment Request; OCC Supplier Registration Form | |
| 81 FR 34428 - Notice of Funding Opportunity for the Advanced Transportation and Congestion Management Technologies Deployment Program | |
| 81 FR 34268 - Delay of Discharge Requirements for U.S. Coast Guard Activities in Greater Farallones and Cordell Bank National Marine Sanctuaries | |
| 81 FR 34313 - Evaluations of National Estuarine Research Reserves and Coastal Management Programs | |
| 81 FR 34309 - Information Collection; Land Exchanges | |
| 81 FR 34310 - Multilayered Wood Flooring From the People's Republic of China: Preliminary Rescission of 2014-2015 Antidumping Duty New Shipper Reviews | |
| 81 FR 34371 - Bulk Manufacturer of Controlled Substances Application: Rhodes Technologies | |
| 81 FR 34372 - Importer of Controlled Substances Application: Wildlife Laboratories, Inc. | |
| 81 FR 34382 - Virginia Electric and Power Company; Surry Power Station, Unit Nos. 1 and 2 | |
| 81 FR 34379 - Entergy Operations, Inc.; Waterford Steam Electric Station, Unit 3 | |
| 81 FR 34326 - Applications for New Awards; American History and Civics Academies Program | |
| 81 FR 34379 - Advisory Committee on Reactor Safeguards 635th Meeting | |
| 81 FR 34317 - Applications for New Awards; Teacher Incentive Fund | |
| 81 FR 34368 - 30-Day Notice of Proposed Information Collection: Office of Hospital Facilities Transactional Forms for FHA Programs 242, 241, 223(f), 223(a)(7) | |
| 81 FR 34437 - Submission for OMB Review; Comment Request | |
| 81 FR 34283 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2016 Accountability Measure-Based Closures for Commercial and Recreational Species in the U.S. Caribbean Off Puerto Rico | |
| 81 FR 34378 - National Council on the Arts 188th Meeting | |
| 81 FR 34360 - Submission for OMB review; 30-day Comment Request; | |
| 81 FR 34282 - Fluazinam; Pesticide Tolerances; Technical Correction | |
| 81 FR 34278 - Safety Zone; Chesapeake Bay, Cape Charles, VA | |
| 81 FR 34427 - 30-Day Notice of Proposed Information Collection: Office of Language Services Contractor Application Form | |
| 81 FR 34370 - Notice of Availability: Well Stimulation Treatments on the Pacific Outer Continental Shelf | |
| 81 FR 34316 - Proposed Collection; Comment Request | |
| 81 FR 34313 - Pacific Fishery Management Council; Public Meeting | |
| 81 FR 34311 - Pacific Fishery Management Council; Public Meeting | |
| 81 FR 34317 - Uniform Formulary Beneficiary Advisory Panel; Notice of Federal Advisory Committee Meeting | |
| 81 FR 34280 - Safety Zones; Upper Mississippi River Between Mile 179.2 and 180.5, St. Louis, MO and Between Mile 839.5 and 840, St. Paul, MN | |
| 81 FR 34371 - Certain Electronic Devices, Including Wireless Communication Devices, Computers, Tablet Computers, Digital Media Players, and Cameras; Commission Determination to Affirm an Initial Determination Granting a Joint Motion to Terminate the Investigation on the Basis of Settlement; Termination of Investigation | |
| 81 FR 34336 - Disability Advisory Committee; Announcement of Next Meeting | |
| 81 FR 34333 - Exelon Generation Company, LLC; Notice of Application Accepted for Filing and Soliciting Comments, Motions To Intervene, and Protests | |
| 81 FR 34352 - Determination of Regulatory Review Period for Purposes of Patent Extension; OLYSIO | |
| 81 FR 34314 - Agency Information Collection Activities: Notice of Intent To Renew Collection 3038-0017, Market Surveys | |
| 81 FR 34342 - Agency Forms Undergoing Paperwork Reduction Act Review | |
| 81 FR 34341 - Agency Forms Undergoing Paperwork Reduction Act Review | |
| 81 FR 34332 - Ware River Power, Inc.; Notice of Application Accepted for Filing, Soliciting Comments, Motions to Intervene, and Protests | |
| 81 FR 34332 - Cottonwood Wind Project, LLC v. Nebraska Public Power District, Inc; Notice of Complaint | |
| 81 FR 34334 - Rover Pipeline LLC; Notice of Amendment to Application | |
| 81 FR 34337 - Proposed Data Collection Submitted for Public Comment and Recommendations | |
| 81 FR 34372 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Trade Adjustment Assistance Program Reserve Funding Request | |
| 81 FR 34375 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Workforce Investment Act Management Information and Reporting System | |
| 81 FR 34376 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Reporting and Performance Standards System for Migrant and Seasonal Farmworker Programs | |
| 81 FR 34377 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Process Safety Management Standard of Highly Hazardous Chemicals | |
| 81 FR 34374 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Standard Job Corps Contractor Information Gathering | |
| 81 FR 34373 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Employee Retirement Income Security Act of 1974 Investment Manager Electronic Registration | |
| 81 FR 34343 - Agency Information Collection Activities: Submission for OMB Review; Comment Request | |
| 81 FR 34378 - Notice of Intent To Grant Exclusive License | |
| 81 FR 34312 - Proposed Information Collection; Comment Request; Southeast Region Dealer and Interview Family of Forms | |
| 81 FR 34301 - Comment Sought on Implementation of Transmitter Identification Requirements for Video Uplink Transmissions | |
| 81 FR 34426 - Agency Information Collection Activities: Proposed Request and Comment Request | |
| 81 FR 34241 - List of Approved Spent Fuel Storage Casks: Holtec International HI-STORM 100 Cask System; Certificate of Compliance No. 1014, Amendment No. 10; Corrections | |
| 81 FR 34431 - Fiscal Year 2015 and 2016 Passenger Ferry Grant Program Project Selections | |
| 81 FR 34276 - Drawbridge Operation Regulation; Housatonic River, Stratford, CT | |
| 81 FR 34275 - Special Local Regulation; Annual Dragon Boat Races, Portland, Oregon | |
| 81 FR 34349 - Collaboration in Regulatory Systems Strengthening and Standardization Activities To Increase Access to Safe and Effective Biological Products | |
| 81 FR 34354 - Facilitating Antibacterial Drug Development for Patients With Unmet Need and Developing Antibacterial Drugs That Target a Single Species Media; Public Workshop | |
| 81 FR 34269 - Medical Devices; Ophthalmic Devices; Classification of the Diurnal Pattern Recorder System | |
| 81 FR 34335 - Information Collection Approved by the Office of Management and Budget (OMB) | |
| 81 FR 34315 - Notice of Availability of Draft Environmental Impact Statement for the Continental United States Interceptor Site | |
| 81 FR 34369 - Renewal of Agency Information Collection for Appointed Counsel in Involuntary Indian Child Custody Proceedings in State Courts | |
| 81 FR 34368 - Homeland Security Science and Technology Advisory Committee | |
| 81 FR 34367 - Sector Outreach and Programs Division Online Meeting Registration Tool | |
| 81 FR 34434 - International Standards on the Transport of Dangerous Goods | |
| 81 FR 34387 - Submission for OMB Review; Comment Request | |
| 81 FR 34403 - Submission for OMB Review; Comment Request | |
| 81 FR 34393 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Removing From Its Rules Certain Internal Procedures Regarding the Use of Fine Income | |
| 81 FR 34404 - Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Amending Section 4.01(a) of the NYSE Arca's Bylaws and NYSE Arca Rule 3.3 to Establish a Committee for Review as a Sub-Committee of the ROC and Making Conforming Changes to NYSE Arca Rules | |
| 81 FR 34401 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Rule 6.43 Regarding Definition of Floor Broker | |
| 81 FR 34407 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the Shares of the First Trust CEF Income Opportunity ETF and the First Trust Municipal CEF Income Opportunity ETF of First Trust Exchange-Traded Fund VIII | |
| 81 FR 34414 - Self-Regulatory Organizations; NASDAQ BX, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Options Pricing at Chapter XV, Section 2 | |
| 81 FR 34388 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing of Proposed Rule Change Regarding Use of Rule 144A Securities by the Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Limited Term Bond ETF, and Fidelity Total Bond ETF | |
| 81 FR 34419 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, Relating to the Listing and Trading of the Shares of the Amplify Dow Theory Forecasts Buy List ETF of Amplify ETF Trust | |
| 81 FR 34398 - Self-Regulatory Organizations; Bats EDGA Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Change to the Market Data Section of its Fee Schedule | |
| 81 FR 34384 - Self-Regulatory Organizations; Bats EDGX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Change to the Market Data Section of Its Fee Schedule | |
| 81 FR 34336 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated Authority | |
| 81 FR 34275 - Drawbridge Operation Regulation; St. Croix River, Stillwater, MN | |
| 81 FR 34360 - National Cancer Institute; Notice of Closed Meetings | |
| 81 FR 34436 - Proposed Collection; Comment Request for Information Collection Tools | |
| 81 FR 34437 - Proposed Collection; Comment Request for Information Collection tools | |
| 81 FR 34354 - Clinical Chemistry and Clinical Toxicology Devices Panel of the Medical Devices Advisory Committee; Notice of Meeting | |
| 81 FR 34353 - Advisory Committee; Science Advisory Board to the National Center for Toxicological Research; Renewal | |
| 81 FR 34355 - Sequencing Quality Control II; Public Workshop | |
| 81 FR 34347 - Determination That LEVOTHROID (Levothyroxine Sodium) Tablets, 0.025 Milligram, 0.05 Milligram, 0.075 Milligram, 0.088 Milligram, 0.112 Milligram, 0.125 Milligram, 0.137 Milligram, 0.15 Milligram, 0.175 Milligram, 0.1 Milligram, 0.2 Milligram, and 0.3 Milligram, Were Not Withdrawn From Sale for Reasons of Safety or Effectiveness | |
| 81 FR 34348 - Clinical Trial Design Considerations for Malaria Drug Development; Notice of Public Workshop; Correction | |
| 81 FR 34277 - Drawbridge Operation Regulation; Atlantic Intracoastal Waterway, South Branch of the Elizabeth River, Portsmouth-Chesapeake, VA | |
| 81 FR 34277 - Drawbridge Operation Regulation; Chester River, Chestertown, MD | |
| 81 FR 34345 - Agency Information Collection Activities; Proposed Collection; Comment Request; E6(R2) Good Clinical Practice; International Council for Harmonisation | |
| 81 FR 34362 - National Institute of Dental & Craniofacial Research; Notice of Closed Meeting | |
| 81 FR 34359 - National Institute of Allergy and Infectious Diseases; Notice of Closed Meetings | |
| 81 FR 34363 - National Library of Medicine; Notice of Closed Meeting | |
| 81 FR 34361 - National Institute on Drug Abuse; Notice of Closed Meeting | |
| 81 FR 34363 - National Institute on Drug Abuse; Notice of Closed Meetings | |
| 81 FR 34362 - National Heart, Lung, and Blood Institute; Amended Notice of Meeting | |
| 81 FR 34363 - National Heart, Lung, and Blood Institute; Notice of Closed Meeting | |
| 81 FR 34359 - Notice of Establishment of the NIH Clinical Center Research Hospital Board | |
| 81 FR 34361 - Center for Scientific Review; Notice of Closed Meetings | |
| 81 FR 34356 - Clinical Chemistry and Clinical Toxicology Devices Panel of the Medical Devices Advisory Committee; Notice of Meeting | |
| 81 FR 34344 - Advisory Committee; Psychopharmacologic Drugs Advisory Committee, Renewal | |
| 81 FR 34343 - Advisory Committee; Allergenic Products Advisory Committee, Renewal | |
| 81 FR 34428 - Air Traffic Procedures Advisory Committee | |
| 81 FR 34855 - Agency Information Collection Activities: Proposed Collection, Comment Request: Final Rule, Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants-Cross-Border Application of the Margin Requirements | |
| 81 FR 34817 - Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants-Cross-Border Application of the Margin Requirements | |
| 81 FR 34290 - Native American Housing Assistance and Self-Determination Act; Revisions to the Indian Housing Block Grant Program Formula | |
| 81 FR 34287 - Airworthiness Directives; Airbus Airplanes | |
| 81 FR 34271 - Categorical Exclusions | |
| 81 FR 34623 - Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers | |
| 81 FR 34426 - Small Business Innovation Research Program and Small Business Technology Transfer Program Policy Directive | |
| 81 FR 34265 - Airworthiness Directives; Turbomeca S.A. Turboshaft Engines | |
| 81 FR 34285 - Airworthiness Directives; Airbus Airplanes | |
| 81 FR 34267 - Establishment of Class E Airspace; Lisbon, ND | |
| 81 FR 34243 - Small Business Government Contracting and National Defense Authorization Act of 2013 Amendments | |
| 81 FR 34539 - Elementary and Secondary Education Act of 1965, As Amended by the Every Student Succeeds Act-Accountability and State Plans | |
| 81 FR 34302 - General Services Administration Acquisition Regulation (GSAR); Unenforceable Commercial Supplier Agreement Terms | |
| 81 FR 34777 - Renewable Fuel Standard Program: Standards for 2017 and Biomass-Based Diesel Volume for 2018 | |
| 81 FR 34439 - Energy Conservation Program: Energy Conservation Standards for Commercial Water Heating Equipment | |
| 81 FR 34358 - National Committee on Vital and Health Statistics: Meeting | |
| 81 FR 34274 - Leasing of Sulfur or Oil and Gas in the Outer Continental Shelf; Correction MMAA104000 | |
| 81 FR 34434 - Hazardous Materials: Notice of Applications for Special Permits |
Forest Service
International Trade Administration
National Oceanic and Atmospheric Administration
Federal Energy Regulatory Commission
Centers for Disease Control and Prevention
Centers for Medicare & Medicaid Services
Food and Drug Administration
National Institutes of Health
Coast Guard
U.S. Customs and Border Protection
Bureau of Safety and Environmental Enforcement
Indian Affairs Bureau
Ocean Energy Management Bureau
Drug Enforcement Administration
National Endowment for the Arts
Federal Aviation Administration
Federal Highway Administration
Federal Railroad Administration
Federal Transit Administration
Pipeline and Hazardous Materials Safety Administration
Comptroller of the Currency
Internal Revenue Service
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Nuclear Regulatory Commission.
Direct final rule; confirmation of effective date and correcting amendments.
The U.S. Nuclear Regulatory Commission (NRC) is confirming the effective date of May 31, 2016, for the direct final rule that was published in the
Please refer to Docket ID NRC-2015-0270 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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Robert MacDougall, Office of Nuclear Material Safety and Safeguards, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: 301-415-5175; email:
On March 14, 2016 (81 FR 13265), the NRC published a direct final rule amending its regulations in § 72.214 of title 10 of the
The March 14, 2016, direct final rule inadvertently omitted Revision 1 to Amendment No. 8 (effective May 2, 2012, as corrected on November 16, 2012) to CoC No. 1014. In a final rule published in the
Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the normal notice and comment requirements if it finds, for good cause, that they are impracticable, unnecessary, or contrary to the public interest. As authorized by 5 U.S.C. 553(b)(B), the NRC finds good cause to waive notice and opportunity for comment on the amendments because they will have no substantive impact and the amendments are of a minor and administrative nature. Specifically, these amendments are to restore Revision 1 to Amendment Nos. 8 and 9 to CoC No. 1014. These amendments do not require action by any person or entity regulated by the NRC. Also, the amendments do not change the substantive responsibilities of any person or entity regulated by the NRC. For these reasons, the NRC finds, pursuant to 5 U.S.C. 553(d)(3), that good cause exists to make the amendments effective upon publication of this document.
In the direct final rule, the NRC stated that if no significant adverse comments were received, the direct final rule would become effective on May 31, 2016. The NRC received four comment submissions with 22 individual comments on the companion proposed rule (81 FR 13295). Electronic copies of these comments can be obtained from the Federal Rulemaking Web site,
The NRC received four comment submissions with 22 individual comments on the companion proposed rule. As explained in the March 14, 2016, direct final rule, the NRC would withdraw the direct final rule only if it received a “significant adverse comment.” This is a comment where the commenter explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. A comment is adverse and significant if:
(1) The comment opposes the rule and provides a reason sufficient to require a substantive response in a notice-and-comment process. For example, a substantive response is required when:
(a) The comment causes the NRC staff to reevaluate (or reconsider) its position or conduct additional analysis;
(b) The comment raises an issue serious enough to warrant a substantive response to clarify or complete the record; or
(c) The comment raises a relevant issue that was not previously addressed or considered by the NRC staff.
(2) The comment proposes a change or an addition to the rule, and it is apparent that the rule would be ineffective or unacceptable without incorporation of the change or addition.
(3) The comment causes the NRC staff to make a change (other than editorial) to the rule, CoC, or Technical Specifications.
The NRC determined that none of the comments submitted on this direct final rule met any of these criteria. The comments either were already addressed by the NRC staff's safety evaluation report (SER) (ADAMS Accession No. ML15331A309), or were beyond the scope of this rulemaking. The NRC has not made any changes to the direct final rule as a result of the public comments. However, the NRC will take the opportunity to respond to the comments in a separate
The NRC staff has concluded that the comments received on the companion proposed rule for the Holtec HI-STORM 100 Cask System, CoC No. 1014, Amendment No. 10, are not significant adverse comments as defined in NUREG/BR-0053, Revision 6. Therefore, the direct final rule will become effective as scheduled.
Administrative practice and procedure, Criminal penalties, Hazardous waste, Indians, Intergovernmental relations, Manpower training programs, Nuclear energy, Nuclear materials, Occupational safety and health, Penalties, Radiation protection, Reporting and recordkeeping requirements, Security measures, Spent fuel, Whistleblowing.
For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting the following amendments to 10 CFR part 72:
Atomic Energy Act of 1954, secs. 51, 53, 57, 62, 63, 65, 69, 81, 161, 182, 183,184, 186, 187, 189, 223, 234, 274 (42 U.S.C. 2071, 2073, 2077, 2092, 2093, 2095, 2099, 2111, 2201, 2210e, 2232, 2233, 2234, 2236, 2237, 2238, 2273, 2282, 2021); Energy Reorganization Act of 1974, secs. 201, 202, 206, 211 (42 U.S.C. 5841, 5842, 5846, 5851); National Environmental Policy Act of 1969 (42 U.S.C. 4332); Nuclear Waste Policy Act of 1982, secs. 117(a), 132, 133, 134, 135, 137, 141, 145(g), 148, 218(a) (42 U.S.C. 10137(a), 10152, 10153, 10154, 10155, 10157, 10161, 10165(g), 10168, 10198(a)); 44 U.S.C. 3504 note.
For the Nuclear Regulatory Commission.
U.S. Small Business Administration.
Final rule.
This rule amends the U.S. Small Business Administration's (SBA or Agency) regulations to implement provisions of the National Defense Authorization Act of 2013, which pertain to performance requirements applicable to small business and socioeconomic program set-aside contracts and small business subcontracting. This rule also amends SBA's regulations concerning the nonmanufacturer rule and affiliation rules. Further, this rule allows a joint venture to qualify as small for any government procurement as long as each partner to the joint venture qualifies individually as small under the size standard corresponding to the NAICS code assigned in the solicitation.
This rule is effective on June 30, 2016.
Michael McLaughlin, Office of Policy, Planning and Liaison, 409 Third Street SW., Washington, DC 20416; (202) 205-5353;
SBA published a proposed rule regarding these changes in the
Section 1621 of the National Defense Authorization Act of 2013 (NDAA), Public Law 112-239, 126 Stat. 1632 (Jan. 2013), revised the Small Business Act regarding the responsibilities of Procurement Center Representatives (PCRs). Section 1621 clarifies that PCRs have the ability to review barriers to small business participation in Federal contracting and to review any bundled or consolidated solicitation or contract in accordance with the Small Business Act. SBA proposed to amend 13 CFR 125.2(b)(1)(i)(A), based on the changes in Section 1621(c)(6)(H) of the NDAA. SBA also proposed to add language to § 125.2(b)(1)(i)(A) and to § 125.2(b)(1)(ii), which clarifies that PCRs advocate for the maximum practicable utilization of small business concerns in Federal contracting, including advocating against the unjustified consolidation or bundling of contract requirements.
Pursuant to Section 1621(c)(6)(G) of the NDAA, SBA proposed new § 125.2(b)(1)(iv), which states that PCRs will consult with the agency's Office of Small and Disadvantaged Business Utilization (OSDBU) and Office of Small Business Program (OSBP) Director regarding an agency's decision to convert an activity performed by a small business concern to an activity performed by a Federal employee. SBA also proposed new § 125.2(b)(1)(v) pursuant to the language enacted by Section 1621(c)(6)(F) of the NDAA, which allows PCRs to receive unsolicited proposals from small business concerns and to provide those proposals to the appropriate agency's personnel for review and disposition.
SBA proposed to amend § 125.2(b)(1) and (2), which pertain to Breakout PCRs (BPCRs). Sections 1621(e) and (f) of the NDAA effectively eliminate the statutory authority for the separate BPCR role. As a result, SBA proposed to reassign the responsibilities currently held by BPCRs to PCRs. SBA proposed to add § 125.2(b)(1)(i)(F), which states that PCRs also advocate full and open competition in Federal contracting and recommend the breakout for competition of items and requirements which previously have not been competed. SBA also proposed to eliminate § 125.2(b)(2) that provided guidance on the role and responsibilities of BPCRs, and redesignate current § 125.2(b)(3) as the new § 125.2(b)(2) and remove any reference to BPCRs from that paragraph.
SBA received 13 comments regarding its proposed changes to § 125.2. Ten of these comments were supportive of the changes to this section. One commenter suggested that SBA clarify the proposed language in § 125.2(b)(1)(i)(A), which states “This review includes acquisitions that are Multiple Award Contracts where the agency has not set-aside all or part of the acquisition or reserved the acquisition for small businesses.” This commenter suggested that SBA delete the words “or part” to make it clear that PCRs can review any Multiple Award Contract that is not 100% set-aside for small business competition. SBA is not adopting this recommendation because the proposed language states that PCRs can review Multiple Award Contracts that are not entirely set aside for small businesses, meaning partially set-aside. Furthermore, if SBA eliminated “or part” it would indicate that PCRs cannot review Multiple Award Contracts that are entirely set aside for small businesses, which is within the PCRs responsibilities.
Another commenter suggested that SBA should meet with contracting officers to assist with setting aside contracts for small businesses. It is the role of the PCR to review procurements that are not set aside for small businesses. PCRs are often located at the procuring activity and routinely interface with contracting officers regarding whether to set aside
Another commenter suggested that the term “acquisition” as used in § 125.2 should be changed to “acquisition, including bridge, interim, and follow-on contracts.” The term “acquisition” is defined broadly in section 2.101 of the Federal Acquisition Regulation (FAR) to include “award of contracts.” The commenter is referencing specific types of contracts that are included in the FAR definition of “acquisition.” SBA believes that this clarification is not necessary and does not adopt it in this final rule.
Another commenter suggested that PCRs should unbundle sole source contracts that are made to incumbent vendors in order to allow the agency time to competitively re-procure the goods or services. The proposed rule directly addresses this concern by providing PCRs with the ability to advocate against consolidation or bundling of contract requirements and reviewing any justification provided for such bundling or consolidation. The same commenter also suggested that a prime contract not be awarded on a sole source basis unless the prime contractor agrees to retain its subcontractors under the previous award and incorporates the small business plan associated with the previous award. SBA does not have the authority to mandate which subcontractors a prime contractor chooses to include in a subcontracting plan or to mandate that a prime contractor incorporate a particular subcontracting plan into its offer, and therefore SBA is not adopting this suggestion.
One commenter requested clarification of the language proposed in § 125.2(b)(1)(i)(F) stating, “PCRs also advocate competitive procedures and recommend the breakout for competition when appropriate.” The commenter raised concerns that this language will discourage contracting officers from utilizing the sole source authority provided for the 8(a) Business Development (BD) program, the Women-Owned Small Business (WOSB) program and the HUBZone program. The commenter suggests that SBA clarify what a PCR would consider as “appropriate” in the decision to recommend competition, and if such a decision is made, that contracting officers and PCRs document this decision in the contract file along with an explanation for why competition is considered more appropriate than a small business program sole source award. The language referenced by the commenter is a BPCR responsibility that SBA is transferring to PCRs due to the statute's elimination of the BPCR role. In addition, PCRs provide contracting officers with guidance on the availability of sole source and competitive options, but the contracting officer has the discretion to choose an acquisition program or method, in accordance with SBA's guidance on parity.
Another commenter noted that PCRs will have to coordinate with agency officials to implement the NDAA's requirement, set forth at § 125.2(b)(1)(iv), that PCRs consult with agency OSDBUs regarding an agency's decision to convert an activity performed by a small business concern to an activity performed by a Federal employee. The statute provides that the PCR will consult with the OSDBU. SBA understands that the PCR and OSDBU will consult with other agency officials, as necessary. However, SBA does not believe that additional clarification is necessary and therefore SBA adopts the proposed language in this final rule.
Section 1623 of the NDAA requires that each Federal department or agency provide opportunities for the participation of small business concerns during acquisition planning processes and in acquisition plans. This section also requires that each Federal department or agency invite the participation of the appropriate OSDBU Director in acquisition planning processes and provides that Director with access to acquisition plans. SBA incorporates the exact statutory text from Section 1623 of the NDAA into 13 CFR 125.2(c)(1) by adding new paragraphs (vi) and (vii).
Section 1651 of the NDAA, as codified at 15 U.S.C. 657s, requires that the limitations on subcontracting for full or partial small business set-aside contracts, HUBZone contracts, 8(a) BD contracts, Service-Disabled Veteran-Owned (SDVO) Small Business Concern (SBC) contracts, and WOSB and Economically Disadvantaged Women Owned Small Business (EDWOSB) contracts, be evaluated based on the percentage of the overall award amount that a prime contractor spends on its subcontractors. Significantly, the NDAA excludes from the limitations on subcontracting calculation the percentage of the award amount that the prime contractor spends on similarly situated entity subcontractors. Specifically, the NDAA deems work done by similarly situated entities not to be subcontracted work for purposes of complying with the limitations on subcontracting requirement. Thus, work done by a similarly situated entity is counted in determining whether the applicable limitation on subcontracting is met. When a contract is awarded pursuant to a small business set-aside or socioeconomic program set-aside or sole source authority, a similarly situated entity subcontractor is a small business concern subcontractor that is a participant of the same SBA program that qualified the prime contractor as an eligible offeror and awardee of the contract.
Currently, SBA's regulations contain different terms for compliance with the performance of work requirements based on the type of small business program set-aside at issue. The method for calculating compliance not only varies by program set-aside type, but also based on whether the acquisition is for services, supplies, general construction, or specialty trade construction. Section 1651 of the NDAA creates a shift from the concept of a required percentage of work to be performed by a prime contractor to the concept of limiting a percentage of the award amount to be spent on subcontractors. The goal is the same: To ensure that a certain amount of work is performed by a small business concern (SBC) that qualified for a small business program set-aside or sole source procurement due to its socioeconomic program status. The Government's policy of promoting contracting opportunities for small businesses, HUBZone SBCs, SDVO SBCs, WOSBs/EDWOSBs, and 8(a) SBCs is seriously undermined when firms pass on work in excess of applicable limitations to firms that are other than small or that are not otherwise eligible for specific types of small business contracts. SBA has revised all references to “performance of work” requirements found in parts 121, 124, 125, 126, and 127 to “limitations on subcontracting.”
SBA proposed to totally revise § 125.6 to take into account the new definition and calculation for the limitations on subcontracting as described in Section 1651 of the NDAA. Additionally, SBA reorganized and simplified this section for easier use. Proposed § 125.6(a) explains how to apply the limitations on subcontracting requirements to small business set-aside contracts. Instead of providing different methods of determining compliance based on the type of small business set-aside program at issue and the type of good or service sought, Section 1651(a) of the NDAA provides one method for determining compliance that is shared by almost all
The approach described in Sections 1651(a) and (d) of the NDAA is to create a limit on the percentage of the award amount received by the prime contractor that may be spent on other-than-small subcontractors. Specifically, the NDAA provides that a small business awarded a small business set-aside, 8(a), SDVO small business, HUBZone, or WOSB/EDWOSB award “may not expend on subcontractors” more than a specified amount. However, as noted below, work done by “similarly situated entities” does not count as subcontracted work for purposes of determining compliance with the limitation on subcontracting requirements. Proposed § 125.6(a)(1) and (a)(2) addressed the limitations on subcontracting applicable to small business set-aside contracts requiring services or supplies. The limitation on subcontracting for both services and supplies is statutorily set at 50% of the award amount received by the prime contractor.
Proposed § 125.6(a)(3) addressed how the limitation on subcontracting requirement would be applied to a procurement that combines both services and supplies. This provision intended to clarify that the contracting officer's (CO) selection of the applicable NAICS code will determine which limitation of subcontracting requirement applies. Proposed § 125.6(a)(4) and (5) addressed the limitations on subcontracting for general and specialty trade construction contracts. SBA proposed to keep the same percentages that currently apply: 15% for general construction and 25% for specialty trade construction.
SBA received 115 comments regarding proposed § 125.6(a). The overwhelming majority of these comments requested that SBA allow contractors to exclude the “cost of materials”, as that term is currently defined in § 125.1(i), from the limitations on subcontracting calculation for all contracts. SBA notes that the cost of materials has never been, and was not proposed to be, a term that applies to service contracts. Historically and as proposed, the term cost of materials is applicable to supply, construction, or specialty trade construction set-aside contracts. “Cost of materials” is currently excluded from the performance of work requirements and SBA did not intend to remove this exclusion in proposed paragraph 125.6(a). The exclusion of “cost of materials” from the limitations on subcontracting for supply, construction, and specialty trade construction procurements is included in this final rule. Several commenters suggested that SBA extend this exclusion to procurements assigned a service NAICS code, but, SBA does not believe that this change is needed. As discussed below, because the limitations on subcontracting for a services contract apply only to the services portion of the contract, any “cost of materials” would not be part of the services to be provided through the contract and, thus, would be excluded from the limitations on subcontracting analysis on that basis.
For a mixed contract (
Several commenters also recommended that SBA change the current definition of “cost of materials” to include any service or product that cannot be procured from a small business. Other commenters recommended that very specific types of services be included in the definition of “cost of materials” such as transportation when procured in the performance of an environmental remediation procurement. SBA did not propose to change the definition of “cost of materials” and does not believe that a change is necessary or required to implement NDAA 2013.
One commenter requested clarity on whether contractors can exclude from the limitations on subcontracting the non-service costs associated with a procurement for services. As noted above, SBA believes that only the services portion of a requirement identified as a services requirement are considered in determining compliance with the limitation on subcontracting requirements. This means that any costs associated with supply items are excluded from that analysis. However, all costs associated with providing the services, including any overhead or indirect costs associated with those services, must be included in determining compliance. This final rule clarifies this application. SBA has also added another example to § 125.6(a)(3) that involves both supplies and services to clarify how the limitations on subcontracting apply in these circumstances.
As noted above, the NDAA prohibits subcontracting beyond a certain specified amount for any small business set-aside, 8(a), SDVO small business, HUBZone, or WOSB/EDWOSB contract. Section 1651(b) of the NDAA creates an exclusion from the limitations on subcontracting for “similarly situated entities.” In effect, the NDAA deems any work done by a similarly situated entity not to constitute “subcontracting” for purposes of determining compliance with the applicable limitation on subcontracting. A similarly situated entity is a small business subcontractor that is a participant of the same small business program that the prime contractor is a certified participant and which qualifies the prime contractor to receive the award. Subcontracts between a small business prime contractor and a similarly situated entity subcontractor are excluded from the limitations on subcontracting calculation because it does not further the goals of SBA's government contracting and business development programs to penalize small business prime contract recipients that benefit
The proposed rule identified SBA's concern with determining compliance with the limitations on subcontracting by looking solely to the first tier of the contracting process (agreements between the prime contractor and its direct subcontractors). If all that was looked at was the first tier subcontract, that first tier subcontractor could in turn pass all of its performance on to a large or otherwise not similarly situated entity through a second subcontract. SBA believes that the intent of the changes in the NDAA were to ensure that the benefits of set-aside contracts flow to the intended beneficiaries. SBA does not believe that an intended consequence of the change was to make it easier to divert these benefits to ineligible entities by merely moving contracts down one or two tiers in the contracting process. As such, the proposed rule retained a requirement that firms benefiting from contracts, and their similarly situated subcontractors perform a required amount of work on the contract themselves. SBA believes that requiring firms to perform significant portions of the work, as well as to retain a significant portion of the contract award, will continue to help ensure that the benefits from these contracts flow to the intended parties.
SBA requested comments on this issue, including whether there may be unintended consequences, as well as comments about SBA's proposed solution. SBA also requested comments on whether prime contractors should be required to report to the contracting officer concerning meeting the performance of work requirements, and comments concerning the frequency and method of reporting.
SBA received three comments regarding SBA's proposal to apply the limitations on subcontracting collectively to all similarly situated entities that are performing work on the contract and that are counted toward the prime contractor's percentage of performance. Two commenters supported SBA's proposed approach and one commenter opposed this approach, and suggested that SBA apply the limitations on subcontracting only to the prime contractor and the first tier subcontractor. Applying the limitations on subcontracting to only the prime contractor and first tier subcontractor creates the possibility that the first tier subcontractor may subcontract 100% of the work it received from the prime to an entity that is not similarly situated as the prime contractor. SBA remains concerned that this would create a loophole for entities that are not small business concerns and would not have qualified to receive the prime contract to benefit, as subcontractors, from government contracts that are set aside for performance by small business concerns. To address these concerns, SBA will apply the limitations on subcontracting collectively to the prime and any similarly situated first tier subcontractor, and any work performed by a similarly situated first tier subcontractor will count toward compliance with the applicable limitation on subcontracting. Any work that a similarly situated first tier subcontractor subcontracts, to any entity, will count as subcontracted to a non-similarly situated entity for purposes of determining whether the prime/sub team performed the required amount of work. In other words, work that is not performed by the employees of the prime contractor or employees of first tier similarly situated subcontractors will count as subcontracts performed by non-similarly situated concerns.
Proposed § 125.6(b)(1) required prime contractors to enter a written agreement with each similarly situated entity that identifies the similarly situated entity and the percentage of work to be performed by that entity. The proposed rule provided that the written agreement must be signed by the similarly situated entity and provided to the contracting officer with the prime contractor's offer. Proposed § 125.6(b)(2) stated that it is immaterial whether the specific subcontractors identified in the written agreement satisfy the percentage of work identified, as long as all similarly situated entities collectively, along with the prime contractor, satisfy the performance of work requirements. Proposed § 125.6(b)(3) stated that a prime contractor may be debarred for a violation of the spirit and intent of this paragraph.
SBA received forty-seven comments related to its proposed § 125.6(b), which described how subcontracts to similarly situated entities will be excluded from the prime contractor's limitations on subcontracting. Eight of these comments generally supported § 125.6(b) as proposed. Four of these comments were considered outside the scope of this rulemaking as they advocated for an interim final rule to apply the exclusion of subcontracts to similarly situated entities from the limitations on subcontracting. One comment generally opposed proposed § 125.6(b), but did not have any suggested alternatives.
Twenty-three of the forty-seven comments received were related to proposed § 125.6(b)(1), which discussed the details that must be included in the required written agreements between the prime contractor and its similarly situated entity subcontractors. Six of these commenters supported the concept of a required written agreement but disagreed with specific aspects of the agreement such as identifying the proposed similarly situated entity subcontractors and identifying the percentage of work to be performed by those subcontractors. Seventeen of the commenters opposed the requirement for any written agreement between a prime contractor and a similarly situated entity subcontractor because it would be impossible to know their identity and possible percentage of performance in advance of the award and because it would be unnecessarily burdensome on small business prime contractors to draft and enter these agreements. SBA also received comments concerning how to address the substitution of one subcontractor for another, or a decision by the prime contractor after award to either perform the work itself or subcontract work to a similarly situated entity.
In response to these comments, SBA has decided not to require a written agreement in order for a prime contractor to rely on the work to be performed by similarly situated entities. For many years SBA's rules have allowed similarly situated entities to be counted towards the limitations on subcontracting requirements under SDVO or HUBZone set-asides or sole source awards, without also requiring a separate written agreement. There is no evidence that this long-standing policy has been difficult to understand or administer, and the rule change that limits subcontracting without regard to cost incurred for personnel should make it easier to track and identify subcontracts, especially in light of other existing requirements to report on subcontracts, such as FAR 52.204-10 (48 CFR 52.204-10). (Reporting Executive Compensation and First-Tier Subcontract Awards). In addition, SBA is concerned that requiring a written agreement would cause an administrative burden on small business concerns, which would in turn cause them to utilize this tool less often, for fear of violating the written agreement or because they would need to constantly amend the agreement based on modifications with respect to team members or to percentages of work performed by individual team members. Further, requiring a written agreement prior to offer would limit a firm's ability to decide to utilize a similarly situated entity after award and during contract
SBA received several comments in response to its request for comments on whether prime contractors should be required to report to the contracting officer on their compliance with the limitations on subcontracting. Eight commenters supported mandatory compliance reporting, and five of those commenters recommended that the reporting be made at the end of the contract term. Three of the supportive commenters recommended compliance reporting on a quarterly or annual basis. Three commenters opposed mandatory compliance reporting because it would be too burdensome on small business concerns. One commenter suggested that SBA use its auditing and investigating authority to determine compliance rather than requiring contractors to report their compliance. Another commenter suggested that the only necessary compliance reporting should be made in the offer.
In addition to the requirement for a written agreement, SBA also proposed to require compliance reporting from small business concerns that rely on similarly situated entities to meet their performance obligations under a set aside contract. Notably, SBA did not propose to require compliance reporting from all small business concerns (
For many years, SBA's regulations have allowed similarly situated entities to count towards fulfilling the limitations on subcontracting requirements under a HUBZone or SDVO set-aside or sole source contract, without a requirement to report to the CO. As discussed above, prime contractors are already required to report on subcontracting pursuant to FAR clause 52.204-10 (48 CFR 52.204-10). Thus, because SBA is not requiring written agreements in this final rule, at this time SBA has decided not to require compliance reports from firms that are utilizing similarly situated subcontractors. SBA believes that to the extent compliance reporting should be required, it should be required from all small businesses, not just those that team with similarly situated subcontractors. Thus, SBA intends to issue a proposed rule to request public comment on the issue of whether all small businesses (and not only those that are using similarly situated entities to perform a contract) should be required to report on compliance with the limitations on subcontracting on set-aside contracts. SBA understands the recommendations made by the Government Accountability Office to strengthen the monitoring and oversight of the required performance percentages for all small businesses that receive set-aside awards, including 8(a) contractors, and believes that a separate rulemaking should address that issue more appropriately.
SBA's proposed § 125.6(b) explained that work subcontracted to similarly situated entities may be excluded from a prime contractor's calculation of its limitation on subcontracting. SBA proposed to include three examples to § 125.6(b) to demonstrate how a small business concern or Federal agency should apply the exclusion for similarly situated entities and determine compliance with the limitations on subcontracting. The final rule has redesignated proposed § 125.6(b) as § 125.6(c). As mentioned above, in response to comments, SBA is adding three more examples to redesignated § 125.6(c) to clarify how the limitations on subcontracting apply when the procurement involves a mix of services and supplies.
SBA received six comments in response to proposed § 125.6(b)(3). All six commenters opposed SBA's ability to consider a party's failure to comply with the spirit and intent of the subcontract with a similarly situated entity as a basis for debarment. These commenters argued that the proposed regulation is too vague because it is unclear how SBA would demonstrate a violation of the spirit and intent, and that the penalty of debarment is too severe. SBA clarifies that a contractor's violation of the spirit and intent of a subcontract with a similarly situated entity is something SBA may consider as a basis for debarment, but is not required to consider for debarment. SBA does not take debarment and suspension lightly and understands fully the implications of such an action. As such, SBA would not initiate any debarment or suspension action unless SBA believed that the government's interests needed to be protected. This would happen where, for example, a small business prime contractor had no intent to actually use similarly situated entities. In such a case, the firm's certification would be a misrepresentation to the government, and the government could no longer rely on any representations made by the firm. SBA would not consider a debarment or suspension action where a firm made a good faith representation that it, along with one or more similarly situated entities, would meet the performance of work requirements and through unforeseen circumstances it failed to do so. Additionally, should SBA choose to consider this as a basis for debarment, the entity at issue would have an opportunity to respond to any allegation with its own arguments and evidence. SBA believes this provision is necessary to deter potential fraud, waste, and abuse of the prime contractor's ability to exclude similarly situated entity work from its limitations on subcontracting. SBA has moved the discussion of debarment to redesignated § 125.6(h).
SBA proposed to relocate the definitions that are relevant to the limitations on subcontracting that are currently found in § 125.6(e) to § 125.1
SBA received 34 comments about its proposed definition of similarly situated entity. Fifteen of these comments opposed SBA's proposition that a small business concern qualifies as a similarly situated entity if it qualifies as small for the NAICS code assigned to the prime contractor's procurement, in addition to the other requirements included in the definition of “similarly situated entity.” Three commenters requested further clarification of the definition. Two commenters supported the definition as proposed. The remaining comments were questions regarding the application of the proposed definition to procurements for specific types of services or were comments that were considered outside the scope of this rulemaking, as they suggested changes that were not proposed and are not authorized by the statute. For example, one commenter recommended that when a solicitation requires the use of a specific subcontractor, that entity should qualify as a similarly situated entity, regardless of the subcontractor's size or small business program participation. SBA believes that this would conflict with the statutory intent that only entities that would be eligible as prime contractors may qualify as similarly situated entity subcontractors. Another commenter recommended that all individuals classified by the Internal Revenue Service as independent contractors should be included in the definition of similarly situated entity. Again, this would conflict with the statutory intent that only contractors who would qualify for the prime contract are eligible to count toward the prime contractor's performance of work as similarly situated entity provisions. However, SBA has clarified in § 125.6(e)(3) that performance by an independent contractor is considered a subcontract, and may qualify as a similarly situated entity if the contractor meets the relevant criteria.
The majority of the questions related to the application of the definition to procurements for architecture and engineering services. Often the prime contract is assigned the NAICS code representing architecture services and has a size standard that is less than the size standard for engineering services. In these cases, the engineering services are often subcontracted and commenters were concerned about how the engineering firm could qualify as a similarly situated entity if it were required to comply with the size standard assigned to the prime contract. SBA received other comments which described complex procurements involving multiple services. Firms that are small for certain types of services would not qualify as small for the NAICS assigned to the contract. In response to the comments received, SBA is not adopting its proposed definition of “similarly situated entity” and instead will allow an entity to qualify as a similarly situated entity if it is small for the NAICS code that the prime contractor assigns to the subcontract. SBA believes that this alteration to the definition will address the concerns raised about specific types of service procurements. Requiring the subcontractors to be small for the size standard assigned to the prime contract would unduly restrict the ability of prime contractors to find and use similarly situated entities to satisfy the limitations on subcontracting. SBA believes the approach adopted in this final rule will increase the ability of small business prime contractors to utilize similarly situated entity subcontractors. In addition, this approach is consistent with SBA's rules which require a prime contractor to assign the NAICS code to a subcontract which describes the principal purpose of the subcontract. 13 CFR 125.3(c)(1)(v).
In § 125.6(c), SBA proposed to require a certification requirement in connection with the limitations on subcontracting requirement. However, existing regulations require firms to agree to comply with the limitations on subcontracting in connection with a set-aside contract, including firms that are utilizing similarly situated entities, and it is SBA's intent to continue that practice. Consequently, SBA's rules do not specifically require certification from the prime contractor when utilizing similarly situated entities. In order to be awarded a set-aside contract as a small business, the prime contractor must agree to comply with the limitations on subcontracting in connection with the offer, whether that entails using similarly situated entities or not.
Proposed § 125.6(f) and (h) contained language that is included in the current rule and did not contain any proposed changes to that language aside from adding new headings to these paragraphs and reorganizing this language. These provisions have been redesignated as § 125.6(d) and (e) in this final rule. Proposed § 125.6(f) discussed HUBZone procurements of commodities. SBA did not receive any comments within the scope of this rulemaking that relate to proposed § 125.6(f) and SBA is adopting the language of proposed § 125.6(f) in § 125.6(d). Proposed § 125.6(g) discussed how to request a change in the applicable limitation on subcontracting for a particular industry. SBA received two comments related to proposed § 125.6(g). One comment supported the language and the other comment was a question regarding the transition period for industries where the limitations on subcontracting percentages do not align with industry practices. It is unclear what the commenter is requesting as this paragraph does not reference a transition period. This final rule adopts the language of proposed § 125.6(g).
Proposed § 125.6(h) discussed the period of time used to determine compliance with the limitations on subcontracting. While SBA did not propose a change to the time period used to determine compliance, SBA received 15 comments related to this paragraph. Twelve of the comments contained suggestions for how to modify the proposed language to be less burdensome on small business prime contractors and allow prime contractors to have the maximum flexibility to choose and manage subcontractors. The majority of these commenters suggested that SBA use the entire contract term, the base and all option periods, to determine whether the prime contractor has complied with the limitations on subcontracting. Other commenters suggested that periodic checks of compliance would suffice in addition to checking compliance during contract close-out. The remaining commenters believed that the current requirement was too onerous on prime contractors to check compliance for each task order issued under an IDIQ contract.
In response to these comments, SBA again emphasizes that redesignated paragraph (e) is not a change in policy. It recites the policy set forth in a prior SBA rulemaking on multiple award contracting, as set forth at § 125.2(e)(2)(iv), but clarifies that this policy applies to single award task and delivery order contracts, not just multiple award contracts. SBA believes that this provides contracting officers with the maximum flexibility to determine the time period that will be used for determining compliance with the limitations on subcontracting for performance of a task or delivery order contract. SBA does not believe it is appropriate for compliance to be determined at the end of the contract term, including all option periods,
Proposed § 125.6(i) addressed how the limitations on subcontracting apply to members of a Small Business Teaming Arrangement (SBTA) that are exempt from affiliation according to § 121.103(b)(9). Proposed § 125.6(i) stated that the limitations on subcontracting apply to the combined effort of the SBTA members, not to the individual members of the SBTA separately. However, SBTAs only apply to bundled contracts, and a bundled contract is a contract that is not suitable for award to a small business concern. The Small Business Act allows small businesses to team together on a bundled contract and requires the agency to consider the capabilities of subcontractors on the team, and exempt those team members from affiliation. 15 U.S.C. 644(e)(4). If a contract contains a reserve, it is suitable for award to a small business, and thus the contract is not bundled and the SBTA would not apply. Thus, SBA is removing language concerning reserves from § 121.109(b)(9) and language concerning SBTAs from § 125.6, because the limitations on subcontracting do not apply. SBTAs with respect to bundled and consolidation contracts are discussed in depth at § 125.2(b)(iii)(G).
SBA proposed to add new § 125.6(j), which exempted small business set-aside contracts valued between $3,500 and $150,000 from the limitations on subcontracting requirements. Section 46 of the Small Business Act mandates that the statutory performance of work requirements (limitations on subcontracting) apply to small business set-aside contracts with values above $150,000, and contracts of any amount awarded to socioeconomically disadvantaged contracting programs, such as 8(a), WOSB/EDWOSB, HUBZone, and SDVO set-aside contracts. 15 U.S.C. 657s. Although the limitations on subcontracting apply to all of these contracts, Section 46 does not specifically cite Section 15(j) of the Small Business Act, which is the statutory authority for non-socioeconomically disadvantaged small business set-asides between $3,500 and $150,000. Further, Section 15(j) of the Small Business Act does not mention any limitation on subcontracting requirements in connection with the performance of set-aside contracts under Section 15(j). Thus, the FAR provides that “[t]he contracting officer shall insert the clause at 52.219-14, Limitations on Subcontracting, in solicitations and contracts for supplies, services, and construction, if any portion of the requirement is to be set aside or reserved for small business and the contract amount is expected to exceed $150,000.” FAR 19.508(e) (48 CFR 19.508(e)). SBA proposed not to expand the application of the limitations on subcontracting to apply to small business set-asides below $150,000, but rather to adopt what the FAR has done. The limitation on subcontracting requirements would continue to apply to all 8(a), HUBZone, SDVO, and WOSB/EDWOSB set-aside contract awards regardless of value, including but not limited to contracts with values between $3,500 and $150,000. SBA requested comments regarding whether the limitations on subcontracting should apply to small business set-aside contracts valued between $3,500 and $150,000. In addition, SBA requested comments on whether, for policy reasons and for purposes of consistency, the performance of work/subcontracting limitation requirements should apply to a small business set-aside contract with a value between $3,500 and $150,000.
SBA received thirteen comments regarding proposed § 125.6(j). Ten of these comments supported SBA's proposed approach to exclude procurements with a value between $3,500 and $150,000 from the limitations on subcontracting. One commenter opposed this approach and stated that eliminating the application of the nonmanufacturer rule (NMR) to procurements of this value would open itself up to direct competition with non-U.S., other than small manufacturers. Another commenter suggested that SBA should exclude all small business program set-aside procurements valued between $3,500 and $150,000 from the limitations on subcontracting rather than just small business set-aside procurements. The remaining comment received was outside the scope of this rule-making.
In response to these comments, SBA notes that the limitations on subcontracting rule and the NMR as set forth in the Small Business Act do not exclude set-asides under other authorities from those requirements based on the value of the contract. 15 U.S.C. 657s. The only set-aside authority that is not cited in the limitations on subcontracting provision is Section 15(j) of the Small Business Act, which is the statutory authority for small business set-asides valued between $3,500 and $150,000. SBA is adopting the proposed language of § 125.6(j), in redesignated § 125.6(f), as the majority of comments supported this approach and it is supported by the Small Business Act and consistent with the existing FAR.
Section 1652 of the NDAA, codified at 15 U.S.C. 645 (Section 16 of the Small Business Act), prescribes penalties for concerns that violate the limitations on subcontracting requirements. SBA proposed to add new § 125.6(k) to incorporate these penalties into the regulations. Proposed § 125.6(k) stated that concerns that violate the limitations on subcontracting are subject to the penalties listed in 15 U.S.C. 645(d) except that the fine associated with these penalties will be the greater of either $500,000 or the dollar amount spent in excess of the permitted levels for subcontracting.
SBA received twenty-nine comments related to proposed § 125.6(k). Twenty-eight of these comments requested that SBA alter this paragraph to lower the penalties and allow a good faith exception for a violation of the limitations on subcontracting. Most of these commenters were concerned that by violating the limitations on subcontracting by even $1, possibly due to a miscalculation or a change in the Service Contract Act wage rates, a prime contractor could be exposed to a minimum fine of $500,000. Many commenters requested that SBA change the language from imposing a minimum fine of $500,000 to imposing a fine that is the lesser of $500,000 or the amount spent in excess of the permitted levels. Several commenters requested that the fine be imposed on the subcontractor that is not qualified to receive the funds, as it is likely that the prime contractor relied in good faith on a misrepresentation of the subcontractor's small business or small business program participation status. Other commenters requested that SBA allow a contractor that has violated the limitations on subcontracting to submit a mitigation plan and provide the contracting officer with discretion to apply the penalty when appropriate and in an amount proportional to the severity of the violation. One commenter supported the penalty language as proposed.
In response to these comments, SBA notes that the language of proposed § 125.6(k) mirrors the language of Section 1652 of the NDAA. The penalty
This rule also proposed to revise § 121.103(h)(4). Paragraph (h) discusses the circumstances under which SBA will find affiliation among joint venturers for size purposes. Paragraph (h)(4) addresses the ostensible subcontractor rule, which is the concept that a subcontractor who performs the majority of the primary and vital requirements of a contract or whom the prime contractor is unusually reliant upon may be considered a joint venturer with the prime contractor and thus affiliated with the prime contractor for size determination purposes. SBA proposed to revise this paragraph to exclude subcontractors that are similarly situated subcontractors, as that term is defined in 13 CFR 125.1, from affiliation under the ostensible subcontractor rule. Such a position clearly flows from the NDAA's treatment of similarly situated subcontractors.
SBA received eleven comments in response to proposed § 121.103(h)(4). All eleven comments supported the exclusion of similarly situated entity subcontractors from the application of the ostensible subcontractor rule, as discussed in § 121.103(h)(4). As such, SBA is adopting the language in § 121.103(h)(4) as proposed.
SBA proposed to amend § 124.510(a), (b), and (c) to reflect the limitations on subcontracting rules with respect to the 8(a) Business Development (BD) program. Part 124 addresses the 8(a) BD program and the limitations on subcontracting that apply to procurements set aside for competition among 8(a) BD participants. SBA proposed to delete paragraphs (a) and (b) and add new paragraph (a). Currently, paragraphs (a) and (b) discuss how 8(a) BD participants can comply with the performance of work requirements even though these specifications are also discussed in § 125.6. To eliminate confusion and repetition, SBA proposed to remove current paragraph (b) and add a new paragraph (a), which will direct 8(a) BD participants to comply with the limitations on subcontracting set forth in § 125.6. The proposed rule would redesignate current paragraph (c) as paragraph (b) and include references to the limitations on subcontracting as opposed to the performance of work requirements in newly redesignated paragraph (b). The NDAA uses the term “limitations on subcontracting” to describe the concept that is currently referred to as “performance of work requirements.” This change provides consistency throughout the rules.
SBA received seventeen comments in response to the proposed language in § 124.510. Ten of these commenters opposed the proposed language and specifically disagreed with providing contracting officers the discretion to apply the limitations on subcontracting to 8(a) contracts per order. Commenters also opposed SBA's proposed § 124.510(b)(2), which allows the SBA District Director the ability to waive the applicable limitations on subcontracting in certain circumstances. Three of the comments received were suggestions to modify the language of proposed § 124.510(b) to clarify that subcontracts awarded to similarly situated entities for an 8(a) procurement are not counted toward that 8(a) prime contractor's limitations on subcontracting but are counted toward their non-8(a) revenue for purposes of meeting their business activity targets. Two commenters supported the language of § 124.510(b) as proposed.
For purposes of counting 8(a) revenue, the dollar amount of a prime contract award is credited towards the revenue of the prime contractor. Thus, to the extent an 8(a) prime decides to utilize a subcontractor for purposes of meeting the limitations on subcontracting provisions, any amount subcontracted is not deducted from the prime's 8(a) revenue. SBA notes that the language in § 124.510(b) is not new, and as such, no changes to this language were proposed. Nonetheless, several commenters expressed their opposition to a District Director's ability to waive compliance with the limitations on subcontracting in certain circumstances and disagreed with the time period used to determine compliance with the limitations on subcontracting for 8(a) procurements. In response to these comments, SBA is eliminating this provision. SBA has not received any comments or input indicating this provision has benefited specific 8(a) concerns. In addition, this exemption is not based on any statutory authority. Thus, in accordance with the intent of the section to make the performance requirements uniform across all programs, SBA is eliminating paragraphs (c)(4) and (c)(5) of § 124.510.
SBA proposed to revise § 125.15(a)(3) and (b)(3), which address the requirements for an SDVO SBC to submit an offer on a contract. SBA proposed to revise paragraph (a)(3) to state that a concern that represents itself as an SDVO SBC must also represent that it will comply with the limitations on subcontracting, as set forth in § 125.6, as part of its initial offer, including price. SBA proposed to revise paragraph (b)(3) to state that joint ventures that represent themselves as an SDVO SBC joint venture must comply with the applicable limitations on subcontracting, as set forth in § 125.6. SBA received no comments related to these paragraphs and as such is adopting the language as proposed.
SBA also proposed to revise § 126.200(b)(6). This paragraph addresses the requirements that a concern must meet in order to receive SBA's certification as a qualified HUBZone SBC. Paragraphs (b)(6) and (d) are repetitive as both address the requirement that HUBZone SBCs must comply with the relevant performance of work requirements. SBA proposed to delete paragraph (d) and revise paragraph (b)(6). Specifically, proposed paragraph (b)(6) would state that the concern must represent in its application for the HUBZone program that it will comply with the applicable limitations on subcontracting requirements with respect to any procurement that it receives as a qualified HUBZone SBC. SBA received one comment related to proposed § 126.200(b)(6), which was a request to clarify whether a HUBZone similarly situated entity subcontractor must meet the 35% residency requirement for HUBZone program participation. In response, SBA clarifies that a HUBZone similarly situated entity subcontractor must be able to qualify for the prime HUBZone procurement in order to be considered a similarly situated entity. This means that it must also be HUBZone certified and be considered small for the NAICS code assigned to its subcontract. SBA is adopting the language in § 126.200(b)(6) as proposed.
SBA proposed to revise § 126.700 in its entirety, including revision of paragraph (a) and removal of paragraphs (b) and (c). This section currently
SBA proposed to revise § 127.504(b), which addresses the requirements a concern must satisfy to submit an offer for an EDWOSB or WOSB requirement. Paragraph (b) states that the concern must meet the performance of work requirements in § 125.6. SBA proposed to revise this paragraph to replace the reference to “performance of work requirement” with “limitations on subcontracting.” SBA did not receive comments related to this paragraph and is adopting the language as proposed.
SBA proposed to revise § 127.506(d), which addresses the requirements that a joint venture must satisfy in order to submit an offer for an EDWOSB or WOSB requirement. SBA proposed to revise this paragraph by replacing the reference to “performance of work requirement” with “limitations on subcontracting.” SBA did not receive comments related to this paragraph and is adopting the language as proposed.
Section 1653 of the NDAA, as codified at 15 U.S.C. 637(d) (Section 8(d) of the Small Business Act), addresses amendments to the requirements for subcontracting plans. Section 1653(a)(2) of the NDAA states that the head of the contracting agency shall ensure that the agency collects, reports, and reviews data on the extent to which the agency's contractors meet the goals and objectives set out in their subcontracting plans. SBA proposed to add a new § 125.3(f)(8) to incorporate these provisions. SBA received three comments on this addition. Two were positive, and the one negative comment felt that the statutory language may be too burdensome for contracting officers and prime contractors. This final rule adopts the proposed language.
Section 1653(a)(3) of the NDAA modifies the Small Business Act to state that a contractor that fails to provide a written corrective action plan after receiving a marginal or unsatisfactory rating for its subcontracting plan performance or that fails to make a good faith effort to comply with its subcontracting plan will not only be in material breach of the contract, but such failure shall also be considered in any past performance evaluation of the contractor. SBA proposed to revise § 125.3(f)(5) to incorporate this language. SBA also proposed adding a new sentence to the end of § 125.3(f)(5), which would prescribe the process for a Commercial Market Representative (CMR) to report firms that are found to have acted fraudulently or in bad faith to the SBA's Area Director for the Office of Government Contracting Area Office where the firm is headquartered. SBA received eight comments on this proposed change. One of the comments wanted SBA to ensure that there was a definitive statement that contracting officers shall take into consideration ratings on performance of past subcontracting plans when evaluating past performance. SBA agrees with this position, but believes that it is already clear in the regulatory text. The provisions of the NDAA make clear that contracting officers shall take into consideration previous performance of its subcontracting plans. The remaining comments were generally supportive of the changes. Two negative comments were related to requirements of the Act itself which can be modified or changed only by another Act passed of Congress. Thus, SBA is not making any changes to the proposed rule.
Section 1653(a)(4) of the NDAA modifies the Small Business Act to state that contracting agencies also perform evaluations of a prime contractor's subcontracting plan performance, and that SBA's evaluations of subcontracting plan performance are completed as a supplement to the contracting agency's review. SBA proposed to revise § 125.3(f)(1) to incorporate this language. SBA did not receive any comments on this change and will be keeping the proposed language.
Section 1653(a)(5) of the NDAA requires that if an SBC is identified as a potential subcontractor in a proposal, offer, bid or subcontracting plan in connection with a covered Federal contract, the prime contractor shall notify the SBC prior to such identification. Section 1653(a)(5) also requires that the Administrator establish a reporting mechanism that allows potential subcontractors to report fraudulent activity or bad faith behavior by a prime contractor with respect to a subcontracting plan. SBA proposed to incorporate these requirements in new § 125.3(c)(8) and (9). SBA received eight comments on these changes. Several comments asked for clarification on how the notification requirements can be met. SBA believes that rule is very clear. There are two requirements: First that the notification is in writing; and second that it be given to the party in question. Ensuring that it is in writing and has been received is the responsibility of the contractor. SBA is not making any changes with regard to this requirement. Several commenters requested that additional requirements be added that would also require notification to SBA or another government party that the contract has provided the written notification that is required. SBA does not believe that this additional step is required by the statute, or that the additional burden on contractors is necessary to ensure compliance with the other provision.
SBA proposed to make changes to its regulations in § 121.103(f), which defines affiliation based on an identity of interest. Paragraph 121.103(f) discusses the circumstances where an identity of interest between two or more persons leads to affiliation among those persons and their interests are aggregated. SBA proposed to add additional guidance on how to analyze affiliation due to an identity of interest. SBA believed that the additional clarifications will better enable concerned parties to understand and determine when they are affiliated.
SBA proposed to divide paragraph (f) into two paragraphs. Paragraph (f)(1) will include further clarification regarding the type of relationships between individuals that will create a presumption of affiliation due to an identity of interest. Specifically, SBA proposed to insert language clarifying that a presumption of affiliation exists for firms that conduct business with each other and are owned and controlled by persons who are married couples, parties to a civil union, parents and children, and siblings. SBA proposed that the presumption would be a rebuttable presumption. The proposed rule is based on size appeal decisions that have been issued interpreting this regulation.
SBA received several comments with respect to identity of interest based on family relationships. Four commenters thought that the list of family relationships was not exhaustive enough and should include all relationships, such as grandparents and
As noted in SBA's proposed rule, the enumerated family relationships are relationships in which SBA's Office of Hearings and Appeals (OHA) has consistently found affiliation in the past.
In paragraph (f)(2), SBA proposed adopting a presumption of affiliation based on economic dependence. Specifically, if a firm derives 70% or more of its revenue from another firm over the previous fiscal year, SBA will presume that the one firm is economically dependent on the other and, therefore, that the two firms are affiliated. Currently there is no fixed percentage that SBA applies when evaluating this criteria. However, OHA size appeal decisions have provided the 70% figure as a guide. SBA believes that providing clarity on this issue will be beneficial for firms, and will enable them to more easily identify their affiliates. Further, this presumption is rebuttable, such as when a firm is new or a start-up and has only received a few contracts or subcontracts. Often new firms will not have as many partners and clients, and therefore will normally be generating more of their revenue from a much smaller number of other companies. Over time these firms should diversify and become less dependent on one entity.
SBA received 26 comments on this section. Several commenters pointed out that SBA should use a three-year time frame rather than a one year time frame because SBA already uses a three-year time frame when averaging annual receipts for size purposes. SBA agrees, and has adopted a three-year measuring period in the final rule. Several commenters were also concerned that this new rule and its interpretation could adversely impact “start-ups” that have low revenues to begin with and fewer contracts. SBA does not want this new rule to negatively impact start-ups or any other company that operates in a unique industry. That is precisely why this is not a bright line rule, but a rebuttable presumption. This rebuttable presumption is based on OHA cases, and OHA has in fact rebutted the presumption in appropriate circumstances. For instance, OHA has held that the mechanical application of the economic dependence rule is erroneous when a startup has only been able to secure one or two contracts.
SBA proposed to amend § 121.103(h) to broaden the exclusion from affiliation for small business size status to allow two or more small businesses to joint venture for any procurement without being affiliated with regard to the performance of that procurement requirement. Currently, in addition to the exclusion from affiliation given to an 8(a) protégé firm that joint ventures with its SBA-approved mentor for any small business procurement, there is also an exclusion from affiliation between two or more small businesses that seek to perform a small business procurement as a joint venture where the procurement is bundled or large (
SBA received 43 comments on this section. The comments were overwhelmingly supportive of the change. As such, this final rule adopts
SBA proposed to amend § 121.104, which explains how SBA calculates annual receipts when determining the size of a business concern. SBA proposed to clarify that receipts include all income, and the only exclusions from income are the ones specifically listed in paragraph (a). It was always SBA's intent to include all income, except for the listed exclusions; however, SBA has found that some business concerns misinterpreted the current definition of receipts to exclude passive income. SBA's proposed change clarifies the intent to include all income, including passive income, in the calculation of receipts.
SBA received 15 comments on this section. The majority of the comments were supportive. Several commenters believed that SBA should not count certain expenses to subcontractors as revenue. The comments were asking SBA to consider new exemptions. The proposed change was not intended to fundamentally change the meaning of SBA's regulation, but merely ensure that small businesses are aware that all income is considered including passive income. Thus, SBA is adopting the proposed language in this final rule.
SBA proposed to amend § 121.404(g)(2)(ii) by adding new paragraph (D) to clarify when recertification of size is required following the merger or acquisition of a firm that submitted an offer as a small business concern. Paragraph (D) clarifies that if the merger or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award.
SBA received twenty-one comments on this proposed change. Nine commenters supported SBA's proposal. One commenter asked that SBA go further and specifically allow contracting officers to refuse novation of contacts if an acquisition or merger occurs within 90 days of an award. Seven commenters strongly opposed SBA's proposed changes. Two commenters argued that there should be a 30 day period prior to award requirement. SBA does not know how this could be implemented given that offerors do not know when an award announcement will be made. One commenter suggested SBA should only require recertification if the merger or sale involves a large business. One commenter was confused about whether this rule would negate the requirement to certify at the time at offer.
SBA is adopting the proposed language in this final rule. For several years SBA's rules have required recertification in connection with a contract when there is an acquisition or merger involving the prime contractor. SBA never intended for the recertification requirement to not apply based on when the acquisition or merger occurred. If recertification is required for an existing contract, it should be required for a pending contract. An agency's receipt of small business credit should not depend on whether an acquisition or merger occurs the day before award of contract.
SBA proposed to amend § 121.702(a)(2), which addresses an ownership and control element of the eligibility requirements for the Small Business Innovation and Research (SBIR) Program, to clarify that a single venture capital operating company (VCOC), hedge fund, or private equity firm may own more than 50% of an SBIR awardee if that single VCOC, hedge fund, or private equity firm qualifies as a small business concern which is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States.
Section 121.702(a) establishes the SBIR program eligibility requirements related to ownership and control. Awardees that satisfy any of the permissible ownership and control structures discussed in § 121.702(a) must also satisfy all of the size and affiliation requirements stated in § 121.702(c). Section 121.702(a)(1)(ii) allows an SBIR awardee to be majority-owned by multiple VCOCs, hedge funds, or private equity firms. Section 121.702(a)(2) prohibits ownership by a single VCOC, hedge fund, or private equity firm that owns a majority of the concern. This paragraph has been misread because it does not account for the scenario where an awardee is majority-owned by a single VCOC, hedge fund, or private equity firm that is itself another small business concern and therefore qualifies as an allowable ownership structure under § 121.702(a)(1)(i). To clarify this point, SBA is amending § 121.702(a)(2) to explain that it is permissible for an SBIR awardee to be majority owned by a single VCOC, hedge fund, or private equity firm if that firm meets the definition of a small business concern under this section and is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States. SBA did not receive any comments related to this proposed change and is adopting the change as proposed.
SBA proposed to amend § 121.1001(a), which specifies who may initiate a size status protest. Small businesses and contracting officers have found the current language to be unclear because it contains a double negative, stating that any offeror that has not been eliminated for reasons not related to size may file a size protest. The intent is to provide standing to any offeror that is in line or consideration for award, but to not provide standing for an offeror that has been found to be non-responsive, technically unacceptable or outside of the competitive range.
In addition, the proposed rule added a new § 121.1001(b)(11) that would authorize the SBA's Director, Office of Government Contracting, to initiate a formal size determination in connection with eligibility for the SDVO SBC and the WOSB/EDWOSB programs. This change is needed to correct an oversight that did not authorize such requests for size determinations when those programs were added to SBA's regulations.
SBA received 16 comments on this change. All commenters were supportive; however one commenter believed that the protests should be allowed for firms outside the competitive range. SBA disagrees. A firm outside of the competitive range is not eligible for award and does not have standing. However, SBA and the contracting officer may file a size protest at any time, so any firm, including those that do not have standing, may bring information pertaining to the size of the apparent successful offeror to the attention of SBA and/or the contracting officer for their consideration.
SBA sought comments on the appropriate timeline for filing a NAICS code appeal. SBA's regulations
SBA proposed to clarify that the limitations on subcontracting and the nonmanufacturer rule (NMR) do not apply to small business set-aside contracts valued between $3,000 and $150,000. The statutory nonmanufacturer rule, which is contained in Section 8(a)(17) of the Small Business Act, 15 U.S.C. 637(a)(17), is an exception to the limitations on subcontracting (LOS). It provides that a concern may not be denied the opportunity to compete for a supply contract under Sections 8(a) and 15(a) of the Small Business Act simply because it is not the actual manufacturer or processor of the product. Section 8(a)(17) of the Small Business Act does not, however, also reference Section 15(j) of the Small Business Act, the authority requiring small business set-aside contracts valued between $3,500 and $150,000. Thus, there is no specific statutory requirement that the nonmanufacturer rule apply to the mandated small business set-asides between $3,500 and $150,000. SBA believes that not applying the nonmanufacturer rule to small business set-asides valued between $3,500 and $150,000 will spur small business competition by making it more likely that a contracting officer will set aside an acquisition for small business concerns because the agency will not have to request a waiver from SBA where there are no small business manufacturers available. In order to request a waiver, an agency must provide SBA with the solicitation and market research on whether manufacturers exist and wait several weeks for SBA to verify the data and grant the waiver. Without a waiver, an offeror on a small business set-aside supply contract must either manufacture at least 50% of the product on its own or supply the product of a small business made in the United States. Many waiver requests below $150,000 are for name brand items (
SBA received 28 comments on this issue, of which 19 were supportive. The non-supportive comments believed that this change would drastically hurt small business manufacturers because most of their contracts fell within the exemption range. One commenter maintained that the proposed rule would hurt resellers by increasing competition among resellers. Given the support for the change and the consistency between the FAR and SBA's regulations that this creates, SBA is adopting the proposed language in the final rule.
Several commenters asked for additional clarity on several discrete issues. Specifically, commenters sought guidance on how the NMR applies to multiple item procurements generally, and especially to procurements with multiple NAICS codes, and how the NMR and LOS apply when a multiple-item procurement contains items manufactured by multiple large and small businesses.
Further, commenters requested guidance on the treatment of rentals with regard to the NMR and LOS. In order to provide more clarity SBA is proposing new language in § 121.406(b)(4) and (e). SBA has also provided several additional examples to demonstrate how the rules should be applied. The final rule clarifies that rental services are not supplies. SBA bases this clarification on the NAICS code and NAICS manual, as well as the FAR and other government contracting statutes which indicate that renting an item is not the same thing as buying an item. SBA is also adding additional language to clarify how to apply the NMR, LOS, and size standards, to address comments concerning how to apply the various rules when the government acquires more than one item in a single procurement. SBA believes this language will more clearly state how the various regulations interact in that situation.
The intent is for the NMR, LOS, and size standards to operate in conjunction with each other in a manner consistent with all of SBA's regulations. Therefore SBA believes that the proper way to calculate LOS requirements with regard to a contract that contains waived item(s)/small business item(s) is that the value of the waived item(s) are subtracted from the total and the prime contractor is responsible for meeting the requirements on the remainder. SBA has added several examples to § 125.6(a) to help explain how this should be calculated in practice.
SBA proposed to amend § 121.1203 to require that contracting officers notify potential offerors of any waivers, whether class waivers or contract specific waivers, that will be applied to the procurement. SBA proposed that this notification of the application of a waiver be contained in the solicitation itself. Without notification that a waiver is being applied by the contracting officer, potential offerors cannot reasonably anticipate what if any requirements they must meet in order to perform the procurement in accordance with SBA's regulations. SBA believed that providing notice of waivers in the solicitation will provide all potential offerors with the information needed to decide if they should submit an offer.
SBA also proposed to amend § 121.1203, regarding waivers to the nonmanufacturer rule. SBA proposed to amend § 121.1203(a) to specifically authorize SBA to grant a waiver to the nonmanufacturer rule for an individual contract award after a solicitation has been issued, provided the contracting officer agrees to provide all potential offerors additional time to respond. SBA believes that a waiver may be appropriate even after a solicitation has been issued, but wants to ensure that all potential offerors would be fully apprised of any waiver granted after the solicitation is issued and have a reasonable amount of time (depending upon the complexities of the procurement) to adjust their offers accordingly.
SBA proposed in § 121.1203(b) to allow some waivers to be granted after the contract has been awarded. SBA believed that granting post-award waivers, when additional items that are eligible for a waiver are sought through in-scope modifications, is reasonable and will increase the use of the waiver process and allow firms to compete for contracts in a manner consistent with SBA regulations. SBA envisioned these types of post-award waivers to be given in situations similar to the example contained in the proposed regulation—where a need for an item occurs after contract award, where requiring the item would be an in-scope modification, and where the item is one for which a waiver would have been granted if sought prior to contract award.
SBA received 32 comments on the changes being made to NMR waivers. Many commenters supported the proposed language regarding notification by the contracting officer. Commenters universally agreed that being informed of the application of a
SBA proposed to add a new § 121.1203(d), dealing with waivers to the nonmanufacturer rule for the purchase of software. SBA proposed to address whether the nonmanufacturer rule should apply to certain software that can readily be treated as an item and not a service. SBA proposed to treat this type of software as a product or item of supply rather than a service. SBA believed that this change will bring SBA's regulations in line with how most buyers already perceive these types of software. Readily available software that is generally available to both the public and private sector unmodified is almost universally perceived to be a supply item, even though SBA's regulations currently would treat the production of any type of software as a service. SBA proposed to allow for certain types of software to be eligible for waivers of the nonmanufacturer rule. SBA proposed to grant waivers on software that meet criteria that establishes that the Government is buying something that is more like a product or supply item than a service. Clearly, when the Government seeks to award a contract to a business concern to create, design, customize or modify custom software, that should be classified as a service requirement and the activity will remain classified in a service NAICS code to which the nonmanufacturer rule does not apply. For a service procurement set aside for small business, the prime (together with one or more similarly situated subcontractors) would have to perform the required percentage of work. On the other hand, when the government buys certain types of unmodified software that is generally available to both the public and the government from a business concern, SBA believes that the contracting officer should classify the requirement as a commodity or supply. If the procurement is a supply contract set aside for small business, the prime contractor, together with any similarly situated subcontractors, would have to perform at least 50% of the cost of manufacturing the software, unless SBA granted a waiver of the nonmanufacturer rule.
Commenters generally supported SBA's proposed language. One commenter stated that given this new approach by SBA, that some software products should be granted class waivers. Once this rule is effective, the public will be able to request a class waiver for a software item under SBA's existing regulations for class waivers. 13 CFR 121.1204. Many commenters requested drastic changes to SBA's current waiver procedures. Specifically, the commenters requested that a waiver requested by CO be assumed granted if SBA does not respond in specified period of time. Two commenters requested language that would allow bidders to assume pending waiver requests are granted when they submit offers. SBA cannot adopt these recommendations. The Small Business Act is clear that only SBA may grant a waiver of the NMR. These comments reinforce SBA's belief that the current situation has caused too much confusion for small contractors, and SBA is adopting the proposed language in this final rule, which requires the contracting officer to request a contract specific waiver prior to issuing the solicitation, and provide notification of the application of the waiver in the solicitation itself.
One commenter complained that the application of the software waiver is not also being applied to cloud based solutions. It is SBA's current position that cloud based solutions are services that are being provided to the government and not supplies that the government is purchasing, and therefore the NMR is not applicable. In our view, cloud based solutions are similar to rentals, which, as discussed above, SBA treats as services. Several commenters asked SBA to address the issue of NMR waiver requests when the issue is contractor requesting a brand name item. The decision to request a brand name item is in the discretion of the contracting officer. However, the Small Business Act does not exclude brand name item acquisitions from the statutory NMR waiver requirements.
In the proposed rule, SBA proposed to amend § 121.201 by adding a footnote to NAICS code 511210, Software Publishers, explaining that this is the proper NAICS code to use when the government is purchasing software that is eligible for a waiver of the NMR. The 2012 NAICs manual provides the following definition of this industry:
This industry comprises establishments primarily engaged in computer software publishing or publishing and reproduction. Establishments in this industry carry out operations necessary for producing and distributing computer software, such as designing, providing documentation, assisting in installation, and providing support services to software purchasers. These establishments may design, develop, and publish, or publish only.
SBA believes that this accurately reflects the type of companies that would be producing and supplying the government with the type of software eligible for a waiver. Further, SBA proposed that the procurement of this type of software would be treated by SBA as a supply requirement, and therefore the NMR would apply, as long as the acquisition meets all of the requirements of the rule. SBA reiterates that the custom design or modification of software for the government will generally continue to be treated as a service. Therefore, if the software being acquired requires any custom modifications in order to meet the needs of the government, it is not eligible for a waiver of the NMR because the contractor is performing a service, not providing a supply.
SBA proposed to amend § 121.406(b)(5) to make a technical correction. Section 121.406(b) addresses how a nonmanufacturer may qualify as a small business concern for a requirement to provide a manufactured product or other supply item. Currently, paragraph (b)(5) states that the SBA's Administrator or designee may waive the requirement set forth in paragraph (b)(1)(iii) of this section, that requires nonmanufacturers to supply the end item of a small business manufacturer, processor or producer made in the United States. The citation to paragraph (b)(1)(iii) is incorrect and as such, SBA proposed to amend this paragraph to include the correct citation, paragraph (b)(1)(iv). SBA also proposed to make this correction in the size standard proposed rule for industries with employee based size standards that are not part of manufacturing, wholesale trade or retail trade. 79 FR 53646 (Sept. 10, 2014). The size standard rule was finalized on January 26, 2016 (81 FR 4436), and SBA has removed the proposed amendment from this final rule.
In addition, in the proposed rule SBA proposed to amend § 121.406(b)(7) to clarify that SBA's waiver of the NMR has no effect on requirements external to the Small Business Act which involve domestic sources of supply, such as the Buy American Act and the Trade Agreements Act.
In order to clarify whether the NMR applies, or whether a general or specific waiver is attached to a procurement, SBA proposed to add a new § 121.1206
SBA proposed to amend § 124.504 to clarify when a procurement for construction services is considered a new requirement. This section generally addresses when SBA must conduct an adverse impact analysis for the award of an 8(a) contract. SBA is not required to perform an adverse impact analysis for new requirements. Currently, paragraph (c)(1)(ii)(B) states that “Construction contracts, by their very nature (
SBA received 11 comments on this proposed change, and most were supportive. The non-supportive comments seemed to have misunderstood how the rule will be implemented. There is no presumption that IDIQ task or delivery order contracts are not new. The rule is neutral and the determination will be made on a case-by-case basis, subject to SBA's statutory authority to appeal. Thus, SBA is adopting the proposed language in the final rule.
SBA proposed to amend § 125.5(f), which addresses SBA's review of an application for the Certificate of Competency (COC) program. SBA proposed to insert new § 125.5(f)(3) to address how SBA should review an application for a COC based on a finding of non-responsibility due to financial capacity where the applicant is the apparent successful offeror for an IDIQ task order or contract. SBA frequently receives inquiries regarding the application of the COC process for financial capacity to the potential award of an IDIQ contract. SBA intended to clarify this process by proposing changes to § 125.5(f). The proposed changes provided that the SBA's Area Director will consider the firm's maximum financial capacity and if such COC is issued, it will be for a specific amount that serves as the limit of the firm's financial capacity for that contract. The contracting officer cannot deny the firm the award of an order or contract on the basis of financial incapacity if the firm has not reached the financial maximum identified by the Area Director.
SBA received two comments on this issue. One was supportive, and one thought it added too much of a burden to small businesses. SBA believes this rule will address certain issues that arise for IDIQ contracts. This rule provides clarity to the process and ensures that small business participation is maximized. Further, the COC process is statutory and provides SBA with the ability to review non-responsibility determinations concerning small businesses. Thus, SBA is adopting the proposed language in the final rule.
SBA is also revising 13 CFR 121.408(a), which provides the size procedures for the COC program. The revision is a technical correction. This paragraph currently references 13 CFR 121.1009 to explain how SBA would initiate a formal size determination; however, § 121.1009 relates to the process SBA uses to make a formal size determination. The correct regulatory reference is to 13 CFR 121.1001(b)(3)(ii), which explains how SBA initiates a formal size determination for the COC program.
SBA is also revising 13 CFR 121.409, to remove the second sentence. This section addresses the size standard that applies in an unrestricted or full and open procurement. The second sentence states that in an unrestricted procurement, the small business concern must supply a domestically furnished product. That may or may not be true, depending on whether or how the Buy American Act or the Trade Agreements Act apply to the procurement. The Small Business Act does not impose such a requirement on full and open or unrestricted procurements.
The Office of Management and Budget (OMB) has determined that this final rule is a “significant” regulatory action for purposes of Executive Order 12866. Accordingly, the next section contains SBA's Regulatory Impact Analysis. However, this is not a major rule under the Congressional Review Act, 5 U.S.C. 801,
The final rule implements Sections 1621, 1623, 1651, 1652, 1653 and 1654 of the National Defense Authorization Act of 2013, Public Law 112-239, 126 Stat. 1632, January 2, 2013; 15 U.S.C. 637(d), 644(l), 645, 657s. In addition, it makes several other changes needed to clarify ambiguities in or remedy perceived problems with the current regulations. These changes should make SBA's regulations easier to use and understand.
These final regulations should benefit small business concerns by allowing small business concerns to use similarly situated subcontractors in the performance of a set-aside contract, thereby expanding the capacity of the small business prime contractor and potentially enabling the firm to compete for and obtain larger contracts. It also strengthens the small business subcontracting provisions, which may result in more subcontract awards to small business concerns. The final rule also seeks to address or clarify issues that are ambiguous or subject to dispute, thereby providing clarity to contracting officers as well as small business concerns. SBA does not believe that this rule will impose new costs on small business concerns.
Many provisions in this final rule are required to implement statutory provisions, thus there are no alternatives for these regulations. SBA did consider various options in the proposed rule, including a requirement that small business concerns that want to team with similarly situated entities enter into a written agreement, certify that they will comply and report on compliance. However, in response to
This executive order directs agencies to, among other things: (a) afford the public a meaningful opportunity to comment through the Internet on proposed regulations, with a comment period that should generally consist of not less than 60 days; (b) provide for an “open exchange” of information among government officials, experts, stakeholders, and the public; and (c) seek the views of those who are likely to be affected by the rulemaking, even before issuing a notice of proposed rulemaking. As far as practicable or relevant, SBA considered these requirements in developing this rule, as discussed below.
1.
To the extent possible, the agency utilized the most recent data available in the Federal Procurement Data System—Next Generation, System for Award Management and Electronic Subcontracting Reporting System.
2.
The proposed rule had a 60-day comment period and was posted on
3.
Yes, the final rule implements statutory provisions and will provide clarification to rules that were requested by agencies and stakeholders. On many occasions, SBA made changes to language or provided additional examples, in response to public comment. The final rule will make it easier for small businesses to contract with the Federal government.
This action meets applicable standards set forth set forth in section 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. This action does not have any retroactive or preemptive effect.
SBA has determined that this final rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, for the purposes of Executive Order 13132, SBA has determined that this rule has no federalism implications warranting preparation of a federalism assessment.
For the purposes of the Paperwork Reduction Act, SBA has determined that this rule would not impose new government-wide reporting requirements on small business concerns.
According to the Regulatory Flexibility Act (RFA), 5 U.S.C. 601, when an agency issues a rulemaking, it must prepare a regulatory flexibility analysis to address the impact of the rule on small entities. However, section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities. The RFA defines “small entity” to include “small businesses,” “small organizations,” and “small governmental jurisdictions.” This final rule concerns various aspects of SBA's contracting programs, as such the rule relates to small business concerns but would not affect “small organizations” or “small governmental jurisdictions” because those programs generally apply only to “business concerns” as defined by SBA's regulations, in other words, to small businesses organized for profit. “Small organizations” or “small governmental jurisdictions” are non-profits or governmental entities and do not generally qualify as “business concerns” within the meaning of SBA's regulations.
There are approximately 300,000 concerns listed as small business concerns in the System for Award Management (SAM) in at least one industry category that could potentially be impacted by the implementation of the NDAA 2013 contracting provisions. However, we cannot say with any certainty how many will be impacted because we do not know how many of these concerns will team together to submit offers, nor do we know how many will be awarded contracts as teams. The number of firms participating in teaming will be lower than the number of firms registered in SAM. However, as discussed elsewhere in this rule, including section 2 of the Regulatory Impact Analysis, the final rule does not impose significant new compliance or other costs on small business concerns. Under current law, firms must adhere to certain performance requirements when performing set-aside contracts. SBA expects that costs now incurred by small business concerns as a result of ambiguous or indefinite regulations will be eliminated or reduced. Clarifying the confusion and uncertainty concerning the applicability of SBA's contracting regulations would also reduce the time burden on the small business contracting community and therefore make it easier for them to contract with the Federal Government. In sum, the final rule would not have a disparate impact on small businesses and would increase their opportunities to participate in Federal Government contracting without imposing any additional costs. For the reasons discussed, SBA certifies that this final rule would not have a significant economic impact on a substantial number of small business concerns.
Administrative practice and procedure, Government procurement, Government property, Grant programs—business, Individuals with disabilities, Loan programs—business, Small businesses.
Administrative practice and procedure, Government procurement, Hawaiian Natives, Indians—business and finance, Minority businesses, Reporting and recordkeeping requirements, Technical assistance.
Government contracts, Government procurement, Reporting and recordkeeping requirements, Small businesses, Technical assistance, Veterans.
Administrative practice and procedure, Government procurement, Penalties, Reporting and Recordkeeping requirements, Small businesses.
Government contracts, Reporting and recordkeeping requirements, Small businesses.
Accordingly, for the reasons stated in the preamble, SBA amends 13 CFR parts 121, 124, 125, 126, and 127 as follows:
15 U.S.C. 632, 634(b)(6), 662, and 694a(9).
(b) * * *
(9) In the case of a solicitation for a bundled contract, a small business contractor may enter into a Small Business Teaming Arrangement with one or more small business subcontractors and submit an offer as a small business without regard to affiliation, so long as each team member is small for the size standard assigned to the contract or subcontract. The agency shall evaluate the offer in the same manner as other offers with due consideration of the capabilities of the subcontractors.
(f) * * *
(1) Firms owned or controlled by married couples, parties to a civil union, parents, children, and siblings are presumed to be affiliated with each other if they conduct business with each other, such as subcontracts or joint ventures or share or provide loans, resources, equipment, locations or employees with one another. This presumption may be overcome by showing a clear line of fracture between the concerns. Other types of familial relationships are not grounds for affiliation on family relationships.
(2) SBA may presume an identity of interest based upon economic dependence if the concern in question derived 70% or more of its receipts from another concern over the previous three fiscal years.
(i) This presumption may be rebutted by a showing that despite the contractual relations with another concern, the concern at issue is not solely dependent on that other concern, such as where the concern has been in business for a short amount of time and has only been able to secure a limited number of contracts.
(ii) A business concern owned and controlled by an Indian Tribe, ANC, NHO, CDC, or by a wholly-owned entity of an Indian Tribe, ANC, NHO, or CDC, is not considered to be affiliated with another concern owned by that entity based solely on the contractual relations between the two concerns.
Firm A has been in business for 9 months and has two contracts. Contract 1 is with Firm B and is valued at $900,000 and Contract 2 is with Firm C and is valued at $200,000. Thus, Firm B accounts for over 70% of Firm A's receipts. Absent other connections between A and B, the presumption of affiliation between A and B is rebutted because A is a new firm.
Firm A has been in business for five years. It has over 200 contracts. Of that 200, 195 are with Firm B, and the value of those contracts is greater than 70% of the revenue over the previous three years. In this case, SBA would most likely find the two firms affiliated unless the firm could provide some other compelling rebuttal to the very strong presumption that it should be considered affiliated with Firm B.
(h) * * * For purposes of this section, contract refers to prime contracts, and any subcontract in which the joint venture is treated as a similarly situated entity as the term is defined in part 125 of this chapter.
* * *
(3)
(4) A contractor and its ostensible subcontractor are treated as joint venturers, and therefore affiliates, for size determination purposes. An ostensible subcontractor is a subcontractor that is not a similarly situated entity, as that term is defined in § 125.1 of this chapter, and performs primary and vital requirements of a contract, or of an order, or is a subcontractor upon which the prime contractor is unusually reliant. All aspects of the relationship between the prime and subcontractor are considered, including, but not limited to, the terms of the proposal (such as contract management, technical responsibilities, and the percentage of subcontracted work), agreements between the prime and subcontractor (such as bonding assistance or the teaming agreement), and whether the subcontractor is the incumbent contractor and is ineligible to submit a proposal because it exceeds the applicable size standard for that solicitation.
(a)
Footnotes
20.
(f) For purposes of architect-engineering, design/build or two-step sealed bidding procurements, a concern must qualify as small as of the date that it certifies that it is small as part of its initial bid or proposal (which may or may not include price).
(g) * * *
(2)(i) In the case of a merger, sale, or acquisition, where contract novation is not required, the contractor must, within 30 days of the transaction becoming final, recertify its small business size status to the procuring agency, or inform the procuring agency that it is other than small. * * *
(ii) * * *
(D) If the merger, sale or acquisition occurs after offer but prior to award, the offeror must recertify its size to the contracting officer prior to award.
(a)
(b) * * *
(4) * * * The rental of an item(s) is a service and should be treated as such in the application of the nonmanufacturer rule and the limitation on subcontracting.
(7) SBA's waiver of the nonmanufacturer rule means that the firm can supply the product of any size business without regard to the place of manufacture. However, SBA's waiver of the nonmanufacturer rule has no effect on requirements external to the Small Business Act which involve domestic sources of supply, such as the Buy American Act or the Trade Agreements Act.
(d) The performance requirements (limitations on subcontracting) and the nonmanufacturer rule do not apply to small business set-aside acquisitions with an estimated value between $3,500 and $150,000.
(e)
(2) If more than 50% of the estimated contract value is composed of items manufactured by other than small concerns, then a waiver is required. SBA may grant a contract specific waiver for one or more items in order to ensure that at least 50% of the value of the products to be supplied by the nonmanufacturer comes from domestic small business manufacturers or are subject to a waiver.
(3) If a small business is both a manufacturer of item(s) and a nonmanufacturer of other item(s), the manufacturer size standard should be applied.
(a) A firm which applies for a COC must file an “Application for Small Business Size Determination” (SBA Form 355). If the initial review of SBA Form 355 indicates the applicant, including its affiliates, is small for purposes of the COC program, SBA will process the application for COC. If the review indicates the applicant, including its affiliates is other than small SBA will initiate a formal size determination as set forth in § 121.1001(b)(3)(ii). In such a case, SBA will not further process the COC application until a formal size determination is made.
(a) * * *
(2) No single venture capital operating company, hedge fund, or private equity firm may own more than 50% of the concern unless that single venture capital operating company, hedge fund, or private equity firm qualifies as a small business concern that is more than 50% directly owned and controlled by individuals who are citizens or permanent resident aliens of the United States.
(a) * * * (1) * * *
(i) Any offeror that the contracting officer has not eliminated from consideration for any procurement-related reason, such as non-responsiveness, technical unacceptability or outside of the competitive range;
(2) * * *
(i) Any offeror that the contracting officer has not eliminated from consideration for any procurement related reason, such as non-responsiveness, technical unacceptability or outside of the competitive range;
(b) * * *
(11) In connection with eligibility for the SDVO SBC and the WOSB/EDWSOB programs, the Director, Office of Government Contracting, may initiate a formal size determination.
(a) Where appropriate, SBA will generally grant waivers for an individual contract or order prior to the issuance of a solicitation, or, where a solicitation has been issued, when the contracting officer provides all potential offerors additional time to respond.
(b) SBA may grant a waiver after contract award, where the contracting officer has determined that the modification is within the scope of the contract and the agency followed the regulations prior to issuance of the solicitation and properly and timely requested a waiver for any other items under the contract, where required.
The Government seeks to buy spare parts to fix Item A. After conducting market research, the government determines that Items B, C, and D that are being procured may be eligible for waivers and requests and receives waivers from SBA for those items prior to issuing the solicitation. After the contract is awarded, the Government determines that it will need additional spare parts to fix Item A. The Government determines that adding the additional parts as a modification to the original contract is within scope. The contracting officer believes that one of the additional parts is also eligible for a waiver from SBA, and requests the waiver at the time of the modification. If all other criteria are met, SBA would grant the waiver, even though the contract has already been awarded.
(c) An individual waiver for an item in a solicitation will be approved when the SBA Director, Office of Government Contracting, reviews and accepts a contracting officer's determination that no small business manufacturer or processor can reasonably be expected to offer a product meeting the specifications of a solicitation, including the period of performance.
(d)
(i) Has been sold, leased, or licensed to the general public, or has been offered for sale, lease, or license to the general public;
(ii) Is sold in substantial quantities in the commercial marketplace; and
(iii) Is offered to the Government, without modification, in the same form in which it is sold in the commercial marketplace.
(2) If the value of services provided related to the purchase of a supply item that meets the requirements of paragraph (d)(1) of this section exceeds the value of the item itself, the procurement should be identified as a service procurement, even if the services are provided as part of the same license, lease, or sale terms. If a contracting officer cannot make a determination of the value of services being provided, SBA will assume that the value of the services is greater than the value of items or supplies, and will not grant a waiver.
(3) Subscription services, remote hosting of software, data, or other applications on servers or networks of a party other than the U.S. Government are considered by SBA to be services and not the procurement of a supply item. Therefore SBA will not grant waivers of the nonmanufacturer rule for these types of services.
(b) * * * (1) * * *
(ii) The proposed solicitation number, NAICS code, dollar amount of the procurement, and a brief statement of the procurement history;
(iii) A determination by the contracting officer that no small business manufacturer or processor reasonably can be expected to offer a product or products meeting the specifications (including period of performance) required by a particular solicitation. Include a narrative describing market research and supporting documentation; and
(a) Contracting officers must provide written notification to potential offerors of any waivers being applied to a specific acquisition, whether it is a class waiver or a contract specific waiver. This notification must be provided at the time a solicitation is issued. If the notification is provided after a solicitation is issued, the contracting officer must provide potential offerors a reasonable amount of additional time to respond to the solicitation.
(b) If a contracting officer does not provide notice, and additional reasonable time for responses when required, then the waiver cannot be applied to the solicitation. This applies to both class waivers and individual waivers.
15 U.S.C. 634(b)(6), 636(j), 637(a), 637(d), 644 and Pub. L. 99-661, Pub. L. 100-656, sec.1207, Pub. L. 101-37, Pub. L. 101-574, section 8021, Pub. L. 108-87, and 42 U.S.C. 9815.
(c) * * *
(1) * * *
(ii) * * *
(B) Procurements for construction services (
(a) To assist the business development of Participants in the 8(a) BD program, there are limitations on the percentage of an 8(a) contract award amount that may be spent on subcontractors. The prime contractor recipient of an 8(a) contract must comply with the limitations on subcontracting at § 125.6 of this chapter.
(b) Indefinite delivery and indefinite quantity contracts. In order to ensure that the required limitations on subcontracting requirements on an indefinite delivery or indefinite quantity 8(a) award are met by the Participant, the Participant cannot subcontract more than the required percentage to subcontractors that are not similarly situated entities for each performance period of the contract (
(1) This includes Multiple Award Contracts that were set-aside or partially set-aside for 8(a) BD Participants.
(2) For orders that are set aside for eligible 8(a) Participants under full and open contracts or reserves, the Participant must meet the applicable limitation on subcontracting requirement and comply with the nonmanufacturer rule, if applicable, for each order.
(b)
(2) Notwithstanding the provisions of paragraph (b)(1) of this section, a joint venture between a protégé firm and its approved mentor (
15 U.S.C. 632(p), (q); 634(b)(6), 637, 644, 657(f), 657q; and 657s.
(b) * * *
(1) * * *
(i) * * *
(A) SBA has PCRs who are generally located at Federal agencies and buying activities which have major contracting programs. At the SBA's discretion, PCRs will review all acquisitions that are not totally set aside for small businesses to determine whether a set-aside or sole source award to a small business under one of SBA's programs is appropriate and to identify alternative strategies to maximize the participation of small businesses in the procurement. PCRs also advocate for the maximum practicable utilization of small business concerns in Federal contracting, including by advocating against the consolidation or bundling of contract requirements, as defined in § 125.1, and reviewing any justification provided by the agency for consolidation or bundling. This review includes acquisitions that are Multiple Award Contracts where the agency has not set-aside all or part of the acquisition or reserved the acquisition for small businesses. It also includes acquisitions where the agency has not set-aside orders placed against Multiple Award Contracts for small business concerns.
(F) PCRs also advocate competitive procedures and recommend the breakout for competition of items and requirements which previously have not been competed when appropriate. They may appeal the failure by the buying activity to act favorably on a recommendation in accord with the appeal procedures in paragraph (b)(2) of this section. PCRs also review restrictions and obstacles to competition and make recommendations for improvement.
(ii)
(iii) * * *
(C) Recommending that the small business subcontracting goals be based on total contract dollars in addition to goals based on a percentage of total subcontracted dollars;
(iv) PCRs will consult with the agency OSDBU regarding agency decisions to convert an activity performed by a small business concern to an activity performed by a Federal employee.
(v) PCRs may receive unsolicited proposals from small business concerns and will transmit those proposals to the agency personnel responsible for reviewing such proposals. The agency personnel shall provide the PCR with information regarding the disposition of such proposal.
(2)
(c) * * * (1) * * *
(i) * * *
(vi) Provide opportunities for the participation of small business concerns during acquisition planning processes and in acquisition plans; and
(vii) Invite the participation of the appropriate Director of Small and Disadvantaged Business Utilization in acquisition planning processes and provide that Director with access to acquisition plans.
(c) * * *
(8) A prime contractor that identifies a small business by name as a subcontractor in a proposal, offer, bid or subcontracting plan must notify those subcontractors in writing prior to identifying the concern in the proposal, bid, offer or subcontracting plan.
(9) Anyone who has a reasonable basis to believe that a prime contractor or a subcontractor may have made a false statement to an employee or representative of the Federal Government, or to an employee or representative of the prime contractor, with respect to subcontracting plans must report the matter to the SBA Office of Inspector General. All other concerns as to whether a prime contractor or subcontractor has complied with SBA regulations or otherwise acted in bad faith may be reported to the Government Contracting Area Office where the firm is headquartered.
(f) * * * (1) A prime contractor's performance under its subcontracting plan is evaluated by means of on-site compliance reviews and follow-up reviews, as a supplement to evaluations performed by the contracting agency, either on a contract-by-contract basis or, in the case of contractors having multiple contracts, on an aggregate basis. * * *
(5) Any contractor that fails to comply with paragraph (f)(4) of this section, or any contractor that fails to demonstrate a good-faith effort, as set forth in paragraph (d) of this section:
(i) May be considered for liquidated damages under the procedures in 48 CFR 19.705-7 and the clause at 52.219-16; and
(ii) Shall be in material breach of such contract or subcontract, and such failure to demonstrate good faith must be considered in any past performance evaluation of the contractor. This action shall be considered by the contracting officer upon receipt of a written recommendation to that effect from the CMR. The CMR's recommendation must include a copy of the compliance report and any other relevant correspondence or supporting documentation. Furthermore, if the CMR has a reasonable basis to believe that a contractor has made a false statement to an employee or representative of the Federal Government, or to an employee or representative of the prime contractor, the CMR must report the matter to the SBA Office of Inspector General. All other concerns as to whether a prime contractor or subcontractor has complied with SBA regulations or otherwise acted in bad faith may be reported to the Area Government Contracting Office where the firm is headquartered.
(8) The head of the contracting agency shall ensure that:
(i) The agency collects and reports data on the extent to which contractors of the agency meet the goals and objectives set forth in subcontracting plans; and
(ii) The agency periodically reviews data collected and reported pursuant to paragraph (f)(8)(i) of this section for the purpose of ensuring that such contractors comply in good faith with the requirements of this section.
(b) * * * (1) * * *
(ii) To be eligible for a COC, an offeror must qualify as a small business under the applicable size standard in accordance with part 121 of this chapter, and must have agreed to comply with the applicable limitations on subcontracting and the nonmanufacturer rule, where applicable.
(f) * * *
(3) Where a contracting officer finds a concern to be non-responsible for reasons of financial capacity on an indefinite delivery or indefinite quantity task or delivery order contract, the Area Director will consider the firm's maximum financial capacity. If the Area Director issues a COC, it will be for a specific amount that is the limit of the firm's financial capacity for that contract. The contracting officer may subsequently determine to exceed the amount, but cannot deny the firm award of an order or contract on financial grounds if the firm has not reached the financial maximum the Area Director identified in the COC letter.
(a)
(1) In the case of a contract for services (except construction), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated. Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded.
(2)(i) In the case of a contract for supplies or products (other than from a nonmanufacturer of such supplies), it will not pay more than 50% of the amount paid by the government to it to firms that are not similarly situated. Any work that a similarly situated subcontractor further subcontracts will count towards the 50% subcontract amount that cannot be exceeded. Cost of materials are excluded and not considered to be subcontracted.
(ii) In the case of a contract for supplies from a nonmanufacturer, it will supply the product of a domestic small business manufacturer or processor, unless a waiver as described in § 121.406(b)(5) of this chapter is granted.
(A) For a multiple item procurement where a waiver as described in § 121.406(b)(5) of this chapter has not been granted for one or more items, more than 50% of the value of the products to be supplied by the nonmanufacturer must be the products of one or more domestic small business manufacturers or processors.
(B) For a multiple item procurement where a waiver as described in § 121.406(b)(5) of this chapter is granted for one or more items, compliance with the limitation on subcontracting requirement will not consider the value of items subject to a waiver. As such, more than 50% of the value of the products to be supplied by the nonmanufacturer that are not subject to a waiver must be the products of one or more domestic small business manufacturers or processors.
(C) For a multiple item procurement, the same small business concern may act as both a manufacturer and a nonmanufacturer.
A contract calls for the supply of one item valued at $1,000,000. The market research shows that there are no small business manufacturers that produce this item, and the contracting officer seeks and is granted a contract specific waiver for this item. In this case, a small business nonmanufacturer may supply an item manufactured by a large business.
A contract is for $1,000,000 and calls for the acquisition of 10 items. Market research shows that nine of the items can be sourced from small business manufacturers and one item is subject to an SBA class waiver. The projected value of the item that is waived is $10,000. Therefore, at least 50% of the value of the items not subject to a waiver, or 50% of $990,000, must be supplied by one or more domestic small business manufacturers, and the prime small business nonmanufacturer may act as a manufacturer for one or more items.
A contract is for $1,000,000 and calls for the acquisition of 10 items. Market research shows that only four of these items are manufactured by small businesses. The value of the items manufactured by small business is estimated to be $400,000. The contracting officer seeks and is granted waivers on the other six items. Therefore, the value of the items granted waivers is excluded from the calculation and at least 50% of $400,000 would have to be spent by the prime contractor on items it manufactures itself, or on items manufactured by one or more other small business concerns.
A contract is for $1,000,000 and calls for the acquisition of 10 items. Market research shows that eight of the items can be sourced from small business manufacturers, and the estimated value of these items is $800,000. At least 50% of the value of the contract (
(3) In the case of a contract for general construction, it will not pay more than 85% of the amount paid by the government to it to firms that are not similarly situated. Any work that a similarly situated subcontractor further subcontracts will count towards the 85% subcontract amount that cannot be exceeded. Cost of materials are excluded and not considered to be subcontracted.
(4) In the case of a contract for special trade contractors, no more than 75% of the amount paid by the government to the prime may be paid to firms that are not similarly situated. Any work that a similarly situated subcontractor further subcontracts will count towards the 75% subcontract amount that cannot be exceeded. Cost of materials are excluded and not considered to be subcontracted.
(b)
A procuring agency is acquiring both services and supplies through a small business set-aside. The total value of the requirement is $3,000,000, with the supply portion comprising $2,500,000, and the services portion comprising $500,000. The contracting officer appropriately assigns a manufacturing NAICS code to the requirement. The cost of material is $500,000. Thus, because the services portion of the contract and the cost of materials are excluded from consideration, the relevant amount for purposes of calculating the performance of work requirement is $2,000,000 and the prime and/or similarly situated entities must perform at least $1,000,000 and the prime contractor may not subcontract more than $1,000,000 to non-similarly situated entities.
A procuring agency is acquiring both services and supplies through a small business set-aside. The total value of the requirement is $3,000,000, with the services portion comprising $2,500,000, and the supply portion comprising $500,000. The contracting officer appropriately assigns a services NAICS code to the requirement. Thus, because the supply portion of the contract is excluded from consideration, the relevant amount for purposes of calculating the performance of work requirement is $2,500,000 and the prime and/or similarly situated entities must perform at least $1,250,000 and the prime contractor may not subcontract more than $1,250,000 to non-similarly situated entities.
(c)
An SDVO SBC sole source contract is awarded in the total amount of $500,000 for hammers. The prime contractor is a manufacturer and subcontracts 51% of the total amount received, less the cost of materials ($100,000) or $204,000, to an SDVO SBC subcontractor that manufactures the hammers in the U.S. The prime contractor does not violate the limitation on subcontracting requirement because the amount subcontracted to a similarly situated entity (less the cost of materials) is excluded from the limitation on subcontracting calculation.
A competitive 8(a) BD contract is awarded in the total amount of $10,000,000 for janitorial services. The prime contractor subcontracts $8,000,000 of the janitorial services to another 8(a) BD certified firm. The prime contractor does not violate the limitation on subcontracting for services because the amount subcontracted to a similarly situated entity is excluded from the limitation on subcontracting.
A WOSB set-aside contract is awarded in the total amount of $1,000,000 for landscaping services. The prime contractor subcontracts $500,001 to an SDVO SBC subcontractor that is not also a WOSB under the WOSB program. The prime contractor is in violation of the limitation on subcontracting requirement because it has subcontracted more than 50% of the contract amount to an SDVO SBC subcontractor, which is not considered similarly situated to a WOSB prime contractor.
(d)
(e)
(1) The contracting officer, in his or her discretion, may require the concern to comply with the applicable limitations on subcontracting and the nonmanufacturer rule for each order awarded under a total or partial set-aside contract.
(2) Compliance will be considered an element of responsibility and not a component of size eligibility.
(3) Work performed by an independent contractor shall be considered a subcontract, and may count toward meeting the applicable limitation on subcontracting where the independent contractor qualifies as a similarly situated entity.
(f)
(1) Small business set-aside contracts with a value greater than $3,500 but not $150,000, or
(2) Subcontracts (except where a prime is relying on a similarly situated entity to meet the applicable limitations on subcontracting).
(g)
(1)
(i) Information relative to the economic conditions and structure of the entire national industry;
(ii) Market data, technical changes in the industry and industry trends;
(iii) Specific reasons and justifications for the change in the subcontracting percentage;
(iv) The effect such a change would have on the Federal procurement process; and
(v) Information demonstrating how the proposed change would promote the purposes of the small business, 8(a), SDVO, HUBZone, WOSB, or EDWOSB programs.
(2)
(3)
(4)
(h)
(a) * * *
(3) It will comply with the limitations on subcontracting requirements set forth in § 125.6;
(b) * * *
(1)
(3)
15 U.S.C. 632(a), 632(j), 632(p), 644, and 657a.
(b) * * *
(6)
(f) A qualified HUBZone SBC may submit an offer on a HUBZone contract for supplies as a nonmanufacturer if it meets the requirements of the nonmanufacturer rule set forth at § 121.406 of this chapter.
A prime contractor receiving an award as a qualified HUBZone SBC must meet the limitations on subcontracting requirements set forth in § 125.6 of this chapter.
15 U.S.C. 632, 634(b)(6), 637(m), and 644.
(b) The concern must also meet the applicable limitations on subcontracting requirements as set forth in § 125.6 of this chapter.
(a)
(d) The joint venture must comply with the limitations on subcontracting, as required by § 125.6 of this chapter;
Federal Aviation Administration (FAA), DOT.
Final rule.
We are adopting a new airworthiness directive (AD) for Turbomeca S.A. Arriel 1D and 1D1 turboshaft engines with a pre-modification (mod) TU357 gas generator module (M03), installed. This AD requires removing the pre-modification (mod) TU357 gas generator module (M03) and replacing with a part eligible for installation. This AD was prompted by reports of divergent rubbing between the piston shaft small diameter labyrinth and the rear bearing support. We are issuing this AD to prevent failure of the labyrinth seal and engine, in-flight shutdown, and loss of control of the helicopter.
This AD becomes effective July 5, 2016.
For service information identified in this final rule, contact Turbomeca S.A., 40220 Tarnos, France; phone: 33 (0)5 59 74 40 00; fax: 33 (0)5 59 74 45 15. You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.
You may examine the AD docket on the Internet at
Philip Haberlen, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7770; fax: 781-238-7199; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to the specified products. The NPRM was published in the
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2016-0009, dated January 13, 2016 (referred to hereinafter as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:
Some cases of divergent rubbing between the piston shaft small diameter labyrinth and the rear bearing support have been reported.
This condition, if not corrected, could lead to an uncommanded engine in-flight shutdown.
You may obtain further information by examining the MCAI in the AD docket on the Internet at
We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (81 FR 10544, March 1, 2016).
We reviewed the available data and determined that air safety and the public interest require adopting this AD as proposed.
Turbomeca S.A. has issued Mandatory Service Bulletin (MSB) No. 292 72 1357, Version B, dated November 12, 2015. The MSB describes procedures for installing a post-modification (mod) TU357 gas generator module (M03). This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We estimate that this proposed AD affects 426 engines installed on helicopters of U.S. registry. We also estimate that it would take about 40 hours per engine to comply with this proposed AD. The average labor rate is $85 per hour. Required parts cost about $16,500 per engine. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $8,477,400.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this AD:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),
(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction, and
(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD becomes effective July 5, 2016.
None.
This AD applies to all Arriel 1D and 1D1 turboshaft engines with a pre-modification (mod) TU357 gas generator module (M03), installed.
This AD was prompted by reports of divergent rubbing between the piston shaft small diameter labyrinth and the rear bearing support. We are issuing this AD to prevent failure of the labyrinth seal and engine, in-flight shutdown, and loss of control of the helicopter.
Comply with this AD within the compliance times specified, unless already done.
(1) Within 4 months or 240 engine operating hours after the effective date of this AD, whichever occurs later, remove the pre-modification (mod) TU357 gas generator module (M03) from service and replace with a part eligible for installation.
(2) Reserved.
The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request to:
(1) For more information about this AD, contact Philip Haberlen, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7770; fax: 781-238-7199; email:
(2) Refer to MCAI European Aviation Safety Agency AD 2016-0009, dated January 13, 2016, for more information. You may examine the MCAI in the AD docket on the Internet at
(3) Turbomeca S.A. Mandatory Service Bulletin (MSB) No. 292 72 1357, Version B, dated November 12, 2015, which is not incorporated by reference in this AD, can be obtained from Turbomeca S.A., using the contact information in paragraph (g)(4) of this AD.
(4) Turbomeca S.A., 40220 Tarnos, France; phone: 33 (0)5 59 74 40 00; fax: 33 (0)5 59 74 45 15.
(5) You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.
None.
Federal Aviation Administration (FAA), DOT.
Final rule.
This action establishes Class E airspace in Lisbon, ND. Controlled airspace is necessary to accommodate new Area Navigation (RNAV) Standard Instrument Approach Procedures at Lisbon Municipal Airport. The FAA is taking this action to enhance the safety and management of Instrument Flight Rule (IFR) operations at the airport.
Effective 0901 UTC, September 15, 2016. The Director of the Federal Register approves this incorporation by reference action under title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA Order 7400.9 and publication of conforming amendments.
FAA Order 7400.9Z, Airspace Designations and Reporting Points, and subsequent amendments can be viewed on line at
FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.
Raul Garza, Jr., Central Service Center, Operations Support Group, Federal Aviation Administration, Southwest Region, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone: (817) 222-5874.
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 establishes controlled airspace at Lisbon Municipal Airport, Lisbon, ND.
On February 17, 2016, the FAA published in the
Class E airspace designations are published in paragraph 6005 of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
This document amends FAA Order 7400.9Z, airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the
This amendment to Title 14, Code of Federal Regulations (14 CFR) part 71 establishes Class E airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Lisbon Municipal Airport, Lisbon, ND, to accommodate new RNAV standard instrument approach procedures. Controlled airspace is needed for the safety and management of IFR operations at the airport.
Class E airspace designations are published in Paragraph 6005 of FAA Order 7400.9Z, dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.
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, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a Regulatory Evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exists that warrant preparation of an environmental assessment.
Airspace, Incorporation by reference, Navigation (air).
In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:
49 U.S.C. 106(f), 106(g); 40103, 40113, 40120, E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.
That airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Lisbon Municipal Airport.
Office of National Marine Sanctuaries (ONMS), National Ocean Service (NOS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Final rule; delay of effectiveness for discharge requirements with regard to U.S. Coast Guard activities.
The National Oceanic and Atmospheric Administration (NOAA) expanded the boundaries of Gulf of the Farallones National Marine Sanctuary (now renamed Greater Farallones National Marine Sanctuary or GFNMS) and Cordell Bank National Marine Sanctuary (CBNMS) to an area north and west of their previous boundaries with a final rule published on March 12, 2015. The final rule entered into effect on June 9, 2015. At that time, NOAA postponed the effectiveness of the discharge requirements in both sanctuaries' regulations in the areas added to GFNMS and CBNMS boundaries in 2015 with regard to U.S. Coast Guard activities for 6 months. This notice extends the postponement of the discharge requirements for these activities for another 6 months to provide adequate time for completion of an environmental assessment, and subsequent rulemaking, as appropriate.
The effectiveness for the discharge requirements in both CBNMS and GFNMS expansion areas with regard to U.S. Coast Guard activities is December 9, 2016.
Copies of the FEIS, final management plans, and the final rule published on March 12, 2015, can be viewed or downloaded at
Maria Brown, Greater Farallones National Marine Sanctuary Superintendent, at
On March 12, 2015, NOAA expanded the boundaries of Gulf of the Farallones National Marine Sanctuary (now renamed Greater Farallones National Marine Sanctuary or GFNMS) and Cordell Bank National Marine Sanctuary (CBNMS) to an area north and west of their previous boundaries with a final rule (80 FR 13078). The final rule entered into effect on June 9, 2015 (80 FR 34047). To ensure that the March 12, 2015, rule does not undermine USCG's ability to perform its duties, at that time, NOAA postponed the effectiveness of the discharge requirements in both sanctuaries' regulations with regard to U.S. Coast Guard (USCG) activities for 6 months. An additional six month postponement of the effectiveness of the discharge requirements was published in the
NOAA previously conducted an environmental analysis under the National Environmental Policy Act (NEPA) as part of the rulemaking process leading to the expansion of CBNMS and GFNMS, which addressed regulations regarding the discharge of any matter or material in the sanctuaries. The environmental impacts of the decision to postpone effectiveness reflect a continuation of the environmental baseline and the no action alternative presented in that analysis. Should NOAA decide to amend the regulations governing discharges for USGS activities in CBNMS and GFNMS, any additional environmental analysis required under NEPA would be prepared and released for public comment.
This action has been determined to be not significant for purposes of the meaning of Executive Order 12866.
The Assistant Administrator of National Ocean Service (NOS) finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive the notice and comment requirements of the Administrative Procedure Act (APA) because this action is administrative in nature. This action postpones the effectiveness of the discharge requirements in the regulations for CBNMS and GFNMS in the areas added to the sanctuaries' boundaries in 2015 (subject to notice and comment review) with regard to U.S. Coast Guard activities for 6 months to provide adequate time for public scoping,
16 U.S.C. 1431
Food and Drug Administration, HHS.
Final order.
The Food and Drug Administration (FDA) is classifying the diurnal pattern recorder system into class II (special controls). The special controls that will apply to the device are identified in this order and will be part of the codified language for the diurnal pattern recorder system's classification. The Agency is classifying the device into class II (special controls) in order to provide a reasonable assurance of safety and effectiveness of the device.
This order is effective May 31, 2016. The classification was applicable on March 4, 2016.
Alexander Beylin, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, Rm. 2404, Silver Spring, MD 20993-0002, 301-796-6463.
In accordance with section 513(f)(1) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 360c(f)(1)), devices that were not in commercial distribution before May 28, 1976 (the date of enactment of the Medical Device Amendments of 1976), generally referred to as postamendments devices, are classified automatically by statute into class III without any FDA rulemaking process. These devices remain in class III and require premarket approval, unless and until the device is classified or reclassified into class I or II, or FDA issues an order finding the device to be substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval. The Agency determines whether new devices are substantially equivalent to predicate devices by means of premarket notification procedures in section 510(k) of the FD&C Act (21 U.S.C. 360(k)) and part 807 (21 CFR part 807) of the regulations.
Section 513(f)(2) of the FD&C Act, as amended by section 607 of the Food and Drug Administration Safety and Innovation Act (Pub. L. 112-144), provides two procedures by which a person may request FDA to classify a device under the criteria set forth in section 513(a)(1) of the FD&C Act. Under the first procedure, the person submits a premarket notification under section 510(k) of the FD&C Act for a device that has not previously been classified and, within 30 days of receiving an order classifying the device into class III under section 513(f)(1) of the FD&C Act, the person requests a classification under section 513(f)(2). Under the second procedure, rather than first submitting a premarket notification under section 510(k) of the FD&C Act and then a request for classification under the first procedure, the person determines that there is no legally marketed device upon which to base a determination of substantial equivalence and requests a classification under section 513(f)(2) of the FD&C Act. If the person submits a request to classify the device under this second procedure, FDA may decline to undertake the classification request if FDA identifies a legally marketed device that could provide a reasonable basis for review of substantial equivalence with the device or if FDA determines that the device submitted is not of “low-moderate risk” or that general controls would be inadequate to control the risks and special controls to mitigate the risks cannot be developed.
In response to a request to classify a device under either procedure provided by section 513(f)(2) of the FD&C Act, FDA will classify the device by written order within 120 days. This classification will be the initial classification of the device.
On April 28, 2014, Sensimed AG submitted a request for classification of the SENSIMED Triggerfish® device under section 513(f)(2) of the FD&C Act. The manufacturer recommended that the device be classified into class II (Ref. 1).
In accordance with section 513(f)(2) of the FD&C Act, FDA reviewed the request in order to classify the device under the criteria for classification set forth in section 513(a)(1). FDA classifies devices into class II if general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness, but there is sufficient information to establish special controls to provide reasonable assurance of the safety and effectiveness of the device for its intended use. After review of the information submitted in the request, FDA determined that the device can be classified into class II with the establishment of special controls. FDA believes these special controls, in addition to general controls, will provide reasonable assurance of the safety and effectiveness of the device.
Therefore, on March 4, 2016, FDA issued an order to the requestor classifying the device into class II. FDA is codifying the classification of the device by adding 21 CFR 886.1925.
Following the effective date of this final classification order, any firm submitting a premarket notification (510(k)) for a diurnal pattern recorder system will need to comply with the special controls named in this final order.
The device is assigned the generic name diurnal pattern recorder system, and it is identified as a nonimplantable, prescription device incorporating a telemetric sensor to detect changes in ocular dimension for monitoring diurnal patterns of intraocular pressure (IOP) fluctuations.
FDA has identified the following risks to health associated with this type of device and the measures required to mitigate these risks in Table 1:
FDA believes that the special controls, in addition to the general controls, address these risks to health and provide reasonable assurance of safety and effectiveness.
Diurnal pattern recorder systems are not safe for use except under the supervision of a practitioner licensed by law to direct the use the device. As such, the device is a prescription device and must satisfy prescription labeling requirements (see 21 CFR 801.109
Section 510(m) of the FD&C Act provides that FDA may exempt a class II device from the premarket notification requirements under section 510(k) of the FD&C Act, if FDA determines that premarket notification is not necessary to provide reasonable assurance of the safety and effectiveness of the device. For this type of device, FDA has determined that premarket notification is necessary to provide reasonable assurance of the safety and effectiveness of the device. Therefore, this device type is not exempt from premarket notification requirements. Persons who intend to market this type of device must submit to FDA a premarket notification, prior to marketing the device, which contains information about the diurnal pattern recorder system they intend to market.
The Agency has determined under 21 CFR 25.34(b) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.
This final order establishes special controls that refer to previously approved collections of information found in other FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in part 807, subpart E, regarding premarket notification submissions have been approved under OMB control number 0910-0120, and the collections of information in 21 CFR parts 801 and 809, regarding labeling, have been approved under OMB control number 0910-0485.
The following reference is on display in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; it is also available electronically at
1. DEN140017: De novo request per 513(f)(2) from Sensimed AG, dated April 28, 2014.
Medical devices, Ophthalmic goods and services.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 886 is amended as follows:
21 U.S.C. 351, 360, 360c, 360e, 360j, 371.
(a)
(b)
(1) Clinical performance data must demonstrate that the device and all of its components perform as intended under anticipated conditions of use. The
(i) Ability of the device to detect diurnal changes.
(ii) Tolerability of the system at the corneoscleral interface in the intended use population.
(2) Nonclinical testing must validate measurements in an appropriate nonclinical testing model to ensure ability to detect changes in intraocular pressure.
(3) Patient-contacting components must be demonstrated to be biocompatible.
(4) Any component that is intended to contact the eye must be demonstrated to be sterile throughout its intended shelf life.
(5) Software verification, validation, and hazard analysis must be performed.
(6) Performance testing must demonstrate the electromagnetic compatibility and electromagnetic interference of the device.
(7) Performance testing must demonstrate electrical safety of the device.
(8) Labeling must include the following:
(i) Warning against activities and environments that may put the user at greater risk.
(ii) Specific instructions for the safe use of the device, which includes:
(A) Description of all device components and instructions for assembling the device;
(B) Explanations of all available programs and instructions for their use;
(C) Instructions and explanation of all user-interface components;
(D) Instructions on all safety features of the device; and
(E) Instructions for properly maintaining the device.
(iii) A summary of nonclinical testing information to describe EMC safety considerations.
(iv) A summary of safety information obtained from clinical testing.
(v) Patient labeling to convey information regarding appropriate use of device.
Federal Highway Administration (FHWA), Federal Transit Administration (FTA), DOT.
Final rule.
This final rule amends FHWA and FTA categorical exclusions (CE) for projects receiving limited Federal assistance to reflect a requirement in the Fixing America's Surface Transportation (FAST) Act to index for inflation the monetary thresholds for these CEs. This final rule also implements a provision in the FAST Act that directs FHWA to amend its rules on programmatic agreements for CEs. The amendments contained in this rule reflect statutory language in the FAST Act.
Effective on June 30, 2016.
For the Federal Highway Administration: Owen Lindauer, Ph.D., Office of Project Delivery and Environmental Review, HEPE, (202) 366-2655,
This document may be viewed online through the Federal eRulemaking portal at
On December 4, 2015, President Obama signed into law the FAST Act, Public Law 114-94, 129 Stat. 1312, which contains new requirements that FHWA and FTA (hereafter referred to as “the Agencies”) must meet in complying with the National Environmental Policy Act (NEPA) (42 U.S.C. 4321
The Agencies included a reference to their respective Web sites (
Section 1315(b) requires FHWA to revise its CE regulation on programmatic agreements. Specifically, FHWA must revise 23 CFR 771.117(g) to allow a State Department of Transportation (State DOT) to make a CE determination on behalf of FHWA. The revision must clarify that the authority under such agreements may include the responsibility to make CE determinations for actions described in 23 CFR 771.117(c)-(d) that meet the criteria for a CE under 40 CFR 1508.4 (the President's Council on Environmental Quality's Regulations for Implementing the Procedural Provisions of NEPA) and are identified in the programmatic agreement.
This rulemaking adopts the language used in FAST Act section 1315(b) with two minor changes to retain the style used throughout the regulation: FHWA uses the abbreviation “CE” instead of “categorical exclusion” and “40 CFR 1508.4” instead of the statutory language of “section 1508.4 of title 40, Code of Federal Regulations.” The rule set forth below incorporates the new phrase “and that meet the criteria for a CE under 40 CFR 1508.4, and are identified in the programmatic agreement” into the otherwise existing regulatory language in 23 CFR 771.117(g). The FHWA reprints below the paragraph 771.117(g) to show how the statutory language is incorporated into the paragraph as a whole.
The Agencies have determined that a final rule is appropriate in this instance because the language in the FAST Act is clear and does not require interpretive text. Therefore the amendments to 23 CFR 771.117(c)(23), 23 CFR 771.118(c)(13), and 23 CFR 771.117(g) follow the statutory language without substantive modification.
Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the normal notice and comment procedure if it finds, for good cause, that it would be impracticable, unnecessary, or contrary to the public interest. The Agencies find good cause as notice and comment for this rule would be unnecessary due to the nature of the revisions (
The Agencies have determined this action is not a significant regulatory action within the meaning of Executive Order 12866, and within the meaning of the U.S. Department of Transportation's regulatory policies and procedures. Since this rulemaking implements a congressional mandate to allow States to make a CE determination on behalf of FHWA in specific instances and to adjust existing monetary-based CEs for inflation, the Agencies anticipate that the economic impact of this rulemaking would be minimal. This final rule will not adversely affect, in a material way, any sector of the economy. Additionally, this action complies with the principles of Executive Order 13563. In addition, these changes will not interfere with any action taken or planned by another agency and would not materially alter the budgetary impact of any entitlements, grants, user fees, or loan programs. Consequently, a full regulatory evaluation is not required.
Since the Agencies find good cause under 5 U.S.C. 553(b)(3)(B) to waive notice and opportunity for comment for this rule, the provisions of the Regulatory Flexibility Act (Pub. L. 96-354, 5 U.S.C. 601-612) do not apply. However, the Agencies evaluated the effects of this action on small entities and determined the action would not have a significant economic impact on a substantial number of small entities. This final rule will not make any substantive changes to the Agencies' regulations or in the way that the Agencies' regulations affect small entities; it merely incorporates statutory text. For this reason, the Agencies certify that this action will not have a significant economic impact on a substantial number of small entities.
This final rule does not impose unfunded mandates as defined by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat. 48, March 22, 1995) as it will not result in the expenditure by State, local, tribal governments, in the aggregate, or by the private sector, of $155 million or more in any one year (2 U.S.C. 1532).
Executive Order 13132 requires agencies to assure meaningful and timely input by State and local officials in the development of regulatory policies that may have a substantial, direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. This action has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 dated August 4, 1999, and the Agencies determined this action will not have a substantial direct effect or sufficient federalism implications on the States. The Agencies also determined this action will not preempt any State law or regulation or affect the States' ability to discharge traditional State governmental functions.
The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities apply to this program.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501,
Agencies are required to adopt implementing procedures for NEPA that establish specific criteria for, and identification of, three classes of actions: Those that normally require preparation of an Environmental Impact Statement; those that normally require preparation of an Environmental Assessment; and those that are categorically excluded from further NEPA review (40 CFR 1507.3(b)). The CEQ regulations do not direct agencies to prepare a NEPA analysis or document before establishing Agency procedures (such as this regulation) that supplement the CEQ regulations for implementing NEPA. The changes
Executive Order 12898, Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, and DOT Order 5610.2(a), 77 FR 27534 (May 10, 2012) (available online at
The Agencies have evaluated this final rule under the Executive Order, the DOT Order, the FHWA Order, and FTA Policy Guidance. They determined that the amendment would not cause disproportionately high and adverse human health and environmental effects on minority or low income populations.
At the time the Agencies apply the NEPA implementing procedures in 23 CFR part 771, they would have an independent obligation to conduct an evaluation of the proposed action under the applicable EJ orders and guidance to determine whether the proposed action has the potential for EJ effects. The rule would not affect the scope or outcome of that EJ evaluation. In any instance where there are potential EJ effects resulting from a proposed Agency action covered under any of the NEPA classes of action in 23 CFR part 771, public outreach under the applicable EJ orders and guidance would provide affected populations with the opportunity to raise any concerns about those potential EJ effects.
The Agencies have analyzed this final rule under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights. The Agencies found this final rule will not affect a taking of private property or otherwise have taking implications under Executive Order 12630.
This action meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.
The Agencies analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. The Agencies certify that this action would not cause an environmental risk to health or safety that might disproportionately affect children.
The Agencies have analyzed this action under Executive Order 13175, dated November 6, 2000, and determined the action will not have substantial direct effects on one or more Indian tribes; will not impose substantial direct compliance costs on Indian tribal governments; and will not preempt tribal laws. This final rule addresses obligations of Federal funds to States for Federal-aid highway projects and Federal funds to transit agencies for Federal public transportation projects and will not impose any direct compliance requirements on Indian tribal governments. Therefore, a tribal summary impact statement is not required.
The Agencies have analyzed this action under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agencies determined this rule is not a significant energy action under that order since it is not a significant regulatory action under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required.
A regulation identification number (RIN) is assigned to each regulatory action listed in the Unified Agenda of Federal Regulations. The Regulatory Information Service Center publishes the Unified Agenda in April and October of each year. The RIN number contained in the heading of this document can be used to cross-reference this action with the Unified Agenda.
Categorical exclusions, Environmental review process, Environmental protection, Grant programs—transportation, Highways and roads, Programmatic approaches, Reporting and recordkeeping requirements.
Categorical exclusions, Environmental review process, Environmental protection, Grant programs—transportation, Public transportation, Transit.
In consideration of the foregoing, the Agencies amend title 23, Code of
42 U.S.C. 4321
(c) * * *
(23) Federally-funded projects:
(i) That receive less than $5,000,000 (as adjusted annually by the Secretary to reflect any increases in the Consumer Price Index prepared by the Department of Labor, see
(ii) With a total estimated cost of not more than $30,000,000 (as adjusted annually by the Secretary to reflect any increases in the Consumer Price Index prepared by the Department of Labor, see
(g) FHWA may enter into programmatic agreements with a State to allow a State DOT to make a NEPA CE certification or determination and approval on FHWA's behalf, for CEs specifically listed in paragraphs (c) and (d) of this section and that meet the criteria for a CE under 40 CFR 1508.4, and are identified in the programmatic agreement. Such agreements must be subject to the following conditions:
(c) * * *
(13) Federally-funded projects:
(i) That receive less than $5,000,000 (as adjusted annually by the Secretary to reflect any increases in the Consumer Price Index prepared by the Department of Labor, see
(ii) With a total estimated cost of not more than $30,000,000 (as adjusted annually by the Secretary to reflect any increases in the Consumer Price Index prepared by the Department of Labor, see
42 U.S.C. 4321
Bureau of Ocean Energy Management (BOEM), Interior.
Final rule; correction.
On March 30, 2016, the Bureau of Ocean Energy Management (BOEM) published in the
This correction is effective on May 31, 2016.
Robert Sebastian, Office of Policy, Regulation and Analysis at (504) 736-2761 or email at
BOEM has the authority, under certain conditions, to disqualify a party from acquiring a lease or an interest in a lease on the Outer Continental Shelf (OCS). The title, as well as the verbiage, of § 556.403 in the final Leasing Rule, states that BOEM may disqualify entities from “holding,” a lease or lease interest on the OCS. This could be interpreted to imply that BOEM would not allow a disqualified party to retain a pre-existing OCS lease interest. That interpretation is incorrect. Disqualified entities may not acquire new leases or lease interests, but they may continue to hold existing leases or lease interests. BOEM is correcting the wording of § 556.403 to avoid the implication that the use of the word “hold” might authorize BOEM, under the conditions stated in § 556.403, to require forfeiture of leases already acquired. The final rule was issued under Docket ID: MMS-2007-OMM-0069, which has expired and is no longer accessible. Therefore, BOEM is utilizing a new Docket ID for this correction (BOEM-2016-0031).
Section V, Legal and Regulatory Analyses, of the final rule issued on March 30, 2016 (81 FR 18145), summarizes BOEM's analyses of that rule pursuant to applicable statutes and executive orders. This amendment does not change the conclusions described in that section because the amendment conforms the regulatory text to BOEM's intent in the final rule, as then analyzed. Therefore, no additional analysis is necessary.
The Administrative Procedure Act, 5 U.S.C. 553(b), provides that, when an agency for good cause finds that “notice and public procedure . . . are impracticable, unnecessary, or contrary to the public interest,” the agency may issue a rule without providing notice and an opportunity for prior public comment. To the extent this rule has substantive effects, it is to relieve regulated parties from sanctions. It does not require any party to change its conduct, and it does not change the rights of any party affected by the final rule. Therefore, BOEM believes that the public would not be interested in commenting on this correction, and thus notice and comment are unnecessary. Moreover, if BOEM were to first publish a proposed rule, allow the public sufficient time to submit comments, analyze the comments, and then publish a final rule, it would not be possible to correct this error and make it effective on the same day as the earlier final rule, May 31, 2016. Accordingly, notice and comment is impracticable. For these reasons, BOEM finds that soliciting public comment is unnecessary and impracticable and that there is good
Similarly, BOEM finds that there is good cause to waive the usual 30-day delay in the effective date for this correction. This correction will not require any party to adjust its conduct and will not change the effect of the already published final rule. For these reasons, BOEM believes that the public does not need 30 days advance notice of this correction and that a delay in effectiveness is unnecessary. If this correction is not made effective on the same date, it would not become effective until after the erroneous language in the already published rule becomes effective, May 31, 2016. This could cause confusion to anyone potentially affected by § 556.403, making a 30-day delay in effectiveness impracticable. Therefore, pursuant to 5 U.S.C. 553(d), BOEM has determined that a 30-day delay in the effective date is unnecessary and impractical, and there is good cause to waive the delayed effective date for this final rule.
For the reasons stated in the preamble, BOEM amends 30 CFR part 556 (as amended by the final rule published on March 30, 2016, at 81 FR 18111) as follows:
30 U.S.C. 1701 note, 30 U.S.C. 1711, 31 U.S.C. 9701, 42 U.S.C. 6213, 43 U.S.C. 1331 note, 43 U.S.C. 1334, 43 U.S.C. 1801-1802.
You may be disqualified from acquiring a lease or an interest in a lease on the OCS if:
(a) You or your principals are excluded or disqualified from participating in a transaction covered by Federal non-procurement debarment and suspension (2 CFR parts 180 and 1400), unless the Department explicitly approves an exception for a transaction pursuant to the regulations in those parts;
(b) The Secretary finds, after notice and hearing, that you or your principals (including in the meaning of “you,” for purposes of this subparagraph, a bidder or prospective bidder) fail to meet due diligence requirements or to exercise due diligence under section 8(d) of OCSLA (43 U.S.C. 1337(d)) on any OCS lease; or
(c) BOEM disqualifies you from acquiring a lease or an interest in a lease on the OCS based on your unacceptable operating performance. BOEM will give you adequate notice and opportunity for a hearing before imposing a disqualification, unless BSEE has already provided such notice and opportunity for a hearing.
Coast Guard, DHS.
Notice of enforcement of regulation.
The Coast Guard will enforce the special local regulation requirements for the Portland Annual Dragon Boat Races from 7 a.m. until 6 p.m. on June 11, 2016 and 7 a.m. until 6 p.m. on June 12, 2016. This action is necessary to ensure the safety of maritime traffic, including the public vessels present, on the Willamette River during the Portland Annual Dragon Boat Races. During the enforcement period, no person or vessel may transit this regulated area without permission from the Sector Columbia River Captain of the Port or a designated representative.
The regulations in 33 CFR 100.1302 will be enforced from 7 a.m. until 6 p.m., on June 11, 2016 and June 12, 2016.
If you have questions about this notice of enforcement, call or email Ken Lawrenson, Waterways Management Division, Marine Safety Unit Portland, U.S. Coast Guard; telephone 503-240-9319, email
The Coast Guard will enforce special local regulations in 33 CFR 100.1302 from 7 a.m. until 6 p.m. on June 11, 2016 and 7 a.m. until 6 p.m. on June 12, 2016, for the Portland Annual Dragon Boat races in the Willamette River. This action is being taken to provide for the safety of life on navigable waterways during the regatta. Our regulation for the Annual Dragon Boat Races, Portland, Oregon, § 100.1302, specifies the location of the regulated area for this regatta course as all waters of the Willamette River shore to shore, bordered on the north by the Hawthorne Bridge, and on the south by the Marquam Bridge. As specified in § 100.1302, during the enforcement period, no vessel may transit this regulated area without approval from the Captain of the Port Sector Columbia River (COTP) or a COTP designated representative.
This notice of enforcement is issued under authority of 33 CFR 100.1302 and 5 U.S.C. 552 (a). In addition to this notice of enforcement in the
Coast Guard, DHS.
Notice of deviation from drawbridge regulations.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Stillwater Highway Bridge across the St. Croix River, mile 23.4, at Stillwater, Minnesota. The deviation is necessary due to increased vehicular traffic after a local Independence Day fireworks display. This deviation allows the bridge to remain in the closed-to-navigation position to clear increased vehicular traffic congestion.
This deviation is effective from 10 p.m. to 11:30 p.m., July 4, 2016.
The docket for this deviation, (USCG-2016-0426) is available at
If you have questions on this temporary deviation, call or email Eric A. Washburn, Bridge Administrator, Western Rivers, Coast Guard; telephone 314-269-2378, email
The Minnesota Department of Transportation requested a temporary deviation for the Stillwater Highway Bridge, across the St. Croix River, mile 23.4, at Stillwater, Minnesota. This deviation allows the bridge to remain in the closed-to-navigation position from 10 p.m. to 11:30 p.m. on July 4, 2016.
The Stillwater Highway Bridge currently operates in accordance with 33 CFR 117.667(b), which states specific seasonal and commuter hour operating requirements.
The Stillwater Highway Bridge provides a vertical clearance of 10.9 feet above normal pool in the closed-to-navigation position. Navigation on the waterway consists primarily of commercial sightseeing/dinner cruise boats and recreational watercraft. This temporary deviation has been coordinated with waterway users. No objections were received.
The bridge will not be able to open for emergencies and there are no alternate routes for vessels transiting this section of the St. Croix River. The Coast Guard will also inform the users of the waterway through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so the vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Metro-North Devon Bridge across the Housatonic River, mile 3.9, at Stratford, Connecticut. This deviation is necessary to allow the bridge owner to perform timber ties and headblocks replacement at the bridge.
This deviation is effective from 8 a.m. on May 31, 2016 to 8 a.m. on July 18, 2016.
The docket for this deviation [USCG-2016-0403], is available at
If you have questions on this temporary deviation, call or email Judy Leung-Yee, Project Officer, First Coast Guard District, telephone (212) 514-4330, email
The Metro-North Devon Bridge, mile 3.9, across the Housatonic River, has a vertical clearance in the closed position of 19 feet at mean high water and 25 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.207(b).
The waterway is transited by seasonal recreational vessels.
The bridge owner, Connecticut Department of Transportation, requested a temporary deviation from the normal operating schedule to perform timber ties and headblocks replacement at the bridge.
Under this temporary deviation, the Metro-North Devon Bridge will operate according to the schedule below:
a. From 8 a.m. on May 31, 2016 through 4 a.m. on June 3, 2016, the bridge will not open to marine traffic.
b. From 4 a.m. on June 3, 2016 through 8 a.m. on June 6, 2016, the bridge will open fully on signal upon 24 hr advance notice.
c. From 8 a.m. on June 6, 2016 through 4 a.m. on June 10, 2016, the bridge will not open to marine traffic.
d. From 4 a.m. on June 10, 2016 through 8 a.m. on June 13, 2016, the bridge will open fully on signal upon 24 hr advance notice.
e. From 8 a.m. on June 13, 2016 through 4 a.m. on June 17, 2016, the bridge will not open to marine traffic.
f. From 4 a.m. on June 17, 2016 through 8 a.m. on June 20, 2016, the bridge will open fully on signal upon 24 hr advance notice.
g. From 8 a.m. on June 20, 2016 through 4 a.m. on June 24, 2016, the bridge will not open to marine traffic.
h. From 4 a.m. on June 24, 2016 through 8 a.m. on June 27, 2016, the bridge will open fully on signal upon 24 hr advance notice.
i. From 8 a.m. on June 27, 2016 through 4 a.m. on July 1, 2016, the bridge will not open to marine traffic.
j. From 4 a.m. on July 1, 2016 through 8 a.m. on July 5, 2016, bridge will open in accordance with 33 CFR 117.207(b).
k. From 8 a.m. on July 5, 2016 through 4 a.m. on July 8, 2016, the bridge will not open to marine traffic.
l. From 4 a.m. on July 8, 2016 through 8 a.m. on July 11, 2016, the bridge will open fully on signal upon 24 hr advance notice.
m. From 8 a.m. on July 11, 2016 through 4 a.m. on July 15, 2016, the bridge will not open to marine traffic.
n. From 4 a.m. on July 15, 2016 through 8 a.m. on July 18, 2016, the bridge will open fully on signal upon 24 hr advance notice.
Vessels able to pass under the bridge in the closed position may do so at anytime. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass.
The Coast Guard will inform the users of the waterways through our Local Notice and Broadcast to Mariners of the change in operating schedule for the bridge so that vessel operations can arrange their transits to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Notice of temporary deviation from drawbridge regulation; modification.
The Coast Guard has modified a temporary deviation from the operating schedule that governs the S213 (MD213) Bridge across the Chester River, mile 26.8, at Chestertown, MD. This modified deviation is necessary to perform bridge maintenance and repairs.
This modified deviation is effective without actual notice from May 31, 2016 through 6 p.m. on July 31 2016. For the purposes of enforcement, actual notice will be used from May 24, 2016 at 2 p.m., until May 31, 2016.
The docket for this deviation, [USCG-2016-0112] is available at
If you have questions on this modified temporary deviation, call or email Mr. Hal R. Pitts, Bridge Administration Branch Fifth District, Coast Guard, telephone 757-398-6222, email
On February 25, 2016, the Coast Guard published a temporary deviation entitled “Drawbridge Operation Regulation; Chester River, Chestertown, MD” in the
The current operating schedule is open on signal if at least six hours notice is given as set out in 33 CFR 117.551. Under this modified temporary deviation, the bridge will remain in the closed-to-navigation position from 6 a.m. on February 22, 2016 to 6 p.m. on July 31, 2016.
The Chester River is used by a variety of vessels including small U.S. government and public vessels, small commercial vessels, and recreational vessels. The Coast Guard has carefully considered the nature and volume of vessel traffic on the waterway in publishing this temporary deviation.
During the closure times there will be limited opportunity for vessels able to safely pass through the bridge in the closed position to do so. Vessels able to safely pass through the bridge in the closed position may do so, after receiving confirmation from the bridge tender that it is safe to transit through the bridge. The bridge will be able to open for emergencies if at least six hours notice is given and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transit to minimize any impact caused by the temporary deviation.
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Notice of deviation from drawbridge regulation.
The Coast Guard has issued a temporary deviation from the operating schedule that governs the Norfolk and Western railroad bridge (Norfolk Southern V6.8 Bridge) across the South Branch of the Elizabeth River, mile 3.6, at Portsmouth-Chesapeake, VA. The deviation is necessary to perform bridge maintenance and repairs.
This deviation is effective from 7 a.m. on June 6, 2016, to 5 p.m. on June 23, 2016.
The docket for this deviation, [USCG-2016-0434] is available at
If you have questions on this temporary deviation, call or email Hal R. Pitts, Bridge Administration Branch Fifth District, Coast Guard, telephone 757-398-6222, email
The Norfolk Southern Corporation, that owns and operates the Norfolk and Western railroad bridge (Norfolk Southern V6.8 Bridge), has requested a temporary deviation from the current operating regulations to install a new tie deck across the vertical lift span and under the mitre joints on the fixed approach spans. The bridge is a vertical lift draw bridge and has a vertical clearance in the closed position of 10 feet above mean high water.
The current operating schedule is set out in 33 CFR 117.997(b). Under this temporary deviation, the bridge will remain in the closed-to-navigation position from 7 a.m. to 11:30 a.m. and from 12:30 p.m. to 5 p.m. from June 6, 2016 through June 9, 2016, June 13, 2016 through June 16, 2016, and June 20, 2016 through June 23, 2016. At all other times the bridge will operate per 33 CFR 117.997(b).
The South Branch of the Elizabeth River is used by a variety of vessels including deep draft ocean-going vessels, U.S. government vessels, small commercial vessels, recreational vessels and tug and barge traffic. The Coast Guard has carefully coordinated the restrictions with waterway users.
There will be limited opportunity for vessels to transit through the bridge in the closed position during this temporary deviation. Vessels able to pass through the bridge in the closed position may do so after receiving confirmation from the bridge tender that it is safe to transit through the bridge. The bridge will be able to open for
In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a safety zone on the navigable waters of the Chesapeake Bay in Cape Charles, Virginia. This safety zone will restrict vessel movement in the specified area during a fireworks display. This action is necessary to provide for the safety of life and property on the surrounding navigable waters during the fireworks display.
This rule is effective and enforced from 8 p.m. through 8:30 p.m. on July 2, 2016.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LCDR Barbara Wilk, Waterways Management Division Chief, Sector Hampton Roads, U.S. Coast Guard; telephone 757-668-5580, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule is impracticable, because information about the fireworks on July 2, 2016 was not received by the Coast Guard with sufficient time to allow for an opportunity to comment on the proposed rule. Publishing an NPRM would also be contrary to the public interest as immediate action is needed to ensure the safety of the fireworks participants, patrol vessels, and other vessels transiting the fireworks display area. The Coast Guard will provide advance notifications to users of the affected waterway via marine information broadcasts and local notice to mariners. For the same reasons, we find good cause, under 5 U.S.C. 553(d)(3), for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Hampton Roads (COTP) has determine that potential hazards associated with the fireworks display starting on July 2, 2016 will be a safety concern for anyone within a 420-foot radius of the fireworks barge. This rule is needed to protect the participants, patrol vessels, and other vessels transiting the navigable waters of the Chesapeake Bay, in the vicinity of the Sunset Beach Resort in Cape Charles, VA from hazards associated with a fireworks display. The potential hazards to mariners within the safety zone include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris.
The Captain of the Port of Hampton Roads is establishing a safety zone on the Chesapeake Bay, in the vicinity of the Sunset Beach Resort, in Cape Charles, VA. The safety zone will encompass all navigable waters within a 420 foot radius of the fireworks display barge location. This safety zone still allows for navigation on the waterway. This safety zone will be effective and enforced from 8 p.m. through 8:30 p.m. on July 2, 2016. Access to the safety zone will be restricted during the effective period. Except for participants and vessels authorized by the Captain of the Port or his Representative, no person or vessel may enter or remain in the regulated area.
The Captain of the Port will give notice of the enforcement of the safety zone by all appropriate means to provide the widest dissemination of notice to the affected segments of the public. This includes publication in the Local Notice to Mariners and Marine Information Broadcasts.
We developed this rule after considering numerous statutes and executive orders (E.O.s) related to rulemaking. Below we summarize our analyses based on a number of these statutes and E.O.s, and we discuss First Amendment rights of protestors.
E.O.s 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under E.O. 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.
Although this safety zone restricts vessel traffic through the regulated area, the effect of this rule will not be significant because: (i) This rule will only be enforced for the limited size and duration of the event; and (ii) the Coast Guard will make extensive notification to the maritime community via marine information broadcasts so mariners may adjust their plans accordingly.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended,
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under E.O. 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in E.O. 13132.
Also, this rule does not have tribal implications under E.O. 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting less than 2 hours that will prohibit entry within 420 feet of the fireworks display. It is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(1) All waters in the vicinity of the of the Sunset Beach Resort, on the Chesapeake Bay, within a 420 foot radius of the fireworks display barge in approximate position 37°08′12″ N., 075°58′34″ W. (NAD 1983).
(c)
(2) With the exception of participants, entry into or remaining in this safety zone is prohibited unless authorized by the Captain of the Port, Hampton Roads or his designated representatives.
(3) All vessels underway within this safety zone at the time it is implemented are to depart the zone immediately.
(4) The Captain of the Port, Hampton Roads or his representative can be contacted at telephone number (757) 668-5555.
(5) The Coast Guard and designated security vessels enforcing the safety zone can be contacted on VHF-FM marine band radio channel 13 (165.65Mhz) and channel 16 (156.8 Mhz).
(6) This section applies to all persons or vessels wishing to transit through the
(i) Enforcing laws;
(ii) Servicing aids to navigation, and
(iii) Emergency response vessels.
(7) The U.S. Coast Guard may be assisted in the patrol and enforcement of the safety zone by Federal, State, and local agencies.
(d)
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing four temporary safety zones for two areas of the Upper Mississippi River (UMR); three safety zones between UMR mile 179.2 and 180.5, and one between UMR mile 839.5 to 840. These temporary safety zones are necessary to protect persons and property from potential damage and safety hazards during fireworks displays on or over the navigable waterway. During the period of enforcement, entry into these safety zones is prohibited unless specifically authorized by the Captain of the Port (COTP) Upper Mississippi River or other designated representative.
This rule is effective from 7:45 p.m. on June 2, 2016 until 10:30 p.m. on July 4, 2016.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LCDR Sean Peterson, Chief of Prevention, Sector Upper Mississippi River, U.S. Coast Guard; telephone 314-269-2332, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency finds good cause that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to these rules because fireworks displays on or over the navigable waterway poses safety concerns for waterway users. In this case, the Coast Guard was not notified of the fireworks displays until April 26, 2016 and May 16, 2016. After full review of the details for the planned and locally advertised displays, the Coast Guard determined action is needed to protect people and property from the safety hazards associated with the fireworks displays on the UMR near St. Louis, MO and St. Paul, MN. It is impracticable to publish an NPRM because we must establish these safety zones by June 2 and 11, and July 3 and 4, 2016.
We are issuing this rule, and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making the rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The COTP has determined that potential hazards associated with fireworks displays taking place on or over these sections of navigable waterway will be a safety concern for anyone within the areas that are designated as the safety zones. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zones during the fireworks displays.
This rule establishes four safety zones as follows:
(1) From 7:45 p.m. until 9 p.m. on June 2, 2016, for the Ribbon Cutting Celebration for the Completion of the Riverfront Component for the Great Rivers Greenway barge based fireworks display, all waters of the UMR from mile 179.2 to 180;
(2) from 9 p.m. until 11 p.m. on June 11, 2016, for the St. Louis Brewers Guild barge based fireworks display, all waters of the UMR from mile 179.2 to 180.5;
(3) from 8:30 p.m. until 11 p.m. on July 3, 2016, for the Lumiere Place July 3, 2016 barge based fireworks display, all waters of the UMR from mile 180 to 180.5; and
(4) from 10 p.m. until 10:30 p.m. on July 4, 2016, for the City of St. Paul July 4th Celebration, all waters of the UMR from mile 839.5 to 840.
Exact times of the closures and any changes to the planned scheduled will be communicated to mariners using Broadcast Notices to Mariners and Local Notices to Mariners. The safety zones are intended to protect personnel, vessels, and the marine environment in these navigable waters during the fireworks displays. No vessel or person will be permitted to enter the safety zones without obtaining permission from the COTP or a designated representative.
We developed this rule after considering numerous statutes and Executive Orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive Orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the
This temporary final rule establishes four safety zones, each of which will be enforced for a limited time period. During the enforcement periods, vessels are prohibited from entering into or remaining within the safety zones unless specifically authorized by the COTP or other designated representative. Based on the locations, limited safety zone sizes, and short duration of the enforcement periods, these rules do not pose a significant regulatory impact. Additionally, notice of the safety zones or any changes in the planned schedules will be made via Broadcast Notices to Mariners and Local Notices to Mariners. Deviation from these rules may be requested from the COTP or other designated representative and will be considered on a case-by-case basis.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zones may be small entities, for the reasons stated in section V.A. above, these rules will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding these rules. If the rules would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that the actions are one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves safety zones, each lasting less than three hours that will limit access to specific areas on the UMR. These safety zones are categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, and Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(1) Great Rivers Greenway fireworks display, St. Louis, MO:
(i)
(ii)
(2) St. Louis Brewers Guild fireworks display, St. Louis, MO:
(i)
(ii)
(3) Lumiere Place fireworks display, St. Louis, MO:
(i)
(ii)
(4) City of St. Paul July 4th Celebration, St. Paul MN.
(i)
(ii)
(b)
(c)
(2) To seek permission to enter, contact the COTP or designated representative via VHF-FM Channel 16, or through Coast Guard Sector Upper Mississippi River at (314) 269-2332.
(3) All persons and vessels shall comply with the instruction of the COTP and designated on-scene personnel.
(d)
Environmental Protection Agency (EPA).
Final rule; technical correction.
EPA issued a final rule in the
This final rule correction is effective May 31, 2016.
The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2015-0197, is available at
Susan Lewis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington DC 20460-0001; telephone number: (703) 305-7090; email address:
The Agency included in the April 8, 2016 final rule a list of those who may be potentially affected by this action.
EPA issued a final rule in the
Section 553 of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)(3)(B)) provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, the agency may issue a final rule without providing notice and an opportunity for public comment. EPA has determined that there is good cause for making this technical correction final without prior proposal and opportunity for comment, because this is correcting a typographical error. EPA finds that this constitutes good cause under 5 U.S.C. 553(b)(3)(B).
No. For a detailed discussion concerning the statutory and executive order review, refer to Unit VI. of the April 8, 2016 final rule.
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pest, Reporting and recordkeeping requirements.
Therefore, 40 CFR part 180 is corrected as follows:
21 U.S.C. 321(q), 346a and 371.
(a) * * *
(1) * * *
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closures.
NMFS implements accountability measures (AMs) for species and species groups in the exclusive economic zone (EEZ) of the U.S. Caribbean off Puerto Rico for the 2016 fishing year through this temporary rule. NMFS has determined that annual catch limits (ACLs) in the EEZ off Puerto Rico were exceeded for spiny lobster; the commercial sectors for triggerfish and filefish, wrasses, Snapper Unit 2, and parrotfishes; and the recreational sector for jacks, based on average landings during the 2012-2014 fishing years. This temporary rule reduces the lengths of the 2016 fishing seasons for these species and species groups by the amounts necessary to ensure that landings do not exceed the applicable ACLs in 2016. NMFS closes the applicable sectors for these species and species groups beginning on the dates specified below (in the
This rule is effective June 30, 2016, until 12:01 a.m., local time, January 1, 2017. The AMs apply in the EEZ off Puerto Rico for the following species and species groups, and fishing sectors, at the times and dates specified below, until 12:01 a.m., local time, January 1, 2017.
• Triggerfish and filefish, combined (commercial) effective at 12:01 a.m., local time, October 16, 2016;
• Jacks (recreational) effective at 12:01 a.m., local time, November 4, 2016;
• Wrasses (commercial) effective at 12:01 a.m., local time, November 16, 2016;
• Snapper Unit 2 (commercial) effective at 12:01 a.m., local time, November 26, 2016;
• Spiny lobster (commercial and recreational) effective at 12:01 a.m., local time, December 10, 2016;
• Parrotfishes (commercial) effective at 12:01 a.m., local time, December 19, 2016.
William S. Arnold, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The reef fish fishery of the Caribbean, which includes triggerfish and filefish, wrasses, snappers in Snapper Unit 2, parrotfishes, and jacks, is managed under the Fishery Management Plan for the Reef Fish Fishery of Puerto Rico and the U.S. Virgin Islands (Reef Fish FMP). Caribbean spiny lobster is managed under the FMP for the Spiny Lobster Fishery of Puerto Rico and the U.S. Virgin Islands (Spiny Lobster FMP). The FMPs were prepared by the Caribbean Fishery Management Council (Council) and are implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.
The 2010 Caribbean ACL Amendment (Amendment 2 to the FMP for the Queen Conch Resources of Puerto Rico and the U.S. Virgin Islands (Queen Conch FMP) and Amendment 5 to the Reef Fish FMP) and 2011 Caribbean ACL Amendment (Amendment 3 to the Queen Conch FMP, Amendment 6 to the Reef Fish FMP, Amendment 5 to the Spiny Lobster FMP, and Amendment 3 to FMP for Corals and Reef Associated Plants and Invertebrates of Puerto Rico and the U.S. Virgin Islands) revised the Reef Fish and Spiny lobster FMPs (76 FR 82404, December 30 2011, and 76 FR 82414, December 30, 2011). Among other actions, the 2010 and 2011 Caribbean ACL Amendments and the associated final rules established ACLs and AMs for Caribbean spiny lobster and reef fish, including the species and species groups identified in this temporary rule. The 2010 and 2011 Caribbean ACL Amendments and final rules also allocated ACLs among three Caribbean island management areas,
On May 11, 2016, NMFS published the final rule implementing the Comprehensive AM Application Amendment to the U.S. Caribbean FMPs: Application of Accountability Measures and additional regulatory clarifications (81 FR 29166). Among other things, the final rule clarified that the spiny lobster ACL for the Puerto Rico management area is applied as a single ACL for both the commercial and recreational sectors, consistent with the Council's intent in the 2011 Caribbean ACL Amendment. Additionally, the final rule clarified the fishing restrictions that occur in the Caribbean EEZ when an ACL is exceeded and an AM is implemented.
The ACLs for the applicable species and species groups, and fishing sectors in the EEZ off Puerto Rico covered by this temporary rule are as follows and are given in round weight:
• The commercial ACL for triggerfish and filefish, combined, is 58,475 lb (26,524 kg), as specified in § 622.12(a)(1)(i)(Q).
• The commercial ACL for wrasses is 54,147 lb (24,561 kg), as specified in § 622.12(a)(1)(i)(L).
• The commercial ACL for Snapper Unit 2 is 145,916 lb (66,186 kg), as specified in § 622.12(a)(1)(i)(D).
• The ACL for spiny lobster is 327,920 lb (148,742 kg), as specified in § 622.12(a)(1)(iii).
• The commercial ACL for parrotfishes is 52,737 lb (23,915 kg), as specified in § 622.12(a)(1)(i)(B).
• The recreational ACL for jacks is 51,001 lb (23,134 kg), as specified in § 622.12(a)(1)(ii)(M).
In accordance with regulations at 50 CFR 622.12(a), if landings from a Caribbean island management area are estimated to have exceeded the
Based on the most recent landings data, from the 2012-2014 fishing years, NMFS has determined that the ACLs for spiny lobster; the commercial sectors for triggerfish and filefish, wrasses, Snapper Unit 2, spiny lobster, and parrotfishes; and the recreational sector of jacks have been exceeded. In addition, NMFS has determined that the ACLs for these species and species groups were exceeded because of increased catches and not as a result of enhanced data collection and monitoring efforts.
This temporary rule implements AMs for the identified commercial and recreational sectors for the species and species groups listed in this temporary rule, to reduce the 2016 fishing season lengths to ensure that landings do not exceed the applicable ACLs in the 2016 fishing year. The 2016 fishing seasons for the applicable sectors for these species and species groups in the Puerto Rico management area of the EEZ are closed at the times and dates listed below. These closures remain in effect until the 2017 fishing seasons begin at 12:01 a.m., local time, January 1, 2017.
• The commercial sector for triggerfish and filefish, combined, is closed effective at 12:01 a.m., local time, October 16, 2016. Triggerfish and filefish, combined, include ocean (
• The recreational sector for jacks is closed effective at 12:01 a.m., local time, November 4, 2016. Jacks include horse-eye (
• The commercial sector for wrasses is closed effective at 12:01 a.m., local time, November 16, 2016. Wrasses include hogfish (
• The commercial sector for Snapper Unit 2 is closed effective at 12:01 a.m., local time, November 26, 2016. Snapper Unit 2 include queen (
• The commercial and recreational sectors for spiny lobster (
• The commercial sector for parrotfishes is closed effective at 12:01 a.m., local time, December 19, 2016. Parrotfishes include queen (
During the Puerto Rico commercial sector closures announced in this temporary rule, the commercial sectors for the indicated species or species groups are closed. All harvest or possession of the indicated species or species group in or from the Puerto Rico management area is limited to the recreational bag and possession limits specified in § 622.437, and the sale or purchase of the indicated species or species group in or from the Puerto Rico management area is prohibited. During the Puerto Rico recreational sector closure for jacks announced in this temporary rule, the jacks recreational sector is closed, and the recreational bag and possession limits for jacks in or from the Puerto Rico management area are zero.
During the spiny lobster closure in the Puerto Rico management area, both the commercial and recreational sectors fo spiny lobster are closed. The harvest, possession, purchase, or sale of spiny lobster in or from the Puerto Rico management area is prohibited. The bag and possession limits for spiny lobster in or from the Puerto Rico management area are zero.
The Regional Administrator, Southeast Region, NMFS, has determined this temporary rule is necessary for the conservation and management of the species and species groups included in this temporary rule, in the EEZ off Puerto Rico, and is consistent with the Magnuson-Stevens Act and other applicable laws.
This action is taken under 50 CFR 622.12(a)(1) and is exempt from review under Executive Order 12866.
These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.
This action responds to the best scientific information available. The AA finds good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such prior notice and opportunity for public comment is unnecessary and contrary to the public interest. Such procedures are unnecessary because the rules implementing the ACLs and AMs for these species and species groups have been subject to notice and comment, and all that remains is to notify the public that the ACLs were exceeded and that the AMs are being implemented for the 2016 fishing year. Prior notice and opportunity for public comment on this action would be contrary to the public interest, because many of those affected by the length of the commercial and recreational fishing seasons, including commercial operations, and charter vessel and headboat operations that book trips for clients in advance, need advance notice to adjust their business plans to account for the reduced commercial and recreational fishing seasons.
16 U.S.C. 1801
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for certain Airbus Model A300 F4-600R series airplanes. This proposed AD was prompted by a report of two adjacent frame forks that were found cracked on the aft lower deck cargo door (LDCD) of two Model A300-600F4 airplanes during scheduled maintenance. This proposed AD would require repetitive high frequency eddy current (HFEC) inspections of the aft LDCD frame forks; a one-time check of the LDCD clearances; and a one-time detailed visual inspection of hooks, eccentric bushes, and x-stops; and corrective actions if necessary. We are proposing this AD to detect and correct cracked or ruptured aft LDCD frames, which could allow loads to be transferred to the remaining structural elements. This condition could lead to the rupture of one or more vertical aft LDCD frames, which could result in reduced structural integrity of the aft LDCD.
We must receive comments on this proposed AD by July 15, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For service information identified in this NPRM, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
You may examine the AD docket on the Internet at
Dan Rodina, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-2125; fax 425-227-1149.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0152, dated July 24, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A300 F4-605R and A300 F4-622R. The MCAI states:
During scheduled maintenance at frames (FR) 61 and FR61A on the aft lower deck cargo door (LDCD) of two A300-600F4 aeroplanes, two adjacent frame forks were found cracked.
Subsequent analysis determined that, in case of cracked or ruptured aft cargo door frame(s), loads will be transferred to the remaining structural elements. However, these secondary load paths will be able to sustain the loads for a limited number of flight cycles only.
This condition, if not detected and corrected, could lead to the rupture of one or more vertical aft cargo door frame(s), resulting in reduced structural integrity of the aft cargo door.
To address this unsafe condition, Airbus issued Alert Operators Transmission (AOT) A52W011-15 to provide inspection instructions.
For the reason described above, this [EASA] AD requires repetitive inspections [for cracking] of the aft LDCD frame forks and, depending on findings, the accomplishment of corrective action(s).
This [EASA] AD is considered interim action and further [EASA] AD action may follow.
Required actions include a one-time check of the LDCD clearances; and a one-time detailed visual inspection of hooks, eccentric bushes, x-stops; and corrective actions if necessary. You may examine the MCAI in the AD docket on the Internet at
Airbus has issued Alert Operators Transmission (AOT) A52W011-15, Revision 00, dated July 23, 2015. The service information describes procedures for repetitive HFEC inspections for cracking of the aft LDCD frame forks; a one-time check of the LDCD clearances; and a one-time detailed visual inspection of hooks, eccentric bushes, and x-stops; and corrective actions if necessary. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
We estimate that this proposed AD affects 58 airplanes of U.S. registry. We also estimate that it would take about 4 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $0 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $19,720, or $340 per product.
In addition, we estimate that any necessary follow-on actions would take about 15 work-hours and require parts costing $10,000, for a cost of $11,275 per product. We have no way of determining the number of aircraft that might need these actions.
Also, we estimate that the reporting requirement would take about 1 work-hour, for a cost of $85 per product.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this proposed AD is 2120-0056. The paperwork cost associated with this proposed AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this proposed AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by July 15, 2016.
None.
This AD applies to Airbus Model A300 F4-605R and A300 F4-622R airplanes, certificated in any category, on which Airbus Modification 12046 has been embodied in production. Modification 12046 has been embodied in production on manufacturer serial numbers (MSNs) 0805 and above, except MSNs 0836, 0837, and 0838.
Air Transport Association (ATA) of America Code 52, Doors.
This AD was prompted by a report of two adjacent frame forks that were found cracked on the aft lower deck cargo door (LDCD) of two Model A300-600F4 airplanes during scheduled maintenance. We are issuing this AD to detect and correct cracked or ruptured aft LDCD frames, which could allow loads to be transferred to the remaining structural elements. This condition could lead to the rupture of one or more vertical aft LDCD frames, which could result in reduced structural integrity of the aft LDCD.
Comply with this AD within the compliance times specified, unless already done.
At the applicable time specified in paragraph (h) of this AD, do the actions specified in paragraphs (g)(1), (g)(2), and (g)(3) of this AD, in accordance with Airbus Alert Operators Transmission (AOT) A52W011-15, Revision 00, dated July 23, 2015.
(1) Do a one-time check of the aft LDCD clearances “U” and “V” between the latching
(2) Do a one-time detailed inspection to detect signs of wear of the hooks, eccentric bushes, and x-stops. If any wear is found, do all applicable corrective actions before further flight.
(3) Do a high frequency eddy current (HFEC) inspection to detect cracking at all frame fork stations of the aft LDCD. If any crack is found, replace the cracked frame fork before further flight. Repeat the HFEC inspection thereafter at intervals not to exceed 600 flight cycles.
At the later of the times specified in paragraphs (h)(1) and (h)(2) of this AD, do the actions required by paragraph (g) of this AD.
(1) Before the accumulation of 4,500 total flight cycles.
(2) At the applicable time specified by paragraph (h)(2)(i) or (h)(2)(ii) of this AD.
(i) For airplanes that have accumulated 8,000 or more total flight cycles as of the effective date this AD: Within 100 flight cycles after the effective date of this AD.
(ii) For airplanes that have accumulated fewer than 8,000 total flight cycles as of the effective date of this AD: Within 400 flight cycles after the effective date of this AD.
At the applicable time specified in paragraph (i)(1) or (i)(2) of this AD, report the findings (both positive and negative) of the clearance check and detailed inspection required by paragraphs (g)(1) and (g)(2) of this AD, and each HFEC inspection required by paragraph (g)(3) of this AD. Send the report to Airbus in accordance with paragraph 7 of Airbus AOT A52W011-15, Revision 00, dated July 23, 2015. The report must include the applicable information specified in Appendix 2 of Airbus AOT A52W011-15, Revision 00, dated July 23, 2015.
(1) If the inspection was done on or after the effective date of this AD: Submit the report within 60 days after the inspection.
(2) If the inspection was done before the effective date of this AD: Submit the report within 60 days after the effective date of this AD.
(1) Accomplishment of corrective actions required by this AD does not terminate the repetitive HFEC inspections required by paragraph (g)(3) of this AD.
(2) If all frame forks are replaced at the same time on the aft LDCD of an airplane, the next HFEC inspection required by paragraph (g)(3) of this AD can be deferred up to 4,500 flight cycles after the frame fork replacement.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) European Airworthiness Directive 2015-0152, dated July 24, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
We propose to adopt a new airworthiness directive (AD) for all Airbus Model A318-111, and -112 airplanes, Model A319-111, -112, -113, -114, and -115 airplanes, Model A320-211, -212 and -214 airplanes, and Model A321-111, -112, -211, -212, and -213 airplanes. This proposed AD was prompted by a report of a production quality deficiency on the inner retainer installed on link assemblies of the engine mount, which could result in failure of the retainer. This proposed AD would require an inspection for, and replacement of, all non-conforming aft engine mount retainers. We are proposing this AD to detect and correct non-conforming retainers of the aft engine mount. This condition could result in the loss of the locking feature of the nuts of the inner and outer pins; loss of the pins will result in the aft mount engine link no longer being secured to the aft engine mount, possibly resulting in damage to the airplane and injury to persons on the ground.
We must receive comments on this proposed AD by July 15, 2016.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
•
•
•
•
For Airbus service information identified in this NPRM, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email:
For Goodrich service information identified in this NPRM, contact Goodrich Corporation,
You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.
You may examine the AD docket on the Internet at
Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1405; fax: 425-227-1149.
We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the
We will post all comments we receive, without change, to
The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2016-0010R1, dated February 16, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A318-111, and -112 airplanes, Model A319-111, -112, -113, -114, and -115 airplanes, Model A320-211, -212, and -214 airplanes, and Model A321-111, -112, -211, -212, and -213 airplanes. The MCAI states:
During in-service inspections, several aft engine mount inner retainers, fitted on aeroplanes equipped with CFM56-5A/5B engines, have been found broken. The results of the initial investigations highlighted that two different types of surface finish had been applied (respectively bright and dull material finishes), and that dull finish affects the strength of the retainer with regard to fatigue properties of the part. The pins which attach the engine link to the aft mount are secured by two nuts, which do not have a self-locking feature; this function is provided by the retainer brackets. In case of failure of the retainer bracket, the locking feature of the nuts of the inner and outer pins is lost; as a result, these nuts could subsequently become loose.
In case of full loss of the nuts, there is the potential to also lose the pins, in which case the aft mount link will no longer be secured to the aft engine mount. The same locking feature is used for the three link assemblies of the aft mount.
This condition, if not detected and corrected, could lead to in-flight loss of an aft mount link, possibly resulting in damage to the aeroplane and/or injury to persons on the ground.
To address this potential unsafe condition, EASA issued AD 2013-0050 [
Since that [EASA] AD was issued, a production quality deficiency was identified by Airbus and UTAS (formerly Goodrich Aerostructures, the engine mount retainer manufacturer) on the delivery of the inner retainer, Part Number (P/N) 238-0252-505, installed in the three Link assemblies of the engine mount fitted on CFM56-5A/5B engines. Airbus issued AOT A71N011-15 and SB A320-71-1070 providing a list of affected parts and applicable corrective actions.
Consequently, EASA issued [a new] AD * * *, retaining the requirements of EASA AD 2015-0021, which was superseded, and in addition requiring the identification and replacement of all non-conforming aft engine mount inner retainers.
Since that [new EASA] AD was issued, AOT A71N011-15 was revised, removing errors and reducing the list of affected parts.
For the reason described above, this [EASA] AD is revised, adding reference to the revised AOT, and removing [EASA] AD appendixes, which content is included in the referenced Airbus documentation.
This [EASA] AD is still considered to be an interim action, pending development and availability of a final solution.
This proposed AD would require an inspection for, and replacement of, all non-conforming aft engine mount retainers. You may examine the MCAI in the AD docket on the Internet at
We reviewed the following service information. This service information describes procedures for replacement of all non-conforming aft engine mount retainers.
• Airbus Service Bulletin A320-71-1070, dated November 23, 2015. This service information also describes procedures for an inspection for non-conforming aft engine mount retainers.
• Airbus Alert Operators Transmission (AOT) A71N011-15, Revision 01, dated February 1, 2016.
• Goodrich Service Bulletin RA32071-165, dated October 9, 2015.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation
We estimate that this proposed AD affects 959 airplanes of U.S. registry.
We estimate the following costs to comply with this proposed AD:
We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. We have no way of determining the number of airplanes that might need these replacements:
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.
We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
1. Is not a “significant regulatory action” under Executive Order 12866;
2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
3. Will not affect intrastate aviation in Alaska; and
4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
We must receive comments by July 15, 2016.
None.
This AD applies to the Airbus airplanes identified in paragraphs (c)(1) through (c)(4) of this AD, certificated in any category, all manufacturer serial numbers.
(1) Airbus Model A318-111 and -112 airplanes.
(2) Airbus Model A319-111, -112, -113, -114, and -115 airplanes.
(3) Airbus Model A320-211, -212, and -214 airplanes.
(4) Airbus Model A321-111, -112, -211, -212, and -213 airplanes.
Air Transport Association (ATA) of America Code 71, Powerplant.
This AD was prompted by a report of a production quality deficiency on the inner retainer installed on link assemblies of the engine mount, which could result in failure of the retainer. We are issuing this AD to detect and correct non-conforming retainers of the aft engine mount. This condition could result in loss of the locking feature of the nuts of the inner and outer pins; loss of the pins will result in the aft mount engine link no longer being secured to the aft engine mount, possibly resulting in damage to the airplane and injury to persons on the ground.
Comply with this AD within the compliance times specified, unless already done.
Within 2 months after the effective date of this AD, do an inspection to determine the part number of each engine mount inner retainer; and within 2 months after the effective date of this AD, replace each part that meets any of the criteria specified in paragraph (g)(1), (g)(2), or (g)(3) of this AD. Do the inspection in accordance with the service information specified in paragraph (h)(1) of this AD. Do the replacement in accordance with the service information specified in paragraph (h)(1), (h)(2), or (h)(3) of this AD. A review of airplane maintenance records is acceptable in lieu of the inspection required by this paragraph, if the part
(1) An aft engine mount having a serial number listed in table 1 of Airbus Alert Operators Transmission (AOT) A71N011-15, Rev 01, dated February 1, 2016.
(2) An engine mount inner retainer installed on an airplane between the first flight of the airplane or March 1, 2015 (whichever occurs later), and the effective date of this AD, and that can be identified by a purchase order (PO) listed in table 2 of Airbus AOT A71N011-15, Rev 01, dated February 1, 2016.
(3) An engine mount inner retainer installed on an airplane between the first flight of the airplane or March 1, 2015 (whichever occurs later), and the effective date of this AD, and that cannot be identified by a PO.
Accomplish the replacement required by paragraph (g) of this AD in accordance with the service information specified in paragraph (h)(1), (h)(2), or (h)(3) of this AD.
(1) The Accomplishment Instructions of Airbus Service Bulletin A320-71-1070, dated November 23, 2015.
(2) Paragraph 4.2.2, “Requirements,” of Airbus AOT A71N011-15, Revision 01, dated February 1, 2016.
(3) The Accomplishment Instructions of Goodrich Service Bulletin RA32071-165, dated October 9, 2015.
This paragraph provides credit for the applicable actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Airbus AOT A71N011-15, Revision 01, dated February 1, 2016, which is not incorporated by reference in this AD.
As of the effective date of this AD, no person may install any part that meets any of the criteria specified in paragraph (j)(1), (j)(2), (j)(3) of this AD on any airplane.
(1) An aft engine mount having a serial number listed in table 1 of Airbus AOT A71N011-15, Rev 01, dated February 1, 2016.
(2) An engine mount inner retainer delivered through a PO listed in table 2 of Airbus AOT A71N011-15, Rev 01, dated February 1, 2016.
(3) An engine mount inner retainer delivered through an unidentified PO.
Special flight permits, as described in Section 21.197 and Section 21.199 of the Federal Aviation Regulations (14 CFR 21.197 and 21.199), are not allowed.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2016-0010R1, dated February 16, 2016, for related information. This MCAI may be found in the AD docket on the Internet at
(2) For Airbus service information identified in this AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email:
Office of the Assistant Secretary for Public and Indian Housing, HUD.
Proposed rule.
This proposed rule would revise the Indian Housing Block Grant (IHBG) Program allocation formula authorized by section 302 of the Native American Housing Assistance and Self-Determination Act of 1996, as amended (NAHASDA). Through the IHBG Program, HUD provides federal housing assistance for Indian tribes in a manner that recognizes the right of Indian self-determination and tribal self-government. HUD negotiated the proposed rule with active tribal participation and using the procedures of the Negotiated Rulemaking Act of 1990. The proposed regulatory changes reflect the consensus decisions reached by HUD and the tribal representatives on ways to improve and clarify the current regulations governing the IHBG Program formula.
Interested persons are invited to submit comments regarding this proposed rule to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title.
1.
2.
To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule.
Public Inspection of Public Comments. HUD will make all properly submitted comments and communications available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, you must schedule an appointment in advance to review the public comments by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the toll-free Federal Relay Service at 800-877-8339. Copies of all comments submitted are available for inspection and downloading at
Randall R. Akers, Acting Deputy Assistant Secretary for Native American Programs, Office of Public and Indian Housing, Department of Housing and Urban Development, 451 Seventh Street, SW., Room 4126, Washington, DC 20410-5000, telephone, (202) 402-7598 (this is not a toll-free number). Hearing or speech-impaired individuals may access this number via TTY by calling the toll-free Federal Relay Service at 1-800-877-8339.
The Native American Housing Assistance and Self-Determination Act of 1996 (25 U.S.C. 4101
NAHASDA has been amended and reauthorized several times since being signed into law in 1996. Following the enactment of the Native American Housing Assistance and Self-Determination Reauthorization Act of 2008 (Pub. L. 110-411, approved October 14, 2008) (NAHASDA Reauthorization Act) HUD established a negotiated rulemaking committee on January 5, 2010 (75 FR 423), that focused on implementing the NAHASDA Reauthorization Act and prior amendments to NAHASDA. The negotiated rulemaking committee addressed all IHBG program regulations, except those provisions which govern the NAHASDA allocation formula codified in subpart D of 24 CFR part 1000. As a result of that negotiated rulemaking, HUD published a final rule on December 3, 2012 (77 FR 71513), that revised HUD regulations governing the IHBG Program and the Title VI Loan Guarantee program (under Title VI of NAHASDA, 25 U.S.C. 4191,
On July 3, 2012 (77 FR 39452) and September 18, 2012 (77 FR 57544), HUD published notices in the
The Committee divided itself into multiple workgroups to analyze specified provisions of the IHBG formula and to draft any new or revised regulatory language it believed was necessary. A workgroup was responsible for analyzing the regulations for the Need component. Another workgroup reviewed the provisions governing the Formula Current Assisted Stock (FCAS) component. The workgroups were not authorized to reach any final or binding decisions but rather, reported to the full Committee. The draft regulatory language developed by the workgroups was then brought before the full Committee for review, amendment, and approval.
At the August 2014 meeting, an additional study group, the Data Study Group, was established to assess alternative data sources to the 2000 United States Decennial Census, which currently serves as the data source for the factors that are used to calculate the Need component of the allocation formula, including American Indian and Alaskan Native (AIAN) households with housing cost burdens, inadequate housing, low- and moderate-income AIAN households, and AIAN population. The Data Study Group was comprised of one Committee member from each of the six HUD-designated ONAP regions, plus one HUD representative. The Data Study Group members identified three technical experts and HUD provided a technical expert to assist with the work. Meetings of the Data Study Group were open to all Committee members and to the public. The Data Study Group met both
In a
After receiving responses to the September 25, 2014
The Data Study Group carefully considered the evaluation results of technical experts, had multiple discussions among its membership, including requests for clarification from the technical experts, and on July 31, 2015, issued its final report containing a recommendation for a data source or sources to be used in calculating the AIAN persons variable of the Need component of the IHBG funding formula, which it presented to the full Committee. Specifically, the Data Study Group recommended that the AIAN population be the greater of the most recently available American Community Survey (ACS), Decennial Census, or Challenge data, and that data no longer be aged. This proposal did not reach consensus at the full Committee level. The Data Study Group's full report can be found as a supporting document to this proposed rule at
The Committee undertook a comprehensive review of the IHBG Formula. The Committee also reviewed any statutory changes that still needed to be addressed in the regulations. The Committee identified certain areas of the IHBG formula that required clarification, were outdated, or could be improved. With the exception of changes to § 1000.330(b)(ii), this proposed rule reflects the consensus decisions reached by the Committee during the negotiated rulemaking process on the best way to address these issues. The following section of this preamble provides a summary of the consensus recommended changes to the IHBG formula by this proposed rule.
To conform § 1000.302 to the decision of the United States Court of Appeals for the Tenth Circuit in
The proposed rule would make a technical amendment to § 1000.306 to eliminate paragraph (c), an outdated section that addressed how Section 8 units would be treated under the formula. Currently, § 1000.306(c) provides that, during the five-year review of the FCAS component of the formula, the count of units associated with expired contracts for tenant-based Section 8 rental assistance would be reduced by the same percentage as the current assisted rental stock has diminished since September 30, 1999. After HUD issued this regulation, section 502(a) of NAHASDA was amended by the Omnibus Indian Advancement Act (Pub. L. 106-568, approved December 27, 2000) (25 U.S.C. 4181(a)) to provide that housing subject to a contract for tenant-based Section 8 rental assistance prior to September 30, 1997, under the authority of the United States Housing Act of 1937 (42 U.S.C. 1437
The proposed rule would revise § 1000.310 to reflect that the IHBG formula would consist of four components: FCAS (§ 1000.316), Need (§ 1000.324), 1996 Minimum (§ 1000.340), and Undisbursed IHBG funds factor (§ 1000.342). FCAS, Need, and 1996 Minimum are existing components of the formula. The proposed addition of the Undisbursed IHBG funds factor is discussed below.
This proposed rule would clarify the type and eligibility of low-income dwelling units developed under the United States Housing Act of 1937 that are converted from Low-Rent to Mutual Help or, from Mutual Help to Low-Rent. The Committee proposed a new paragraph (c) to codify HUD's existing practice and establish the following. Units that were converted before NAHASDA's effective date of October 1, 1997, would count in the formula as the type of unit to which they were converted, and their FCAS eligibility would be evaluated on the basis of the type of unit to which they were converted. The amount of per unit FCAS funding for units that were converted after October 1, 1997, would be determined according to the unit's type specified in the original Annual Contributions Contract (ACC),
This proposed rule would clarify in § 1000.318 the FCAS eligibility of Mutual Help and Turnkey III units developed under the United States Housing Act of 1937 that are not conveyed within 25 years from the Date of Full Availability (DOFA plus 25 years). The proposed rule would provide specific milestones for demonstrating FCAS eligibility. Specifically, the proposed rule would provide that a unit may continue to be considered FCAS when conveyance of the unit is prevented by a legal impediment, if the tribe, TDHE, or Indian Housing Authority (IHA) has taken all other steps necessary to effectuate the conveyance and has made and documented reasonable efforts to remove the impediment. Mutual Help and Turnkey III units that are eligible for conveyance under the terms of their Mutual Help and Occupancy Agreement (MHOA) but not conveyed would continue to be considered FCAS if the delay in conveyance is caused by reasons beyond the control of the tribe, TDHE, or IHA. Section 302(b)(1)(D) of NAHASDA (25 U.S.C. 4152(b)(1)(D)) provides that the term “reasons beyond the control of a recipient” means, after the recipient makes “reasonable efforts” to resolve all issues necessary for conveyance, the conveyance is still delayed because there remain delays in obtaining or, the absence of title status reports, incorrect or inadequate legal descriptions or other legal documentation necessary for conveyance, clouds on title due to probate or intestacy or other court proceedings, or any other legal impediment. Thus, under this proposed rule, to demonstrate reasonable efforts, the tribe, TDHE or IHA would be required, no later than four months after the unit becomes eligible for conveyance, to create a written plan of action that describes the impediment and the actions it will take to resolve the impediment within 24 months after the date the unit became eligible for conveyance. If the legal impediment remains after that 24-month period, the unit would no longer be considered FCAS unless the tribe, TDHE, or IHA provides evidence from a third party, such as a Federal, State, or tribal court, or State or Federal agency, documenting that the impediment continues to prevent conveyance. Proposed § 1000.318(a)(3) would address Mutual Help and Turnkey III units that, as of the effective date of this regulation, have not been conveyed because timely conveyance was demonstrably beyond the tribe's control. These units would be considered to have become eligible to convey on the effective date of this regulation, triggering the time periods for creating a written plan of action to resolve the impediment and conveying the units or providing the third party evidence of continued impediment within the 24-month period. Section 1000.318(a)(3)(iv) would apply to units that have not been conveyed due to legal impediments, and would not apply to units that are eligible for conveyance before the effective date of this regulation but have not been conveyed for other reasons.
At the August 2014 meeting, the Committee approved revising § 1000.318 to add a new paragraph (d) to establish the eligibility criteria for FCAS units that are demolished and rebuilt. Under section 302(b)(1)(C) of NAHASDA, if a unit is demolished and the recipient rebuilds the unit within 1-year of demolition of the unit, the unit may continue to be considered an FCAS unit under the formula. To implement this requirement, the Committee approved a regulatory provision that would permit the unit to continue to be considered FCAS if the recipient certifies in writing, within one-year from the date that the unit becomes damaged or deteriorated, that it has taken tangible action to demolish and rebuild the unit. In addition, the provision would require that reconstruction of the unit be completed within four years of the point at which demolition or replacement became necessary. At the end of the four year period, the unit would no longer be considered FCAS unless the recipient notified HUD that the reconstruction of the unit has been completed. If a recipient fails to rebuild a unit within the four-year time frame, the unit would nonetheless have been considered eligible as FCAS during those four years. This provision was intended to incentivize the reconstruction of properties in a condition of such significant disrepair that they must be demolished and rebuilt in order to preserve critical housing stock and ensure that housing remains available to assist low-income Indian families in the future.
Upon further review, HUD has determined that this provision may exceed the scope of section 302(b)(1)(C) of NAHASDA. The provision would have potentially allowed FCAS units that are rebuilt in a time period that exceeds 1-year from the time of demolition to remain FCAS units under the formula. While this proposed rule does not propose specific regulatory language addressing demolished FCAS units, HUD is seeking public comment on how to address this issue by regulation, while also remaining within the scope of section 302(b)(1)(C) of NAHASDA.
In this regard, HUD notes that during this negotiated rulemaking, the FCAS workgroup considered defining the term “demolition” in order to help clarify the point in time in which the 1-year period begins to run. For instance, the workgroup discussed whether to define demolition in cases involving natural disasters or fires as occurring at the time of the event. The workgroup also considered whether demolition should be defined as occurring only when a recipient voluntarily demolishes units in order to clear a site for a new replacement unit. HUD is specifically soliciting public comment, therefore, on these and alternative proposals that address section 302(b)(1)(C). Once HUD receives all public comments on this proposed rule, it is HUD's intent to afford the Committee, based on the public comment received, another opportunity at the final negotiated rulemaking session to consider specific regulatory language addressing this issue to be included in a final rule.
This proposed rule would revise § 1000.326(a) to provide in cases where a State recognized tribe's formula area overlaps with the formula area of a Federally recognized Indian tribe, that the Federally recognized Indian tribe would receive the allocation for the formula area up to its population cap. The revision also provides that the State recognized tribe would receive the balance of the allocation, if any exists, up to its own population cap.
Section 1000.326 would also be revised to require that HUD follow the notice and comment procedures in the definition of “Formula Area” (§ 1000.302 (2)(ii)) upon receiving a request for expansion or redefinition of a tribe's formula area, if approving the request would create an overlap of formula areas with one or more other tribes. This proposed change is intended
Section 1000.329 is proposed as a new provision of the Need component of the IHBG formula. Section 1000.329 would provide for a minimum block grant allocation in the event that amounts available for allocation include carryover funds. This section would provide that allocations be adjusted to ensure all tribes a minimum block grant allocation of 0.011547 percent of that year's IHBG appropriation. HUD and the Committee estimated, based on current year appropriations, that approximately $3 million would be required to ensure that tribes receive a minimum allocation of approximately 0.011547 percent of the annual IHBG appropriation (close to $75,000, given historical appropriated amounts). Therefore, HUD would set aside an amount equal to the lesser of $3 million of available carryover funds or the entire amount of available carryover funds to increase allocations pursuant to this section. If set-aside carryover funds are insufficient to fund all eligible tribes at 0.011547 percent of that year's appropriations, the minimum total grant would be reduced to an amount which can be fully funded with the available set-aside carryover funds. Set-aside carryover funds that are not required to fund this additional allocation would be carried over to the subsequent year's formula. A tribe would be eligible for a minimum allocation under § 1000.329 if there are eligible households at or below 80 percent of median income in the tribe's formula area. For purposes of this proposed rule, “carryover funds” are defined as any grant funds voluntarily returned to the formula or not accepted by tribes in a fiscal year. The definition of carryover funds would not include any amounts that are returned to the IHBG formula voluntarily or involuntarily pursuant to § 1000.536, as a result of a HUD action under § 1000.532. The Committee considered and rejected including such amounts in the definition of carryover funds under this section.
Section 1000.331 would be added to minimize and phase-in funding changes to allocations under the Need component of the formula resulting from the introduction of a new data source under § 1000.330, beginning in fiscal year 2018 (the first year that a new data source could be introduced). Under § 1000.331, if as a direct result of the introduction of a new data source, an Indian tribe's allocation under the Need component of the formula results in an allocation that is less than 90 percent of the amount it received under the Need component in the immediate previous fiscal year, the Indian tribe's Need allocation would be adjusted upward to an amount equal to 90 percent of the previous year's Need allocation. As proposed, this volatility control provision would not impact other adjustments under 24 CFR part 1000, including minimum funding, census challenges, formula area changes, or an increase in the total amount of funds available under the Need component. Section 1000.331 also proposes that in the event that HUD's IHBG appropriation is reduced and results in a decrease in the total amount of funds available under the Need component, an Indian tribe's adjusted allocation under § 1000.331(a) would be reduced by an amount proportionate to the reduced amount available for distribution under the Need component of the formula. Adjustments to the tribe's Need allocation under §§ 1000.331(b) or (c) would be made after adjustment of the tribe's allocation under § 1000.331(a).
This rule proposes to revise § 1000.336 to provide that an Indian tribe, TDHE, and HUD may challenge data used to determine the proposed undisbursed funds factor, § 1000.342. Specifically, this section would add the undisbursed funds factor to the list of IHBG formula data and HUD formula determinations that Indian tribes and TDHEs may appeal under the formula appeal procedures in § 1000.336. As the undisbursed funds factor is part of the formula for determining allocations, its application is not an enforcement action (under 24 CFR part 1000, subpart F).
In addition, § 1000.336(d) would be revised to clarify the format and provide the timeframes by which the tribe or TDHE must submit its appeal of the undisbursed funds factor. As proposed, this section would provide that the appeal must be in writing and submitted to HUD no later than 30 days after the tribe's or TDHE's receipt of HUD's application of the undisbursed funds factor.
This proposed rule also revises §§ 1000.336(e) and (f) for clarity. These revisions do not substantively amend these provisions.
The Committee proposed adding § 1000.342 to encourage tribes to timely expend their annual grants. Section 1000.342 would add an undisbursed funds factor to the IHBG formula. As proposed, the undisbursed funds factor would apply to Indian tribes whose initial allocation calculation is $5 million or more. A tribe's initial allocation calculation would include its FCAS, Need, the 1996 Minimum, and repayments or additions for past over- or under-funding for each Indian tribe (under 24 CFR part 1000, subpart D). Repayments or additions would not include repayments resulting from enforcement actions (24 CFR part 1000, subpart F).
Section § 1000.342(a) proposes that an Indian tribe would be subject to the undisbursed funds factor if it has undisbursed IHBG funds in an amount that is greater than the sum of its prior 3 years initial allocation calculations. Under proposed § 1000.342(c), for purposes of this section, “undisbursed IHBG funds” means the amount of IHBG funds allocated to an Indian tribe in HUD's line of credit control system (or successor system) on October 1 of the fiscal year for which the allocation is made. To determine the amount of undisbursed IHBG funds of a tribe under an umbrella TDHE (a recipient that has been designated to receive grant amounts by more than one Indian tribe), § 1000.342(c) proposes that the TDHE's total balance in HUD's line of credit control system on October 1 of the fiscal year for which the allocation is made would be multiplied by a percentage based on the tribe's proportional share of the initial allocation calculation of all tribes under the umbrella. Under proposed § 1000.342(b), if subject to the undisbursed funds factor in a given fiscal year, the Indian tribe's grant allocation would be the greater of the initial allocation calculation minus the amount of undisbursed IHBG funds that exceed the sum of the prior 3 years' initial allocation calculations, or its 1996 Minimum. Section 1000.342(d) also proposes that amounts subtracted from an initial allocation calculation under this section would be redistributed under the Need component of the formula to Indian tribes not subject to this section.
The eighth meeting of the Committee, which took place on January 26-27, 2016, was convened at the request of the
In an effort to address the concerns of the Committee regarding this proposal, HUD scheduled the eighth meeting to discuss the use of these data sources, vote on adjustments to data sources and approve the final preamble language. HUD's proposal is discussed in more detail later in this preamble.
Section 1000.330 describes the data source used for the Need variables in § 1000.324. Currently, § 1000.330 provides that the data sources for the Need variables “shall be data available that is collected in a uniform manner that can be confirmed and verified for all AIAN households and persons living in an identified area.” Current § 1000.330 also states that “[i]nitially, the data used are the U.S. Decennial Census data.” HUD originally codified § 1000.330 in 1998
Beginning in 2010, the U.S. Census Bureau discontinued use of the “long form” that, along with the short-form census questionnaire, went to a sample of households. The “long form” contained additional questions and provided more detailed socioeconomic information about the population. As part of this change, the more detailed socioeconomic information once collected by the long-form questionnaire is now collected by the ACS. The ACS potentially provides more current data regarding communities and is sent to a sample of the population on a rotating basis throughout the decade.
One impact of the discontinuation of the use of the “long form” is that data for six of the seven variables in § 1000.324 are no longer collected by the Decennial Census. During the course of this negotiated rulemaking the Committee extensively discussed revising § 1000.330 to use more current data sources, including the ACS, that might be used to determine Need under the formula. Because of the complexity of the issue, the Committee agreed by consensus to a procedure to identify and evaluate alternate data sources. Specifically, at the sixth negotiated rulemaking meeting in August 2014, the Committee agreed to provide itself with an additional year to study the issue by delaying implementation of any new data source until fiscal year 2018. At the same time, the Committee agreed to form the Data Study Group that would seek to identify and evaluate potential data sources that could replace the 2000 Decennial Census. The Committee provided that the Data Study Group would report its findings and recommendations by the seventh negotiated rulemaking scheduled for August 2015. The Committee also agreed that absent a consensus decision by the Committee regarding a new data source, HUD would make a final decision on a new data source that would be introduced starting in fiscal year 2018. The data source would be data collected in a uniform manner that can be confirmed and verified for all AIAN household and persons living in an identified area. Initially, the data used would be the most recent data available from the U.S. Census Bureau.
As discussed in this preamble, the Data Study Group conducted an extensive review of several potential data sources and reported the results of its work and its recommendations at the seventh negotiated rulemaking session. The Committee did not accept the recommendations of the Data Study Group and did not come to a consensus on a new data source. This inability to reach consensus was based in part on a concern expressed by several Committee members that the 2010 Decennial Census undercounted AIAN persons in some tribal areas and that the ACS suffered from similar inaccuracies.
Throughout the negotiated rulemaking process, HUD's Committee representatives made it known that while HUD was open to the results of the Data Study Group and worked toward reaching consensus on the data source, HUD considered the ACS as providing an up-to-date, reliable, comprehensive and accurate data source available for the variables in § 1000.324. In this regard, HUD made clear that the ACS were data “collected in a uniform manner that can be confirmed and verified for all AIAN households and persons living in an identified area.” HUD also made it known that the 2010 Decennial Census also met these standards for the count of AIAN persons variable in § 1000.324(g). Accordingly, and consistent with the Committee's consensus decision to establish the Need study group, this rule proposes to use the ACS 5-Year Estimates as the source of the data for the variables in paragraphs (a) through (f) of § 1000.324, and the most recent Decennial Census as the source for the total AIAN person variable in § 1000.324(g). HUD believes that the use of these sources more accurately reflect Indian Country given the substantial changes that have taken place since 2000.
Notwithstanding, HUD recognized that the Data Study Group found evidence to support the concerns of a number of tribes that the 2010 Decennial Census has a significant undercount in some tribal areas and that the ACS suffers from a similar inaccuracy. HUD has further researched these concerns and identified three adjustments that mitigate these problems. These adjustments were the focus of eighth meeting of the Committee, which took place on January 26-27, 2016.
The eighth meeting of the Committee, considered this adjustment, and after consideration, voted on the adjustment.
The U.S. Census Bureau adopted a different approach for the ACS, setting population control total weights at the county and place levels that have population estimates. That is, they are set at a higher level geography, mostly county and incorporated places, and not tribal areas. The ACS has adopted this approach because it establishes weights for all variables according to annual population estimates that are only available at these higher level geographies.
This change in methodology for setting control total weights can create a problem for the IHBG formula data for tribes. Without a small geography control total for the weights, the ACS can produce a population count for a subgroup in a small geography that is much different than the Decennial Census count for the same population.
To address this issue, HUD proposed in § 1000.330(b)(ii) to adjust the ACS data for the variables described in paragraphs (a) through (f) of § 1000.324 by the ratio of the adjusted total of AIAN persons based on the aged 2010 Decennial Census to the most recently available ACS count of AIAN persons as adjusted by § 1000.330(b)(i). HUD believes that this adjustment would make the ACS data methodology for small area geographic areas better align with the methodology used in the 2000 Decennial Census and provide a more accurate count of AIAN persons for smaller tribes. Some tribal members of the Committee did not agree.
During the eighth meeting of the Committee, the Committee considered this adjustment, and after consideration, voted on the adjustment. The Committee did not reach consensus on the vote for this adjustment. The majority of tribal Committee members did not support this adjustment. While some members supported this adjustment, the majority of tribal Committee members expressed concern with this proposal. Some members opposed the use of ACS as the data source for the formula and therefore voted against the adjustment. Other members supported the use of ACS data but believed that reweighting the data as proposed by HUD was not appropriate for other reasons. Specifically, some tribal Committee members believed that the undercount of one variable, AIAN persons, could not be properly assumed to translate to other variables. Notwithstanding, this rule proposes to adjust the ACS data for the variables described in paragraph (a) through (f) of § 1000.324 by the ratio of the adjusted total of AIAN persons based on the aged 2010 Decennial Census to the most recently available ACS count of AIAN persons as adjusted by § 1000.330(b)(i).
During the eighth meeting of the Committee, the Committee considered this adjustment, and after consideration, voted on the adjustment. The Committee reached consensus on this adjustment.
After HUD's issuance of a proposal on November 19, 2015, and prior to the eighth meeting of Committee, HUD invited the tribal members of the Committee to submit comments on its proposal and on the preamble section describing its proposal. The comment period lasted from November 23, 2015, to December 23, 2015. HUD received comments from six Committee members during this time frame.
Several Committee members expressed support for the use of aged 2010 Decennial Census data for the AIAN population count. Those same commenters supported the use of ACS data for the remaining six Need variables.
Other commenters expressed dissatisfaction with the compensation of
One commenter expressed support for developing and using a federally- or tribally-administered national tribal survey to collect information concerning enrollment in a recognized tribe, in lieu of the Decennial Census or the ACS.
In response to a discussion of the Allowable Expense Level adjustment factor in § 1000.320 during the 2005 IHBG Negotiated Rulemaking Session, HUD commissioned a study to assess the cost of operating 1937 Act housing programs across Indian Country and Alaska. The Indian Housing Operating Cost Study
During the seventh Negotiated Rulemaking Session, the FCAS Working Group considered whether USDA 515 data could be used as an additional cost adjustment factor under § 1000.320. The Committee requested the USDA 515 data and requested that HUD calculate block grant allocations to all tribes under two scenarios: (1) Using a local area cost adjustment factor that is the greater of Fair Market Rents (FMR), Allowable Expense Level (AEL), and USDA 515 factors for each tribe, and (2) using a factor that is the greater of the FMR and USDA 515 factors. Ultimately, the Committee considered a proposal to revise § 1000.320 to use a local area cost adjustment factor that is the greater of FMR, AEL, and USDA 515 factors for each tribe. After discussion of the proposal, the Committee was unable to reach consensus on how to modify the Current Assisted Stock local cost adjustment in § 1000.320. Several Committee members raised concerns that the USDA 515 rural housing rental program did not provide cost data for some locations and others felt that insufficient data was available to determine how the addition of this factor would affect tribes nationwide.
Although the Data Study Group did not reach consensus on the issue, it recommended that the Committee discuss whether or not to exclude South, Central, and Canadian AIAN persons from the data provided by the Decennial Census and the ACS for purposes of the IHBG formula. The study group made this recommendation after some study group members expressed concern that the IHBG is intended to serve only AIAN persons with a tribal affiliation in the United States. Because individuals having their origins in the indigenous peoples of Central America, South America, and Canada may or may not fall within the category of persons eligible to be served through the IHBG program, the study group referred the matter to the full Committee for consideration. The Committee discussed this issue as recommended, considered language drafted by the Drafting Committee, however the full Committee did not take the language up for a formal vote due to the withdrawal of the language.
HUD understands that other organizations, including State and local governments or nonprofits, may use certain factors or data from the IHBG formula to inform their own work with Indian tribes. HUD requests public comment on what factors or data are used by these organizations and how the changes proposed to the IHBG formula would impact the work done by such organizations.
Non-HUD members of the Committee recommend HUD establish a joint task force that includes tribal and HUD representatives to develop a methodology to collect operating cost data from IHBG recipients in a consistent and accurate manner that could be used to adjust for local operating costs in the adjustment to the operating subsidy under the current assisted stock portion of the formula (
The Committee notes that for a variety of reasons, the Committee did not accommodate the examination of the Needs variables.
Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and, therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the 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 proposed rule was determined to be a “significant regulatory action” as defined in section 3(f) of Executive Order 12866. The docket file is available for public inspection in the Regulations Division, Office of General Counsel, 451 7th Street, SW., Room 10276, Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, an advance appointment to
The information collection requirements contained in this rule have been submitted to the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.
The burden of the information collections in this proposed rule is estimated as follows:
(1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Enhance the quality, utility, and clarity of the information to be collected; and
(4) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated collection techniques or other forms of information technology,
Interested persons are invited to submit comments regarding the information collection requirements in this rule. Comments must refer to the proposal by name and docket number (FR-5650) and must be sent to:
The Regulatory Flexibility Act (RFA) (5 U.S.C. 601
Notwithstanding HUD's view that this rule will not have a significant effect on a substantial number of small entities, HUD specifically invites comments regarding any less burdensome alternatives to this rule that will meet HUD's objectives as described in this preamble.
Executive Order 13132 (entitled “Federalism”) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on state and local governments and is not required by statute, or preempts state law, unless the relevant requirements of section 6 of the Executive Order are met. 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. 1531-1538) (UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments, and on the private sector. This rule will not impose any federal mandate on any state, local, or tribal government, or on the private sector, within the meaning of UMRA.
A Finding of No Significant Impact (FONSI) with respect to the environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The Finding of No Significant Impact is available for public inspection between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel,
The Catalog of Federal Domestic Assistance Number (CFDA) for Indian Housing Block Grants is 14.867, and the CFDA for Title VI Federal Guarantees for Financing Tribal Housing Activities is 14.869.
Aged, Community development block grants, Grant programs—housing and community development, Grant programs—Indians, Indians, Individuals with disabilities, Public housing, Reporting and recordkeeping requirements.
Accordingly, for the reasons described in the preamble, HUD proposes to amend 24 CFR part 1000 as follows:
25 U.S.C. 4101
(2) * * *
(i) For a geographic area not identified in paragraph (1) of this definition, and for expansion or re-definition of a geographic area from the prior year, including those identified in paragraph (1) of this definition, the Indian tribe must submit, on a form agreed to by HUD, information about the geographic area it wishes to include in its Formula Area, including proof that the Indian tribe, where applicable, has agreed to provide housing services pursuant to a Memorandum of Agreement (MOA) with the tribal and public governing entity or entities of the area, or has attempted to establish such an MOA, and is providing substantial housing services and will continue to expend or obligate funds for substantial housing services, as reflected in its Indian Housing Plan and Annual Performance Report for this purpose.
(a) The IHBG formula can be modified upon development of a set of measurable and verifiable data directly related to Indian and Alaska Native housing need. Any data set developed shall be compiled with the consultation and involvement of Indian tribes and examined and/or implemented not later than 5 years from the date of issuance of these regulations and periodically thereafter.
(b) The IHBG formula shall be reviewed not later than May 21, 2012, to determine if a subsidy is needed to operate and maintain NAHASDA units or if any other changes are needed in respect to funding under the Formula Current Assisted Stock component of the formula.
The IHBG formula consists of four components:
(a) Formula Current Assisted Stock (FCAS) (§ 1000.316);
(b) Need (§ 1000.324);
(c) 1996 Minimum (§ 1000.340); and
(d) Undisbursed IHBG funds factor (§ 1000.342).
(c)
(1) If units were converted before October 1, 1997, as evidenced by an amended ACC, then those units will be counted for formula funding and eligibility purposes as the type of unit to which they were converted.
(2) If units were converted on or after October 1, 1997, the following applies:
(i)
(ii)
(3) The Indian tribe, TDHE, or IHA shall report conversions on the Formula Response Form.
(a) * * *
(3) A Mutual Help or Turnkey III unit not conveyed after the unit becomes eligible for conveyance by the terms of the MHOA may continue to be considered Formula Current Assisted Stock only if a legal impediment prevented conveyance; the legal impediment continues to exist; the tribe, TDHE, or IHA has taken all other steps necessary for conveyance and all that remains for conveyance is a resolution of the legal impediment; and the tribe, TDHE, or IHA made the following reasonable efforts to overcome the impediments:
(i) No later than four months after the unit becomes eligible for conveyance, the tribe, TDHE, or IHA creates a written plan of action, which includes a description of specific legal impediments as well as specific, ongoing, and appropriate actions for each applicable unit that have been taken and will be taken to resolve the legal impediments within a 24-month period; and
(ii) The tribe, TDHE, or IHA has carried out or is carrying out the written plan of action; and
(iii) The tribe, TDHE, or IHA has documented undertaking the plan of action.
(iv) No Mutual Help or Turnkey III unit will be considered FCAS 24 months after the date the unit became eligible for conveyance, unless the tribe, TDHE, or IHA provides evidence from a third party, such as a court or state or federal government agency, documenting that a legal impediment continues to prevent conveyance. FCAS units that have not been conveyed due to legal impediments on [effective date of this regulation] shall be treated as having become eligible for conveyance on [effective date of this regulation].
(a) * * *
(3) In cases where a State recognized tribe's formula area overlaps with the formula area of a Federally recognized Indian tribe, the Federally recognized Indian tribe receives the allocation for the formula area up to its population cap, and the State recognized tribe receives the balance of the overlapping area (if any) up to its population cap.
(c) Upon receiving a request for expansion or redefinition of a tribe's formula area, if approving the request would create an overlap, HUD shall follow the notice and comment procedures set forth in paragraph (2)(ii) of the definition of “Formula area” in § 1000.302.
(a) If in any given year there are carryover funds, then HUD will hold the lesser amount of $3 million or available carryover funds for additional allocations to tribes with grant allocations of less than 0.011547 percent of that year's appropriations. All tribes eligible under this section shall receive a grant allocation equal to 0.011547 percent of that year's appropriations.
(b)(1) If the set-aside carryover funds are insufficient to fund all eligible tribes at 0.011547 percent of that year's appropriations, the minimum total grant shall be reduced to an amount which can be fully funded with the available set-aside carryover funds.
(2) If less than $3 million is necessary to fully fund tribes under paragraph (a) of this section, any remaining carryover amounts of the set aside shall be carried forward to the next year's formula.
(c) Certify in its Indian Housing Plan the presence of any eligible households at or below 80 percent of median income;
(d) For purposes of this section, carryover funds means grant funds voluntarily returned to the formula or not accepted by tribes in a fiscal year.
(a) The sources of data for the Need variables shall be data that are available and collected in a uniform manner that can be confirmed and verified for all AIAN households and persons living in an identified area. Until fiscal year 2018, the data used are 2000 U.S. Decennial Census data and any HUD-accepted Census challenges. The 2000 U.S. Decennial Census data shall be adjusted annually using IHS projections based upon birth and death rate data provided by the National Center for Health Statistics.
(b)(i) Beginning fiscal year 2018, the data source used to determine the AIAN persons variable described in § 1000.324(g) shall be the most recent U.S. Decennial Census data adjusted for any statistically significant undercount for AIAN population confirmed by the U.S. Census Bureau and updated annually using the U.S. Census Bureau county level Population Estimates for Native Americans. For purposes of this paragraph, Indian Lands in Remote Alaska shall be treated as Reservation and Trust Lands, unless the U.S. Census Bureau includes Remote Alaska in their Census Coverage Measurement or comparable study. The data under this paragraph shall be updated annually using the U.S. Census Bureau county level Population Estimates for Native Americans.
(ii) Beginning fiscal year 2018, the data source used to determine the variables described in paragraphs (a) through (f) of § 1000.324 shall initially be the American Community Survey (ACS) 5-year Estimates adjusted by the ratio of the count of AIAN persons as provided by paragraph (b)(i) of this section to the ACS count of AIAN persons.
(c) Indian tribes may challenge the data described in this section pursuant to § 1000.336.
(a) To minimize the impact of funding changes based on the introduction of a new data source under § 1000.330, in fiscal year 2018 and each year thereafter, if, solely as a direct result of the introduction of a new data source, an Indian tribe's allocation under the Need component of the formula is less than 90 percent of the amount it received under the Need component in the immediate previous fiscal year, the Indian tribe's Need allocation shall be adjusted up to an amount equal to 90 percent of the previous year's Need allocation.
(b) Nothing in this section shall impact other adjustments under this part, including minimum funding, census challenges, formula area changes, or an increase in the total amount of funds available under the Need component.
(c) In the event of a decrease in the total amount of funds available under the Need component, an Indian tribe's adjusted allocation under paragraph (a) of this section shall be reduced by an amount proportionate to the reduced amount available for distribution under the Need component of the formula.
(d) Adjustments under paragraph (b) or (c) of this section shall be made to a tribe's Need allocation after adjusting that allocation under paragraph (a) of this section.
(a) * * *
(8) The undisbursed funds factor.
(d) An Indian tribe or TDHE that seeks to appeal data or a HUD formula determination, and has data in its possession that are acceptable to HUD, shall submit the challenge or appeal in writing with data and proper documentation to HUD. An Indian tribe or TDHE may appeal the undisbursed funds factor no later than 30 days after the receipt of the formula determination. Data used to challenge data contained in the U.S. Census must meet the requirements described in § 1000.330(a). Further, in order for a census challenge to be considered for the upcoming fiscal year allocation, documentation must be submitted by March 30th.
(e) HUD shall respond to all challenges or appeals no later than 45 days after receipt and either approve or deny the appeal in writing, setting forth the reasons for its decision.
(1) If HUD challenges the validity of the submitted data HUD and the Indian tribe or TDHE shall attempt in good faith to resolve any discrepancies so that such data may be included in the formula allocation.
(2) If HUD denies a challenge or appeal, the Indian tribe or TDHE may request reconsideration of HUD's denial within 30 calendar days of receipt of HUD's denial. The request shall be in writing and set forth justification for reconsideration.
(3) HUD shall in writing affirm or deny the Indian tribe's or TDHE's request for reconsideration, setting forth HUD's reasons for the decision, within 20 calendar days of receiving the
(4) If HUD approves the Indian tribe or TDHE's appeal, HUD will adjust to the Indian tribe's or TDHE's subsequent fiscal year allocation to include only the disputed fiscal year(s).
(f) In the event HUD questions whether the data contained in the formula accurately represents the Indian tribe's need, HUD shall request the Indian tribe to submit supporting documentation to justify the data and, if applicable, to provide a commitment to serve the population indicated in the geographic area.
Yes, beginning fiscal year 2018. After calculating the initial allocation calculation for the current fiscal year by calculating FCAS, Need, the 1996 Minimum, and repayments or additions for past over- or under-funding for each Indian tribe, the undisbursed funds factor shall be applied as follows:
(a) The undisbursed funds factor applies if an Indian tribe's initial allocation calculation is $5 million or more and the Indian tribe has undisbursed IHBG funds in an amount that is greater than the sum of the prior 3 years' initial allocation calculations.
(b) If subject to paragraph (a) of this section, the Indian tribe's grant allocation shall be the greater of the initial allocation calculation minus the amount of undisbursed IHBG funds that exceed the sum of the prior 3 years' initial allocation calculations, or its 1996 Minimum.
(c) For purposes of this section, “undisbursed IHBG funds” means the amount of IHBG funds allocated to an Indian tribe in HUD's line of credit control system (or successor system) on October 1 of the fiscal year for which the allocation is made. For Indian tribes under an umbrella TDHE (a recipient that has been designated to receive grant amounts by more than one Indian tribe), if the Indian tribe's initial allocation calculation is $5 million or more, its undisbursed IHBG funds is the amount calculated by multiplying the umbrella TDHE's total balance in HUD's line of credit control system (or successor system) on October 1 of the fiscal year for which the allocation is made by a percentage based on the Indian tribe's proportional share of the initial allocation calculation of all tribes under the umbrella.
(d) Amounts subtracted from an initial allocation calculation under this section shall be redistributed under the Need component among all Indian tribes not subject to paragraph (a) of this section (while also retaining the 1996 Minimum).
Federal Communications Commission.
Proposed rule.
The Federal Communications Commission (Commission) seeks comment on the appropriate schedule for implementing carrier identification requirements for digital video uplink transmissions, which were adopted by the Commission in August 2013.
Submit comments on or before June 30, 2016, and replies on or before July 15, 2016.
You may submit comments, identifying IB Docket No. 12-267, by any of the following means:
•
•
For detailed instructions for submitting comments and additional information on the rulemaking process, see the
Clay DeCell, 202-418-0803.
This is a summary of the Commission's document, DA 16-367, released April 6, 2016. The full text of this document is available at
By this Public Notice, we seek comment on the appropriate schedule for implementing carrier identification requirements for digital video uplink transmissions, as adopted by the Commission in August 2013.
In August 2013, the Commission updated the ATIS requirement in 47 CFR 25.281 to better accommodate digitally modulated video transmissions.
The record in the 2013 proceeding indicated that the new ATIS requirement for digital video could be accommodated by replacing the equipment with new facilities incorporating an embedded modulator or upgrading existing earth station equipment with an external modulator. Based on this record, the Commission adopted a two-year grace period for operators to bring their equipment into compliance with the new ATIS rule in 47 CFR 25.281(b). The Commission concluded that two years was a sufficient implementation period, and declined a proposed five-year phase-in schedule, because it was not requiring the ATIS to be embedded and therefore not requiring existing facilities to be replaced.
Recent information from affected earth station operators, and independent staff market surveillance, indicate that
Interested parties may file comments and reply comments in IB Docket No. 12-267 on or before the dates indicated in the
•
•
Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.
• All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.
• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.
• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington DC 20554.
Documents in IB Docket No. 12-267 are available for public inspection and copying during business hours at the FCC Reference Information Center, Portals II, 445 12th St. SW., Room CY A257, Washington, DC 20554.
This document does not contain proposed information collection requirements subject to the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, therefore, it does not contain any proposed information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,
Federal Communications Commission.
Office of Acquisition Policy, General Services Administration (GSA).
Proposed rule.
The General Services Administration (GSA) is proposing to amend the General Services Administration Acquisition Regulation (GSAR) to address common Commercial Supplier Agreement terms that are inconsistent with or create ambiguity with Federal Law.
Interested parties should submit written comments to the Regulatory Secretariat Division at one of the addresses shown below on or before August 1, 2016 to be considered in the formation of the final rule.
Submit comments in response to GSAR Case 2015-G512 by any of the following methods:
•
•
For clarification about content, contact Ms. Janet Fry, General Services Acquisition Policy Division, by phone at 703-605-
GSA defines Commercial Supplier Agreements as terms and conditions that are customarily offered to the public by vendors of supplies or services that meet the definition of “commercial item” and are intended to create a binding legal obligation on the end user. Commercial Supplier Agreements are particularly common in information technology acquisitions, including acquisitions of commercial computer software and commercial technical data, but they may apply to any supply or service.
Customarily, commercial supplies and services are offered to the public under standard agreements that may take a variety of forms, including license agreements, terms of service (TOS), terms of sale or purchase, and similar agreements. These customary, standard Commercial Supplier Agreements typically contain terms and conditions that make sense when the purchaser is a private party but are inappropriate when the purchaser is the Federal Government.
The existence of Federally-incompatible terms in standard Commercial Supplier Agreements has long been recognized in FAR 27.405-3(b), which is limited to the acquisition of commercial computer software. This clause advises contracting officers to exercise caution when accepting a contractor's terms and conditions. The use of Commercial Supplier Agreements is not limited to information technology acquisitions; Commercial Supplier Agreements have become ubiquitous in a broad variety of contexts, from travel to telecommunications to financial services to building maintenance systems, including purchases below the simplified acquisition threshold.
Discrepancies between Commercial Supplier Agreements and Federal law or the Government's needs create recurrent points of inconsistency. Below are several examples of incompatible clauses that are commonly found in Commercial Supplier Agreements:
• Jurisdiction or venue clauses may require that disputes be resolved in a particular state or Federal court. Such clauses conflict with the sovereign immunity of the U.S. Government and cannot apply to litigation where the U.S. Government is a defendant because those disputes must be heard either in U.S. District Court (28 U.S.C. 1346) or the U.S. Court of Federal Claims (28 U.S.C. 1491).
• Automatic renewal clauses may automatically renew or extend contracts unless affirmative action is taken by the Government. Such clauses that require the obligation of funds prior to appropriation violate the restrictions of the Anti-Deficiency Act (31 U.S.C. 1341(a)(1)(B)).
• Termination clauses may allow the contractor to unilaterally terminate a contract if the Government is alleged to have breached the contract. Government contracts are subject to the Contract Disputes Act of 1978 (41 U.S.C. 601-613). The Contract Disputes Act requires a certain process for resolving disputes, including terminations, and that the “Contractor shall proceed diligently with performance of this contract, pending final resolution” under the terms of the FAR Disputes clause at 52.233-1.
Additionally, the current order of precedence contained in the Commercial Items clause at FAR 52.212-4 is not clear on prevailing terms, and potentially allows Commercial Supplier Agreements to supersede the terms of Federal contracts, especially in those areas where Federal law is implicated indirectly. As a result, industry and Government representatives must spend significant time and resources negotiating and tailoring Commercial Supplier Agreements to comply with Federal law and to ensure both parties have agreement on the contract terms.
GSA has identified common illegal, improper or inappropriate Commercial Supplier Agreement terms that constitute the majority of the negotiated Commercial Supplier Agreement terms. The outcome of the negotiations regarding these identified terms is generally predetermined by rule of law, but GSA and contractors must spend significant time and resources to negotiate out these terms. By explicitly addressing common unenforceable terms within the Commercial Items clause at FAR 52.212-4 and clarifying prevailing terms in the order of precedence, it eliminates the need for negotiation on these identified terms, and makes clear to both parities the precedence of terms.
This approach will decrease the time needed for legal review prior to contract formation and will significantly reduce costs to both the Government and contractors. GSA believes that such an approach will benefit contractors, including small business concerns by (1) decreasing proposal costs associated with negotiating the identified unenforceable Commercial Supplier Agreement terms; (2) facilitating faster procurement and contract lead times, therefore decreasing the time it takes for contractors to make a return on their investment; (3) reducing administrative costs for companies that maintain alternate Federally compliant Commercial Supplier Agreements; and (4) for small business concerns it levels the playing field with larger competitors since negotiations will only be required if the Commercial Supplier Agreements contains objectionable clauses outside of those already identified in proposed clause. Additionally, this approach ensures consistent application and understanding of these unenforceable terms.
On July 31, 2015, GSA issued a class deviation to immediately address the order of precedence and Commercial Supplier Agreement terms that are incompatible with Federal law. The class deviation protects GSA and contractors by uniformly addressing common unacceptable terms, immediately reducing risk, reducing administrative cost and further streamlining the acquisition process for commercial-item supplies and services. Additionally the class deviation clarifies the precedence of terms to ensure both parties have a mutual understanding of the contract terms. For example, bilateral modifications to the commercial supplier agreements are only required for material changes to ensure the contracting officer is aware of and agrees to the changes.
A supplement to the class deviation was issued on September 30, 2015, to (1) reiterate that the change in the order of precedence protects GSA in the occasion where unilateral license updates could change government rights, and (2) clarify that Commercial Supplier Agreement terms can be negotiated except for the improper terms addressed in paragraph (w) of the GSAR clause 552.212-4. GSA refined the language in the class deviation while developing this proposed rule to further clarify (1) unauthorized obligations and other fees; (2) unilateral termination provisions; and (3) terms incorporated by reference. These issues are discussed in greater detail in Section II of this rule.
GSA is proposing to amend the General Services Administration Acquisition Regulation (GSAR) to implement standard terms and conditions for the most common conflicting Commercial Supplier Agreement terms to minimize the need for the negotiation of the terms of Commercial Supplier Agreements on an individual basis. The proposed rule will add provisions to contracts making certain conflicting or inconsistent terms in a Commercial Supplier Agreement unenforceable, so long as an express exception is not authorized elsewhere by Federal statute. GSA is also proposing to amend the GSAR to modify the order of precedence contained in the Commercial Items clause (52.212-4) to make clear that all of the terms of the GSAR clause control in the event of a conflict with a Commercial Supplier Agreement unless both parties agree to specific terms during the course of negotiating the contract.
Both of the above changes will be accomplished by revising guidance and clauses contained throughout the GSAR. The specific changes contained in the proposed rule are as follows:
• A definition for Commercial Supplier Agreements is added at GSAR 502.101.
• GSAR 512.216 is created and clarifies that paragraph (u) of the Commercial Items clause at 552.212-4 prevents violation of the Anti-Deficiency Act.
• GSAR 512.301 is updated to prescribe the use of the deviated Commercial Items clause at 552.212-4 in lieu of FAR 52.212-4.
• GSAR 513.202 is created and will automatically apply the clause at 552.232-39 into all purchases below the micro-purchase threshold.
• GSAR 513.302-5 is created and requires the inclusion of GSAR 552.232-39 and 552.232-78 in all acquisitions for supplies or services that are offered under a Commercial Supplier Agreement.
• GSAR 532.705 is created and clarifies the definition of supplier license agreements as used in the Unenforceability of Unauthorized Obligations clause at FAR 32.705.
• GSAR 532.706-3 is created and directs contracting officers to utilize the clause at GSAR 552.232-39 in lieu of FAR 52.232-39 and prescribes the use of the clause Commercial Supplier Agreements—Unenforceable Clauses at 552.232-78.
• The Commercial Items clause at GSAR 552.212-4 is modified to include instructions to contracting officers on how to incorporate the change in language from FAR 52.212-4.
• The order of precedence contained in paragraph (s) of the Commercial Items clause at GSAR 552.212-4 is amended to ensure that all of the terms of GSAR 552.212-4 shall control over the terms of a Commercial Supplier Agreement by moving “Addenda to this solicitation or contract, including any license agreements for computer software” down two spaces in the order of precedence, behind “Solicitation provisions as awarded if there is a solicitation” and “Other paragraphs of this clause.”
• Paragraph (u) of the Commercial Items clause at GSAR 552.212-4 is amended to (1) reflect the new Commercial Supplier Agreement definition contained in GSAR 502.101, (2) to expand coverage to “language or provision” in addition to “clause” in order to ensure that all Commercial Supplier Agreement terms are covered, regardless of terminology utilized, and (3) to include future fees, penalties, interest and legal costs as unauthorized obligations in addition to indemnification.
• Paragraph (w) of the Commercial Items clause at GSAR 552.212-4 is created to address the following commonplace unenforceable elements found in Commercial Supplier Agreements:
○ Definition of contracting parties: Contract agreements are between the commercial supplier or licensor and the U.S. Government. Government employees or persons acting on behalf of the Government will not be bound in their personal capacity by the Commercial Supplier Agreement.
○ Laws and disputes: Clauses that conflict with the sovereign immunity of the U.S. Government cannot apply to litigation where the U.S. Government is a defendant because those disputes must be heard either in U.S. District Court or the U.S. Court of Federal Claims. Commercial Supplier Agreement terms that require the resolution of a dispute in a forum or time period other than that expressly authorized by Federal law are deleted. Statutes of limitation on potential claims shall be governed by U.S. Government law.
○ Continued Performance: Commercial suppliers may not unilaterally terminate or suspend a contract based upon a suspected breach of contract by the Government. Accepting terms that can be unilaterally terminated or revoked places the Government at risk of not receiving goods or services for money it has obligated on a contract or task order, if the price paid by the Government is non-refundable. This position is in violation of 31 U.S.C. 3324, which provides that payment under a contract may not exceed the value of a service or product already delivered. A license that is prematurely terminated outside of the regular dispute resolution procedures results in the Government not receiving the value of that license because the license is no longer delivered. The removal of the contractor's right to unilateral termination does not impair the contractor's ability to pursue remedies. It preserves all the legal remedies the contractor otherwise has under Federal law, including Contract Disputes Act claims. Remedies through the Contract Disputes Act or other applicable Federal statutes align with the continuing performance requirement set forth in subparagraph (d) Disputes.
○ Arbitration; equitable or injunctive relief: A binding arbitration may not be enforced unless explicitly authorized by agency guidance or statute. Equitable remedies or injunctive relief such as attorney fees, cost or interest may only be awarded against the U.S. Government when expressly authorized by statute (
○ Additional Terms: Incorporation of terms by reference is allowed provided the full text of terms is provided with the offer. Unilateral modifications to the Commercial Supplier Agreement after the time of award may be allowed to the extent that the modified terms do not materially change the Government's rights or obligations, increase the Government's prices, decrease the level of service provided, or limit any Government right addressed elsewhere in the contract. A bilateral contract modification is required in order for any of the above described changes to be enforceable against the Government.
○ Automatic renewals: Due to Anti-Deficiency Act restrictions, automatic contract renewal clauses are impermissible. Any such Commercial Supplier Agreement clauses are unenforceable.
○ Indemnity (contractor assumes control of proceedings): Any clause requiring that the commercial supplier or licensor control any litigation arising from the Government's use of the contractor's supplies or services is deleted. Such representation when the Government is a party is reserved by statute for the U.S. Department of Justice.
○ Audits (automatic liability for payment): Discrepancies found during an audit must comply with the invoicing procedures from the underlying contract. Disputed charges
○ Taxes or surcharges: Any taxes or surcharges that will be passed along to the Government will be governed by the terms of the underlying contract. The cognizant contracting officer must make a determination of applicability of taxes whenever such a request is made.
○ Assignment of Commercial Supplier Agreement or Government contract by supplier: The contract, Commercial Supplier Agreement, party rights and party obligations may not be assigned or delegated without express Government approval. Payment to a third party financial institution may still be reassigned.
○ Confidentiality of Commercial Supplier Agreement terms and conditions: The content of the Commercial Supplier Agreement and the Federal Supply Schedule list price (if applicable) may not be deemed confidential. The Government may retain other marked confidential information as required by law, regulation or agency guidance, but will appropriately guard such confidential information.
• GSAR 552.232-78 is created and addresses the same common unenforceable Commercial Supplier Agreement terms addressed in GSAR 552.212-4(w) described above.
• GSAR 552.232-39 is created to amended the language of FAR 52.232-39 to reflect the definition of Commercial Supplier Agreements contained at GSAR 502.101, to expand coverage to “language or provision” in addition to “clause” in order to ensure that all Commercial Supplier Agreement terms are covered, regardless of terminology utilized, and to include future fees, penalties, interest and legal costs as unauthorized obligations in addition to indemnification.
This proposed rule will reduce risk by uniformly addressing common unacceptable Commercial Supplier Agreement terms, facilitate efficiency and effectiveness in the contracting process by reducing the administrative burden for the Government and industry, and promote competition by reducing barriers to industry, particularly for small businesses.
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.
The change may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act 5 U.S.C. 601,
This effort is expected to reduce the overall burden on small entities by reducing the amount of time and resources required to negotiate Commercial Supplier Agreements. GSA believes that such an approach will disproportionately benefit small business concerns since they are less likely to retain in-house counsel and the GSAR revision will reduce or eliminate the costs associated with the negotiation of the identified unenforceable elements. Furthermore, this approach will allow small businesses that do not have Commercial Supplier Agreements tailored to Federal Government procurements to potentially utilize their otherwise compliant, standard Commercial Supplier Agreements when conducting business with the Government.
The Regulatory Secretariat Division will be submitting a copy of the Initial Regulatory Flexibility Analysis (IRFA) to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. GSA invites comments from small business concerns and other interested parties on the expected impact of this proposed rule on small entities.
GSA will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (GSAR Case 2015-G512) in correspondence.
The proposed rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).
Government procurement.
Therefore, GSA proposes to amend 48 CFR parts 502, 512, 513, 532, and 552 as set forth below:
40 U.S.C. 121(c).
(1) Regardless of the format or style of the document. For example, a commercial supplier agreement may be styled as standard terms of sale or lease, Terms of Service (TOS), End User License Agreement (EULA), or another similar legal instrument or agreement, and may be presented as part of a proposal or quotation responding to a solicitation for a contract or order;
(2) Regardless of the media or delivery mechanism used. For example, a commercial supplier agreement may be presented as one or more paper documents or may appear on a computer or other electronic device screen during a purchase, software installation, other product delivery, registration for a service, or another transaction.
40 U.S.C. 121(c).
GSA has a deviation to FAR 12.216 for this section to read as follows:
For commercial contracts, supplier license agreements are referred to as commercial supplier agreements (defined in 502.101). Paragraph (u) of clause 552.212-4 prevents violations of the Anti-Deficiency Act (31 U.S.C. 1341) for supplies or services acquired subject to a commercial supplier agreement.
(e) GSA has a deviation to revise certain paragraphs of FAR clause 52.212-4. Use clause 552.212-4 Contract Terms and Conditions—Commercial Items (FAR DEVIATION), for acquisitions of commercial items in lieu of FAR 52.212-4. The contracting officer may tailor this clause in accordance with FAR 12.302 and GSAM 512.302.
40 U.S.C. 121(c).
Clause 552.232-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION), will automatically apply to any micro-purchase in lieu of FAR 52.232-39 for supplies and services acquired subject to a commercial supplier agreement (as defined in 502.101).
Where the supplies or services are offered under a commercial supplier agreement (as defined in 502.101), the purchase order or modification shall incorporate clause 552.232-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION), in lieu of FAR 52.232-39, and clause 552.232-78, Commercial Supplier Agreements-Unenforceable Clauses.
40 U.S.C. 121(c).
Supplier license agreements defined in FAR 32.705 are equivalent to commercial supplier agreements defined in 502.101.
(a) The contracting officer shall utilize the clause at 552.232-39, Unenforceability of Unauthorized Obligations (FAR DEVIATION) in all solicitations and contracts in lieu of FAR 52.232-39.
(b) The contracting officer shall utilize the clause at 552.232-78, Commercial Supplier Agreements—Unenforceable Clauses, in all solicitations and contracts (including orders) when not using FAR part 12.
40 U.S.C. 121(c).
As prescribed in 512.301(e), replace paragraphs (g)(2), (s), and (u) of FAR clause 52.212-4. Also, add paragraph (w) to FAR clause 52.212-4.
(g)(2) The due date for making invoice payments by the designated payment office is the later of the following two events:
(i) The 10th day after the designated billing office receives a proper invoice from the Contractor. If the designated billing office fails to annotate the invoice with the date of receipt at the time of receipt, the invoice payment due date shall be the 10th day after the date of the Contractor's invoice; provided the Contractor submitted a proper invoice and no disagreement exists over quantity, quality, or Contractor compliance with contract requirements.
(ii) The 10th day after Government acceptance of supplies delivered or services performed by the Contractor.
(s)
(1) The schedule of supplies/services.
(2) The Assignments, Disputes, Payments, Invoice, Other Compliances, Compliance with Laws Unique to Government Contracts, Unauthorized Obligations, and Commercial Supplier Agreements-Unenforceable Clauses paragraphs of this clause.
(3) The clause at 52.212-5.
(4) Solicitation provisions if this is a solicitation.
(5) Other paragraphs of this clause.
(6) Addenda to this solicitation or contract, including any license agreements for computer software.
(7) The Standard Form 1449.
(8) Other documents, exhibits, and attachments.
(9) The specification.
(u)
(i) Any such language, provision, or clause is unenforceable against the Government.
(ii) Neither the Government nor any Government authorized end user shall be deemed to have agreed to such clause by virtue of it appearing in the commercial supplier agreement. If the commercial supplier agreement is invoked through an “I agree” click box or other comparable mechanism (
(iii) Any such language, provision, or clause is deemed to be stricken from the commercial supplier agreement.
(2) Paragraph (u)(1) of this clause does not apply to indemnification or any other payment by the Government that is expressly authorized by statute and specifically authorized under applicable agency regulations and procedures.
(w)
(1) Notwithstanding any other provision of this agreement, when the end user is an agency or instrumentality of the U.S. Government, the following shall apply:
(i)
(ii)
(iii)
(A) Any language purporting to subject the U.S. Government to the laws of a U.S. state, U.S. territory, district, or municipality, or a foreign nation, except where Federal law expressly provides for the application of such laws, is hereby deleted.
(B) Any language requiring dispute resolution in a specific forum or venue that is different from that prescribed by applicable Federal law is hereby deleted.
(C) Any language prescribing a different time period for bringing an action than that prescribed by applicable Federal law in relation to a dispute is hereby deleted.
(iv)
(v)
(vi)
(B) After award, the contractor may unilaterally revise terms provided:
(
(
(
(
(C) The order of precedence clause of this contract is not enforceable against the government, notwithstanding any software license terms unilaterally revised subsequent to award that is inconsistent with any material term or provision of this contract.
(vii)
(viii)
(ix)
(A) Discrepancies found in an audit may result in a charge by the commercial supplier or licensor to the ordering activity. Any resulting invoice must comply with the proper invoicing requirements specified in the underlying Government contract or order.
(B) This charge, if disputed by the ordering activity, will be resolved through the Disputes clause at 522.212-4(d); no payment obligation shall arise on the part of the ordering activity until the conclusion of the dispute process.
(C) Any audit requested by the contractor will be performed at the contractor's expense, without reimbursement by the Government.
(x)
(xi)
(xii)
(2) If any language, provision, or clause of this agreement conflicts or is inconsistent with the preceding paragraph (w)(1), the language, provisions, or clause of paragraph (w)(1) shall prevail to the extent of such inconsistency.
As prescribed in 513.302-5 and 532.706-3, insert the following clause:
(a) Except as stated in paragraph (b) of this clause, when any supply or service acquired under this contract is subject to any commercial supplier agreement (as defined in 502.101) that includes any language, provision, or clause requiring the Government to pay any future fees, penalties, interest, legal costs or to indemnify the Contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an Anti-Deficiency Act violation (31 U.S.C. 1341), the following shall govern:
(1) Any such language, provision, or clause is unenforceable against the Government.
(2) Neither the Government nor any Government authorized end user shall be deemed to have agreed to such language, provision, or clause by virtue of it appearing in the commercial supplier agreement. If the commercial supplier agreement is invoked through an “I agree” click box or other comparable mechanism (
(3) Any such language, provision, or clause is deemed to be stricken from the commercial supplier agreement.
(b) Paragraph (a) of this clause does not apply to indemnification or any other payment by the Government that is expressly authorized by statute and specifically authorized under applicable agency regulations and procedures.
As prescribed in 513.302-5 and 532.706-3 insert the following clause:
(a) When any supply or service acquired under this contract is subject to a commercial supplier agreement, the following language shall be deemed incorporated into the commercial supplier agreement. As used herein, “this agreement” means the commercial supplier agreement:
(1) Notwithstanding any other provision of this agreement, when the end user is an agency or instrumentality of the U.S. Government, the following shall apply:
(i)
(ii)
(iii)
(A) Any language purporting to subject the U.S. Government to the laws of a U.S. state, U.S. territory, district, or municipality, or foreign nation, except where Federal law expressly provides for the application of such laws, is hereby deleted.
(B) Any language requiring dispute resolution in a specific forum or venue that is different from that prescribed by applicable Federal law is hereby deleted.
(C) Any language prescribing a different time period for bringing an action than that prescribed by applicable Federal law in relation to a dispute is hereby deleted.
(iv)
(v)
(vi)
(B) After award the contractor may unilaterally revise terms provided:
(
(
(
(
(C) The order of precedence clause of this contract notwithstanding, any software license terms unilaterally revised subsequent to award that is inconsistent with any material term or provision of this contract is not enforceable against the government.
(vii)
(viii)
(ix)
(A) Discrepancies found in an audit may result in a charge by the commercial supplier or licensor to the ordering activity. Any resulting invoice must comply with the proper invoicing requirements specified in the underlying Government contract or order.
(B) This charge, if disputed by the ordering activity, will be resolved through the Disputes clause at 52.233-1; no payment obligation shall arise on the part of the ordering activity until the conclusion of the dispute process.
(C) Any audit requested by the contractor will be performed at the contractor's expense, without reimbursement by the Government.
(x)
(xi)
(xii)
(2) If any language, provision or clause of this agreement conflicts or is inconsistent with the preceding subparagraph (a)(1), the language, provisions, or clause of subparagraph (a)(1) shall prevail to the extent of such inconsistency.
Forest Service, USDA.
Notice; request for comment.
In accordance with the Paperwork Reduction Act of 1995, the Forest Service is seeking comments from all interested individuals and organizations on the extension with no revision of a currently approved information collection, OMB 0596-0105, Land Exchanges.
Comments must be received in writing on or before August 1, 2016 to be assured of consideration. Comments received after that date will be considered to the extent practicable.
Comments concerning this notice should be addressed to Nancy Parachini, National Land Adjustment Program Manager, Lands, Forest Service, 201 14th Street SW., Suite 1SE, Mail Stop 1124, Washington, DC 20024.
Comments also may be submitted via facsimile to 703-605-5117 or by email to:
The public may inspect comments received at Office of the Land Adjustment Program Manager—Lands Staff, Yates Building, 201 14th Street, SW., Washington, DC during normal business hours. Visitors are encouraged to call ahead to 202-205-3563 or 800-832-1355 to facilitate entry to the building.
Nancy Parachini, Lands Adjustment Program Manager, 202-205-1238.
Individuals who use telecommunication devices for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1-800-877-8339 between 8:00 a.m. and 8:00 p.m., Eastern Standard Time, Monday through Friday.
Type of Request: Extension with revision of a currently approved information collection.
Each land exchange requires preparation of an Agreement to Initiate as required by Title 36 Code of Federal Regulations (CFR), part 254, subpart A—section 254.4—Agreement to Initiate. The Agreement to Initiate document specifies the preliminary and non-binding intentions of the non-Federal land exchange party and the Forest Service in pursuing a land exchange. The Agreement to Initiate can contain such information as the description of properties being considered in the land exchange, an implementation schedule of action items, identification of the party responsible for each action item, as well as target dates for completion of each action item.
As the exchange proposal develops, the Forest Service and the non-Federal land exchange party may enter into a binding Exchange Agreement, pursuant to Title 36 CFR part 254, subpart A, section 254.14—Exchange Agreement. The Exchange Agreement documents the conditions that must be met to complete the exchange. The Exchange Agreement can contain information such as identification of parties, description of lands and interests to be exchanged, identification of all reserved and outstanding interest, and all other terms and conditions necessary to complete the exchange.
The Forest Service collects the information from the non-Federal party (or parties) necessary to complete the Agreement to Initiate and the Exchange Agreement. The information is collected by Forest Service personnel from parties involved in the exchange via telephone, email or in person. Data from this information collection is unique to each land exchange and is not available from other sources. No standardized forms are associated with this information collection.
Agreement to Initiate: 3 hours.
Exchange Agreement: 1 hour.
Comment is invited on: (1) whether this collection of information is necessary for the stated purposes and the proper performance of the functions of the Agency, including whether the information will have practical or scientific utility; (2) the accuracy of the Agency's estimate of the burden of the collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.
All comments received in response to this notice, including names and addresses when provided, will be a matter of public record. Comments will be summarized and included in the submission request toward Office of Management and Budget approval.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (“the Department”) is conducting two new shipper reviews (“NSRs”) of the antidumping duty order on multilayered wood flooring from the People's Republic of China (“PRC”). The NSRs cover two exporters and producers of subject merchandise, Dongtai Zhangshi Wood Industry Co., Ltd. (“Zhangshi”) and Huzhou Muyun Wood Co., Ltd. (“Muyun”). The period of review (“POR”) is December 1, 2014 through May 31, 2015. The Department preliminarily determines that both Zhangshi's sale and Muyun's sale to the United States were not
Robert Galantucci or Aleksandras Nakutis, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-2923 or (202) 482-3147, respectively.
On July 29, 2015, the Department published a notice of initiation of two NSRs of the antidumping duty order on multilayered wood flooring from the PRC.
Multilayered wood flooring is composed of an assembly of two or more layers or plies of wood veneer(s) in combination with a core. The several layers, along with the core, are glued or otherwise bonded together to form a final assembled product. For a full description of the scope,
The Department is conducting this review in accordance with section 751(a)(2)(B) of the Tariff Act of 1930, as amended (“the Act”) and 19 CFR 351.214.
As discussed in the
Interested parties may submit case briefs no later than 30 days after the date of publication of the preliminary results of review.
Interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement & Compliance, U.S. Department of Commerce, within 30 days after the date of publication of this notice.
All submissions, with limited exceptions, must be filed electronically using ACCESS. An electronically filed document must be received successfully in its entirety by the Department's electronic records system, ACCESS, by 5 p.m. Eastern Time (“ET”) on the due date. Documents excepted from the electronic submission requirements must be filed manually (
The Department intends to issue the final results of these NSRs, which will include the results of its analysis of issues raised in any briefs received, no later than 90 days after the date these preliminary results of review are issued pursuant to section 751(a)(2)(B)(iv) of the Act.
If the Department proceeds to a final rescission of Zhangshi and Muyun's NSRs, the assessment rate to which Zhangshi and Muyun's shipments will be subject will not be affected by this review. However, the Department initiated an administrative review of the antidumping duty order on multilayered wood flooring from the PRC covering numerous exporters, including Zhangshi and Muyun, for the period December 1, 2014 through November 30, 2015 which encompasses the POR of these NSRs.
If the Department does not proceed to a final rescission of this new shipper review, pursuant to 19 CFR 351.212(b)(1), we will calculate importer-specific (or customer) assessment rates based on the final results of this review. However, pursuant to the Department's refinement to its assessment practice in non-market economy cases, for entries that were not reported in the U.S. sales database submitted by Zhangshi or Muyun, the Department will instruct CBP to liquidate such entries at the PRC-wide rate.
Effective upon publication of the final rescission or the final results of these NSRs, pursuant to section 751(a)(2)(B)(iii) of the Act and 19 CFR 351.214(e), the Department will instruct CBP to discontinue the option of posting a bond or security in lieu of a cash deposit for entries of subject merchandise by Zhangshi and Muyun. If the Department proceeds to a final rescission of these NSRs, the cash deposit rate will continue to be the PRC-wide rate for Zhangshi and Muyun because the Department will not have determined an individual margin of dumping for either company. If the Department issues final results for these NSRs, the Department will instruct CBP to collect cash deposits, effective upon the publication of the final results, at the rates established therein.
This notice also serves as a reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.
We are issuing and publishing these results in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The Pacific Fishery Management Council's (Pacific Council) Salmon Technical Team (STT) and Salmon Advisory Subpanel (SAS) will hold a webinar, which is open to the public, to discuss and make recommendations on issues on the Council's June 2016 agenda.
The webinar will be held on Friday, June 17, 2016, from 1:30 p.m. until business for the day is complete.
To attend the webinar, visit:
Mr. Mike Burner, Pacific Council; telephone: (503) 820-2414.
The STT and SAS will discuss and make recommendations on items on the Council's June 2016 meeting agenda. Major topics include, but are not limited to: Sacramento River Winter Chinook Harvest Control Rule Update, Scoping of Pacific Halibut Catch Share Plan Allocation Changes, and Western Region Climate Change Action Plan. The STT and SAS may also address one or more of the Council's scheduled Administrative Matters. Public comments during the webinar will be received from attendees at the discretion of the STT and SAS Chairs.
Although nonemergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt at (503) 820-2425 at least 5 days prior to the meeting date.
National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
Written comments must be submitted on or before August 1, 2016.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument and instructions should be directed to Dr. David Gloeckner, (305) 361-4257 or
This request is for revision of a current information collection.
Fishery quotas are established for many species in the fishery management plans developed by the Gulf of Mexico Reef Fish Fishery Management Council, the South Atlantic Fishery Management Council, and The Caribbean Fishery Management Council. The Southeast Fisheries Science Center has been delegated the responsibility to monitor these quotas. To do so in a timely manner, seafood dealers that handle these species are required to report the purchases (landings) of these species. The frequency of these reporting requirements varies depending on the magnitude of the quota (
In addition, information collection included in this family of forms includes interview with fishermen to gather information on the fishing effort, location and type of gear used on individual trips. This data collection is conducted for a subsample of the fishing trips and vessel/trips in selected commercial fisheries in the Southeast region and commercial fisheries of the U.S. Caribbean. Fishing trips and individuals are selected at random to provide a viable statistical sample. These data are used for scientific analyses that support critical conservation and management decisions made by national and international fishery management organizations.
A revision to this collection is requested because the Caribbean Fishery Management Council has asked that commercial trip interviews be conducted for the fisheries of the Caribbean. In order to support this request, the SEFSC has developed a sampling procedure which will require additional commercial trip interview with fishers in the Caribbean. This data collection is authorized under 50 CFR part 622.5.
Dealer reports may be emailed, faxed or mailed. Information from fisherman is obtained by face-to-face interviews.
Dealer reporting for monitoring Federal fishery annual catch limits (ACLs): Coastal fisheries dealers reporting, 10 minutes; mackerel dealer reporting (non-gillnet), 10 minutes; mackerel dealer reporting (gillnet), 10 minutes; mackerel vessel reporting (gillnet), 10 minutes; wreckfish dealer reporting, 10 minutes.
Bioprofile data from Trip Interview programs (TIP): Shrimp Interviews,10 minutes; Fin Fish interviews, 10 minutes.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
Office for Coastal Management (OCM), National Ocean Service (NOS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Notice.
The National Oceanic and Atmospheric Administration (NOAA), Office for Coastal Management will hold a public meeting to solicit comments on the performance evaluation of the Tijuana River National Estuarine Research Reserve. Notice is also hereby given of the availability of the final evaluation findings for the Florida Coastal Management Program.
For specific dates, times, and locations of the public meetings, see
You may use any of the following methods to submit comments regarding the reserve NOAA intends to evaluate:
Ralph Cantral, Evaluator, Policy, Planning and Communications, Office for Coastal Management, NOS/NOAA, 1305 East-West Highway, 11th Floor, N/OCM1, Silver Spring, Maryland 20910, or
Sections 312 and 315 of the Coastal Zone Management Act (CZMA) require NOAA to conduct periodic evaluations of federally approved national estuarine research reserves. The process includes a public meeting, consideration of written public comments and consultations with interested Federal, state, and local agencies and members of the public. During the evaluation, NOAA will consider the extent to which the state has met the national objectives, adhered to the final management plan approved by the Secretary of Commerce, and adhered to the terms of financial assistance under the CZMA. When the evaluation is completed, NOAA's Office for Coastal Management will place a notice in the
Specific information on the periodic evaluation of reserves that are the subject of this notice are detailed below:
You may participate or submit oral comments at the public meeting scheduled as follows:
Date: July 19, 2016.
Time: 6 p.m., local time.
Location: 301 Caspian Way, Imperial Beach, California 91932.
Written comments must be received on or before July 29, 2016.
The NOAA Office for Coastal Management has completed review of the Coastal Zone Management Program evaluations for the state of Florida. The state was found to be implementing and enforcing their federally approved coastal management program, addressing the national coastal management objectives identified in CZMA Section 303(2)(A)-(K), and adhering to the programmatic terms of their financial assistance awards. Copies of the final evaluation findings may be downloaded at
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; public meeting.
The Pacific Fishery Management Council's (Pacific Council) Ad hoc Sacramento River Winter Chinook Workgroup (SRWCW) will hold a webinar, which is open to the public, to discuss progress on development of potential harvest control rule options.
The webinar will be held on Wednesday, June 15, from 1:30 p.m. until business for the day is complete.
To attend the webinar, visit:
Mr. Mike Burner, Pacific Council; telephone: (503) 820-2414.
The SRWCW will discuss progress on the development of new indicators and predictors of Sacramento River winter Chinook ocean abundance, review methods for evaluating the relative risks and benefits of alternative harvest control rules, prepare a report for the Council's June 2016 meeting, and discuss future meeting plans.
Although nonemergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this document and any issues arising after publication of this document that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the intent to take final action to address the emergency.
The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt at (503) 820-2280, extension 425 at least 5 days prior to the meeting date.
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“CFTC” or “Commission”) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (“PRA”), Federal agencies are required to publish notice in the
Comments must be submitted on or before August 1, 2016.
You may submit comments, identified by “Market Surveys,” Collection Number 3038-0017, by any of the following methods:
• The Agency's Web site, at
•
•
Please submit your comments using only one method.
•
Please submit your comments using only one method.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Gary J Martinaitis, Associate Deputy Director, Division of Market Oversight, Commodity Futures Trading Commission, (202) 418-5209; email:
Under the PRA, Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of Information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day notice in the
With respect to the collection of information, the CFTC invites comments on:
• Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;
• The accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Ways to enhance the quality, usefulness, and clarity of the information to be collected; and
• Ways to minimize the burden of collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology;
You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from
44 U.S.C. 3501
Missile Defense Agency, Department of Defense.
Notice of availability and notice of activity in Wetlands as required by Executive Order 11990 (
The Missile Defense Agency (MDA) announces the availability of the Draft Environmental Impact Statement (EIS) for the potential deployment of a Continental United States (CONUS) Interceptor Site (CIS). A CIS Draft EIS was prepared in accordance with the National Environmental Policy Act (NEPA) of 1969 and the Council on Environmental Quality Regulations for Implementing the Procedural Provisions of NEPA and assesses the impacts of the potential deployment of a CIS.
As required by the fiscal year 2013 National Defense Authorization Act, the MDA has conducted extensive surveys and assessments for development of a Draft EIS in order to evaluate candidate sites for the potential future deployment of additional ground-based interceptors for homeland defense against threats from nations such as North Korea and Iran.
All potential sites analyzed in this Draft EIS contain wetlands that would be affected. All practicable measures were taken to arrange a CIS footprint to minimize and avoid impacts to wetlands while still maintaining operational effectiveness. However there are no practicable deployment alternatives that would completely avoid impacts to wetlands. If a deployment decision were made MDA would coordinate with the U.S. Army Corps of Engineers and applicable state department of environmental protection to determine appropriate mitigations for wetland impacts. As required by Executive Order (EO) 11990 (
The public comment period will be from June 3 to July 18, 2016.
Comments on the Draft EIS should be received by July 18, 2016 by one of the following methods:
•
•
Public comments on the Draft EIS are requested pursuant to the NEPA. All written comments received during the comment period will become part of the public record. Providing private address information with your comment is voluntary and such personal information will be kept confidential unless release is required by law. All comments received by the public, including at public meetings, will be addressed in the Final EIS. A NOA will be published notifying the public of the final EIS.
Mr. Christopher Johnson, MDA Public Affairs, at 571-231-8212, or by email:
If deployed, a CIS would be an extension of the existing Ground-based Midcourse Defense (GMD) element of the Ballistic Missile Defense System. To the extent practicable, the CIS would be built as a contiguous Missile Defense Complex, similar to that found at Fort Greely, Alaska, and would consist of a deployment of up to a total of 60 Ground-Based Interceptors (GBIs) in up to three GBI fields. The GBIs would not be fired from their deployment site except in the Nation's defense and no test firing would be conducted at a CIS. The overall system architecture and baseline requirements for a notional CIS include, but are not limited to, the GBI fields, Command Launch Equipment, In-Flight Interceptor Communication
Candidate site locations under consideration include: Fort Custer Training Center in Michigan; Camp Ravenna Joint Military Training Center in Ohio; and Fort Drum in New York. Earlier this year, MDA designated the Center for Security Forces Detachment Kittery Survival, Evasion, Resistance and Escape Facility (SERE East) in Redington Township, Maine as an Alternative Considered, but Not Carried Forward. The Draft EIS also analyzed a No Action Alternative or no CIS deployment. The DoD has not made a decision to deploy or construct a CIS and does not have a preferred alternative.
For each of the candidate site locations, the following resource areas were assessed: air quality, air space, biological, cultural, environmental justice, geology and soils, hazardous materials and hazardous waste management, health and safety, land use, noise, socioeconomics, transportation, utilities, water, wetlands, and visual and aesthetics.
The open house events and dates are as follows: (1) June 21, 2016 from 5:00 p.m. to 8:00 p.m.; Lakeview Middle School, 300 S. 28th St., Battle Creek, Michigan; (2) June 23, 2016 from 5:00 p.m. to 8:00 p.m.; Richland Community Center, 9400 E. Cd Ave., Richland, Michigan; (3) June 28, 2016 from 5:00 p.m. to 8:00 p.m.; Carthage Senior High School, 36500 New York 26, Carthage, New York; (4) June 30, 2016 from 5:00 p.m. to 8:00 p.m.; Ravenna High School, 6589 N. Chestnut Street, Ravenna, Ohio.
Department of Defense Education Activity, DoD.
Notice.
In compliance with the
Consideration will be given to all comments received by August 1, 2016.
You may submit comments, identified by docket number and title, by any of the following methods:
•
•
Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at
To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to Aniko Maher, MED, BSN, RN, NCSN, Instructional System Specialist, Nursing, Department of Defense Education Activity, 4800 Mark Center Drive, Alexandria Virginia, 22350-1400,
Respondents are sponsors/parents/guardians for military dependent school aged children attending DoDEA schools, and medical professionals who provide medical care for those children. Forms collect health history, immunization history, medical care plans, and physical clearance on students for safe health care management during school hours and activities. If the form is not collected, unsafe conditions may develop impacting the welfare of individual students, the school community and the community at large. The 23 forms are batched based on the purpose of the forms being collection of health status and medical related information to be processed by the school nurse or other authorized personnel in DoDEA schools.
Assistant Secretary of Defense (Health Affairs), DoD.
Notice of meeting.
The Department of Defense is publishing this notice to announce a Federal Advisory Committee meeting of the Uniform Formulary Beneficiary Advisory Panel (hereafter referred to as the Panel).
Wednesday, June 22, 2016, from 9 a.m. to 12 p.m.
Naval Heritage Center Theater, 701 Pennsylvania Avenue NW., Washington, DC 20004.
CAPT Edward Norton, Designated Federal Officer (DFO), Uniform Formulary Beneficiary Advisory Panel, 7700 Arlington Boulevard, Suite 5101, Falls Church, VA 22042-5101. Telephone: (703) 681-2890. Fax: (703) 681-1940. Email Address:
This meeting is being held under the provisions of the Federal Advisory Committee Act of 1972 (Title 5, United States Code (U.S.C.), Appendix, as amended) and the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended).
Written statements that do not pertain to the scheduled meeting of the Panel may be submitted at any time. However, if individual comments pertain to a specific topic being discussed at a planned meeting, then these statements must be submitted no later than 5 business days prior to the meeting in question. The DFO will review all submitted written statements and provide copies to all the committee members.
To ensure timeliness of comments for the official record, the Panel encourages that individuals and interested groups consider submitting written statements instead of addressing the Panel.
Office of Innovation and Improvement, Department of Education.
Notice.
Notice inviting applications for new awards for fiscal year (FY) 2016.
The Department designed each of the previous three TIF competitions in FYs 2006, 2010, and 2012 to build on earlier efforts as the Department, States, districts, and schools learned more about how to support Educators in their efforts to help students learn. Through the most recent TIF competition (in FY 2012), the Department funded projects that encompassed broader human capital management systems that supported sustainable performance-based compensation. This is in contrast to earlier TIF competitions, which focused almost exclusively on the provision of annual one-time bonuses. The FY 2012 competition also focused on projects under which grantees deployed a variety of human capital management strategies throughout an Educator's career trajectory (
For example, several grantees in the FY 2012 cohort changed their district-wide compensation systems to: (1) Allow Educators who demonstrate effectiveness to earn significantly higher pay or to significantly accelerate the timeline for increased compensation, particularly for those Educators in High-Need Schools and subjects; (2) provide incentives and supports to increase the number of effective Educators who are recruited and retained in High-Need Schools; (3) develop and implement career ladders to give Educators opportunities for leadership and advancement inside and outside the classroom; and (4) implement a salary system where increases are based in part on effectiveness. This expanded strategy of incentivizing effective Educators through performance-based compensation aligns with the purpose and goals of the TIF program.
There is no single set of best practices that districts should use to demonstrate their readiness to implement innovative human capital management strategies, including performance-based compensation. We know, however, that when TIF grantees have a set of human capital policies and practices in place at the outset of the grant period that support and align with their performance-based compensation strategies, these grantees face fewer challenges in implementing transformation efforts than those without such a foundation in place. The experience of these grantees demonstrates that building the systems and tools designed to evaluate, support, and manage Educators in ways that support and sustain their performance-based compensation requires districts to make significant infrastructure and capacity commitments, including: a district-wide, Educator evaluation and support system that includes multiple measures, including gains in student achievement, and meaningfully differentiates performance levels of Educators; data systems that collect and report on the elements of an Educator evaluation and support system in clear and coherent ways; a range of mechanisms to identify specific areas for Educator development and support, and for providing that support; and practices that enable administrators, school leaders, and Educators to communicate and influence the implementation of these systems. Efforts to create these kinds of systems and tools are more likely to drive enduring, sustainable improvements in Educator practice and student learning if they are aligned with the current district work to improve student outcomes and produce valid, reliable, and trusted information. A robust Educator evaluation system—one that uses, among other things, gains in student academic achievement and multiple annual observations—is not only statutorily required for TIF grantees, but is also critical to the readiness of a district to take on this work.
Additionally, TIF grantees are more successful when they collaborate with key stakeholders in designing, implementing, and continuously improving their projects. A district's Performance-based Compensation System, developed with the input of teachers and school leaders in the schools to be served by the grant, prepares districts to immediately take on this work by regularly seeking the feedback of Educators on initiatives and programs that impact schools. Districts that have systems in place for seeking this feedback demonstrate an understanding of the critical role Educator voice plays in successful human capital transformation. Common effective practices include initial design teams that bring together teachers and principals; task forces to tackle specific issues, such as selecting a rubric for use in evaluations; and focus groups that provide feedback on proposed career ladder systems or new compensation models. This ongoing engagement is critical to obtaining Educator buy-in to, and the success of, high-quality evaluation and support systems that are critical to a viable, meaningful Performance-based Compensation System.
District-level human capital strategies have shifted significantly since the FY 2012 competition. In recent years, many State educational agencies (SEAs) and LEAs have developed high-quality educator evaluation and support systems as part of comprehensive reform strategies implemented consistent with competitive federal awards and flexibility offered by the Department under the Elementary and Secondary Education Act of 1965, as amended (ESEA). States and Districts have used these systems as part of their efforts to improve districts' hiring practices, provide Educators with meaningful feedback and targeted professional development, and use Educator performance information to inform key school- and district-level decisions, such as teacher placement or leadership opportunities. Consequently, an increasing number of districts are prepared to make more informed human capital decisions that both support Educators and improve student outcomes. While section 4(c) of the Every Student Succeeds Act (ESSA) (Pub. L. 114-95, December 10, 2015) ends waivers under ESEA flexibility as of August 1, 2016, section 2101(c)(4)(B)(ii) of the ESEA, as amended by ESSA, provides States and districts with explicit authority to “support the design and implementation of teacher, principal, or other school leader evaluation and support systems.” This will allow States and districts to continue to improve the systems they have established.
While SEAs and LEAs have made substantial progress, additional work is needed to ensure that these Educator evaluation and support systems are robust, relevant, reliably producing trusted information, and seamlessly integrated into school- and district-level human capital processes. In some cases, this may mean expanding or improving existing approaches within a current educator evaluation and support system, by, for example, providing more mentoring and coaching opportunities for Educators. In other cases, districts may be well-positioned to take on new challenges or opportunities that affect Educator effectiveness, such as partnering with institutions of higher education to strengthen pre-service programming.
Finally, SEAs are now engaged in renewed efforts to ensure that high-need
Sass, Tim, Jane Hannaway, Zeyu Xu, David Figlio, and Li Feng. “Value Added of Teachers in High-Poverty Schools and Lower-Poverty Schools.” Journal of Urban Economics, vol. 72, 2012, pp.104-122:
Tennessee Department of Education. “Tennessee's Most Effective Teachers: Are They Assigned to the Schools That Need Them Most?” Nashville, TN: Tennessee Department of Education, 2007:
Most SEAs started to implement approved plans in the 2015-16 school year; these plans can be found at
The priority is:
To meet this priority, the applicant must include, in its application, a description of its LEA-wide HCMS, as it exists currently and with any modifications proposed for implementation during the project period of the grant. The application must describe—
(1) How the HCMS is or will be aligned with the LEA's vision of instructional improvement;
(2) How the LEA uses or will use the information generated by the Evaluation and Support System it describes in its application to inform key human capital decisions, such as decisions on recruitment, hiring, placement, retention, dismissal, compensation, professional development, tenure, and promotion;
(3) The human capital strategies the LEA uses or will use to ensure that High-Need Schools are able to attract and retain effective Educators; and
(4) Whether or not modifications are needed to an existing HCMS to ensure that it includes the features described in response to paragraphs (1), (2), and (3) of this priority, and a timeline for implementing the described features, provided that the use of evaluation information to inform the design and delivery of professional development and the award of performance-based compensation under the applicant's proposed Performance-based Compensation Systems in High-Need Schools begins no later than the third year of the grant's project period in the High-Need Schools listed in response to paragraph (a) of
TIF funds can be used to support the costs of the systems and strategies described under this priority.
The priorities are:
For the purposes of this priority, teacher effectiveness must be measured using an Evaluation and Support System.
Within this competitive preference priority, we are particularly interested in applications that address the following invitational priority. Whether an LEA's TIF application addresses the competitive preference priority based on strategies they are already implementing or strategies they propose to implement, this invitational priority encourages LEAs to align their own strategies with the State Equity Plan.
This priority is:
(a) A list of High-Need Schools in which the proposed TIF-supported Performance-based Compensation Systems would be implemented; and
(b) For each High-Poverty School listed, the most current data on the percentage of students who are eligible for free or reduced-price lunch subsidies under the Richard B. Russell National School Lunch Act or are considered students from low-income families based on another poverty measure that the LEA uses (see section 1113(a)(5) of the ESEA (20 U.S.C. 6313(a)(5))). Data provided to demonstrate eligibility as a High-Poverty School must be school-level data; the Department will not accept LEA- or State-level data for purposes of documenting whether a school is a High-Poverty School; and
(c) For any Priority Schools listed, documentation verifying that the State has received approval of a request for ESEA flexibility, and that the schools have been identified by the State as priority schools.
(a) A high-poverty school, or
(b) A persistently lowest-achieving school, or
(c) In the case of States that have received the Department's approval of a request for ESEA flexibility, a priority school. (TIF NFP)
(A) That differentiates levels of compensation based in part on measurable increases in student academic achievement; and
(B) Which may include—
(i) Differentiated levels of compensation, which may include bonus pay, on the basis of the employment responsibilities and success of effective teachers, principals, and other school leaders in hard-to-staff schools or high-need subject areas; and
(ii) Recognition of the skills and knowledge of teachers, principals, and other school leaders as demonstrated through—
(I) Successful fulfillment of additional responsibilities or job functions, such as teacher leadership roles; and
(II) Evidence of professional achievement and mastery of content knowledge and superior teaching and leadership skills. (ESSA § 2211(b)(4))
(i) Any Title I school in improvement, corrective action, or restructuring that—
(a) Is among the lowest-achieving five percent of Title I schools in improvement, corrective action, or restructuring or the lowest-achieving five Title I schools in improvement, corrective action, or restructuring in the State, whichever number of schools is greater; or
(b) Is a high school that has had a graduation rate as defined in 34 CFR 200.19(b) that is less than 60 percent over a number of years; and
(ii) Any secondary school that is eligible for, but does not receive, Title I funds that—
(a) Is among the lowest-achieving five percent of secondary schools or the lowest-achieving five secondary schools in the State that are eligible for, but do not receive, Title I funds, whichever number of schools is greater; or
(b) Is a high school that has had a graduation rate as defined in 34 CFR 200.19(b) that is less than 60 percent over a number of years.
To identify the persistently lowest achieving schools, a State must take into account both:
(i) The academic achievement of the “all students” group in a school in terms of proficiency on the State's assessments under section 1111(b)(3) of the ESEA in reading/language arts and mathematics combined; and
(ii) The school's lack of progress on those assessments over a number of years in the “all students” group. (TIF NFP)
Public Law 114-113, 2016 Appropriations Act; the ESEA, as amended by the ESSA.
The regulations in 34 CFR part 86 apply to institutions of higher education only.
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2017 from the list of unfunded applications from this competition.
The Department estimates a wide range of awards given the potentially large differences in the scope of funded projects, including the size and number of participating LEAs.
The Department is not bound by any estimates in this notice.
1.
(a) LEAs, including charter schools that are LEAs.
(b) States that apply with one or more LEAs.
(c) Nonprofit organizations that apply in partnership with one or more LEAs or an LEA and State.
2.
Vicki Robinson, U.S. Department of Education, 400 Maryland Avenue SW., Room 4W103, Washington, DC 20202-6200. Telephone: (202) 205-5471 or by email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
Requirements concerning the content of an application, together with the forms you must submit, are in the application package for this program.
Notice of Intent to Apply: We will be able to develop a more efficient process for reviewing grant applications if we can anticipate the number of applicants that intend to apply for funding under this competition. Therefore, we strongly encourage each potential applicant to notify us of the applicant's intent to submit an application for funding by sending a short email message. This short email should provide (1) the applicant organization's name and address; and (2) all priorities the applicant intends to address. Please send this email notification to
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions, as well as all text in charts, tables, figures, and graphs.
• Use a font that is either 12 point or larger or no smaller than 10 pitch (characters per inch).
• Use one of the following fonts: Times New Roman, Courier, Courier New, or Arial.
The suggested page limit does not apply to the cover sheet; the budget section, including the narrative budget justification; the assurances and certifications; or the one-page abstract, the resumes, the bibliography, or the letters of support. However, the suggested page limit does apply to all of the application narrative.
b.
Because we plan to make successful applications available to the public, you may wish to request confidentiality of business information.
Consistent with Executive Order 12600, please designate in your application any information that you believe is exempt from disclosure under Exemption 4. In the appropriate Appendix section of your application, under “Other Attachments Form,” please list the page number or numbers on which we can find this information. For additional information please see 34 CFR 5.11(c).
Pre-application workshops will be held for this competition in the spring of 2016. The workshops are intended to provide technical assistance to all interested grant applicants. Detailed information regarding the pre-application workshops times, and online registration form, can be found on the Teacher Incentive Fund's Web site at
Applications for grants under this program must be submitted electronically using the
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
4.
5.
6.
a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM) (formerly the Central Contractor Registry), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet at the following Web site:
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow two to five weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data you enter into the SAM database. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, it may be 24 to 48 hours before you can access the information in, and submit an application through, Grants.gov.
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via
Applications for grants under this program must be submitted electronically unless you qualify for an exception to this requirement in accordance with the instructions in this section.
Applications for grants under the Teacher Incentive Fund, CFDA number 84.374A, must be submitted electronically using the Governmentwide
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for the Teacher Incentive Fund competition at
Please note the following:
• When you enter the
• Applications received by
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through
• You should review and follow the Education Submission Procedures for submitting an application through
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere in this section, and submit your application in paper format.
• You must submit all documents electronically, including all information you typically provide on the following forms: the Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a read-only, non-modifiable Portable Document format (PDF). Do not upload an interactive or fillable PDF file. If you upload a file type other than a read-only, non-modifiable PDF or submit a password-protected file, we will not review that material. Please note that this could result in your application not being considered for funding because the material in question—for example, the project narrative—is critical to a meaningful review of your proposal. For that reason it is important to allow yourself adequate time to upload all material as PDF files. The Department will not convert material from other formats to PDF.
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from
Once your application is successfully validated by
These emails do not mean that your application is without any disqualifying errors. While your application may have been successfully validated by
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal holiday), you mail or fax a written statement to the Department, explaining which of the two grounds for an exception prevents you from using the Internet to submit your application.
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Address and mail your statement to: Vicki Robinson, U.S. Department of Education, 400 Maryland Avenue SW.,
Your paper application must be submitted in accordance with the mail or hand delivery instructions described in this notice.
If you qualify for an exception to the electronic submission requirement, you may mail (through the U.S. Postal Service or a commercial carrier) your application to the Department. You must mail the original and two copies of your application, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.374A), LBJ Basement Level 1, 400 Maryland Avenue SW., Washington, DC 20202-4260.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
We will not consider applications postmarked after the application deadline date.
If you qualify for an exception to the electronic submission requirement, you (or a courier service) may deliver your paper application to the Department by hand. You must deliver the original and two copies of your application by hand, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.374A), 550 12th Street SW., Room 7039, Potomac Center Plaza, Washington, DC 20202-4260.
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
If you mail or hand deliver your application to the Department—
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245-6288.
1.
The maximum score for all the selection criteria is 100 points. The maximum score for each criterion is indicated in parentheses. The selection criteria for this competition are as follows:
The Secretary considers the significance of the proposed project. In determining the significance of the proposed project, the Secretary considers the extent to which the proposed project is likely to build local capacity to provide, improve, or expand services that address the needs of the target population.
The Secretary considers the quality of the design of the proposed project. In determining the quality of the design of the proposed project, the Secretary considers the following factors:
(1) The extent to which the proposed project is part of a comprehensive effort to improve teaching and learning and support rigorous academic standards for students.
(2) The extent to which the services to be provided by the proposed project involve the collaboration of appropriate partners for maximizing the effectiveness of project services.
(3) The extent to which the proposed project is supported by a strong theory.
(4) The extent to which the proposed project will integrate with or build on similar or related efforts to improve relevant outcomes (as defined in 34 CFR 77.1(c)), using existing funding streams from other programs or policies supported by community, State, and Federal resources.
The Secretary considers the extent to which each participating LEA has a high-quality plan for professional development to help all Educators located in High-Need Schools, listed in response to Requirement 2(a), to improve their effectiveness. In determining the quality of each plan for professional development, the Secretary considers the extent to which the plan describes how the participating LEA will use the disaggregated information generated by the proposed educator Evaluation and Support System to identify the professional development needs of individual Educators and schools.
The Secretary considers the quality of the management plan for the proposed project. In determining the quality of the management plan for the proposed project, the Secretary considers the adequacy of the management plan to achieve the objectives of the proposed project on time and within budget, including clearly defined responsibilities, timelines, and milestones for accomplishing project tasks.
The Secretary considers the adequacy of resources for the proposed project. In determining the adequacy of resources for the proposed project, the Secretary considers the following factors:
(1) The extent to which the applicant demonstrates that Performance-based Compensation Systems are developed with the input of teachers and school leaders in the schools and local educational agencies to be served by the grant.
(2) The extent to which the applicant demonstrates a plan to sustain financially the activities conducted and systems developed under the grant once the grant period has expired.
2.
In addition, in making a competitive grant award, the Secretary requires various assurances including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
3.
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
(c) Under 34 CFR 75.250(b), the Secretary may provide a grantee with additional funding for data collection analysis and reporting. In this case the Secretary establishes a data collection period.
4.
(a) The percentage of educators in all schools who earned performance-based compensation.
(b) The percentage of educators in all High-Need Schools who earned performance-based compensation.
(c) The gap between the retention rate of educators receiving performance-based compensation and the average retention rate in each high-need school.
(d) The number of school districts participating in a TIF grant that use educator evaluation systems to inform the following human capital decisions: Recruitment; hiring; placement; retention; dismissal; professional development; tenure; promotion; or all of the above.
(e) The percentage of performance-based compensation paid to educators with State, local, or other non-TIF Federal resources.
(f) The percentage of teachers and principals who receive the highest effectiveness rating.
(g) The percentage of teachers and principals in high-needs schools who receive the highest effectiveness rating.
5.
In making a continuation award, the Secretary also considers whether the grantee is operating in compliance with the assurances in its approved application, including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
Vicki Robinson, U.S. Department of Education, 400 Maryland Avenue SW., Room 4W103, Washington, DC 20202-6200. Telephone: (202) 205-5471 or by email:
If you use a TDD or a TTY, call the FRS, toll free, at 1-800-877-8339.
You may also access documents of the Department published in the
Office of Innovation and Improvement, Department of Education.
Notice.
American History and Civics Academies Program.
Notice inviting applications for new awards for fiscal year (FY) 2016.
On December 10, 2015, the President signed into law the Every Student Succeeds Act (ESSA), Public Law 114-95, which reauthorized the Elementary and Secondary Education Act of 1965 (ESEA), as amended by the No Child Left Behind Act of 2001 (NCLB). Among other things, the ESSA amends part B of title II of the ESEA to include a reauthorized Academies program, which was previously authorized under the American History and Civics Education Act of 2004. Under section 5(c) of the ESSA, however, the amendments made by the ESSA to the ESEA with respect to competitive grant programs (including the Academies program) take effect beginning with FY 2017 appropriations. Accordingly, the Department will use the FY 2016 funds available for this competition to make Academies grants in accordance with the requirements of the American History and Civics Education Act of 2004, and not those of the ESEA, as amended by the ESSA. In addition, we intend to use FY 2016 funds to support the entire project period of awards made under this competition and expect that, consistent with section 5(c) of the ESSA, any funding provided by Congress in FY 2017 and future years for the Academies program would be for the new program as authorized by the ESEA, as amended by the ESSA.
Students who have an understanding of and engagement with American history and civics are more likely to be civically engaged and active participants in their community.
Recent studies indicate a critical need to improve teaching and learning in American history and civics. For example, only 18 percent of eighth-graders performed at or above the proficient level on the National Assessment of Educational Progress (NAEP) assessment in U.S. history, and only 23 percent performed at or above the proficient level on the NAEP assessment in civics.
The Academies Program supports projects to raise student achievement in American history and civics by improving teachers' and students' knowledge, understanding, and engagement with these subjects through intensive workshops with scholars, master teachers, and curriculum experts. Project activities should reflect the best available research and practice in teaching and learning. Presidential Academies will strive to enable teachers to develop further expertise in the content areas of American history and civics, teaching strategies, use of technologies, and other essential elements of teaching to rigorous college- and career-ready standards. Congressional Academies are intended to broaden and deepen students' interest in and understanding of American history and civics through the use of content-rich, engaging learning resources and strategies.
Offering a wide array of perspectives in teaching and learning American history and civics is essential to acknowledging students' rich and diverse perspectives and experiences, and to stimulating their long-term interest in these subjects. Accordingly, projects funded under this grant program might consider incorporating diverse historical perspectives and relying on an array of resources (
Through a competitive preference priority, we encourage applicants to consider projects that will focus on serving high-need students and students from underserved populations to help ensure that these students have access to high-quality, interactive instruction that will help them become college- and career-ready and be better prepared to participate fully in civic activities. In addition, applicants may want to consider projects that are designed to recruit teachers and students from the same schools and school districts in order to promote a seamless delivery of training and instruction into a target district and maximize project benefits.
Grantees will be expected to measure the impact of their projects on teacher development and student learning. Early findings from grantee evaluations are expected to help guide the grantee's subsequent teacher professional development and student learning efforts over the three-year project period.
Under this priority, an applicant must propose to establish a Presidential Academy for Teaching of American History and Civics that may offer workshops for both veteran and new teachers of American history and civics.
Under this priority, an applicant must propose to establish a Congressional Academy for Students of American History and Civics.
This priority is:
Projects that are designed to improve academic outcomes for high-need students (as defined in this notice).
The following definitions are from the Supplemental Priorities and apply to this competition:
American History and Civics Education Act of 2004, Pub. Law 108-474.
The regulations in 34 CFR part 86 apply to institutions of higher education only.
Contingent upon the availability of funds and the quality of applications, we may make additional awards in FY 2017 from the list of unfunded applicants from this competition.
The Department is not bound by any estimates in this notice.
1.
• Local educational agencies;
• Institutions of higher education; and
• Other public and private agencies, organizations, and institutions, including cultural institutions and museums.
To be eligible to receive an award, an applicant must include in its application evidence of its expertise in historical methodology or the teaching of history.
If more than one eligible entity wishes to form a consortium and jointly submit a single application, they must follow the procedures for group applications described in 34 CFR 75.127 through 34 CFR 75.129.
2.
1.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
Individuals with disabilities can obtain a copy of the application package in an accessible format (
2.
The Department will be able to develop a more efficient process for reviewing grant applications if it has a better understanding of the number of entities that intend to apply for funding under this competition. Therefore, the Secretary strongly encourages each potential applicant to notify the Department by sending a short email message indicating the applicant's intent to submit an application for funding. The email need not include information regarding the content of the proposed application, only the applicant's intent to submit it. The Department requests that this email notification be sent to the Academies Program inbox at:
• A “page” is 8.5″ x 11″, on one side only, with 1″ margins at the top, bottom, and both sides.
• Double space (no more than three lines per vertical inch) all text in the application narrative, including titles, headings, footnotes, quotations, references, and captions. However, you may single space all text in charts, tables, figures, and graphs.
• Use a font that is either 12 point or larger or no smaller than 10 pitch (characters per inch).
•
The recommended page limit does not apply to Part I, the cover sheet; Part II, the budget section, including the narrative budget justification; Part IV, the assurances and certifications; or the one-page abstract, the resumes, the bibliography, or the letters of support. However, the recommended page limit does apply to all of the application narrative.
b.
Because we plan to post the project narrative section of funded Academies Program applications on our Web site, you may wish to request confidentiality of business information.
Consistent with Executive Order 12600, please designate in your application any information that you believe is exempt from disclosure under Exemption 4. In the appropriate Appendix section of your application, under “Other Attachments Form,” please list the page number or numbers on which we can find this information. For additional information please see 34 CFR 5.11(c).
3.
Applications for grants under this program must be submitted electronically using the
We do not consider an application that does not comply with the deadline requirements.
Individuals with disabilities who need an accommodation or auxiliary aid in connection with the application process should contact the person listed under
4.
5.
6.
a. Have a Data Universal Numbering System (DUNS) number and a Taxpayer Identification Number (TIN);
b. Register both your DUNS number and TIN with the System for Award Management (SAM) (formerly the Central Contractor Registry), the Government's primary registrant database;
c. Provide your DUNS number and TIN on your application; and
d. Maintain an active SAM registration with current information while your application is under review by the Department and, if you are awarded a grant, during the project period.
You can obtain a DUNS number from Dun and Bradstreet at the following Web site:
If you are a corporate entity, agency, institution, or organization, you can obtain a TIN from the Internal Revenue Service. If you are an individual, you can obtain a TIN from the Internal Revenue Service or the Social Security Administration. If you need a new TIN, please allow two to five weeks for your TIN to become active.
The SAM registration process can take approximately seven business days, but may take upwards of several weeks, depending on the completeness and accuracy of the data you enter into the SAM database. Thus, if you think you might want to apply for Federal financial assistance under a program administered by the Department, please allow sufficient time to obtain and register your DUNS number and TIN. We strongly recommend that you register early.
Once your SAM registration is active, it may be 24 to 48 hours before you can access the information in, and submit an application through,
If you are currently registered with SAM, you may not need to make any changes. However, please make certain that the TIN associated with your DUNS number is correct. Also note that you will need to update your registration annually. This may take three or more business days.
Information about SAM is available at
In addition, if you are submitting your application via
7. Other Submission Requirements:
Applications for grants under this program must be submitted electronically unless you qualify for an exception to this requirement in accordance with the instructions in this section.
Applications for grants under the Academies Program, CFDA 84.422, must be submitted electronically using the Government wide
We will reject your application if you submit it in paper format unless, as described elsewhere in this section, you qualify for one of the exceptions to the electronic submission requirement
You may access the electronic grant application for the Academies Program at
Please note the following:
• When you enter the
• Applications received by
• The amount of time it can take to upload an application will vary depending on a variety of factors, including the size of the application and the speed of your Internet connection. Therefore, we strongly recommend that you do not wait until the application deadline date to begin the submission process through
• You should review and follow the Education Submission Procedures for submitting an application through
• You will not receive additional point value because you submit your application in electronic format, nor will we penalize you if you qualify for an exception to the electronic submission requirement, as described elsewhere in this section, and submit your application in paper format.
• You must submit all documents electronically, including all information you typically provide on the following forms: The Application for Federal Assistance (SF 424), the Department of Education Supplemental Information for SF 424, Budget Information—Non-Construction Programs (ED 524), and all necessary assurances and certifications.
• You must upload any narrative sections and all other attachments to your application as files in a read-only, non-modifiable Portable Document Format (PDF). Do not upload an interactive or fillable PDF file. If you upload a file type other than a read-only, non-modifiable PDF (
• Your electronic application must comply with any page-limit requirements described in this notice.
• After you electronically submit your application, you will receive from
Once your application is successfully validated by
These emails do not mean that your application is without any disqualifying errors. While your application may have been successfully validated by
• We may request that you provide us original signatures on forms at a later date.
If you are prevented from electronically submitting your application on the application deadline date because of technical problems with the
If you submit an application after 4:30:00 p.m., Washington, DC time, on the application deadline date, please contact the person listed under
The extensions to which we refer in this section apply only to the unavailability of, or technical problems with, the
• You do not have access to the Internet; or
• You do not have the capacity to upload large documents to the
• No later than two weeks before the application deadline date (14 calendar days or, if the fourteenth calendar day before the application deadline date falls on a Federal holiday, the next business day following the Federal holiday), you mail or fax a written statement to the Department, explaining which of the two grounds for an exception prevents you from using the Internet to submit your application.
If you mail your written statement to the Department, it must be postmarked no later than two weeks before the application deadline date. If you fax your written statement to the Department, we must receive the faxed statement no later than two weeks before the application deadline date.
Address and mail or fax your statement to: Christine Miller, U.S. Department of Education, 400 Maryland Avenue SW., Room 4W205, Washington, DC 20202-5960. FAX: (202) 205-5630.
Your paper application must be submitted in accordance with the mail or hand delivery instructions described in this notice.
If you qualify for an exception to the electronic submission requirement, you may mail (through the U.S. Postal Service or a commercial carrier) your application to the Department. You must mail the original and two copies of your application, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.422A), LBJ Basement Level 1, 400 Maryland Avenue SW., Washington, DC 20202-4260.
You must show proof of mailing consisting of one of the following:
(1) A legibly dated U.S. Postal Service postmark.
(2) A legible mail receipt with the date of mailing stamped by the U.S. Postal Service.
(3) A dated shipping label, invoice, or receipt from a commercial carrier.
(4) Any other proof of mailing acceptable to the Secretary of the U.S. Department of Education.
If you mail your application through the U.S. Postal Service, we do not accept either of the following as proof of mailing:
(1) A private metered postmark.
(2) A mail receipt that is not dated by the U.S. Postal Service.
The U.S. Postal Service does not uniformly provide a dated postmark. Before relying on this method, you should check with your local post office.
We will not consider applications postmarked after the application deadline date.
If you qualify for an exception to the electronic submission requirement, you (or a courier service) may deliver your paper application to the Department by hand. You must deliver the original and two copies of your application by hand, on or before the application deadline date, to the Department at the following address: U.S. Department of Education, Application Control Center, Attention: (CFDA Number 84.422A), 550 12th Street SW., Room 7039, Potomac Center Plaza Washington, DC 20202-4260.
The Application Control Center accepts hand deliveries daily between 8:00 a.m. and 4:30:00 p.m., Washington, DC time, except Saturdays, Sundays, and Federal holidays.
If you mail or hand deliver your application to the Department—
(1) You must indicate on the envelope and—if not provided by the Department—in Item 11 of the SF 424 the CFDA number, including suffix letter, if any, of the competition under which you are submitting your application; and
(2) The Application Control Center will mail to you a notification of receipt of your grant application. If you do not receive this notification within 15 business days from the application deadline date, you should call the U.S. Department of Education Application Control Center at (202) 245-6288.
1.
A.
(i) The extent to which the proposed project represents an exceptional approach to the priority or priorities established for the competition.
(ii) The extent to which the services to be provided by the proposed project involve the collaboration of appropriate partners for maximizing the effectiveness of project services.
(iii) The extent to which the design of the proposed project reflects up-to-date knowledge from research and effective practice.
B.
(i) The extent to which the proposed project is likely to build local capacity to provide, improve, or expand services that address the needs of the target population.
(ii) The importance or magnitude of the results or outcomes likely to be attained by the proposed project, especially improvements in teaching and student achievement.
C.
(i) The adequacy of the management plan to achieve the objectives of the proposed project on time and within budget, including clearly defined responsibilities, timelines, and milestones for accomplishing project tasks.
(ii) The adequacy of mechanisms for ensuring high-quality products and services from the proposed project.
D.
(i) The extent to which the methods of evaluation include the use of objective performance measures that are clearly related to the intended outcomes of the project and will produce quantitative and qualitative data to the extent possible.
(ii) The extent to which the methods of evaluation will provide performance feedback and permit periodic assessment of progress toward achieving intended outcomes.
2.
In addition, in making a competitive grant award, the Secretary requires various assurances including those applicable to Federal civil rights laws that prohibit discrimination in programs or activities receiving Federal financial assistance from the Department of Education (34 CFR 100.4, 104.5, 106.4, 108.8, and 110.23).
3.
1.
If your application is not evaluated or not selected for funding, we notify you.
2.
We reference the regulations outlining the terms and conditions of an award in the
3.
(b) At the end of your project period, you must submit a final performance report, including financial information, as directed by the Secretary. If you receive a multiyear award, you must submit an annual performance report that provides the most current performance and financial expenditure information as directed by the Secretary under 34 CFR 75.118. The Secretary may also require more frequent performance reports under 34 CFR 75.720(c). For specific requirements on reporting, please go to
(c) Under 34 CFR 75.250(b), the Secretary may provide a grantee with additional funding for data collection analysis and reporting. In this case the Secretary establishes a data collection period.
4.
The Department has established the following Government Performance and Results Act of 1993 (GPRA) performance objective for the Academies Program:
Participants will demonstrate through pre- and post-assessments an increased understanding of American history and civics that can be directly linked to their participation in the Presidential Academy or Congressional Academy.
We will track performance on this objective through the following indicators:
We advise an applicant for a grant under this program to give careful consideration to these indicators in conceptualizing the approach and evaluation of its proposed project. Each grantee will be required to provide, in its annual and final performance reports, data about its performance with respect to the performance objective and these indicators.
Christine Miller, U.S. Department of Education, 400 Maryland Avenue SW., Room 4W205, Washington, DC 20202-5960, telephone (202) 453-6740. Or by email:
If you use a TDD or a TTY, call the FRS, toll-free, at 1-800-877-8339.
You may also access documents of the Department published in the
Take notice that on May 20, 2016, pursuant to sections 206 and 306 of the Federal Power Act, 16 U.S.C. 824e and 825e (2012), and Rule 206 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.206 (2015), Cottonwood Wind Project, LLC (Cottonwood or Complainant) filed a formal complaint against Nebraska Public Power District (Respondent) alleging that Respondent made unauthorized expenditures for network upgrade construction under the Cottonwood Generator Interconnection Agreement, as more fully explained in its complaint.
Complainant certifies that copies of the complaint were served on the contacts for Respondent listed on the Commission's list of Corporate Officials.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. The Respondent's answer and all interventions, or protests must be filed on or before the comment date. The Respondent's answer, motions to intervene, and protests must be served on the Complainant.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at
This filing is accessible on-line at
Comment Date: 5:00 p.m. Eastern Time on June 20, 2016.
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j. Deadline for filing comments, motions to intervene, protests, and recommendations is 15 days from the date of issuance of this notice by the Commission. The Commission strongly encourages electronic filing. Please file motions to intervene, protests, comments, or recommendations using the Commission's eFiling system at
k.
l.
m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
n.
o.
Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
The Commission strongly encourages electronic filing. Please file comments, motions to intervene, and protests using the Commission's eFiling system at
The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.
k.
l.
m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.
n.
o.
Take notice that on May 19, 2016, Rover Pipeline LLC (Rover), 1300 Main Street, Houston, Texas 77002, filed an amendment to its application in Docket No. CP15-93-000, pursuant to section 7(c) of the Natural Gas Act (NGA) and Part 157 of the Commission's regulations for a certificate of public convenience and necessity to construct and operate the Rover Pipeline Project. Specifically, Rover filed an amendment to its proposed pro forma tariff and updated Exhibits K, L, N, O, and P, all as more fully set forth in the application which is on file with the Commission and open to public inspection. The filing may be viewed on the web at
Any questions concerning these applications may be directed to Stephen Veatch, Senior Director of Certificates, Rover Pipeline LLC, 1300 Main Street, Houston, Texas 77002, by telephone at (713) 989-2024, by facsimile at (713) 989-1205, or by email at
Pursuant to section 157.9 of the Commission's rules, 18 CFR 157.9, within 90 days of this Notice the Commission staff will either: Complete its environmental impact statement (EIS) and place it into the Commission's public record (eLibrary) for this proceeding, or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) for this proposal. The filing of the FEIS in the Commission's public record for this proceeding or the issuance of a Notice of Schedule will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below, file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit 5 copies of filings made with the Commission and must mail a copy to the applicant and to every other party in the proceeding. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commenters will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commenters will not be required to serve copies of filed documents on all other parties. However, the non-party commenters will not receive copies of all documents filed by other parties or issued by the Commission (except for the mailing of environmental documents issued by the Commission) and will not have the right to seek court review of the Commission's final order.
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Environmental Protection Agency (EPA).
Notice.
On May 12, 2016, the Environmental Protection Agency received a written request from the U.S. Energy Information Administration (EIA) for historical model year sales data
The sales data will be disclosed to EIA on or after June 10, 2016.
Sara Zaremski, Office of Transportation and Air Quality, Compliance Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-4362; fax number: 734-214- 4053; email address:
Entities potentially affected by this action are those involved with the production and sale of motor vehicles. Regulated categories include:
This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be affected by the disclosure.
In their May 12, 2016 request letter to EPA, EIA requested that EPA provide to EIA historical model year sales data for years 2009 through 2014 by manufacturer and nameplate. As noted above, EIA uses this information to model and project energy demand in the light-duty vehicle sector. Additionally, EIA noted that these data are critical to EIA's continued efforts to project energy demand, fuel efficiency, fuel consumption, and greenhouse gas emissions for the transportation sector. Previously, EIA had been unable to obtain official model year sales data for 2009 through 2014 due to the fact that it contained CBI. The specific data they requested includes all the data fields currently available in the Excel files provided on the fueleconomy.gov Web site (see the Download Fuel Economy Data page at
EIA indicated that they are aware that this information is subject to claims of confidential business information. EIA's letter states “We will take the necessary steps to ensure the data are secure and kept confidential. EIA routinely works with sensitive data and has strong data handling safeguards in place.”
Pursuant to 40 CFR 2.209(c), EPA may disclose business information to another Federal agency if: (1) EPA receives a written request for disclosure of the information from a duly authorized officer or employee of the other agency; (2) the request sets forth the official purpose for which the information is needed; (3) when the information has been claimed as confidential or has been determined to be confidential, the responsible EPA office provides notice to each affected business of the type of information to be disclosed and to whom it is to be disclosed, and such notice may be given by notice published in the
In the case at hand, all of the required elements of 40 CFR 2.209(c) have been met upon publication of this notice.
Given that EIA is aware that the shared information is CBI or has been claimed as CBI, and intends to take the necessary steps to ensure that the data provided is kept secure and confidential, there is no impact on vehicle manufacturers to the release of this data.
Federal Communications Commission.
Notice.
The Federal Communications Commission (FCC) has received Office of Management and Budget (OMB) approval for a new information collection pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). An agency may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number, and no person is required to respond to a collection of information unless it displays a currently valid control number. Comments about the accuracy of the burden estimates and any suggestions for reducing the burden should be directed to the person listed in the
Cathy Williams, Office of the Managing Director, at (202) 418-2918, or email:
The total annual reporting burdens and costs for the respondents are as follows:
Federal Communications Commission.
Notice and request for comments.
As part of its continuing effort to reduce paperwork burdens, and as required by the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3520), the Federal Communications Commission (FCC or Commission) invites the general public and other Federal agencies to take this opportunity to comment on the following information collections. Comments are requested concerning: Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information shall have practical utility; the accuracy of the Commission's burden estimate; ways to enhance the quality, utility, and clarity of the information collected; ways to minimize the burden of the collection of information on the respondents, including the use of automated collection techniques or other forms of information technology; and ways to further reduce the information collection burden on small business concerns with fewer than 25 employees.
The FCC may not conduct or sponsor a collection of information unless it displays a currently valid OMB control number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the PRA that does not display a valid OMB control number.
Written PRA comments should be submitted on or before August 1, 2016. If you anticipate that you will be submitting comments, but find it difficult to do so within the period of time allowed by this notice, you should advise the contact listed below as soon as possible.
Direct all PRA comments to Cathy Williams, FCC, via email to
For additional information about the information collection, contact Cathy Williams at (202) 418-2918.
Federal Communications Commission.
Notice.
This document announces the date of the next meeting of the Commission's Disability Advisory
The Committee's next meeting will take place on Thursday, June 16, 2016, from 9:00 a.m. to 3:30 p.m. (EST).
Federal Communications Commission, 445 12th Street SW., Washington, DC 20554, in the Commission Meeting Room.
Elaine Gardner, Consumer and Governmental Affairs Bureau: 202-418-0581 (voice); email:
The Committee was established in December 2014 to make recommendations to the Commission on a wide array of disability matters within the jurisdiction of the Commission, and to facilitate the participation of people with disabilities in proceedings before the Commission. The Committee is organized under, and operated in accordance with, the provisions of the Federal Advisory Committee Act (FACA). The Committee held its first meeting on March 17, 2015.
At its June 16, 2016 meeting, the Committee is expected to receive and consider a report on the activities of its Communications Subcommittee; a report and recommendation from its Emergency Communications Subcommittee regarding proposed DAC comments on the Commission's Notice of Proposed Rulemaking on Wireless Emergency Alerts; a report on the activities of its Relay & Equipment Distribution Subcommittee; a report and recommendation from its Technology Transitions Subcommittee regarding the benefits of HD Voice and ways to address the transition to HD Voice; and a report and possible recommendation from its Video Programming Subcommittee regarding appropriate capitalization of offline captioning of video programming. The Committee will also (1) hear presentations from Commission staff on recent activities; (2) hear reports from various FCC bureaus, including: A report from the FCC Wireline Competition Bureau on the modernization of the Lifeline program; a report from FCC Media Bureau on the commercial availability of set top boxes and the expansion of video description; and an update on the ACE Direct project; and (3) discuss new issues for its consideration.
A limited amount of time may be available on the agenda for comments and inquiries from the public. The public may comment or ask questions of presenters via the email address
The meeting site is fully accessible to people using wheelchairs or other mobility aids. Sign language interpreters, open captioning, and assistive listening devices will be provided on site. Other reasonable accommodations for people with disabilities are available upon request. If making a request for an accommodation, please include a description of the accommodation you will need and tell us how to contact you if we need more information. Make your request as early as possible by sending an email to
To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to
Federal Election Commission
999 E Street NW., Washington, DC (Ninth Floor)
This meeting will be open to the public.
The May 26, 2016 meeting was cancelled.
Judith Ingram, Press Officer, Telephone: (202) 694-1220.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing efforts to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. This notice invites comment on the National Healthcare Safety Network (NHSN). NHSN is a system designed to accumulate, exchange, and integrate relevant information and resources among private and public stakeholders to support local and national efforts to protect patients and promote healthcare safety.
Written comments must be received on or before August 1, 2016.
You may submit comments, identified by Docket No. CDC-2016-0046 by any of the following methods:
•
•
All public comment should be submitted through the Federal eRulemaking portal (
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact the Information
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; to develop, acquire, install and utilize technology and systems for the purpose of collecting, validating and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information, to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information.
National Healthcare Safety Network (NHSN)—Revision—National Center for Emerging and Zoonotic Infection Diseases (NCEZID), Centers for Disease Control and Prevention (CDC).
The National Healthcare Safety Network (NHSN) is a system designed to accumulate, exchange, and integrate relevant information and resources among private and public stakeholders to support local and national efforts to protect patients and promote healthcare safety. Specifically, the data is used to determine the magnitude of various healthcare-associated adverse events and trends in the rates of these events among patients and healthcare workers with similar risks. The data will be used to detect changes in the epidemiology of adverse events resulting from new and current medical therapies and changing risks. The NHSN currently consists of five components: Patient Safety, Healthcare Personnel Safety, Biovigilance, Long-Term Care Facility (LTCF), and Dialysis. The Outpatient Procedure Component is on track to be released in NHSN in 2017/2018. The development of this component has been previously delayed to obtain additional user feedback and support from outside partners.
Changes were made to six facility surveys and two new facility surveys were added. Based on user feedback and internal reviews of the annual facility surveys it was determined that questions and response options be amended, removed, or added to fit the evolving uses of the annual facility surveys. The surveys are being increasingly used to help intelligently interpret the other data elements reported into NHSN. Currently the surveys are used to appropriately risk adjust the numerator and denominator data entered into NHSN while also guiding decisions on future division priorities for prevention.
Further, three new forms were added to expand NHSN surveillance to pediatric ventilator-associated events, adult sepsis, and custom HAI event surveillance. An additional 14 forms were added to the Hemovigilance Component to streamline data collection/entry for adverse reaction events.
Additionally, minor revisions have been made to 22 forms within the package to clarify and/or update surveillance definitions. The previously approved NHSN package included 52 individual collection forms; the current revision request adds nineteen forms and removes one form for a total of 70 forms. The reporting burden will increase by 489,174 hours, for a total of 5,110,716 hours.
The Centers for Disease Control and Prevention (CDC) has submitted the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The notice for the proposed information collection is published to obtain comments from the public and affected agencies.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address any of the following: (a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) Enhance the quality, utility, and clarity of the information to be collected; (d) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570 or send an email to
Prevalence Survey of Healthcare-Associated Infections and Antimicrobial Use in U.S. Nursing Homes—New—National Center for Emerging and Zoonotic Infectious Diseases (NCEZID), Centers for Disease Control and Prevention (CDC).
Preventing healthcare-associated infections (HAI) and encouraging appropriate use of antimicrobials are priorities of both the U.S. Department of Health and Human Services and the Centers for Disease Control and Prevention. The burden and epidemiology of HAIs and antimicrobial use in U.S. nursing homes is currently unknown. Understanding the scope and magnitude of all types of HAIs in patient populations across the spectrum of U.S. healthcare facilities is essential to the development of effective prevention and control strategies and policies.
HAI prevalence and antimicrobial use estimates can be obtained through prevalence surveys in which data are collected in healthcare facilities during a short, specified time period. Essential steps in reducing the occurrence of HAIs and the prevalence of resistant pathogens include estimating the burden, types, and causative organisms of HAIs; assessing the nature and extent of antimicrobial use in U.S. healthcare facilities; and assessing the nature and extent of antimicrobial use.
Prevalence surveys, in which data are collected in healthcare facilities during a short, specified time period represent an efficient and cost-effective alternative to prospective studies of HAI and antimicrobial use incidence. Given the absence of existing HAI and antimicrobial use data collection mechanisms for nursing homes, prevalence surveys represent a robust method for obtaining the surveillance data required to identify HAIs and antibiotic use practices that should be targeted for more intensive surveillance and to guide and evaluate prevention efforts.
The methods for the data collection are based on those used in CDC hospital prevalence surveys and informed by a CDC pilot survey conducted in nine U.S. nursing homes. The survey will be performed by the CDC through the Emerging Infections Program (EIP), a collaboration with CDC and 10 state health departments with experience in HAI surveillance and data collection. Respondents are nursing homes certified by the Centers for Medicare & Medicare Services in EIP states. Nursing homes will be randomly selected for participation. The EIP will recruit 20 nursing homes in each of the 10 EIP sites. Nursing home participation is voluntary.
OMB approval is requested for three years. Participation is voluntary and there are no costs to respondents other than their time. The total estimated annual burden hours are 5,217.
The Centers for Disease Control and Prevention (CDC) has submitted the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The notice for the proposed information collection is published to obtain comments from the public and affected agencies.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address any of the following: (a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) Enhance the quality, utility, and clarity of the information to be collected; (d) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639-7570 or send an email to
DELTA FOCUS Program Evaluation (OMB No. 0920-0984)—Reinstatement with Change—National Center for Injury Prevention and Control (NCIPC), Centers for Disease Control and Prevention (CDC).
Intimate Partner Violence (IPV) is a serious, preventable public health problem that affects millions of Americans and results in serious consequences for victims, families, and communities. IPV occurs between two people in a close relationship. The term “intimate partner” describes physical, sexual, or psychological harm by a current or former partner or spouse. IPV can impact health in many ways, including long-term health problems, emotional impacts, and links to negative health behaviors. IPV exists along a continuum from a single episode of violence to ongoing battering; many victims do not report IPV to police, friends, or family. In 2002, authorized by the Family Violence Prevention Services Act (FVPSA), CDC developed the Domestic Violence Prevention Enhancements and Leadership Through Alliances (DELTA) Program, with a focus on the primary prevention of IPV.
The purpose of the DELTA FOCUS program is to promote the prevention of IPV through the implementation and evaluation of strategies that create a foundation for the development of practice-based evidence. By emphasizing primary prevention, this program will support comprehensive and coordinated approaches to IPV prevention. On March 2, 2013, CDC awarded 10 cooperative agreements to state domestic violence coalitions (SDVCs).
Each SDVC is required to identify and fund one to two well-organized, broad-based, active local organizations (referred to as coordinated community responses or CCRs) that are already engaging in, or are at capacity to engage in, IPV primary prevention strategies affecting the structural determinants of health at the societal and/or community levels of the SEM. SDVCs must facilitate and support local-level implementation and hire empowerment evaluators (EEs) to support the evaluation of IPV prevention strategies by the CCRs. SDVCs must also implement and with their empowerment evaluators, evaluate state-level IPV prevention strategies.
The CDC seeks OMB approval for three years to collect program evaluation data. Information will be collected from awardees funded under FOA-CE13-1302, the DELTA FOCUS (Domestic Violence Prevention Enhancement and Leadership Through Alliances, Focusing on Outcomes for Communities United with States) cooperative agreement program. The information will be used to guide program improvements by CDC in the national DELTA FOCUS program implementation and program improvements by SDVCs in implementation of the program within their state. Not collecting this data could result in inappropriate implementation, resulting in ineffective use of tax payer resources. Thus, this data collection is an essential program evaluation activity and the results will not be generalizable to the universe of study. The estimated annual burden hours are 59. There is no cost to respondents other than their time.
Notice.
The Centers for Medicare & Medicaid Services (CMS) is announcing an opportunity for the public to comment on CMS' intention to collect information from the public. Under the Paperwork Reduction Act of 1995 (PRA), federal agencies are required to publish a notice in the
Comments on the collection(s) of information must be received by the OMB desk officer by
When commenting on the proposed information collections, please reference the document identifier or OMB control number. To be assured consideration, comments and recommendations must be received by the OMB desk officer via one of the following transmissions: OMB, Office of Information and Regulatory Affairs, Attention: CMS Desk Officer, Fax Number: (202) 395-5806
To obtain copies of a supporting statement and any related forms for the proposed collection(s) summarized in this notice, you may make your request using one of following:
1. Access CMS' Web site address at
2. Email your request, including your address, phone number, OMB number, and CMS document identifier, to
3. Call the Reports Clearance Office at (410) 786-1326.
Reports Clearance Office at (410) 786-1326.
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. The term “collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires federal agencies to publish a 30-day notice in the
1.
Food and Drug Administration, HHS.
Notice; renewal of advisory committee.
The Food and Drug Administration (FDA) is announcing the renewal of the Allergenic Products Advisory Committee by the Commissioner of Food and Drugs (the Commissioner). The Commissioner has determined that it is in the public interest to renew the Allergenic Products Advisory Committee for an additional 2 years beyond the charter
Authority for the Allergenic Products Advisory Committee will expire on July 9, 2016, unless the Commissioner formally determines that renewal is in the public interest.
Janie Kim, Division of Scientific Advisors and Consultants, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 6129, Silver Spring, MD 20993-0002; 301-796-9016,
Pursuant to 41 CFR 102-3.65 and approval by the Department of Health and Human Services pursuant to 45 CFR part 11 and by the General Services Administration, FDA is announcing the renewal of the Allergenic Products Advisory Committee (the Committee). The Committee is a discretionary Federal advisory committee established to provide advice to the Commissioner. The Committee advises the Commissioner or designee in discharging responsibilities as they relate to helping to ensure safe and effective drugs for human use and, as required, any other product for which FDA has regulatory responsibility.
The Committee reviews and evaluates available data concerning the safety, effectiveness, and adequacy of labeling of marketed and investigational allergenic biological products or materials that are administered to humans for the diagnosis, prevention, or treatment of allergies and allergic disease, and makes appropriate recommendations to the Commissioner of its findings regarding the affirmation or revocation of biological product licenses, on the safety, effectiveness, and labeling of the products, on clinical and laboratory studies of such products, on amendments or revisions to regulations governing the manufacture, testing, and licensing of allergenic biological products, and on the quality and relevance of FDA's research programs which provide the scientific support for regulating these agents.
The Committee shall consist of a core of nine voting members including the Chair. Members and the Chair are selected by the Commissioner or designee from among authorities knowledgeable in the fields of allergy, immunology, pediatrics, internal medicine, biochemistry, and related specialties. Members will be invited to serve for overlapping terms of up to 4 years. Almost all non-Federal members of this committee serve as Special Government Employees. The core of voting members may include one technically qualified member, selected by the Commissioner or designee, who is identified with consumer interests and is recommended by either a consortium of consumer-oriented organizations or other interested persons. In addition to the voting members, the Committee may include one non-voting member who is identified with industry interests.
Further information regarding the most recent charter and other information can be found at
This document is issued under the Federal Advisory Committee Act (5 U.S.C. app.). For general information related to FDA advisory committees, please visit us at
Food and Drug Administration, HHS.
Notice; renewal of advisory committee.
The Food and Drug Administration (FDA) is announcing the renewal of the Psychopharmacologic Drugs Advisory Committee by the Commissioner of Food and Drugs (the Commissioner). The Commissioner has determined that it is in the public interest to renew the Psychopharmacologic Drugs Advisory Committee for an additional 2 years beyond the charter expiration date. The new charter will be in effect until the June 4, 2018.
Authority for the Psychopharmacologic Drugs Advisory Committee will expire on June 4, 2016, unless the Commissioner formally determines that renewal is in the public interest.
Kalyani Bhatt, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 31, Rm. 2417, Silver Spring, MD 20993-0002, 301-796-9001,
Pursuant to 41 CFR 102-3.65 and approval by the Department of Health and Human Services pursuant to 45 CFR part 11 and by the General Services Administration, FDA is announcing the renewal of the Psychopharmacologic Drugs Advisory Committee. The committee is a discretionary Federal advisory committee established to provide advice to the Commissioner. The Psychopharmacologic Drugs Advisory Committee advises the Commissioner or designee in discharging responsibilities as they relate to helping to ensure safe and effective drugs for human use and, as required, any other product for which the Food and Drug Administration has regulatory responsibility. The Committee reviews and evaluates data concerning the safety and effectiveness of marketed and investigational human drug products for use in the practice of psychiatry and related fields and make appropriate recommendations to the Commissioner of Food and Drugs.
The Committee shall consist of a core of nine voting members including the Chair. Members and the Chair are selected by the Commissioner or designee from among authorities knowledgeable in the fields of psychopharmacology, psychiatry, epidemiology or statistics, and related specialties. Members will be invited to serve for overlapping terms of up to 4 years. Almost all non-Federal members of this committee serve as Special Government Employees. The core of voting members may include one technically qualified member, selected by the Commissioner or designee, who is identified with consumer interests and is recommended by either a consortium of consumer-oriented organizations or other interested persons. In addition to the voting members, the Committee may include one non-voting member who is identified with industry interests.
Further information regarding the most recent charter and other information can be found at
This document is issued under the Federal Advisory Committee Act (5 U.S.C. app.). For general information related to FDA advisory committees, please visit us at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA, we, or the Agency) is announcing an opportunity for public comment on the proposed collection of certain information by the Agency. Under the Paperwork Reduction Act of 1995 (the PRA), Federal Agencies are required to publish notice in the
Submit either electronic or written comments on the collection of information by August 1, 2016 on the “ADDENDUM” sections of the E6(R2) draft guidance.
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submission” and “Instructions”).
Submit written/paper submissions as follows:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
FDA PRA Staff, Office of Operations, Food
Under the PRA (44 U.S.C. 3501-3520), Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal Agencies to provide a 60-day notice in the
With respect to the following collection of information, FDA invites comments on these topics: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology.
In the
The E6(R2) draft guidance recommends that sponsors develop and maintain a system to manage quality when designing, conducting, recording, evaluating, reporting, and archiving clinical trials. The draft guidance also recommends that the sponsor describe the quality management approach implemented in the trial and summarize important deviations from the predefined quality tolerance limits in the clinical study report. We are requesting OMB approval for the following collections of information identified in the “ADDENDUM” sections of the E6(R2) draft guidance and are inviting public comments on these sections.
In table 1 of this document, we estimate that approximately 1,457 sponsors of clinical trials of human drugs will develop approximately 1,457 quality management systems per year (as described in section 5.0 of the E6(R2) draft guidance). We further estimate that it will take sponsors approximately 60 hours to develop and implement each quality management system, totaling 87,420 hours annually. These estimates are based on the number of annual investigational new drug applications (IND) and new drug applications (NDA) submitted to the Center for Drug Evaluation and Research in previously approved collections of information. The estimated number of sponsors that will develop a quality management system as described in the guidance, as well as the estimated number of hours it will take, is based on FDA interactions with sponsors about activities that support drug development plans.
In table 2 of this document, we estimate that approximately 1,457 sponsors of clinical trials of human drugs will describe the quality management approach implemented in a clinical trial and summarize important deviations from the predefined quality tolerance limits in a clinical study report (as described in section 5.0.7 of the E6(R2) draft guidance). We further estimate that sponsors will submit approximately 4.6 responses per respondent and that it will take sponsors 3 hours to complete this reporting task, totaling 20,107 reporting hours annually. These estimates are based on past experiences with IND, NDA, and previously approved collections of information.
In table 3 of this document, we estimate that approximately 218 sponsors of clinical trials of biological products will develop approximately 218 quality management systems per year (as described in section 5.0.7 of the E6(R2) draft guidance). We further estimate that it will take sponsors approximately 60 hours to develop and implement each quality management system, totaling 13,080 hours annually. These estimates are based on past experiences with INDs, biologics license applications (BLA), and previously approved collections of information.
In table 4 of this document, we estimate that 218 sponsors of biological products will describe the quality management approach implemented in a clinical trial and summarize important deviations from the predefined quality tolerance limits in a clinical study report (as described in section 5.0.7 of the E6(R2) draft guidance). We further estimate that sponsors will submit approximately 3.69 responses per respondent and that it will take sponsors 3 hours to complete this reporting task, totaling 2,413 reporting hours annually. As described previously, these estimates are also based on past experiences with IND, BLA, and previously approved collections of information.
FDA estimates the burden of this collection of information as follows:
The collections of information included in the sections marked as “ADDENDUM” in the E6(R2) draft guidance also refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by OMB under the PRA. The collections of information found in 21 CFR part 11 have been approved under OMB control number 0910-0303; the collections of information found in 21 CFR part 312 have been approved under OMB control number 0910-0014; and collections of information found in 21 CFR part 314 have been approved under OMB control number 0910-0001. The collections of information found in 21 CFR part 601 have been approved under OMB control number 0910-0338.
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA or Agency) has determined that LEVOTHROID
Reena Raman, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6284, Silver Spring, MD 20993-0002, 301-796-7577.
In 1984, Congress enacted the Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. 98-417) (the 1984 amendments), which authorized the approval of duplicate versions of drug products under an ANDA procedure. ANDA applicants must, with certain exceptions, show that the drug for which they are seeking approval contains the same active ingredient in the same strength and dosage form as the “listed drug,” which is a version of the drug that was previously approved. ANDA applicants do not have to repeat the extensive clinical testing otherwise necessary to gain approval of a new drug application (NDA).
The 1984 amendments include what is now section 505(j)(7) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 355(j)(7)), which requires FDA to publish a list of all approved drugs. FDA publishes this list as part of the “Approved Drug Products With Therapeutic Equivalence Evaluations,” which is known generally as the “Orange Book.” Under FDA regulations, drugs are removed from the list if the Agency withdraws or suspends approval of the drug's NDA or ANDA for reasons of safety or effectiveness or if FDA determines that the listed drug was withdrawn from sale for reasons of safety or effectiveness (21 CFR 314.162).
A person may petition the Agency to determine, or the Agency may determine on its own initiative, whether a listed drug was withdrawn from sale for reasons of safety or effectiveness. This determination may be made at any time after the drug has been withdrawn from sale, but must be made prior to approving an ANDA that refers to the listed drug (§ 314.161 (21 CFR 314.161)). FDA may not approve an ANDA that does not refer to a listed drug.
LEVOTHROID (levothyroxine sodium) tablets, 0.025 mg, 0.05 mg, 0.075 mg, 0.088 mg, 0.112 mg, 0.125 mg, 0.137 mg, 0.15 mg, 0.175 mg, 0.1 mg, 0.2 mg, and 0.3 mg, are the subject of NDA 021116, held by Lloyd Inc., and initially approved on October 24, 2002. LEVOTHROID is used for the following indications:
• Hypothyroidism—As replacement or supplemental therapy in congenital or acquired hypothyroidism of any etiology, except transient hypothyroidism during the recovery phase of subacute thyroiditis. Specific indications include: Primary (thyroidal), secondary (pituitary), and tertiary (hypothalamic) hypothyroidism and subclinical hypothyroidism. Primary hypothyroidism may result from functional deficiency, primary atrophy, partial or total congenital absence of the thyroid gland, or from the effects of surgery, radiation, or drugs, with or without the presence of goiter.
• Pituitary Thyrotropine-Stimulating Hormone Suppression—In the treatment or prevention of various types of euthyroid goiters, including thyroid nodules, subacute or chronic lymphocytic thyroiditis (Hashimoto's thyroiditis), multinodular goiter, and as an adjunct to surgery and radioiodine therapy in the management of thyrotropin-dependent well-differentiated thyroid cancer.
LEVOTHROID (levothyroxine sodium) tablets, 0.025 mg, 0.05 mg, 0.075 mg, 0.088 mg, 0.112 mg, 0.125 mg, 0.137 mg, 0.15 mg, 0.175 mg, 0.1 mg, 0.2 mg, and 0.3 mg are currently listed in the “Discontinued Drug Product List” section of the Orange Book.
Lachman Consultant Services, Inc., submitted a citizen petition dated February 4, 2015 (Docket No. FDA-2015-P-0403), under 21 CFR 10.30, requesting that the Agency determine whether LEVOTHROID (levothyroxine sodium) tablets, 0.025 mg, 0.05 mg, 0.075 mg, 0.088 mg, 0.112 mg, 0.125 mg, 0.137 mg, 0.15 mg, 0.175 mg, 0.1 mg, 0.2 mg, and 0.3 mg, were withdrawn from sale for reasons of safety or effectiveness.
After considering the citizen petition and reviewing Agency records and based on the information we have at this time, FDA has determined under § 314.161 that LEVOTHROID (levothyroxine sodium) tablets, 0.025 mg, 0.05 mg, 0.075 mg, 0.088 mg, 0.112 mg, 0.125 mg, 0.137 mg, 0.15 mg, 0.175 mg, 0.1 mg, 0.2 mg, and 0.3 mg, were not withdrawn for reasons of safety or effectiveness. The petitioner has identified no data or other information suggesting that this drug product was withdrawn for reasons of safety or effectiveness. We have carefully reviewed our files for records concerning the withdrawal of LEVOTHROID (levothyroxine sodium) tablets, 0.025 mg, 0.05 mg, 0.075 mg, 0.088 mg, 0.112 mg, 0.125 mg, 0.137 mg, 0.15 mg, 0.175 mg, 0.1 mg, 0.2 mg, and 0.3 mg, from sale. We have also independently evaluated relevant literature and data for possible postmarketing adverse events. We have found no information that would indicate that this drug product was withdrawn from sale for reasons of safety or effectiveness.
Accordingly, the Agency will continue to list LEVOTHROID (levothyroxine sodium) tablets, 0.025 mg, 0.05 mg, 0.075 mg, 0.088 mg, 0.112 mg, 0.125 mg, 0.137 mg, 0.15 mg, 0.175 mg, 0.1 mg, 0.2 mg, and 0.3 mg, in the “Discontinued Drug Product List” section of the Orange Book. The “Discontinued Drug Product List” delineates, among other items, drug products that have been discontinued from marketing for reasons other than safety or effectiveness. ANDAs that refer to this drug product may be approved by the Agency as long as they meet all other legal and regulatory requirements for the approval of ANDAs. If FDA determines that labeling for this drug product should be revised to meet current standards, the Agency will advise ANDA applicants to submit such labeling.
Food and Drug Administration, HHS.
Notice; correction.
The Food and Drug Administration (FDA) is correcting a notice that appeared in the
Lori Benner and/or Jessica Barnes, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 6221, Silver Spring, MD 20993-0002, 301-796-1300.
In FR Doc. 2016-10913, appearing on page 28876 in the
1. On page 28876, in the first column, the title is corrected to read “Clinical Trial Design Considerations for Malaria Drug Development.”
2. On page 28876, in the second column, the
If you need special accommodations because of a disability, please contact Jessica Barnes or Lori Benner (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) announces its intention to accept and consider a single source application for award of a cooperative agreement to the World Health Organization (WHO) in support of collaboration in regulatory systems strengthening, development of norms and standards, and innovative research to advance global access to safe and effective biological products that meet international standards. The goal of FDA's Center for Biologics Evaluation and Research (FDA/CBER) is to enhance technical collaboration and cooperation between the FDA, WHO, and its member states to facilitate strengthening regulatory capacity and support product development and standardization activities to increase access to safe and effective biologicals globally.
The application due date is July 5, 2016.
Submit electronic applications to
Gopa Raychaudhuri, CBER Liaison to WHO, Office of the Director, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7250, Silver Spring, MD 20993, 240-402-8000,
For more information on this funding opportunity announcement (FOA) and to obtain detailed requirements, please refer to the full FOA located at
WHO is the directing and coordinating authority on international health within the United Nations' (UN) system. It is responsible for providing leadership on global health matters, shaping the health research agenda, setting norms and standards, articulating evidence-based policy options, providing technical support to countries, and monitoring and assessing health trends. WHO assists countries in building capacity to increase and sustain access to medical products to prevent, detect, and treat communicable diseases, including reducing vaccine-preventable diseases. WHO also coordinates efforts to respond to public health emergencies by monitoring the health situation, undertaking risk assessments, identifying priorities, and providing technical guidance and other forms of support to countries and regions.
Providing adequate regulatory oversight throughout the product life cycle (pre- and post-licensure) is essential for assuring the safety, purity, and potency of vaccines and other biologicals. However, this is a major challenge for many National Regulatory Authorities (NRAs) confronted by a steadily increasing number of novel products, complex quality concerns, new regulatory issues arising from rapid technical and technological advances, and emerging infectious diseases (
FDA/CBER has been a leader and active participant in the global community to improve human health in the world's populations over many years. Its international engagements have been informed by the knowledge that protection of global public health against infectious disease threats translates into protection of public health in the United States. FDA, through CBER, has longstanding collaborations with WHO in the area of biologicals (vaccines, blood and blood products, relevant in vitro diagnostics, and cell and tissue therapies).
FDA/CBER has been a Pan American Health Organization/WHO Collaborating Center for Biological Standardization since 1998 with the current commitment running until 2020 and expectation of future extensions. As a WHO Collaborating Center for Biological Standardization, CBER has provided scientific and technical support to WHO for development of
WHO plays a key role in establishing the WHO International Biological Reference Preparations and in developing WHO guidelines and recommendations on the production and control of vaccines and other biological products and technologies. The WHO Expert Committee on Biological Standardization (ECBS) is commissioned by WHO to advise the Organization on international standards setting activities. These norms and standards are based on wide scientific consultation and on international consensus and are intended to ensure the consistent quality and safety of biological products and related in vitro diagnostic tests worldwide.
Blood products are inherently variable due to the nature of the source materials as well as the methods used to test them. The objective is to ensure that only blood products of acceptable quality, safety, and efficacy are used in the patient population. Similarly, ensuring the quality, safety, and effectiveness of vaccines is one of WHO's highest priorities. The WHO works in close collaboration with the international scientific and professional communities, regional and national regulatory authorities, manufacturers, and expert laboratories worldwide to ensure that global standards are developed and made readily available to assess the quality, safety, and effectiveness of biological products, and to support monitoring safety throughout the product life cycle.
NRAs play a vital role in the national health care system. Providing regulatory oversight throughout the product life cycle (pre- and post-licensure) is a major challenge for many NRAs confronted by a steadily increasing number of novel products, complex quality concerns, new regulatory issues arising from rapid technical and technological advances, and emerging infectious diseases (
The WHO prequalification program was established in response to the need to supply quality health products, including vaccines and in vitro diagnostic tests for the prevention, diagnosis, and treatment of priority diseases in low-and-middle-income countries. Through the prequalification program, WHO assures the quality, safety, and effectiveness/performance of these products, and suitability for use in the target settings.
As part of the vaccine prequalification program, WHO provides advice to the United Nations Children's Fund (UNICEF) and other UN agencies on the acceptability, in principle, of vaccines considered for purchase by such agencies for vaccination programs they administer. An important part of the vaccine prequalification program is WHO's reliance upon a stringent NRA to provide regulatory oversight of the vaccine throughout the product's life cycle. In 2009, FDA entered into a confidentiality arrangement with WHO to enable FDA/CBER to serve as a NRA of record in the vaccine prequalification program and currently serves in this capacity for nine U.S. licensed, WHO prequalified vaccines.
The safety of medical products depends on a variety of factors that range from good manufacturing practices to strong national systems able to monitor the products in domestic markets. However, with increasing globalization of trade, overall effective surveillance of medical products depends on international regulatory cooperation and information sharing. WHO promotes the global safety of medical products by coordinating global networks for information sharing, such as data bases and monitoring and alert systems, and by supporting countries to develop national capacities for the post-marketing surveillance of biological products.
WHO and partners have developed a strategic framework (“Global Vaccine Safety Blueprint”) to promote the establishment of effective vaccine pharmacovigilance systems globally. The Blueprint proposes a strategic plan for strengthening vaccine safety activities worldwide, focusing on building national capacity for vaccine safety in the world's poorest countries through the coordinated efforts of major stakeholders.
WHO advisory bodies also play a significant role in reviewing and assessing product safety data and making recommendations to WHO regarding use of vaccines and other biological products. For example, the Global Advisory Committee on Vaccine Safety (GACVS) provides independent, authoritative, scientific advice to WHO on vaccine safety issues of global or regional concern, and the Blood Regulators' Network (BRN) serves as an advisory body to WHO on matters related to safety and availability of blood and blood products.
Regulatory science aims to contribute to the development of new tools, standards, and approaches to assess the safety, efficacy, quality, and performance of regulated biological products. Examples include tools to standardize assays used for regulatory purposes (
FDA, with other HHS technical agencies and offices, WHO, and other regulatory counterparts, are strategizing on approaches to increase access of the global population to safe and effective biological products for the prevention, diagnosis, and treatment of priority diseases, especially for use in low-and-middle-income countries. This project represents a collaborative effort between FDA and WHO (and complements and builds upon the U.S. Government's existing commitments with WHO) to support scientific collaboration and enhance regulatory capabilities of NRAs and networks to advance global access to safe and effective vaccines and other biologicals that meet international standards. This project will further
The project has the following goals:
• Support NRA assessments and analyses and synthesis of the data, and development of an institutional development plan to enhance regulatory performance in low-and-middle-income countries. Assessment of regulatory systems could include but is not limited to, analyses and synthesis of existing data from assessments of vaccine regulatory capabilities of different NRAs, and new applications of assessment frameworks to specific areas, such as pharmacovigilance (
• Analysis of regulatory systems performance can include assessment of challenges, risks, and emerging trends, with the aim of further strengthening the development of data/information systems as sources of inputs for evidence-based regulatory decisions and actions; and
• Expected outputs could include analyses, reports, and data-driven strategy papers, among others.
• Enable the strengthening of regulatory systems at the national and regional levels in such critical domains as good manufacturing, clinical, and laboratory practices; monitoring and evaluation of product quality; lot release; inspection and surveillance of products throughout the supply chain; pharmacovigilance systems building and analyses; risk assessment, analysis, and management etc.;
• Support the diffusion and application of knowledge, data, and information through active participation in regional and global committees and networks, such as the African Vaccine Regulatory Forum, ECBS, GACVS, BRN etc.; and
• Expected outputs could include analyses, reports, and data-driven strategy papers, among others.
• Enable the timely and effective sharing of scientific findings and data through international collaboration to develop WHO International Biological Reference Preparations and WHO guidelines and recommendations on the production and control of vaccines and other biological products and technologies;
• Assist Member States in the implementation of internationally-recognized standards and guidelines,
• Utilize WHO's convening power to engage with relevant stakeholders in support of data-driven and science-based public health strategies and approaches to enhancing global regulatory capacity and cooperation; and
• Expected outputs could include guideline documents, physical standards (
• Enable development of new tools, standards, and approaches to assess the safety, efficacy, quality, and performance of regulated biological products;
• Support programs, including but not limited to WHO prequalification, that increase access to safe and effective biological products; and
• Expected outputs could include analyses, reports, and data-driven strategy papers, among others.
The following organization is eligible to apply: WHO.
FDA/CBER anticipates providing in FY2016 up to $2 million (total costs including indirect costs) for one award (subject to availability of funds) in support of this project. Future year amounts will depend on annual appropriations, availability of funding, and awardee performance. CBER anticipates providing four additional years of support up to the following amounts:
The support will be 1 year with the possibility of an additional 4 years of noncompetitive support. Continuation beyond the first year will be based on satisfactory performance during the preceding year, receipt of a noncompeting continuation application, and available Federal Fiscal Year appropriations.
Only electronic applications will be accepted. To submit an electronic application in response to this FOA, applicants should first review the full announcement located at
• Step 1: Obtain a Dun and Bradstreet (DUNS) Number.
• Step 2: Register with System for Award Management (SAM)(formerly CCR).
• Step 3: Obtain Username & Password.
• Step 4: Authorized Organization Representative (AOR) Authorization.
• Step 5: Track AOR Status.
• Step 6: Register with Electronic Research Administration (eRA) Commons.
Steps 1 through 5, in detail, can be found at
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) has determined the regulatory review period for OLYSIO and is publishing this notice of that determination as required by law. FDA has made the determination because of the submission of an application to the Director of the U.S. Patent and Trademark Office (USPTO), Department of Commerce, for the extension of a patent which claims that human drug product.
Anyone with knowledge that any of the dates as published (in the
You may submit comments as follows:
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
• Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
•
Beverly Friedman, Office of Regulatory Policy, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6250, Silver Spring, MD 20993, 301-796-3600.
The Drug Price Competition and Patent Term Restoration Act of 1984 (Pub. L. 98-417) and the Generic Animal Drug and Patent Term Restoration Act (Pub. L. 100-670) generally provide that a patent may be extended for a period of up to 5 years so long as the patented item (human drug product, animal drug product, medical device, food additive, or color additive) was subject to regulatory review by FDA before the item was marketed. Under these acts, a product's regulatory review period forms the basis for determining the amount of extension an applicant may receive.
A regulatory review period consists of two periods of time: A testing phase and an approval phase. For human drug products, the testing phase begins when the exemption to permit the clinical investigations of the drug becomes effective and runs until the approval phase begins. The approval phase starts with the initial submission of an application to market the human drug product and continues until FDA grants permission to market the drug product. Although only a portion of a regulatory review period may count toward the actual amount of extension that the Director of USPTO may award (for example, half the testing phase must be subtracted as well as any time that may have occurred before the patent was issued), FDA's determination of the length of a regulatory review period for a human drug product will include all of the testing phase and approval phase as specified in 35 U.S.C. 156(g)(1)(B).
FDA has approved for marketing the human drug product OLYSIO (simeprevir). OLYSIO is indicated for
FDA has determined that the applicable regulatory review period for OLYSIO is 2,006 days. Of this time, 1,766 days occurred during the testing phase of the regulatory review period, while 240 days occurred during the approval phase. These periods of time were derived from the following dates:
1.
2.
3.
This determination of the regulatory review period establishes the maximum potential length of a patent extension. However, the USPTO applies several statutory limitations in its calculations of the actual period for patent extension. In its applications for patent extension and amendments, the applicants seek 801 or 280 days of patent term extension.
Anyone with knowledge that any of the dates as published are incorrect may submit either electronic or written comments and ask for a redetermination (see DATES). Furthermore, any interested person may petition FDA for a determination regarding whether the applicant for extension acted with due diligence during the regulatory review period. To meet its burden, the petition must be timely (see DATES) and contain sufficient facts to merit an FDA investigation. (See H. Rept. 857, part 1, 98th Cong., 2d sess., pp. 41-42, 1984.) Petitions should be in the format specified in 21 CFR 10.30.
Submit petitions electronically to
Food and Drug Administration, HHS.
Notice; renewal of advisory committee.
The Food and Drug Administration (FDA) is announcing the renewal of the Science Advisory Board to the National Center for Toxicological Research (NCTR) by the Commissioner of Food and Drugs (the Commissioner). The Commissioner has determined that it is in the public interest to renew the Science Advisory Board to the National Center for Toxicological Research for an additional 2 years beyond the charter expiration date. The new charter will be in effect until June 2, 2018.
Authority for the Science Advisory Board to the National Center for Toxicological Research will expire on June 2, 2016, unless the Commissioner formally determines that renewal is in the public interest.
Donna L. Mendrick, National Center for Toxicological Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 32, Rm. 2208, Silver Spring, MD 20993-0002, 301-796-8892,
Pursuant to 41 CFR 102-3.65 and approval by the Department of Health and Human Services pursuant to 45 CFR part 11 and by the General Services Administration, FDA is announcing the renewal of the Science Advisory Board to the National Center for Toxicological Research. The committee is a discretionary Federal advisory committee established to provide advice to the Commissioner. The Science Advisory Board to the National Center for Toxicological Research advises the Commissioner or designee in discharging responsibilities as they relate to helping to ensure safe and effective drugs for human use and, as required, any other product for which FDA has regulatory responsibility. The Board advises the Director, NCTR, in establishing, implementing, and evaluation the research programs that assist the Commissioner of Food and Drugs in fulfilling his regulatory responsibilities. The Board provides an extra-agency review in ensuring that the research programs at NCTR are scientifically sound and pertinent.
The Committee shall consist of a core of nine voting members including the Chair. Members and the Chair are selected by the Commissioner or designee from among authorities knowledgeable in the fields of toxicological research. Members will be invited to serve for overlapping terms of up to 4 years. Almost all non-Federal members of this committee serve as Special Government Employees. The core of voting members may include one technically qualified member, selected by the Commissioner or designee, who is identified with consumer interests and is recommended by either a consortium of consumer-oriented organizations or other interested persons.
Further information regarding the most recent charter and other information can be found at
This document is issued under the Federal Advisory Committee Act (5 U.S.C. app.). For general information related to FDA advisory committees, please visit us at
Food and Drug Administration, HHS.
Notice of public workshop.
The Food and Drug Administration (FDA) is announcing a public workshop regarding antibacterial drug development for patients with unmet need and developing antibacterial drugs that target a single species. FDA is interested in discussing the scientific challenges pertaining to such development programs, including enrollment challenges, clinical trial designs, and trial population. This public workshop is intended to provide information for and gain perspective from health care providers, other U.S. government Agencies, public health organizations, academic experts, and industry on various aspects of drug development for new antibacterial drugs for patients with unmet need and new antibacterial drugs that target a single species. The input from this public workshop will also help in developing topics for future discussion.
The public workshop will be held on July 18, 2016, from 8:30 a.m. to 5 p.m. and July 19, 2016, from 8:30 a.m. to 4 p.m. See the
The public workshop will be held at FDA's White Oak campus, 10903 New Hampshire Ave., Bldg. 31 Conference Center, the Great Room (Rm. 1503), Silver Spring, MD 20993-0002. Entrance for the public workshop participants (non-FDA employees) is through Building 1 where routine security check procedures will be performed. For parking and security information, please refer to
Lori Benner and/or Jessica Barnes, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 22, Rm. 6221 Silver Spring, MD 20993-0002, 301-796-1300.
FDA is announcing a public workshop regarding antibacterial drug development for patients with unmet need and developing antibacterial drugs that target a single species. Discussions will focus on potential development pathways, aspects of clinical trials including patient population, trial designs, and endpoints, and the role of clinical trial networks in antibacterial drug development.
If you need special accommodations due to a disability, please contact Jessica Barnes or Lori Benner (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) announces a forthcoming public advisory committee meeting of the Clinical Chemistry and Clinical Toxicology Devices Panel of the Medical Devices Advisory Committee. The general function of the committee is to provide advice and recommendations to the Agency on FDA's regulatory issues. The meeting will be open to the public.
The meeting will be held on August 10, 2016, from 8 a.m. to 6 p.m.
Gaithersburg Holiday Inn, Ballroom, Two Montgomery Village Ave., Gaithersburg, MD 20879. The hotel's telephone number is 301-948-8900. Answers to commonly asked questions including information regarding special accommodations due to a disability, visitor parking, and transportation may be accessed at:
Patricio G. Garcia, Center for Devices and Radiological Health, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 66, rm. 1611, Silver Spring, MD 20993-0002,
The SEEKER System is intended for quantitative measurement of the activity of multiple lysosomal enzymes from newborn dried blood spot specimens. Reduced activity of these enzymes may be indicative of a lysosomal storage disorder. The enzymes measured using the SEEKER 4-Plex Assay Kit and their associated lysosomal storage disorder are listed in the following table.
Reduced activity for any of the four enzymes must be confirmed by other confirmatory diagnostic methods.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with disabilities. If you require accommodations due to a disability, please contact AnnMarie Williams at
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Food and Drug Administration, HHS.
Notice of public workshop.
The Food and Drug Administration (FDA) is announcing a public workshop entitled “Sequencing Quality Control II.” The purpose of the public workshop is to define the scope of project and study designs, and solicit participation of DNA sequencing community and stakeholders for data generation, management, analysis, and interpretation.
The public workshop will be held on September 13 and 14, 2016, from 8 a.m. to 5 p.m. See the
The public workshop will be held at Wilson Hall, Bldg. 1, National Institutes of Health (NIH), 31 Center Dr., Bethesda, MD 20892. Entrance for the public workshop participants (non-NIH employees) is through the NIH Gateway Center where routine security check procedures will be performed. For parking and security information, please refer to
Weida Tong, National Center for Toxicological Research (NCTR), Food and Drug Administration, 3900 NCTR Rd., Jefferson, AR 72079, 870-543-7142, FAX: 870-543-7854,
FDA's Critical Path Initiative (
Starting in 2005, FDA initiated an open project, MicroArray Quality Control (MAQC), which has gone through three phases. MAQC-I focused on the technical aspects of microarray-based gene expression measurements, the MAQC-II focused on validation of microarray-based predictive models, and MAQC-III, which is also called the Sequencing Quality Control (SEQC), focused on assessing the performance of whole transcriptome sequencing (RNA-seq).
The Sequencing Quality Control Phase 2 (SEQC-II) is a natural extension of the SEQC project with emphasis on DNA-Seq for various applications. The SEQC-II project, with broad participation from scientists and reviewers within FDA and collaborators across the public, academic, and private sectors, is expected to help prepare FDA for the next wave of submission of genomic data generated from the next-generation sequencing technologies.
If you need special accommodations due to a disability, please contact Weida Tong (see
Food and Drug Administration, HHS.
Notice.
The Food and Drug Administration (FDA) announces a forthcoming public advisory committee meeting of the Clinical Chemistry and Clinical Toxicology Devices Panel of the Medical Devices Advisory Committee. The general function of the committee is to provide advice and recommendations to the Agency on FDA's regulatory issues. The meeting will be open to the public.
The meeting will be held on July 21 and July 22, 2016, from 8 a.m. to 6 p.m.
Hilton Washington DC North/Gaithersburg, Salons A, B, C, and D, 620 Perry Pkwy., Gaithersburg, MD 20877. The hotel's telephone number is 301-977-8900. Answers to commonly asked questions including information regarding special accommodations due to a disability, visitor parking, and transportation may be accessed at:
Patricio Garcia, Center for Devices and Radiological Health, Food and Drug Administration, Bldg. 66, Rm. 1116, 10903 New Hampshire Ave., Silver Spring, MD 20993;
On July 22, 2016, the committee will discuss and make recommendations on information regarding a premarket notification (510(k)) submission for the Alere Afinion
Alere Afinion HbA1c Dx is an in vitro diagnostic test for quantitative determination of glycated hemoglobin (% hemoglobin A1c, HbA1c) in human whole blood. This test is to be used as an aid in the diagnosis of diabetes and as an aid in identifying patients who may be at risk for developing diabetes. The measurement of % HbA1c is recommended as a marker of long-term metabolic control in persons with diabetes mellitus. For use in clinical laboratories and point of care laboratory settings.
Current clinical guidelines contraindicate the use of point-of-care hemoglobin A1c (HbA1c) tests to diagnose diabetes. FDA is seeking feedback from the clinical community to determine significant, scientific and practical, reservations or support for using this point-of-care HbA1c test as an aid in the diagnosis of diabetes and pre-diabetes.
FDA intends to make background material available to the public no later than 2 business days before the meeting. If FDA is unable to post the background material on its Web site prior to the meeting, the background material will be made publicly available at the location of the advisory committee meeting, and the background material will be posted on FDA's Web site after the meeting. Background material is available at
Persons attending FDA's advisory committee meetings are advised that the Agency is not responsible for providing access to electrical outlets.
FDA welcomes the attendance of the public at its advisory committee meetings and will make every effort to accommodate persons with disabilities. If you require accommodations due to a disability, please contact AnnMarie Williams, at
FDA is committed to the orderly conduct of its advisory committee meetings. Please visit our Web site at
Notice of this meeting is given under the Federal Advisory Committee Act (5 U.S.C. app. 2).
Office of the Secretary, HHS.
Notice.
Notice is hereby given that the Office of Research Integrity (ORI) has taken final action in the following case:
ORI found that falsified and/or fabricated data were included in the following three (3) NIH grant applications, one (1) NIH grant progress report, one (1) publication, seven (7) presentations, and one (1) image file:
ORI found that Respondent reused and falsely relabeled Western blot gel images, falsified the related densitometry measurements based on the falsified Western blots, and falsified and/or fabricated data for experiments that were not performed. Respondent continued this falsification at UC, after the UM research misconduct investigation was completed. Specifically:
• While at UM, Respondent falsified and/or fabricated images in R03 AG029508-01 and three (3) presentations, where:
R03 AG029508-01, Figure 2, represented Western blots for phosphorylated p53 (Ser15) and β-actin expression in normal and Snell dwarf mice fibroblasts (mN/SF) treated with the DNA alkylating agent methyl methanesulfonate (MMS), when the same images were duplicated to represent different proteins and treatments in the presentations Autophagy Pathway.ppt and RM.ppt.
R03 AG029508-01, Figure 3, represented Western blots for p16
• While at UM, Respondent fabricated data in R21 AG030361-01 and supporting data for the grant application in the research record, where:
R21 AG030361-01, Figure 2, represented a Western blot for phosphorylated c-Jun-N-terminal kinase (JNK) expression in mN/SF exposed to cadmium, when the experiment was not performed.
The research record contained ninety (90) Western blot images and ninety (90) densitometry measurement files for 45 experiments that examined phosphorylated JNK or Mitogen-activated protein kinase 4 (MMK4) expression in mN/SF exposed to UV light, H
The research record contained densitometric analyses for an additional twenty-eight (28) experiments that examined phosphorylated JNK or MMK4 expression in mN/SF exposed to UV light, H
• While at UM, Respondent falsified and/or fabricated Western blots for phosphorylated and total Rac1/cdc42 expression in mN/SF, total JNK expression in mN/SF treated with anisomycin, phosphorylated JNK expression in Snell dwarf mice fibroblasts treated with cadmium, β-actin expression in mN/SF, β-actin expression in Snell dwarf mice fibroblasts treated with or without MMS, β-actin expression in normal mice fibroblasts treated with cadmium, and β-actin expression in mN/SF treated with H
• While at UM, Respondent falsified twenty-four (24) Western blots for phosphorylated JNK or MMK4 expression in mN/SF exposed to UV light, H
• While at UC, Respondent falsified and/or fabricated Western blots by using images from unrelated experiments and the related densitometric analyses that were based on falsified Western blots in the following:
R01 HL102405-01 for:
K08 HL081472-05 Progress Report for:
Dr. Malhotra has entered into a Voluntary Settlement Agreement with ORI, in which he voluntarily agreed to the administrative actions set forth below:
(1) Respondent agreed that he had no intention in applying for or engaging in U.S. Public Health Service (PHS)-supported research or otherwise working with PHS. However, if within five (5) years of the effective date of the Agreement (May 6, 2016), Respondent receives or applies for PHS support, Respondent agreed to have his research supervised for a period of ten (10) years beginning on the date of his employment in a position in which he receives or applies for PHS support and to notify his employer/institution(s) of the terms of this supervision.
(2) Respondent certified that he is not currently engaged in or receiving PHS support. Respondent agreed that prior to the submission of an application for PHS support for a research project on which the Respondent's participation is proposed and prior to the Respondent's participation in any capacity on PHS-supported research, Respondent shall ensure that a plan for supervision of Respondent's duties is submitted to ORI for approval. The supervision plan must be designed to ensure the scientific integrity of Respondent's research contribution as outlined below. Respondent agreed that he shall not participate in any PHS-supported research until such a supervision plan is submitted to and approved by ORI. Respondent agreed to maintain responsibility for compliance with the agreed upon supervision plan.
(3) The requirements for Respondent's supervision plan are as follows:
i. A committee of senior faculty members and officials at the institution who are familiar with Respondent's field of research, but not including Respondent's supervisor or collaborators, will provide oversight and guidance for ten (10) years. The committee will review primary data for Respondent's PHS-supported research on a quarterly basis setting forth the committee meeting dates, Respondent's compliance with appropriate research standards, and confirming the integrity of Respondent's research.
ii. The committee will conduct an advance review of any PHS grant application (including supplements, resubmissions, etc.), manuscripts reporting PHS-funded research submitted for publication, and abstracts. The review will include a discussion with Respondent of the primary data represented in those documents and will include a certification that the data presented in the proposed application/publication is supported by the research record.
(4) If within five (5) years from the effective date of the Agreement, Respondent receives or applies for PHS support, Respondent agreed that for a period of ten (10) years beginning on the date of his employment that any institution employing him shall submit, in conjunction with each application for PHS funds, or report, manuscript, or abstract involving PHS-supported research in which Respondent is involved, a report and certification to ORI at six (6) month intervals that the data provided by Respondent are based on actual experiments or are otherwise legitimately derived and that the data, procedures, and methodology are accurately reported in the application, report, manuscript, or abstract.
(5) If no supervisory plan is provided to ORI, Respondent agreed to provide certification to ORI on a quarterly basis for a period of five (5) years, beginning on May 6, 2016, that he has not engaged in, applied for, or had his name included on any application, proposal, or other request for PHS funds made available through grants, subgrants, cooperative agreements, contracts, subcontracts, supplements, awards, fellowships, projects, programs, small business technology transfer (STTR) and small business innovation research (SBIR) programs, conferences, meetings, centers, resources, studies, and trials, without prior notification to ORI.
(6) Respondent agreed to exclude himself voluntarily from serving in any advisory capacity to PHS including, but not limited to, service on any PHS advisory committee, board, and/or peer review committee, or as a consultant for a period of five (5) years, beginning on May 6, 2016.
(7) As a condition of the Agreement, Respondent agreed to the retraction of
Director, Office of Research Integrity, 1101 Wootton Parkway, Suite 750, Rockville, MD 20852, (240) 453-8200.
National Committee on Vital and Health Statistics (NCVHS), HHS
Notice of full committee and subcommittee meetings.
Pursuant to the Federal Advisory Committee Act, the Department of Health and Human Services (HHS) announces the following advisory committee meeting.
Tuesday, June 14, 2016: 9 a.m.-5:40 p.m.—Full Committee Meeting.
Wednesday, June 15, 2016: 8 a.m.-2:25 p.m.—Full Committee Meeting.
Thursday, June 16, 2016: 8:30 a.m.-5 p.m.—Privacy Subcommittee Meeting on “Minimum Necessary and the Health Insurance Portability and Accountability Act (HIPAA)”.
Friday, June 17, 2016: 8:15 a.m.-4 p.m.—NCVHS Meeting on Claims-based Databases for Policy Development and Evaluation.
The public meetings on June 14-16, 2016 will be held at the U.S. Department of Health and Human Services, Hubert H. Humphrey Building, Room 705-A, 200 Independence Avenue SW., Washington, DC 20024. The public meeting on June 17, 2016 will be held at the Wilbur J. Cohen Building, 330 Independence Avenue SW, Snow Room, #5051, Washington, DC 20201. Phone: (202) 690-7100.
Substantive program information may be obtained from Rebecca Hines, Executive Secretary, NCVHS, National Center for Health Statistics, Centers for Disease Control and Prevention, 3311 Toledo Road, Hyattsville, Maryland 20782, telephone (301) 458-4715. Summaries of meetings and a roster of committee members are available on the NCVHS home page of the HHS Web site:
Should you require reasonable accommodation, please contact the CDC Office of Equal Employment Opportunity on (301) 458-4EEO (4336) as soon as possible.
Purpose: At the June 14-15, 2016 meeting the Committee will hear presentations and hold discussions on several health data policy topics. The Committee will receive updates from the Department, including from the Office of the National Coordinator and the Centers for Medicare and Medicaid Services. The Committee will discuss and take action on two recommendation letters stemming from the February 16, 2016 Standards Subcommittee hearing on the proposed Phase IV Operating Rules and proposed Attachment Standard. Findings from the June 2015 Review Committee Hearing on Adopted Transaction Standards, Operating Rules, Code Sets and Identifiers also will be discussed. The Committee will review the current public health data landscape with briefings from the National Center for Health Statistics, U.S. Census Bureau and CDC's Center for Surveillance, Epidemiology, and Laboratory Services. CMS will provide a briefing on MACRA and the Merit-Based Incentive Payment System (MIPS). The Committee will further review its strategic plan for 2016 and all Subcommittees will report on work plans and next steps. The Subcommittee on Privacy, Confidentiality, and Security will brief the full Committee on proceedings from the meeting on De-identification and the Health Insurance Portability and Accountability Act (HIPAA) scheduled for May 24-25, 2016, and discuss preliminary findings.
After the plenary session adjourns, the Work Group on HHS Data Access and Use will continue strategic discussions on building a framework for guiding principles for data access and use.
Privacy-specific topics will be addressed during the same week at the following meeting: The NCVHS Privacy, Confidentiality and Security Subcommittee will hold a one day meeting on June 16, 2016 to review the state of implementation of current policies and practices of the Health Insurance Portability and Accountability Act (HIPAA) Privacy Minimum Necessary provisions. The Subcommittee plans to identify and discuss issues and challenges that the industry is facing when addressing this requirement for potential recommendations to the HHS Secretary for policy and practice guidance addressing compliance with the “minimum necessary” standard.
On June 17th the full Committee will hold a meeting to explore the current state of the art associated with the collection and use of Multipayor claims data bases. These data bases include private data bases (sometimes known as Multi-claims Data Bases) and State claims data bases referred to as All-Payer Claims Databases (APCDs). The purpose of this meeting is to highlight the current state of development, challenges, issues, and opportunities faced by these initiatives, engage stakeholders on key issues, and identify priority areas and opportunities for recommendations to the Secretary of HHS and to the industry.
Dated: May 16, 2016.
Pursuant to the Federal Advisory Committee Act, as amended (5 U.S.C. App.), the Director, National Institutes of Health (NIH) announces the establishment of the NIH Clinical Center Research Hospital Board (Board) as authorized by 42 U.S.C. 282(b)(16), Section 402(b)(16) of the Public Health Service Act, as amended.
It has been determined that the NH Clinical Center Research Hospital Board is in the public interest in connection with the performance of duties imposed on the National Institutes of Health by law, and that these duties can best be performed through the advice and counsel of the Board.
Inquiries may be directed to Jennifer Spaeth, Director, Office of Federal Advisory Committee Policy, Office of the Director, National Institutes of Health, 6701 Democracy Boulevard, Suite 1000, Bethesda, Maryland 20892 (Mail code 4875), Telephone (301) 496-2123, or
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Request for Human Embryonic Stem Cell Line To Be Approved for Use in NIH Funded Research (OD)
In compliance with the requirement of Section 3507(a) (1) (D) of the Paperwork Reduction Act of 1995, the National Institutes of Health (NIH) has submitted to the Office of Management and Budget (OMB) a request for review and approval of the information collection instrument listed below. This proposed information collection was previously published in the
Comment Due Date: Comments regarding this information collection are best assured of having their full effect if received within 30-days of the date of this publication.
To obtain a copy of the data collection plans and instruments or request more information on the proposed project contact: Dr. Ellen Gadbois, Office of Science Policy, Office of the Director, NIH, Building 1, Room 218, MSC 0166, 9000 Rockville Pike, Bethesda, MD 20892, or call non-toll-free number (301) 496-9838 or Email your request, including your address to:
OMB approval is requested for 3 years. There are no costs to respondents other than their time. The total estimated annualized burden hours are 2,550.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended
(5 U.S.C. App), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The contract proposals and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the contract proposals, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Notice is hereby given of a change in the meeting of the Heart, Lung, and Blood Program Project Review Committee, June 17, 2016, 08:00 a.m. to June 17, 2016, 01:00 p.m., Hyatt Regency Bethesda, One Bethesda Metro Center, 7400 Wisconsin Avenue, Bethesda, MD, 20814 which was published in the
The meeting notice is amended to change the location of the meeting from The Hyatt Regency Bethesda to The Bethesda Marriott Suites, 6711 Democracy Boulevard, Bethesda, MD, 20817. The meeting is closed to the public.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable materials, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App.), notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in section 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App), notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
U.S. Customs and Border Protection, Department of Homeland Security.
Notice of final determination.
This document provides notice that U.S. Customs and Border Protection (“CBP”) has issued a final determination concerning the country of origin of certain network cables and transceivers. Based upon the facts presented, CBP has concluded that the country of origin of the network cables and transceivers is China for purposes of U.S. Government procurement.
The final determination was issued on May 19, 2016. A copy of the final determination is attached. Any
Grace A. Kim, Valuation and Special Programs Branch, Regulations and Rulings, Office of International Trade (202) 325-7941.
Notice is hereby given that on May 19, 2016, pursuant to subpart B of Part 177, U.S. Customs and Border Protection Regulations (19 CFR part 177, subpart B), CBP issued a final determination concerning the country of origin of certain network cables and transceivers, which may be offered to the U.S. Government under an undesignated government procurement contract. This final determination, HQ H273091, was issued under procedures set forth at 19 CFR part 177, subpart B, which implements Title III of the Trade Agreements Act of 1979, as amended (19 U.S.C. 2511-18). In the final determination, CBP concluded that the processing in the U.S. does not result in a substantial transformation. Therefore, the country of origin of the certain network cables and transceivers is China for purposes of U.S. Government procurement.
Section 177.29, CBP Regulations (19 CFR 177.29), provides that a notice of final determination shall be published in the
This is in response to your letter dated October 24, 2014, requesting a final determination on behalf of AddOn Computer Peripherals LLC (“AddOn”) pursuant to Subpart B of Part 177 of the U.S. Customs & Border Protection (“CBP”) Regulations (19 CFR part 177). Under these regulations, which implement Title III of the Trade Agreements Act of 1979 (“TAA”), as amended (19 U.S.C. 2511
In your letter, you requested confidential treatment for certain information contained in the file. Pursuant to 19 CFR 177.2(b)(7), the identified information has been bracketed and will be redacted in the public version of this final determination.
The products at issue are network transceivers and high speed cabling devices. You state that network transceivers are used for transmitting and receiving information between two network devices. The medium of transmission is usually copper or fiber optic cables and you claim that AddOn's network transceivers can work with one or the other. There are different models of transceivers based on the technology employed for a particular network device, transmission medium, speed and/or distance. Depending on the original equipment manufacturer (“OEM”), technology, and applications, the sales price for the transceivers range from [*******] to [*******]. You claim that the difference in cost and the sales price is attributable to the software program and subsequent testing and quality assurance process. The transceiver also “hot plugs,” which means that it can be plugged into a network device while the transceiver is working, and connect that device to a network.
You state that most transceivers are built to a Multi-Source Agreement (“MSA”) standard to provide common formats and functions to ensure that transceivers can operate with systems and each other. The MSA standard is said to incorporate a programmable memory, called an EEPROM. The EEPROM can also be used to tell the transceiver to enable functionality that goes beyond the MSA standard, which can be unique to the network device manufacturer. You claim that sometimes the EEPROM is programmed to allow the transceiver to perform a proprietary handshake and be identified as capable of certain advanced features. You further claim that if the transceiver fails the proprietary handshake, it may be rendered inoperable. You state that AddOn's transceivers conform to the MSA standard and to the OEM's higher level of compatibility.
You provided two scenarios in transceiver production. In both scenarios, the hardware components are manufactured in China or other Asian country. In Scenario 1, AddOn purchases the “blank” transceivers from an unrelated supplier in China or other Asian country. You state that “blank” transceivers are just hardware without any programming. AddOn downloads its proprietary software, which was developed in the U.S. and you claim that this makes the transceivers functional. This scenario applies to over 95% of the imported transceivers. In Scenario 2, AddOn purchases transceivers that have already been programmed with a generic program, which is removed and AddOn's proprietary software is installed to provide interoperability between different OEMs' systems. AddOn's transceivers are then tested for compatibility in its Certification Test Lab. In both scenarios, the programming and testing are conducted in the U.S.
The second product is a high speed cabling device, which comprises two transceivers and a transmission medium (copper or fiber optic cable) in one integrated part. All programming and testing are said to be the same as the transceivers, except that AddOn programs and tests two transceivers instead of one for each product.
AddOn's proprietary operational firmware/software was developed and programmed in the U.S. You state that the amount of time invested in development was approximately [*******] hours and the software developers have a Bachelors of Science or better or equivalent work experience. You also state that the dollar value increases significantly after programming, which ranges from [*******] depending on the part type, application and customer.
What is the country of origin of the network transceivers and high speed cabling devices for purposes of U.S. government procurement and marking?
Government Procurement
Pursuant to Subpart B of Part 177, 19 CFR 177.21
Under the rule of origin set forth under 19 U.S.C. 2518(4)(B):
An article is a product of a country or instrumentality only if (i) it is wholly the growth, product, or manufacture of that country or instrumentality, or (ii) in the case of an article which consists in whole or in part of materials from another country or instrumentality, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was so transformed.
In rendering advisory rulings and final determinations for purposes of U.S. government procurement, CBP applies the provisions of subpart B of part 177 consistent with the Federal Acquisition Regulations.
. . .an article that is mined, produced, or manufactured in the United States or that is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed.
In
In
In C.S.D. 84-85, 18 Cust. B. & Dec. 1044, CBP stated:
We are of the opinion that the rationale of the court in the Data General case may be applied in the present case to support the principle that the essence of an integrated circuit memory storage device is established by programming; . . . [W]e are of the opinion that the programming (or reprogramming) of an EPROM results in a new and different article of commerce which would be considered to be a product of the country where the programming or reprogramming takes place.
Accordingly, the programming of a device that confers its identity as well as defines its use generally constitutes substantial transformation.
In this case, the hardware components of the transceivers in both scenarios are wholly manufactured in a foreign country and imported into the U.S. In Scenario 1, the transceivers are “blanks”, and in Scenario 2, the transceivers are preprogrammed with a generic program. In both scenarios, AddOn will download its proprietary software onto the transceivers which will transform them into a proprietary network device capable of performing its intended functions. You argue that in both scenarios, the imported hardware is substantially transformed by the development, configuration, and download operations of the U.S. origin software. In Scenario 1, you argue that the completely non-functional hardware is transformed into a transceiver and in Scenario 2, you argue that the hardware with generic software is substantially transformed into a fully functional network device that is capable of performing their intended functions. You also state that the expenses for the work performed in the U.S. far outweigh the work performed abroad. In support of your argument, you cite to HQ 562964, dated March 29, 2004; HQ H034843, dated May 5, 2009; and HQ H175415, dated October 4, 2011.
In HQ 562964, CBP considered certain network tape drive units and its components, including “bare bones” (basic) tape drives, imported into Country X where the components were assembled into a Small Computer System Interface (“SCSI”) tape drive rack unit. The assembly process involved approximately eight major components, simple operations, and required approximately twenty minutes. In Scenario 1, the “bare bones” tape drives were preprogrammed with the
In HQ H034843, CBP held that USB flash drives were products of Israel because, though the assembly process began in China and the software and firmware were developed in Israel, the installation and customization of the firmware and software that took place in Israel made the USB flash drives functional, permitted them to execute their security features, and increased their value. In HQ H175415, CBP held that Ethernet switches were products of the U.S. because, though the hardware components were fully assembled into Ethernet switches in China, they were programmed with U.S.-origin operating software enabling them to interact and route within the network, and to monitor, secure, and access control of the network.
However, in HQ H241177, dated December 3, 2013, Ethernet switches were assembled to completion in Malaysia and then shipped to Singapore, where U.S.-origin software was downloaded onto the switches. CBP further found that software downloading did not amount to programming, which involved writing, testing and implementing code necessary to make the computer function a certain way.
In Scenario 1, the imported transceivers are completely non-functional and AddOn's proprietary software is downloaded in the U.S., making the transceivers functional and compatible with the OEM technology. The proprietary software was developed in the U.S. at significant cost to AddOn over many years. Without the proprietary software, the transceivers could not function as a network device in any capacity. In accordance with HQ H175415, we find that the non-functional transceivers are substantially transformed as a result of downloading performed in the U.S., with proprietary software developed in the U.S. Therefore, the country of origin of the transceivers in Scenario 1 is the U.S.
In Scenario 2, the imported transceivers are preprogrammed with a generic program prior to importation, which is replaced with the proprietary software in the U.S. While the transceivers have generic network functionality, it is stated that they will not be recognized by or work on proprietary networks. As HQ 732870 and HQ 734518 point out, when programming does not actually create a new or different product, it may not constitute a substantial transformation. Given these considerations, it would appear that programming an imported, already functional, transceiver just to customize its network compatibility, would not actually change the identity of the imported transceiver.
Section 304 of the Tariff Act of 1930, as amended (19 U.S.C. 1304), provides that, unless excepted, every article of foreign origin imported into the U.S. shall be marked in a conspicuous place as legibly, indelibly, and permanently as the nature of the article (or container) will permit, in such manner as to indicate to the ultimate purchaser in the U.S. the English name of the country of origin of the article.
Part 134, CBP Regulations (19 CFR part 134), implements the country of origin marking requirements and exceptions of 19 U.S.C. 1304. Section 134.1(b), CBP Regulations (19 CFR 134.1(b)), defines the country of origin of an article as the country of manufacture, production, or growth of any article of foreign origin entering the U.S. Further work or material added to an article in another country must effect a substantial transformation in order to render such other country the country of origin for country of origin marking purposes.
Thus, the issue in determining the country of origin of the transceivers is whether the transceivers of Chinese (or other Asian country) origin are substantially transformed as a result of the operations performed in the U.S. As indicated above, in Scenario 1, we have found that the Chinese (or other Asian country) origin transceivers are substantially transformed in the U.S., but not in Scenario 2. Therefore, pursuant to 19 U.S.C. 1304, the country of origin for marking purposes of the transceivers is the U.S. in Scenario 1, and China or other Asian country in Scenario 2.
Based on the facts of this case, the country of origin of transceivers and high speed cabling devices is the U.S. in Scenario 1, and China or other Asian country in Scenario 2 for purposes of U.S. Government procurement and country of origin marking.
Notice of this final determination will be given in the
National Protection and Programs Directorate, DHS.
60-day notice and request for comments; Renewal Information Collection Request: 1670-0019.
The Department of Homeland Security (DHS), National Protection and Programs Directorate (NPPD), Office of Infrastructure Protection (IP), Sector Outreach and Programs Division (SOPD), will submit the following Information Collection Request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995 (Pub. L. 104-13, 44 U.S.C. chapter 35).
Comments are encouraged and will be accepted until August 1, 2016. This process is conducted in accordance with 5 CFR 1320.1.
Written comments and questions about this Information Collection Request should be forwarded to DHS/NPPD/IP/SOPD, 245 Murray Lane SW., Mail Stop 0608, Arlington, VA 20598-0640. Emailed requests should go to Michael Bowen,
•
On behalf of DHS, NPPD/IP manages the Department's program to protect the Nation's 16 critical infrastructure sectors by implementing the National Infrastructure Protection Plan (NIPP) 2013, Partnering for Critical Infrastructure Security and Resilience. Under Presidential Policy Directive 21 on
The mission of SOPD is to enhance the resiliency of the Nation by leading the unified public-private sector effort to ensure its assigned critical infrastructure is prepared, secure, and safe from terrorist attacks, natural disasters, and other incidents. To achieve this mission, SOPD leverages the resources and knowledge of its critical infrastructure sectors to develop and apply security initiatives that result in significant benefits to the Nation.
Each SOPD branch builds sustainable partnerships with its public and private sector stakeholders to enable more effective sector coordination, information sharing, and program development and implementation. These partnerships are sustained through the Sector Partnership Model, described in the NIPP 2013, pages 10-12.
Information sharing is a key component of the NIPP Partnership Model, and DHS-sponsored conferences are one mechanism for information sharing. To facilitate conference planning and organization, SOPD established an event registration tool for use by all of its branches. The information collection is voluntary and is used by the SSAs within the SOPD. The six SSAs within SOPD use this information to register public and private sector stakeholders for meetings hosted by the SSA. The Sector Outreach and Programs Division will use the information collected to reserve space at a meeting for the registrant, contact the registrant with a reminder about the event, develop meeting materials for attendees, determine key topics of interest, and efficiently generate attendee and speaker nametags. Additionally, it will allow SOPD to have a better understanding of the organizations participating in the critical infrastructure protection partnership events. By understanding who is participating, the SSA can identify portions of a sector that are underrepresented, and the SSA could then target that underrepresented sector element through outreach and awareness initiatives.
OMB is particularly interested in comments that:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; and
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Science and Technology Directorate, DHS.
Committee management; notice of federal advisory committee meeting.
The Homeland Security Science and Technology Advisory Committee (HSSTAC) will meet on June 21-22, 2016 in Washington, DC. The meeting will be an open session with both in-person and webinar participation.
The HSSTAC will meet in-person Tuesday, June 21, 2016, from 9:00 a.m.-4:25 p.m. and Wednesday, June 22, 2016, from 9:00 a.m.-3:00 p.m.
Due to security requirements, screening pre-registration is required for this event. Please see the “REGISTRATION” section below.
The meeting may close early if the committee has completed its business.
Schafer Government Services, Homeland Security, 1125 15th St. NW., Suite 500, Washington, DC 20005.
Bishop Garrison, HSSTAC Executive Director, S&T IAO STOP 0205, Department of Homeland Security, 245 Murray Lane, Washington, DC 20528-0205, 202-254-5617(Office), 202-254-6176 (Fax)
Notice of this meeting is given under the Federal Advisory Committee Act (FACA), 5 U.S.C. appendix (Pub. L. 92-463). The committee addresses areas of interest and importance to the Under Secretary for Science and Technology (S&T), such as new developments in systems engineering, cyber-security, knowledge management and how best to leverage related technologies funded by other Federal agencies and by the private sector. It also advises the Under Secretary on policies, management processes, and organizational constructs as needed.
To pre-register for the virtual meeting (webinar) please send an email to:
If you plan to attend the meeting in-person you must RSVP by June 17, 2016. To register, email
At the end of each open session, there will be a period for oral statements. Please note that the oral statement period may end before the time indicated, following the last call for oral statements. To register as a speaker, contact the person listed in the
To facilitate public participation, we invite public comment on the issues to be considered by the committee as listed in the “Agenda” below. Written comments must be received by June 6, 2016. Please include the docket number (DHS-2016-0028) and submit via
• Federal eRulemaking Portal:
• Email:
• Fax: 202-254-6176.
• Mail: Bishop Garrison, HSSTAC Executive Director, S&T IAO STOP 0205, Department of Homeland Security, 245 Murray Lane, Washington, DC 20528-0205.
Office of the Chief Information Officer, HUD.
Notice.
HUD has submitted the proposed information collection requirement described below to the Office of Management and Budget (OMB) for review, in accordance with the Paperwork Reduction Act. The purpose of this notice is to allow for an additional 30 days of public comment.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: HUD Desk Officer, Office of Management and Budget, New Executive Office Building, Washington, DC 20503; fax: 202-395-5806. Email:
Paul Giaudrone, Underwriting Director, Office of Hospital Facilities, Office of Healthcare Programs, Office of Housing, Department of Housing and Urban Development, 451 7th Street, SW., Room 2247, Washington, DC 20410-0500; email:
The documents that are the subject of this notice can be viewed on HUD's Web site:
Copies of available documents submitted to OMB may be obtained from Ms. Pollard.
This notice informs the public that HUD is seeking approval from OMB for the information collection described in Section A.
The
This notice is soliciting comments from members of the public and affected parties concerning the collection of information described in Section A on the following:
(1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
(2) The accuracy of the agency's estimate of the burden of the proposed collection of information;
(3) Ways to enhance the quality, utility, and clarity of the information to be collected; and
(4) Ways to minimize the burden of the collection of information on those who are to respond; including through the use of appropriate automated collection techniques or other forms of information technology,
HUD encourages interested parties to submit comment in response to these questions.
Section 3507 of the Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35.
Bureau of Indian Affairs, Interior.
Notice of request for comments.
In compliance with the Paperwork Reduction Act of 1995, the Bureau of Indian Affairs (BIA has submitted to the Office of Management and Budget (OMB) a request for renewal of the collection of information for the collection of information for Appointed Counsel in Involuntary Indian Child Custody Proceedings in State Courts authorized by OMB Control Number 1076-0111. This information collection expires June 30, 2016.
Interested persons are invited to submit comments on or before June 30, 2016.
Please submit your comments to the Desk Officer for the Department of the Interior at the Office of Management and Budget, by facsimile to (202) 395-5806 or you may send an email to:
Ms. Evangeline Campbell, (202) 513-7621, or Ms. Debra Burton, (202) 513-7610. You may review the information collection request online at
The BIA is seeking renewal of the approval for the information collection conducted under 25 CFR 23.13, implementing the Indian Child Welfare Act (25 U.S.C. 1901
The BIA requests your comments on this collection concerning: (a) The necessity of this information collection for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) The accuracy of the agency's estimate of the burden (hours and cost) of the collection of information, including the validity of the methodology and assumptions used; (c) Ways we could enhance the quality, utility, and clarity of the information to be collected; and (d) Ways we could minimize the burden of the collection of the information on the respondents.
Please note that an agency may not conduct or sponsor, and an individual need not respond to, a collection of information unless it has a valid OMB Control Number.
It is our policy to make all comments available to the public for review at the location listed in the
Bureau of Ocean Energy Management (BOEM), and Bureau of Safety and Environmental Enforcement (BSEE), Interior.
Notice of availability.
BOEM and BSEE are announcing the availability of a Programmatic Environmental Assessment (PEA) and Finding of No Significant Impact (FONSI) for well stimulation treatments (WSTs) on the Pacific Outer Continental Shelf (OCS). This Notice of Availability (NOA) is published pursuant to implement the provisions of the National Environmental Policy Act (NEPA) of 1969, as amended. The PEA evaluates potential environmental effects of WSTs on the Pacific OCS. These activities include: fracturing WSTs (diagnostic fracture injection tests; hydraulic fracturing (
Mr. Rick Yarde, Regional Supervisor, Office of the Environment, Pacific Region BOEM, (805) 384-6379 or Mr. David Fish, Acting Chief Environmental Compliance Division BSEE, (202) 208-3599.
In February 2016, BOEM and BSEE released for public review and comment a draft PEA to evaluate potential environmental effects of WSTs on the Pacific OCS. A notice of availability was published on February 22, 2016, to announce the availability of the draft PEA and initiate a 30-day comment period. A comment and response appendix has been added to the final PEA, and where appropriate the analysis in the final PEA was clarified or revised based on comments received during the comment period.
To obtain a copy of the PEA and FONSI:
1. You may download or view the documents on the following Web site:
2. You may obtain a hard copy of the documents by contacting either Mr. Rick Yarde or Mr. David Fish.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined to affirm the administrative law judge's (ALJ) initial determination (ID) (Order No. 52) granting a joint motion to terminate the above-referenced investigation on the basis of a settlement agreement.
Ron Traud, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, (202) 205-3427. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, (202) 205-2000. General information concerning the Commission may also be obtained by accessing its Internet server at
On April 3, 2015, the Commission instituted this investigation (the 952 investigation) based on a complaint filed by Ericsson Inc. of Plano, Texas and Telefonaktiebolaget LM Ericsson of Sweden (collectively, “Ericsson”). 80 FR 18254 (Apr. 3, 2015). The complaint alleged violations of 19 U.S.C. 1337 (Section 337) based upon the importation into the United States, the sale for importation, and the sale within the United States after importation of certain electronic devices, including wireless communication devices, computers, tablet computers, digital media players, and cameras by reason of infringement of certain claims of U.S. Patent Nos. 6,633,550; 6,157,620; 6,029,052; 8,812,059; 6,291,966; and 6,122,263.
On December 29, 2015, Ericsson and Apple (collectively, the private parties) filed a joint motion to terminate the investigation pursuant to Commission Rule 210.21(b) on the basis of a settlement.
On February 3, 2016, the ALJ presiding in the 953 investigation (Judge Lord) denied the motion to terminate that investigation, reasoning that the public version of the Agreement was over-redacted.
On March 9, 2016, Judge Shaw issued the Subject ID, which grants the Joint Motion. Subject ID, at 3. The Subject ID concludes that termination of the 952 investigation based on the private parties' settlement is in the public interest.
On May 4, 2016, the Commission granted Ericsson's interlocutory appeal in the 953 investigation, reversed the ALJ on all five of the appealed confidentiality determinations, and remanded to the ALJ. Order Granting Appeal for Interlocutory Review of Order No. 45, Upon Review, Reversing, and Remanding to the Administrative Law Judge, at 3 (May 4, 2016).
On May 9, 2016, Ericsson filed with the Commission for purposes of the 952 investigation the Final Public Version. Letter to Secretary Lisa R. Barton enclosing Proposed Public Version of Parties' Global Patent License Agreement for Consideration in the Pending Initial Determination Terminating the Investigation Based on a Settlement Agreement (May 9, 2016).
The Commission hereby affirms the Subject ID, which grants the private parties' motion to terminate the investigation.
The authority for the Commission's determination is contained in Section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in Part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
Drug Enforcement Administration, DOJ.
Notice of application.
Registered bulk manufacturers of the affected basic classes, and applicants therefore, may file written comments on or objections to the issuance of the proposed registration in accordance with 21 CFR 1301.33(a) on or before August 1, 2016.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA
The Attorney General has delegated her authority under the Controlled Substances Act to the Administrator of the Drug Enforcement Administration (DEA), 28 CFR 0.100(b). Authority to exercise all necessary functions with respect to the promulgation and implementation of 21 CFR part 1301, incident to the registration of manufacturers, distributors, dispensers, importers, and exporters of controlled substances (other than final orders in connection with suspension, denial, or revocation of registration) has been redelegated to the Deputy Assistant Administrator of the DEA Office of Diversion Control (“Deputy Assistant Administrator”) pursuant to section 7 of 28 CFR part 0, appendix to subpart R.
In accordance with 21 CFR 1301.33(a), this is notice that on March 26, 2016, Rhodes Technologies, 498 Washington Street, Coventry, Rhode Island 02816 applied to be registered as a bulk manufacturer the following basic classes of controlled substances:
The company plans to manufacture the listed controlled substances in bulk for conversion and sale to dosage form manufacturers.
In reference to drug code 7370 the company plans to bulk manufacture a synthetic tetrahydrocannabinol. No other activity for this drug code is authorized for this registration.
Drug Enforcement Administration, DOJ.
Notice of application.
Registered bulk manufacturers of the affected basic classes, and applicants therefore, may file written comments on or objections to the issuance of the proposed registration in accordance with 21 CFR 1301.34(a) on or before June 30, 2016. Such persons may also file a written request for a hearing on the application pursuant to 21 CFR 1301.43 on or before June 30, 2016.
Written comments should be sent to: Drug Enforcement Administration, Attention: DEA Federal Register Representative/ODW, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for hearing must be sent to: Drug Enforcement Administration, Attn: Administrator, 8701 Morrissette Drive, Springfield, Virginia 22152. All requests for hearing should also be sent to: (1) Drug Enforcement Administration, Attn: Hearing Clerk/LJ, 8701 Morrissette Drive, Springfield, Virginia 22152; and (2) Drug Enforcement Administration, Attn: DEA
The Attorney General has delegated her authority under the Controlled Substances Act to the Administrator of the Drug Enforcement Administration (DEA), 28 CFR 0.100(b). Authority to exercise all necessary functions with respect to the promulgation and implementation of 21 CFR part 1301, incident to the registration of manufacturers, distributors, dispensers, importers, and exporters of controlled substances (other than final orders in connection with suspension, denial, or revocation of registration) has been redelegated to the Deputy Assistant Administrator of the DEA Office of Diversion Control (“Deputy Assistant Administrator”) pursuant to section 7 of 28 CFR part 0, appendix to subpart R.
In accordance with 21 CFR 1301.34(a), this is notice that on February 19, 2016, Wildlife Laboratories, Inc., 1230 W. Ash Street, Suite D, Windsor, Colorado 80550-8055 applied to be registered as an importer of the following basic classes of controlled substances:
The company plans to import the listed controlled substances for sale to its customer.
Notice.
The Department of Labor (DOL) is submitting the Employment and Training Administration (ETA) sponsored information collection request (ICR) titled, “Trade Adjustment Assistance Program Reserve Funding Request,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 30, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 725 17th Street NW.,
Contact Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Trade Adjustment Assistance Program Reserve Funding Request information collection. The DOL requires financial data for the Trade Adjustment Assistance (TAA) and North America Free Trade Agreement-TAA programs administered by States. The required data are necessary in order to meet statutory requirements prescribed in the Trade Act of 1974, as amended by the Trade Adjustment Assistance Act of 2002, the American Recovery and Reinvestment Act of 2009 (Division B, Title I, Subtitle I), the Omnibus Trade and Competitiveness Act of 1988, and the North American Free Trade Act. Using Form ETA-9117, a State may request reserve funds before the final distribution to cover training costs, job search allowances, relocation allowances, employment and case management services, and State administration of these benefits. Trade Act of 1974, as amended section 236(a)(2) authorizes this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on May 31, 2016. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Notice.
The Department of Labor (DOL) is submitting the Employee Benefits Security Administration (EBSA) sponsored information collection request (ICR) titled, “Employee Retirement Income Security Act of 1974 Investment Manager Electronic Registration,” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 30, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-EBSA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064,
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Employee Retirement Income Security Act of 1974 (ERISA) Investment Manager Electronic Registration information collection. Regulations 29 CFR 2510.3-38 provides that, in order to meet the definition of investment manager under ERISA section 3(38), a State-registered investment adviser must register electronically through a centralized electronic filing system established by the Securities and Exchange Commission or a State investment authority called the Investment Adviser Registration Depository. ERISA section 3(38) authorizes this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on May 31, 2016. The DOL seeks to extend PRA authorization for this information collection for three (3) more years, without any change to existing requirements. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Office of the Secretary, Labor.
Notice.
The Department of Labor (DOL) is submitting the Employment and Training Administration (ETA) sponsored information collection request (ICR) titled, “Standard Job Corps Contractor Information Gathering,” to the Office of Management and Budget (OMB) for review and approval for use, without change, in accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 30, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or sending an email to
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Standard Job Corps Contractor Information Gathering information collection. The ICR covers standard operating and/or reporting forms a Job Corps Center uses. Workforce Innovation and Opportunity Act sections 145, 151, and 159 authorize this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Notice.
The Department of Labor (DOL) is submitting the Employment and Training Administration (ETA) sponsored information collection request (ICR) titled, “Workforce Investment Act Management Information and Reporting System” to the Office of Management and Budget (OMB) for review and approval for continued use, without change, in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 30, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks to extend PRA authority for the Workforce Investment Act Management Information and Reporting System information collection. This reporting structure includes quarterly (ETA 9090) and annual (ETA 9091) reports, as well as a standardized individual record file for program participants, called the Workforce Investment Act Standardized Record Data (WIASRD). A State submits WIASRD to the ETA and includes participant level information on customer demographics, type of services received, and statutorily defined measures of outcomes. This ICR also covers customer satisfaction surveys related to the program. Workforce Innovation and Opportunity Act (WIOA) section 116 authorizes this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
OMB authorization for an ICR cannot be for more than three (3) years without renewal, and the current approval for this collection is scheduled to expire on May 31, 2016. The DOL seeks to extend PRA authorization for this information collection while the Department completes promulgating final WIOA implementing regulations. The DOL notes that existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. For additional substantive information about this ICR, see the related notice published in the
Interested parties are encouraged to send comments to the OMB, Office of
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
Notice.
The Department of Labor (DOL) is submitting the Employment and Training Administration sponsored information collection request (ICR) revision titled, “Reporting and Performance Standards System for Migrant and Seasonal Farmworker Programs,” to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 30, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the RegInfo.gov Web site at
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-ETA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or by email at
44 U.S.C. 3507(a)(1)(D).
This ICR seeks approval under the PRA for revisions to the Reporting and Performance Standards System for Migrant and Seasonal Farmworker Programs information collection relating to the operation of employment and training programs for migrant and seasonal farmworkers. The ICR also contains the basis of the performance standards system for National Farmworker Jobs Program grantees. The ETA uses the information obtained for program oversight, evaluation, and performance assessment. This ICR is considered a revision because the ETA proposes to discontinue use of Form ETA-9093, Budget Information Summary. Workforce Innovation and Opportunity Act section 116 authorizes this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated,
Notice.
The Department of Labor (DOL) is submitting the Occupational Safety and Health Administration (OSHA) sponsored information collection request (ICR) revision titled, “Process Safety Management Standard of Highly Hazardous Chemicals,” to the Office of Management and Budget (OMB) for review and approval for use in accordance with the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501
The OMB will consider all written comments that agency receives on or before June 30, 2016.
A copy of this ICR with applicable supporting documentation; including a description of the likely respondents, proposed frequency of response, and estimated total burden may be obtained free of charge from the
Submit comments about this request by mail or courier to the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for DOL-OSHA, Office of Management and Budget, Room 10235, 725 17th Street NW., Washington, DC 20503; by Fax: 202-395-5806 (this is not a toll-free number); or by email:
Contact Michel Smyth by telephone at 202-693-4129, TTY 202-693-8064, (these are not toll-free numbers) or sending an email to
44 U.S.C. 3507(a)(1)(D).
This ICR seeks approval under the PRA for revisions to the Process Safety Management Standard of Highly Hazardous Chemicals (PSM Standard) information collection requirements codified in regulations 29 CFR 1910.119. The major information collection requirements in the PSM Standard include: Consulting with workers and their representatives on and providing them access to process hazard analyses and the development of other elements of the standard; developing a written action plan for implementing employee participation in process hazard analyses and other elements of the standard; completing a compilation of written process safety information; performing a process hazard analysis; documenting actions taken to resolve process hazard analysis team findings and recommendations; updating, revalidating and retaining the process hazard analysis; developing and implementing written operating procedures that are accessible to workers; reviewing operating procedures as often as necessary and certifying the procedures annually; developing and implementing safe work practices; preparing training records; informing contract employers of known hazards and pertinent provisions of the emergency action plan; maintaining a contract worker injury and illness log; establishing written procedures to maintain the integrity of and document inspections and tests of process equipment; providing information on permits issued for hot work operations; establishing and implementing written procedures to manage process changes; preparing reports at the conclusion of incident investigations, documenting resolutions and corrective measures, and reviewing the reports with affected personnel; establishing and implementing an emergency action plan; developing a compliance audit report and certifying compliance; and disclosing information necessary to comply with the Standard to persons responsible for compiling process safety information.
This information collection has been classified as a revision because of including additional retail exemption establishments and a change to an OSHA enforcement policy on the minimum concentration of a chemical in a process needed in order to count that chemical toward the threshold quantity levels that trigger coverage under the PSM Standard. Occupational Safety and Health Act sections 2(b)(9) and 8(c) authorize this information collection.
This information collection is subject to the PRA. A Federal agency generally cannot conduct or sponsor a collection of information, and the public is generally not required to respond to an information collection, unless it is approved by the OMB under the PRA and displays a currently valid OMB Control Number. In addition, notwithstanding any other provisions of law, no person shall generally be subject to penalty for failing to comply with a collection of information that does not display a valid Control Number.
Interested parties are encouraged to send comments to the OMB, Office of Information and Regulatory Affairs at the address shown in the
• Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
• Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Enhance the quality, utility, and clarity of the information to be collected; and
• Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
National Aeronautics and Space Administration.
Notice of intent to grant exclusive license.
This notice is issued in accordance with 35 U.S.C. 209(e) and 37 CFR 404.7(a)(1)(i). NASA hereby gives notice of its intent to grant an exclusive license in the United States to practice the inventions described and claimed in USSN 14/200,122, RFID Torque-Sensing Tag System for Fasteners, MSC-25626-1, to Academic Tech Ventures Inc., having its principal place of business in Trinity, FL. The patent rights in these inventions have been assigned to the United States of America as represented by the Administrator of the National Aeronautics and Space Administration. The prospective exclusive license will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7.
The prospective exclusive license may be granted unless within fifteen (15) days from the date of this published notice, NASA receives written objections including evidence and argument that establish that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7. Competing applications completed and received by NASA within fifteen (15) days of the date of this published notice will also be treated as objections to the grant of the contemplated exclusive license.
Objections submitted in response to this notice will not be made available to the public for inspection and, to the extent permitted by law, will not be released under the Freedom of Information Act, 5 U.S.C. 552.
Objections relating to the prospective license may be submitted to Patent Counsel, Office of Chief Counsel, NASA Johnson Space Center, 2101 NASA Parkway, Mail Code AL; Houston, Texas 77058, Phone (281) 483-3021; Fax (281) 483-6936
Ms. Michelle P. Lewis, Technology Transfer and Commercialization Office, NASA Johnson Space Center, 2101 NASA Parkway, Mail Code XP1, Houston, TX 77058, (281) 483-8051. Information about other NASA inventions available for licensing can be found online at
National Endowment for the Arts, National Foundation on the Arts and Humanities.
Notice of meeting.
Pursuant to section 10(a)(2) of the Federal Advisory Committee Act (Public Law 92-463), as amended, notice is hereby given that a meeting of the National Council on the Arts will be held in Conference Rooms A & B at Constitution Center, 400 7th St., SW., Washington, DC 20506. Agenda times are approximate.
Friday, June 24, 2016 from 9 a.m. to 11:15 a.m.
Office of Public Affairs, National Endowment for the Arts, Washington, DC 20506, at 202/682-5570.
The meeting, on March 24th in Conference Rooms A & B, from 9:30 a.m. to 11:15 a.m., will be open to the public on a space available basis. The tentative agenda is as follows: The meeting will begin at 9 a.m. with opening remarks and voting on recommendations for funding and rejection and guidelines, followed by updates from the Chairman. There also will be the following presentations (times are approximate): from 9:30 a.m. to 10 a.m.—
The meeting also will be webcast. To register to watch the webcasting of this open session, go to:
If, in the course of the open session discussion, it becomes necessary for the Council to discuss non-public commercial or financial information of intrinsic value, the Council will go into closed session pursuant to subsection (c)(4) of the Government in the Sunshine Act, 5 U.S.C. 552b, and in accordance with the February 15, 2012 determination of the Chairman. Additionally, discussion concerning purely personal information about individuals, such as personal biographical and salary data or medical information, may be conducted by the Council in closed session in accordance with subsection (c)(6) of 5 U.S.C. 552b.
Any interested persons may attend, as observers, Council discussions and reviews that are open to the public. If
1:00 p.m., Monday, June 6, 2016.
NeighborWorks America—Gramlich Boardroom, 999 North Capitol Street NE., Washington, DC 20002.
Open (with the exception of Executive Session).
Jeffrey Bryson, EVP & General Counsel/Secretary, (202) 760-4101;
The General Counsel of the Corporation has certified that in his opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(2), (4) and (6) permit closure of the following portions of this meeting:
The 635th Advisory Committee on Reactor Safeguards Meeting scheduled for June 8-10, 2016, has been cancelled.
The notice of this meeting was previously published in the
Information regarding this meeting can be obtained by contacting Quynh Nguyen, Designated Federal Official (DFO) (Telephone 301-415-5844 or Email:
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
License renewal application; opportunity to request a hearing and to petition for leave to intervene.
The U.S. Nuclear Regulatory Commission (NRC) is considering an application for the renewal of operating license NPF-38, which authorizes Entergy Operations, Inc. (the applicant), to operate Waterford Steam Electric Station, Unit 3 (Waterford 3). The renewed license would authorize the applicant to operate Waterford 3 for an additional 20 years beyond the period specified in the current license. The current operating license for Waterford 3 expires at midnight on December 18, 2024.
A request for a hearing or petition for leave to intervene must be filed by August 1, 2016.
Please refer to Docket ID NRC-2016-0078 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
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NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.
Phyllis Clark, Office of Nuclear Reactor Regulation, U.S. Nuclear Regulatory Commission, Washington DC 20555-0001; telephone: 301-415-6447, email:
The NRC received a license renewal application (LRA) from Entergy Operations, Inc., dated March 23, 2016, requesting renewal of operating license NPF-38, which authorizes Entergy Operations, Inc., to operate Waterford 3 at 3716 megawatts thermal. Waterford 3 is located in Killona, Louisiana. Entergy Operations, Inc. submitted the application, pursuant to part 54 of title 10 of the
The NRC's staff has determined that Entergy Operations, Inc. has submitted sufficient information in accordance with 10 CFR 54.19, 54.21, 54.22, 54.23, 51.45, and 51.53(c), to enable the staff to undertake a review of the application, and that the application is, therefore, acceptable for docketing. The current docket number, 50-382, for operating license number NPF-382, will be retained. The determination to accept the LRA for docketing does not
Before issuance of the requested renewed license, the NRC will have made the findings required by the Atomic Energy Act of 1954, as amended (the Act), and the Commission's rules and regulations. In accordance with 10 CFR 54.29, the NRC may issue a renewed license on the basis of its review if it finds that actions have been identified and have been or will be taken with respect to: 1) Managing the effects of aging during the period of extended operation on the functionality of structures and components that have been identified as requiring aging management review; and 2) time-limited aging analyses that have been identified as requiring review, such that there is reasonable assurance that the activities authorized by the renewed license will continue to be conducted in accordance with the current licensing basis (CLB) and that any changes made to the plant's CLB will comply with the Act and the Commission's regulations.
Additionally, in accordance with 10 CFR 51.95(c), the NRC will prepare an environmental impact statement as a supplement to the Commission's NUREG-1437, “Generic Environmental Impact Statement for License Renewal of Nuclear Power Plants,” dated June 2013. In considering the LRA, the Commission must find that the applicable requirements of subpart A of 10 CFR part 51 have been satisfied, and that matters raised under 10 CFR 2.335 have been addressed. Pursuant to 10 CFR 51.26, and as part of the environmental scoping process, the staff intends to hold public scoping meetings. Detailed information regarding the environmental scoping meetings will be the subject of a separate
Within 60 days after the date of publication of this
If a request for a hearing/petition for leave to intervene is filed within the 60-day period, the Commission or a presiding officer designated by the Commission or by the Chief Administrative Judge of the Atomic Safety and Licensing Board Panel will rule on the request and/or petition; and the Secretary of the Commission (Secretary) or the Chief Administrative Judge of the Atomic Safety and Licensing Board Panel will issue a notice of a hearing or an appropriate order. In the event that no request for a hearing or petition for leave to intervene is filed within the 60-day period, the NRC may, upon completion of its evaluations and upon making the findings required under 10 CFR parts 51 and 54, renew the license without further notice.
As required by 10 CFR 2.309, a petition for leave to intervene shall set forth with particularity the interest of the petitioner in the proceeding, and how that interest may be affected by the results of the proceeding, taking into consideration the limited scope of matters that may be considered pursuant to 10 CFR parts 51 and 54. Pursuant to 10 CFR 2.309(d), the petition must provide the name, address, and telephone number of the petitioner; and specifically explain the reasons why intervention should be permitted with particular reference to the following factors for the Waterford 3 site: 1) The nature of the requestor's/petitioner's right under the Act to be made a party to the proceeding; 2) the nature and extent of the requestor's/petitioner's property, financial, or other interest in the proceeding; and 3) the possible effect of any decision or order which may be entered in the proceeding on the requestor's/petitioner's interest. The petition must also set forth the specific contentions which the petitioner/requestor seeks to have litigated at the proceeding.
In accordance with 10 CFR 2.309(f), each contention must consist of a specific statement of the issue of law or fact to be raised or controverted. In addition, the requestor/petitioner shall provide a brief explanation of the basis for each contention and a concise statement of the alleged facts or the expert opinion that supports the contention on which the requestor/petitioner intends to rely in proving the contention at the hearing. The requestor/petitioner must also provide references to those specific sources and documents of which the requestor/petitioner is aware and on which the requestor/petitioner intends to rely to establish those facts or expert opinion. The requestor/petitioner must provide sufficient information to show that a genuine dispute exists with the applicant on a material issue of law or fact. Contentions shall be limited to matters within the scope of the action under consideration. The contention must be one that, if proven, would entitle the requestor/petitioner to relief. A requestor/petitioner who fails to satisfy these requirements with respect to at least one contention will not be permitted to participate as a party.
The petition should be submitted to the Commission by August 1, 2016. Petitions filed after the deadline, amended petitions, and supplemental petitions will not be entertained absent a determination by the Commission, the Atomic Safety and Licensing Board Panel or a Presiding Officer that the filing demonstrates good cause by satisfying the three factors in 10 CFR 2.309(c)(1)(i)-(iii).
A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof, may submit a petition to the Commission to participate as a party under 10 CFR 2.309(h)(1). The petition should state the nature and extent of the petitioner's interest in the proceeding. The petition should be submitted to the Commission by August 1, 2016. The petition must be filed in accordance with the filing instructions in the “Electronic Submission (E-Filing)” section of this document, and should meet the requirements for petitions for leave to intervene set forth in this section, except that under 10 CFR 2.309(h)(2) a State, local governmental body, or Federally-recognized Indian Tribe, or agency thereof does not need to address the standing requirements in 10 CFR 2.309(d) if the facility is located within its boundaries. A State, local governmental body, Federally-recognized Indian Tribe, or agency thereof may also have the opportunity to participate under 10 CFR 2.315(c).
If a hearing is granted, any person who does not wish, or is not qualified, to become a party to the proceeding may, in the discretion of the presiding officer, be permitted to make a limited appearance pursuant to the provisions of 10 CFR 2.315(a). A person making a limited appearance may make an oral or
The Commission requests that each contention be given a separate numeric or alpha designation within one of the following groups: (1) Ktechnical (primarily related to safety concerns); (2) environmental; or (3) miscellaneous.
As specified in 10 CFR 2.309, if two or more requestors/petitioners seek to co-sponsor a contention or propose substantially the same contention, the requestors/petitioners will be required to jointly designate a representative who shall have the authority to act for the requestors/petitioners with respect to that contention.
All documents filed in NRC adjudicatory proceedings, including a request for hearing, a petition for leave to intervene, any motion or other document filed in the proceeding prior to the submission of a request for hearing or petition to intervene, and documents filed by interested governmental entities participating under 10 CFR 2.315(c), must be filed in accordance with the NRC's E-Filing rule (72 FR 49139; August 28, 2007). The E-Filing process requires participants to submit and serve all adjudicatory documents over the internet, or in some cases to mail copies on electronic storage media. Participants may not submit paper copies of their filings unless they seek an exemption in accordance with the procedures described below.
To comply with the procedural requirements of E-Filing, at least 10 days prior to the filing deadline, the participant should contact the Office of the Secretary by email at
Information about applying for a digital ID certificate is available on the NRC's public Web site at
If a participant is electronically submitting a document to the NRC in accordance with the E-Filing rule, the participant must file the document using the NRC's online, Web-based submission form. In order to serve documents through the Electronic Information Exchange System, users will be required to install a Web browser plug-in from the NRC's Web site. Further information on the Web-based submission form, including the installation of the Web browser plug-in, is available on the NRC's public Web site at
Once a participant has obtained a digital ID certificate and a docket has been created, the participant can then submit a request for hearing or petition for leave to intervene. Submissions should be in Portable Document Format (PDF) in accordance with NRC guidance available on the NRC's public Web site at
A person filing electronically using the NRC's adjudicatory E-Filing system may seek assistance by contacting the NRC Meta System Help Desk through the “Contact Us” link located on the NRC's public Web site at
Participants who believe that they have a good cause for not submitting documents electronically must file an exemption request, in accordance with 10 CFR 2.302(g), with their initial paper filing requesting authorization to continue to submit documents in paper format. Such filings must be submitted by: (1) First class mail addressed to the Office of the Secretary of the Commission, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001, Attention: Rulemaking and Adjudications Staff; or (2) courier, express mail, or expedited delivery service to the Office of the Secretary, Sixteenth Floor, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852, Attention: Rulemaking and Adjudications Staff. Participants filing a document in this manner are responsible for serving the document on all other participants. Filing is considered complete by first-class mail as of the time of deposit in the mail, or by courier, express mail, or expedited delivery service upon depositing the document with the provider of the service. A presiding officer, having granted an exemption request from using E-Filing, may require a participant or party to use E-Filing if the presiding officer subsequently determines that the reason for granting the exemption from use of E-Filing no longer exists.
Documents submitted in adjudicatory proceedings will appear in the NRC's electronic hearing docket which is available to the public at
Detailed information about the license renewal process can be found under the Nuclear Reactors icon at
The NRC staff has verified that a copy of the license renewal application is also available to local residents near the site at the St. Charles Parish Library—East Regional Library, 160 W. Campus Drive, Destrehan, Louisiana 70047.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Draft environmental assessment and finding of no significant impact; request for comment.
The U.S. Nuclear Regulatory Commission (NRC) is issuing for public comment a draft environmental assessment and finding of no significant impact regarding the request for temporary exemption from specific requirements of acceptance criteria for emergency core cooling systems and evaluation models for Facility Operating License Nos. DPR-32 and DPR-37, issued to Virginia Electric and Power Company (the licensee) for the Surry Power Station, Unit Nos. 1 and 2 (Surry).
Submit comments by June 30, 2016. Comments received after this date will be considered if it is practical to do so, but the Commission is able to ensure consideration only for comments received before this date.
You may submit comments by any of the following methods (unless this document describes a different method for submitting comments on a specific subject):
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For additional direction on obtaining information and submitting comments, see “Obtaining Information and Submitting Comments” in the
Karen Cotton, telephone: 301-415-1438; email:
Please refer to Docket ID NRC-2016-0105 when contacting the NRC about the availability of information for this action. You may obtain publicly-available information related to this action by any of the following methods:
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• NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland.
Please include Docket ID NRC-2016-0105 in your comment submission.
The NRC cautions you not to include identifying or contact information that you do not want to be publicly disclosed in your comment submission. The NRC posts all comment submissions at
If you are requesting or aggregating comments from other persons for submission to the NRC, then you should inform those persons not to include identifying or contact information that they do not want to be publicly disclosed in their comment submission. Your request should state that the NRC does not routinely edit comment submissions to remove such information before making the comment submissions available to the public or entering the comment submissions into ADAMS.
The NRC is considering issuance of an exemption from § 50.46 of title 10 of the
The proposed action would exempt the licensee from certain requirements contained in 10 CFR 50.46 and appendix K to 10 CFR part 50 to allow the use of up to eight AREVA AGORA® lead test assemblies (LTAs) containing fuel rods fabricated with M5® cladding material at Surry. The proposed action is in accordance with the licensee's application dated September 30, 2015 (ADAMS Accession No. ML15282A036).
The proposed temporary exemption to 10 CFR 50.46 and appendix K to 10 CFR part 50 is needed to allow Surry to use up to eight LTAs containing fuel rods fabricated with M5® advanced zirconium cladding. The requested exemption is required since Surry's technical specifications do not currently include the use of M5® advanced zirconium cladding material for use in its reactors.
The regulations in 10 CFR 50.46(a)(1)(i) and appendix K to 10 CFR part 50 require the demonstration of adequate ECCS performance for light-water reactors that contain fuel consisting of uranium oxide pellets enclosed in Zircaloy or ZIRLO tubes. In addition, 10 CFR 50.44(a) addresses requirements to control hydrogen generated by Zircaloy or ZIRLO fuel after a postulated loss-of-coolant accident. Each of these three regulations, either implicitly or explicitly, assume that either Zircaloy or ZIRLO is used as the fuel rod cladding material.
The proposed temporary exemption is needed by Surry to allow the use of M5 alloy clad LTAs to evaluate cladding material for use in up to eight fuel assemblies and to provide a more robust design to eliminate grid to rod fretting fuel failures. The regulations specify standards and acceptance criteria only for fuel rods clad with Zircaloy or ZIRLO. Consistent with 10 CFR 50.46, a temporary exemption is required to use fuel rods clad with an advanced alloy that is not Zircaloy or ZIRLO. Therefore, the licensee needs a temporary exemption to insert up to eight LTAs containing new cladding material into the Surry, Unit Nos. 1 and 2, reactor cores.
The NRC has completed its evaluation of the proposed action and concludes that the proposed action will not present any undue risk to public health and safety. The details of the NRC staff's safety evaluation will be provided in the exemption that, if approved by the NRC, will be issued as part of the letter to the licensee approving the exemption to the regulation.
The proposed action does not exempt the licensee from complying with the acceptance and analytical criteria of 10 CFR 50.46 and appendix K to 10 CFR part 50 applicable to the M5 alloy cladding. The exemption solely allows the criteria set forth in these regulations to apply to the M5 cladding material, which is similar in design and function to the Zircaloy and ZIRLO cladding material required by NRC regulations. Consequently, no changes are being made in the types of effluents that may be released offsite and there is no significant increase in the amount of any effluent released offsite, nor a significant increase in occupational or public radiation exposure because this exemption will not change the criteria set forth in the present regulations, since the M5-clad fuel has been shown by the licensee to be capable of meeting this criteria. Therefore, there are no significant radiological environmental impacts associated with the proposed action.
With regard to potential non-radiological impacts, the proposed action does not have any foreseeable impacts to historic properties, land, air, or water resources, including impacts to biota, because the exemption only allows the application of the acceptance criteria in the regulations to the new fuel assemblies, rather than fuel assemblies with Zircaloy or ZIRLO cladding material. The exemptions do not allow any changes that will impact any offsite or onsite resources. In addition, there are also no known socioeconomic or environmental justice impacts associated with such proposed action. Therefore, there are no significant non-radiological environmental impacts associated with the proposed action.
Accordingly, the NRC concludes that there are no significant environmental impacts associated with the proposed action.
As an alternative to the proposed actions, the NRC staff considered denial of the proposed action (
The action does not involve the use of any different resources than those previously considered in the “Final Environmental Statement Related to Operation of Surry Power Station Unit 1”; “Final Environmental Statement Related to Operation of Surry Power Station Unit 2,” dated 1972; and NUREG-1437, “Generic Environmental Impact Statement for License Renewal of Nuclear Plants, Supplement 6, Regarding Surry Power Station Units 1 and 2, Final Report,” dated November 2002 (ADAMS Accession No. ML023310717).
The staff did not enter into consultation with any other Federal agency or with the State of Virginia regarding the environmental impact of the proposed action.
The licensee has requested an exemption from certain requirements contained in 10 CFR 50.46 and appendix K to 10 CFR part 50 to allow the use of up to eight AREVA AGORA® LTAs containing fuel rods fabricated with M5® cladding material. On the basis of the environmental assessment, the NRC concludes that the proposed action will not have a significant effect on the quality of the human environment. Accordingly, the NRC has determined not to prepare an environmental impact statement for the proposed action.
For the Nuclear Regulatory Commission.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the Market Data section of its fee schedule to amend: (i) The External Distribution and User fees for the EDGX Top and EDGX Last Sale feeds; and (ii) the New External Distributor Credit for the EDGX Top, EDGX Last Sale, and Bats One Feeds.
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the Market Data section of its fee schedule to amend: (i) The External Distribution and User fees for the EDGX Top and EDGX Last Sale feeds; and (ii) the New External Distributor Credit for the EDGX Top, EDGX Last Sale, and Bats One Feeds.
EDGX Top is a market data feed that includes top of book quotations and execution information for all equity securities traded on the Exchange.
The Exchange currently charges an External Distributor
The Exchange also charges those who receive either EDGX Top or EDGX Last Sale from External Distributors different fees for both their Professional
The Exchange also offers a New External Distributor Credit under which new External Distributors of EDGX Top or EDGX Last Sale will not be charged a Distributor Fee for their first three (3) months. The Exchange now proposes to decrease the time a new External Distributor of EDGX Top or EDGX Last Sale will not be charged a Distributor Fee from their first three (3) months to their first one (1) month.
Lastly, the Exchange proposes to provide External Distributors of EDGX Depth,
In sum, the Bats One Feed is a data feed that disseminates, on a real-time basis, the aggregate best bid and offer (“BBO”) of all displayed orders for securities traded on EDGX and its affiliated exchanges and for which the Bats Exchanges report quotes under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The Bats One Feed also contains the individual last sale information for the Bats Exchanges (collectively with the aggregate BBO, the “Bats One Summary Feed”). In addition, the Bats One Feed contains optional functionality which enables recipients to receive aggregated two-sided quotations from the Bats Exchanges for up to five (5) price levels (“Bats One Premium Feed”).
The Exchange charges External Distributors of the Bats One Summary Feed a monthly Distribution fee of $5,000. The Exchange also offers a New External Distributor Credit under which new External Distributors of the Bats One Feed will not be charged a Distributor Fee for their first three (3) months in order to allow them to enlist new Users to receive the Bats One Summary Feed. The Exchange now proposes to decrease the time a new External Distributor of the Bats One Feed will not be charged a Distributor Fee from their first three (3) months to their first one (1) month.
The Exchange proposes to implement the proposed changes to its fee schedule on June 1, 2016.
The Exchange believes that the proposed rule change is consistent with the objectives of section 6 of the Act,
The Exchange also believes that the proposed rule change is consistent with Section 11(A) of the Act
In addition, the proposed fees would not permit unfair discrimination because all of the Exchange's customers and market data vendors will be subject to the proposed fees on an equivalent basis. EDGX Last Sale, EDGX Top and the Bats One Feed are distributed and purchased on a voluntary basis, in that neither the Exchange nor market data distributors are required by any rule or regulation to make this data available. Accordingly, Distributors and Users can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. The Exchange also believes the proposed External Distribution fees for EDGX Last Sale and EDGX Top are reasonable and equitable in light of the benefits to data recipients. To the extent consumers do purchase the data products, the revenue generated will offset the Exchange's fixed costs of operating and regulating a highly efficient and reliable platform for the trading of U.S. equities as well as the proposed fee decreases proposed by BYX and EDGA.
In addition, the fees that are the subject of this rule filing are constrained by competition. As explained below in the Exchange's Statement on Burden on Competition, the existence of alternatives to EDGX Top, EDGX Last Sale, and the Bats One Feed further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives because the Exchange competes with other exchanges (and their affiliates) that provide similar market data products. If another exchange (or its affiliate) were to charge less to consolidate and distribute its similar product than the Exchange charges to consolidate and distribute EDGX Top, EDGX Last Sale, or the Bats One Feed, prospective Users likely would not subscribe to, or would cease subscribing to, the EDGX Top, EDGX Last Sale, or the Bats One Feed.
The Exchange notes that the Commission is not required to undertake a cost-of-service or rate-making approach. The Exchange believes that, even if it were possible as a matter of economic theory, cost-based pricing for non-core market data would be so complicated that it could not be done practically.
The Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will be charged uniformly to recipient firms and Users. In addition, the proposed fees are reasonable when compared to similar fees for comparable products offered by the NYSE. Specifically, NYSE offers NYSE BBO, which includes best bid and offer for NYSE traded securities, for a monthly fee of $4.00 per professional subscriber and $0.20 per non-professional subscriber.
The Exchange also believes that amending the New External Distributor Credit for EDGX Top, EDGX Last Sale, and the Bats One Feed is equitable and reasonable. The Exchange notes that the New External Distributor Credit was initially adopted at the time the Exchange began to offer the Bats One Summary Feed to subscribers. It was intended to incentivize new Distributors to enlist Users to subscribe to the Bats One Summary Feed in an effort to broaden the product's distribution. The credit was also provided for EDGX Top and EDGX Last Sale in order to alleviate any competitive issues that may arise with a vendor seeking to offer a product similar to the Bats One Summary Feed based on the underlying data feeds. The Exchange also believes that decreasing the time during which the New External Distributor Credit is available from three (3) to one (1) month for EDGX Top, EDGX Last Sale, and the Bats One Feed is equitable and reasonable because the credit has been available to Distributors since January 2015 providing new Distributors with ample time to grow their subscriber bases during the available three (3) month periods. Decreasing the credit period to one (1) month is equitable and reasonable as it would continue to provide new Distributors ample time to grow their subscriber bases.
Lastly, the Exchange believes it is equitable and reasonable to provide External Distributors of EDGX Depth, upon request and at no additional External Distribution Fee, access to the EDGX Top or EDGX Last Sale feeds for External Distribution. Doing so will increase the market data products available without increasing the Distribution fees for External Distributors.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange's ability to price EDGX Last Sale, EDGX Top, and the Bats One Feed are constrained by: (i) Competition among exchanges, other trading platforms, and Trade Reporting Facilities (“TRF”) that compete with each other in a variety of dimensions; (ii) the existence of inexpensive real-time consolidated data and market-specific data and free delayed data; and (iii) the inherent contestability of the market for proprietary data.
The Exchange and its market data products are subject to significant competitive forces and the proposed fees represent responses to that competition. To start, the Exchange competes intensely for order flow. It competes with the other national securities exchanges that currently trade equities, with electronic communication networks, with quotes posted in FINRA's Alternative Display Facility, with alternative trading systems, and with securities firms that primarily trade as principal with their customer order flow.
In addition, EDGX Last Sale, EDGX Top, and the Bats One Feed compete with a number of alternative products. For instance, EDGX Last Sale, EDGX Top, and the Bats One Feed do not provide a complete picture of all trading activity in a security. Rather, the other national securities exchanges, the several TRFs of FINRA, and Electronic Communication Networks (“ECN”) that produce proprietary data all produce trades and trade reports. Each is currently permitted to produce last sale information products, and many currently do, including Nasdaq and NYSE. In addition, market participants can gain access to EDGX last sale prices and top-of-book quotations, though integrated with the prices of other markets, on feeds made available through the SIPs.
In sum, the availability of a variety of alternative sources of information imposes significant competitive pressures on the Exchange's data products and the Exchange's compelling need to attract order flow imposes significant competitive pressure on the Exchange to act equitably, fairly, and reasonably in setting the proposed data product fees. The proposed data product fees are, in part, responses to that pressure. The Exchange believes that the proposed fees would reflect an equitable allocation of its overall costs to users of its facilities.
In addition, when establishing the proposed fees, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all Users. The existence of alternatives to EDGX Last Sale, EDGX Top, and the Bats One Feed, including existing similar feeds by other exchanges, consolidated data, and proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives or choose not to purchase a specific proprietary data product if its cost to purchase is not justified by the returns
The Exchange has neither solicited nor received written comments on the proposed rule change.
The foregoing rule change has become effective pursuant to section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Rule 248.30 (17 CFR 248.30) under Regulation S-P, is titled “Procedures to Safeguard Customer Records and Information; Disposal of Consumer Report Information.” Rule 248.30 (the “safeguard rule”) requires brokers, dealers, investment companies, and investment advisers registered with the Commission (“registered investment advisers”) (collectively “covered institutions”) to adopt written policies and procedures for administrative, technical, and physical safeguards to protect customer records and information. The safeguards must be reasonably designed to “insure the security and confidentiality of customer records and information,” “protect against any anticipated threats or hazards to the security and integrity” of those records, and protect against unauthorized access to or use of those records or information, which “could result in substantial harm or inconvenience to any customer.” The safeguard rule's requirement that covered institutions' policies and procedures be documented in writing constitutes a collection of information and must be maintained on an ongoing basis. This requirement eliminates uncertainty as to required employee actions to protect customer records and information and promotes more systematic and organized reviews of safeguard policies and procedures by institutions. The information collection also assists the Commission's examination staff in assessing the existence and adequacy of covered institutions' safeguard policies and procedures.
We estimate that as of the end of 2015, there are 4,176 broker-dealers, 4,041 investment companies, and 11,956 investment advisers registered with the Commission, for a total of 20,173 covered institutions. We believe that all of these covered institutions have already documented their safeguard policies and procedures in writing and therefore will incur no hourly burdens related to the initial documentation of policies and procedures.
Although existing covered institutions would not incur any initial hourly burden in complying with the safeguards rule, we expect that newly registered institutions would incur some hourly burdens associated with documenting their safeguard policies and procedures. We estimate that approximately 1200 broker-dealers, investment companies, or investment advisers register with the Commission annually. However, we also expect that approximately 70% of these newly registered covered institutions (840) are affiliated with an existing covered institution, and will rely on an organization-wide set of previously documented safeguard policies and procedures created by their affiliates. We estimate that these affiliated newly registered covered institutions will incur a significantly reduced hourly burden in complying with the safeguards rule, as they will need only to review their affiliate's existing
Finally, we expect that the 360 newly registered entities that are not affiliated with an existing institution will incur a significantly higher hourly burden in reviewing and documenting their safeguard policies and procedures. We expect that virtually all of the newly registered covered entities that do not have an affiliate are likely to be small entities and are likely to have smaller and less complex operations, with a correspondingly smaller set of safeguard policies and procedures to document, compared to other larger existing institutions with multiple affiliates. We estimate that it will take a typical newly registered unaffiliated institution approximately 60 hours to review, identify, and document their safeguard policies and procedures, for a total of 21,600 hours for all newly registered unaffiliated entities. We expect that half of this time would be incurred by inside counsel at an hourly rate of $380, and half would be by a compliance officer at an hourly rate of $334, for a total cost of $7,711,200.
Therefore, we estimate that the total annual hourly burden associated with the safeguards rule is 34,200 hours at a total hourly cost of $12,209,400. We also estimate that all covered institutions will be respondents each year, for a total of 20,173 respondents.
These estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number. The safeguard rule does not require the reporting of any information or the filing of any documents with the Commission. The collection of information required by the safeguard rule is mandatory.
The public may view the background documentation for this information collection at the following Web site,
Pursuant to Section 19(b)(1)
The Exchange proposes to permit the Fidelity Corporate Bond ETF, Fidelity Investment Grade Bond ETF, Fidelity Limited Term Bond ETF, and Fidelity Total Bond ETF (each a “Fund” and together the “Funds”) to consider securities issued pursuant to Rule 144A under the Securities Act of 1933 as debt securities eligible for the principal investment of 80% of Fund assets. Shares of the Fidelity Corporate Bond ETF, Fidelity Limited Term Bond ETF, and Fidelity Total Bond ETF have been approved by the Exchange for listing and trading on the Exchange under NYSE Arca Equities Rule 8.600. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Commission approved proposed rule changes relating to listing and trading on the Exchange of shares (“Shares”) of the Funds under NYSE Arca Equities Rule 8.600,
Fidelity Investments Money Management, Inc. (“FIMM”), an affiliate of Fidelity Management & Research Company (“FMR”), is the manager (“Manager”) of each Fund. FMR Co., Inc. (“FMRC”) serves as a sub-adviser for the Fidelity Total Bond ETF. FMRC has day-to-day responsibility for choosing certain types of investments of foreign and domestic issuers for Fidelity Total Bond ETF. Other investment advisers, which also are affiliates of FMR, serve as sub-advisers to the Funds and assist FIMM with foreign investments, including Fidelity Management & Research (U.K.) Inc. (“FMR U.K.”), Fidelity Management & Research (Hong Kong) Limited (“FMR H.K.”), and Fidelity Management & Research (Japan) Inc. (“FMR Japan”) (each a “Sub-Adviser” and together with FMRC, “Sub-Advisers”). Fidelity Distributors Corporation (“FDC”) is the distributor for the Funds' Shares.
The Funds are funds of Fidelity Merrimack Street Trust (“Trust”), a Massachusetts business trust.
Shares of the Fidelity Corporate Bond ETF, Fidelity Limited Term Bond ETF, and Fidelity Total Bond ETF have been approved by the Exchange for listing and trading on the Exchange under NYSE Arca Equities Rule 8.600 and are currently trading on the Exchange.
As described in the Prior Corporate Bond Notice, the Fidelity Corporate Bond ETF seeks a high level of current income. The Manager normally invests at least 80% of Fidelity Corporate Bond ETF assets in investment-grade corporate bonds and other corporate debt securities.
The Fidelity Corporate Bond ETF may hold uninvested cash or may invest it in cash equivalents such as money market securities, or shares of short-term bond exchanged-traded funds registered under the 1940 Act (“ETFs”) or mutual funds or money market funds, including Fidelity central funds (special types of investment vehicles created by Fidelity for use by the Fidelity funds and other advisory clients). The Manager uses the Barclays® U.S. Credit Bond Index as a guide in structuring the Fund and selecting its investments. FIMM manages the Fund to have similar overall interest rate risk to the Barclays® U.S. Credit Bond Index.
As stated in the Prior Corporate Bond Releases, in buying and selling securities for the Fund, the Manager analyzes the credit quality of the issuer, security-specific features, current valuation relative to alternatives in the market, short-term trading opportunities resulting from market inefficiencies, and potential future valuation. In managing the Fund's exposure to various risks, including interest rate risk, the Manager considers, among other things, the market's overall risk characteristics, the market's current pricing of those risks, information on the Fund's competitive universe and internal views of potential future market conditions.
While the Manager normally invests at least 80% of assets of the Fund in investment grade corporate bonds and other corporate debt securities, as described above, the Manager may invest up to 20% of the Fund's assets in other securities and financial instruments, as described in the Prior Corporate Bond Notice.
According to the Registration Statement, the Fund may invest in restricted securities, which are subject to legal restrictions on their sale. Restricted securities generally can be sold in privately negotiated transactions, pursuant to an exemption from registration under the Securities Act, or in a registered public offering.
As described in the Prior Total Bond Notice, the Fidelity Investment Grade Bond ETF (which has not yet commenced operation) will seek a high level of current income. The Manager normally will invest at least 80% of the Fund's assets in investment-grade debt securities (those of medium and high quality). The debt securities in which the Fund may invest are corporate debt securities; U.S. Government securities; repurchase agreements and reverse repurchase agreements; money market securities; mortgage and other asset-backed securities; senior loans; loan participations and loan assignments and other evidences of indebtedness, including letters of credit, revolving credit facilities and other standby financing commitments; stripped securities; municipal securities; sovereign debt obligations; and obligations of international agencies or supranational entities (collectively, “Debt Securities”).
As described in the Prior Total Bond Notice, the Fidelity Investment Grade Bond ETF may hold uninvested cash or may invest it in cash equivalents such as repurchase agreements, shares of short term bond ETFs, mutual funds or money market funds, including Fidelity central funds (special types of investment vehicles created by Fidelity for use by the Fidelity funds and other advisory clients). The Manager will use the Barclays U.S. Aggregate Bond Index (the “Aggregate Index”) as a guide in structuring the Fund and selecting its investments, and will manage the Fund to have similar overall interest rate risk to the Aggregate Index.
As described in the Prior Total Bond Notice, the Manager will consider other factors when selecting the Fidelity Investment Grade Bond ETF's investments, including the credit quality of the issuer, security-specific features, current valuation relative to alternatives in the market, short-term trading opportunities resulting from market inefficiencies, and potential future valuation. In managing the Fidelity Investment Grade Bond ETF's exposure to various risks, including interest rate risk, the Manager will consider, among other things, the market's overall risk characteristics, the market's current pricing of those risks, information on the Fidelity Investment Grade Bond ETF's competitive universe and internal views of potential future market conditions.
As described in the Prior Total Bond Notice, the Fidelity Limited Term Bond
The Manager considers other factors when selecting the Fidelity Limited Term Bond ETF's investments, including the credit quality of the issuer, security-specific features, current valuation relative to alternatives in the market, short-term trading opportunities resulting from market inefficiencies, and potential future valuation. In managing the Fidelity Limited Term Bond ETF's exposure to various risks, including interest rate risk, the Manager considers, among other things, the market's overall risk characteristics, the market's current pricing of those risks, information on the Fund's competitive universe and internal views of potential future market conditions.
As described in the Prior Total Bond Notice, the Fidelity Total Bond ETF seeks a high level of current income. The Manager normally invests at least 80% of the Fidelity Total Bond ETF's assets in Debt Securities. The Manager allocates the Fidelity Total Bond ETF's assets across investment-grade, high yield, and emerging market Debt Securities. The Manager may invest up to 20% of the Fund's assets in lower-quality Debt Securities. The Fidelity Total Bond ETF may hold uninvested cash or may invest it in cash equivalents such as repurchase agreements, shares of short term bond ETFs mutual funds or money market funds, including Fidelity central funds (special types of investment vehicles created by Fidelity for use by the Fidelity funds and other advisory clients).
The Manager uses the Barclays U.S. Universal Bond Index (the “Universal Index”) as a guide in structuring and selecting the investments of the Fidelity Total Bond ETF and selecting its investments, and in allocating the Fidelity Total Bond ETF's assets across the investment-grade, high yield, and emerging market asset classes. The Manager manages the Fidelity Total Bond ETF to have similar overall interest rate risk to the Universal Index. The Manager considers other factors when selecting the Fund's investments, including the credit quality of the issuer, security-specific features, current valuation relative to alternatives in the market, short-term trading opportunities resulting from market inefficiencies, and potential future valuation. In managing the Fund's exposure to various risks, including interest rate risk, the Manager considers, among other things, the market's overall risk characteristics, the market's current pricing of those risks, information on the Fund's competitive universe and internal views of potential future market conditions.
As described in the Prior Total Bond Notice, the Manager may invest the Fidelity Total Bond ETF's assets in Debt Securities of foreign issuers in addition to securities of domestic issuers.
While, as described above, the Manager normally invests at least 80% of assets of Fidelity Limited Term Bond ETF in investment-grade Debt Securities (and will normally invest at least 80% of assets of the Fidelity Investment Grade Bond ETF in investment-grade Debt Securities), and the Manager normally invests at least 80% of assets of the Fidelity Total Bond ETF in Debt Securities, the Manager may invest up to 20% of a Fund's assets in other securities and financial instruments (“Other Investments”, as described in the Prior Total Bond Notice).
As described in the Prior Corporate Bond Notice and Prior Total Bond Notice, as part of a Fund's Other Investments, (
The Exchange proposes that each Fund may include Rule 144A securities within a Fund's principal investments in debt securities (
FMR has represented to the Exchange that Rule 144A securities account for approximately 20% of daily trading volume in U.S. corporate bonds. Dealers trade and report transactions in Rule 144A securities in the same manner as registered corporate bonds. While the average number of daily trades and U.S. dollar volume in registered corporate bonds is much higher than in Rule 144A securities, the average lot size is higher for Rule 144A securities.
In addition, in 2013, the Commission approved FINRA rules relating to dissemination of information regarding transactions in Rule 144A securities in TRACE.
Real-time dissemination of last-sale information could aid dealers in deriving better quotations, because they would know the prices at which other market participants had recently transacted in the same or similar instruments. This information could aid all market participants in evaluating current quotations, because they could inquire why dealer quotations might differ from the prices of recently executed transactions. Furthermore, post-trade transparency affords market participants a means of testing whether dealer quotations before the last sale were close to the price at which the last sale was executed. In this manner, post-trade transparency can promote price competition between dealers and more efficient price discovery and ultimately lower transaction costs in the market for Rule 144A securities.
Transactions executed by FINRA members became subject to dissemination through FINRA's TRACE on June 30, 2014, thus providing a level of transparency to the Rule 144A market comparable to that of registered bonds.
The Exchange notes that, while the proposed rule change would categorize Rule 144A securities within a Fund's principal investments in debt securities, any investments in Rule 144A securities, of course, would be required to comply with restrictions under the 1940 Act and rules thereunder relating to investment in illiquid assets.
Moreover, as stated in the Prior Corporate Bond Notice and Prior Total Bond Notice, each Fund does not currently intend to purchase any asset if, as a result, more than 10% of its net assets would be invested in assets that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. For purposes of a Fund's illiquid assets limitation discussed above, if through a change in values, net assets, or other circumstances, a Fund were in a position where more than 10% of its net assets were invested in illiquid assets, it would consider appropriate steps to protect liquidity.
The Prior Corporate Bond Notice and Prior Total Bond Notice stated that various factors may be considered in determining the liquidity of a Fund's investments, including: (1) The frequency of trades and quotes for the asset; (2) the number of dealers wishing to purchase or sell the asset and the number of other potential purchasers; (3) dealer undertakings to make a market in the asset; and (4) the nature of the asset and the nature of the marketplace in which it trades (including any demand, put or tender features, the mechanics and other requirements for transfer, any letters of credit or other credit enhancement features, any ratings, the number of holders, the method of soliciting offers, the time required to dispose of the security, and the ability to assign or offset the rights and obligations of the asset).
The Exchange believes that the size of the Rule 144A market (approximately 20% of daily trading volume in U.S. corporate bonds), the active participation of multiple dealers utilizing trading protocols that are similar to those in the corporate bond market, and the transparency of the 144A market resulting from reporting of Rule 144A transactions in TRACE will deter manipulation in trading the Shares.
Except for the change described above, all other representations made in the Prior Corporate Bond Releases and the Prior Total Bond Releases remain unchanged.
The Exchange represents that the trading in the Shares will be subject to the existing trading surveillances, administered by the Exchange or FINRA, on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The basis under the Act for this proposed rule change is the requirement under Section 6(b)(5)
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in NYSE Arca Equities Rule 8.600. The Exchange believes it is appropriate for Rule 144A securities to be included as principal investments of a Fund in view of (1) the high level of liquidity in the market for such securities compared to other debt securities asset classes, and (2) the high level of transparency in the market for Rule 144A securities, particularly in light of reporting of transaction data in such securities through TRACE. The Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by the Funds reported to TRACE. The Manager and the Sub-Advisers are not broker-dealers but are affiliated with one or more broker-dealers and have each implemented a fire wall with respect to such broker-dealers regarding access to information concerning the composition and/or changes to the portfolios, and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the portfolios. Each Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including Rule 144A securities deemed illiquid by the Manager or Sub-Advisers.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange has in place surveillance procedures that are adequate to properly monitor trading in the Shares in all trading sessions and to deter and detect violations of Exchange rules and federal securities laws applicable to trading on the Exchange. FINRA, on behalf of the Exchange, is able to access, as needed, trade information for certain fixed income securities held by the Funds reported to TRACE. The Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time. In addition, a large amount of information is publicly available regarding the Funds and the Shares, thereby promoting market transparency. Transaction information relating to Rule 144A securities will be available via TRACE. Moreover, the Portfolio Indicative Value with respect to Shares of each Fund will be widely disseminated by one or more major market data vendors at least every 15 seconds during the Exchange's Core Trading Session. On each business day, before commencement of trading in Shares in the Core Trading Session on the Exchange, each Fund will disclose on the Trust's Web site the Disclosed Portfolio that will form the basis for a Fund's calculation of NAV at the end of the business day. The Trust's Web site will include a form of the prospectus for the Funds and additional data relating to NAV and other applicable quantitative information. Trading in Shares of a Fund will be halted if the circuit breaker parameters in NYSE Arca Equities Rule 7.12 have been reached or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to NYSE Arca Equities Rule 8.600(d)(2)(D), which sets forth circumstances under which Shares of a Fund may be halted. In addition, as noted above, investors will have ready access to information regarding each Fund's holdings, the Portfolio Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest. The Exchange believes that the size of the Rule 144A market (approximately 20% of daily trading volume in U.S. corporate bonds), the active participation of multiple dealers utilizing trading protocols that are similar to those in the corporate bond market, and the transparency of the Rule 144A market resulting from reporting of Rule 144A transactions in TRACE will deter manipulation in trading the Shares. Any investments in Rule 144A securities would be required to comply with restrictions under the 1940 Act and rules thereunder relating to investment in illiquid assets. Each Fund does not currently intend to purchase any asset if, as a result, more than 10% of its net assets would be invested in assets that are deemed to be illiquid because they are subject to legal or contractual restrictions on resale or because they cannot be sold or disposed of in the ordinary course of business at approximately the prices at which they are valued. Various factors may be considered in determining the liquidity of a Fund's investments, including: (1) The frequency of trades and quotes for the asset; (2) the number of dealers wishing to purchase or sell the asset and the number of other potential purchasers; (3) dealer undertakings to make a market in the asset; and (4) the nature of the asset and the nature of the marketplace in which it trades (including any demand, put or tender features, the mechanics and other requirements for transfer, any letters of credit or other credit enhancement features, any ratings, the number of holders, the method of soliciting offers, the time required to dispose of the security, and the ability to assign or offset the rights and obligations of the asset). The Exchange has in place
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purpose of the Act. The Exchange believes the proposed rule change is designed to allow the Funds to invest in a broader range of debt securities thereby helping the Funds to achieve their respective investment objective.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to remove from its rules certain internal procedures regarding the use of fine income. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to remove from its rules certain internal procedures regarding the use of fine income, which were approved in 2007 (the “Fine Income Procedures”) in order to align the Exchange's use of fine income with other self-regulatory organizations (“SROs”). The Exchange believes that the Fine Income Limitations [sic] are no longer necessary and are duplicative of the limitations on the use of regulatory assets and income, including fine income, set forth in Article IV, Section 4.05 of the operating agreement of the Exchange (“Section 4.05”). Section 4.05 prohibits the Exchange from using any regulatory assets or any regulatory fees, fines or penalties collected by the Exchange's regulatory staff for commercial purposes or distributing such assets, fees, fines or penalties to NYSE Group, Inc. (“NYSE Group”), the Exchange's member, or any other entity.
For the reasons discussed below, the Exchange believes that together Section 4.05 and the provisions governing the Regulatory Oversight Committee (“ROC”) of the Exchange's Board of Directors adequately address the concerns underlying the Fine Income Procedures and provide sufficient protections to ensure the proper use of fine income by the Exchange.
In 2006, New York Stock Exchange, Inc. merged with Archipelago Holdings, Inc. (the “Archipelago Merger”).
The Exchange's Fine Income Procedures referred to actions to be taken by the Exchange's subsidiary, NYSE Regulation, Inc. (“NYSE Regulation”), and NYSE Regulation's board of directors (the “NYSE Regulation Board”), because at the time performance of certain of the Exchange's regulatory functions was delegated to NYSE Regulation. Such delegation was made in 2006 pursuant to a Delegation Agreement (the “Delegation Agreement”) between the Exchange, NYSE Regulation, and NYSE Market (DE), Inc. (“NYSE Market (DE)”).
As approved, the Fine Income Procedures provided that:
• Fines would play no role in the annual NYSE Regulation budget process. Beginning with the preparation of the 2007 operating budget, fines would be budgeted at zero, that is, budgeted expenses of NYSE Regulation would be offset entirely by budgeted income that did not include any anticipated income from fines. Among other things, this meant that fines would not offset amounts budgeted for compensation of NYSE Regulation employees or directors. During the course of a year, income from fines would be considered as available to fund non-compensation expenses of NYSE Regulation, which expenses were not anticipated in the budget process or which could not be included in the budget prepared in advance of the fiscal year because NYSE Regulation was unable to budget sufficient income from sources other than fines to offset the expenses.
• The use of fine income by NYSE Regulation would be subject to specific review and approval by the NYSE Regulation board of directors. On a quarterly basis, the staff of NYSE Regulation would provide to the NYSE Regulation Board a report on the amount of fine income received to date during the year and recommendations regarding its proposed use to fund regulatory expenses as above described. The use of the fine income would be subject to NYSE Regulation Board approval. Following each year, the staff of NYSE Regulation would provide the NYSE Regulation Board a report reprising the fines imposed and the utilization of fine income by NYSE Regulation during that year. This report would analyze fines imposed by NYSE Regulation for consistency with precedent from both other NYSE disciplinary cases as well as publicly available disciplinary cases adjudicated by the National Association of Securities Dealers, Inc. and the Commission.
Each year the NYSE Regulation Board would also consider whether unused fine income had accumulated beyond a level reasonably necessary for future contingencies, and could determine to utilize any such excess to fund one or more special projects of NYSE Regulation, to reduce fees charged by NYSE Regulation to its member organizations or the markets that it serves, or for a charitable purpose.
Effective February 16, 2016, the Delegation Agreement terminated and NYSE Regulation ceased performing regulatory functions on behalf of the Exchange, which has re-integrated its regulatory functions. The ROC of the Exchange's Board of Directors now provides independent oversight of the regulatory function of the Exchange.
In its filing proposing the creation of the ROC and termination of the Delegation Agreement, the Exchange addressed the Fine Income Procedures. Specifically, it “reiterate[ed] [sic] the previous commitments that fines would play no role in the annual regulatory operating budget process and that the use of fine income by Exchange regulatory staff would be subject to review and approval by the proposed ROC.”
The Exchange proposes to delete the Fine Income Procedures from the Exchange rules. The Exchange would remain subject to Section 4.05, which prohibits it from using any regulatory assets or any regulatory fees, fines or penalties collected by the Exchange's regulatory staff for commercial purposes or distributing such assets, fees, fines or penalties to the Exchange's member or any other entity.
In its Order Approving the Fine Income Procedures, the Commission stated that the Fine Income Procedures were “to assure the proper exercise by NYSE Regulation of its power to fine member organizations of the Exchange and the proper use by NYSE Regulation of the funds so collected.”
First, the Exchange believes that limitations on the use of fines is not the most effective way to assure proper exercise by Exchange regulatory staff of the Exchange's power to fine member organizations. Simply put, usage limitations on fine income do not provide oversight of regulatory performance. They just monitor how the resulting income is spent. The Exchange believes that the responsibility to assure proper exercise by Exchange regulatory staff of the Exchange's power to fine member organizations more properly lies with the ROC, which is responsible to oversee the Exchange's regulatory and self-regulatory organization responsibilities and assess the Company's regulatory performance.
In addition, the disciplinary process itself contains a powerful check on the improper exercise by Exchange regulatory staff of the power to fine members and member organizations, specifically the appellate process, whereby adverse hearing panel determinations can be appealed to the Committee for Review, a committee of the Board of Directors of the Exchange that includes independent directors and individuals associated with member organizations of the Exchange, which recommends a disposition to the Board of Directors of the Exchange. Final actions of the Exchange can be appealed to the Commission, and Commission determinations can be challenged in federal court.
Second, the Exchange believes that, by setting clear limitations on its use, Section 4.05 is sufficient to ensure the proper use by the Exchange of fine income. Section 4.05 addresses this concern by prohibiting the use of fines for commercial purposes or distributions. Indeed, because Section 4.05 encompasses all regulatory assets and income, not just fines, it ensures the proper use by the Exchange of a broader range of regulatory funds, by prohibiting their use for commercial purposes or distributions.
The Commission stated in its Order Approving the Fine Income Procedures that it believed the Fine Income Procedures would “guard against the possibility that fines may be assessed to respond to budgetary needs rather than to serve a disciplinary purpose.”
The Exchange believes that the circumstances that led to the Fine Income Procedures no longer exist. At the time the Fine Income Procedures were adopted, a predecessor to Section 4.05 was in effect (the “Predecessor Section”). Indeed, the Commission cited that fact when approving the Archipelago Merger:
The Commission further notes that the NYSE has taken steps to safeguard the use of regulatory monies. Specifically, New York Stock Exchange LLC will not be permitted to use any assets of, or any regulatory fees, fines, or penalties collected by, NYSE Regulation for commercial purposes or distribute such assets, fees, fines, or penalties to NYSE Group or any entity other than NYSE Regulation.
At the time, NYSE Regulation performed regulatory functions on behalf of the Exchange. On its face, the Predecessor Section, found in the Exchange's 2006 operating agreement, only limited the Exchange itself. NYSE Regulation had the obligation under the Delegation Agreement to assure compliance with the rules of the Exchange, but the Fine Income Procedures provided a more direct commitment by NYSE Regulation to ensure the proper exercise of NYSE Regulation's power to fine member organizations and the proper use by NYSE Regulation of fines collected.
Today, because the Delegation Agreement is no longer in effect, the same entity that fines member organizations is directly subject to the limits of Section 4.05. Accordingly, the Exchange believes that removing the Fine Income Procedures and relying on Section 4.05 and the provisions governing the ROC would provide adequate protections against the concerns cited by the Commission in the Order Approving the Fine Income Procedures. Indeed, as pointed out above, Section 4.05 is wider in scope than the Fine Income Procedures, and so limits the Exchange's use of all regulatory assets and income, not just fine income.
The proposed change would have the benefit of bringing the Exchange's restrictions on the use of regulatory assets and income into greater conformity with those of its affiliates NYSE MKT LLC and NYSE Arca, Inc. NYSE MKT LLC has substantially the same provision as Section 4.05 its operating agreement.
In addition, removing the Fine Income Procedures from its rules would
For example, the limited liability company agreement of the BOX Options Exchange (“BOX”) provides that regulatory funds shall be used to the [sic] fund legal, regulatory and surveillance operations of BOX, and BOX shall not make any distribution to members using regulatory funds. BOX defines “regulatory funds” to include fees, fines or penalties derived from its regulatory operations.
Section 4.05 is more restrictive than the provisions of some other SROs, whose rules allow the use of regulatory funds for restitution and disgorgement of funds intended for customers. For example, the governing documents of affiliates BATS BZX Exchange, Inc., BATS BYX Exchange, Inc., BATS EDGX Exchange, Inc., and EDGA Exchange, Inc. provide that revenues received from fees derived from the regulatory function or regulatory penalties may be used to pay restitution and disgorgement of funds intended for customers, as well as to fund legal and regulatory operations, including surveillance and enforcement activities. Such funds may not be used for non-regulatory purposes or distributed to the stockholder.
The limitations imposed on the NASDAQ Stock Market LLC (“Nasdaq”) in its operating agreement are also less restrictive than the limitations imposed on the Exchange by Section 4.05. They simply limit Nasdaq from making a distribution to its member using regulatory funds. “Regulatory funds” is defined to mean fees, fines, or penalties derived from the regulatory operations of Nasdaq.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Exchange Act
The Exchange believes that Section 4.05 and the operating agreement provisions governing the ROC adequately address the concerns underlying adoption of the Fine Income Procedures, rendering the Fine Income Procedures superfluous. First, the Fine Income Procedures cannot assure the proper exercise by Exchange regulatory staff of the Exchange's power to fine member organizations of the Exchange, as usage limitations on fine income do not provide oversight of regulatory performance. The responsibility more properly lies with the ROC, which is responsible for overseeing the Exchange's regulatory and self-regulatory organization responsibilities and assessing its regulatory performance, including reviewing the regulatory budget and inquiring into the adequacy of resources available in the budget for regulatory activities.
Finally, the Exchange believes that Section 4.05 and the operating agreement provisions governing the ROC would provide adequate protections against the assessment of regulatory income, or the use of regulatory assets, to respond to budgetary needs. By limiting their use, Section 4.05 guards against the possibility that fines may be assessed to respond to budgetary needs rather than to serve a disciplinary purpose. However, unlike the Fine Income Procedures, Section 4.05 also guards against the possibility that other regulatory income, such as examination, access, registration, qualification, arbitration, dispute resolution and other regulatory fees, or regulatory assets, could be used or assessed to respond to budgetary needs, by making them unavailable for commercial purposes or distributions.
For the same reasons, the Exchange believes that the proposed deletion of the Fine Income Procedures is consistent with Section 6(b)(4),
The Exchange believes that the proposed deletion of the Fine Income Procedures is consistent with the Exchange's present governance structure, centered on a ROC. Today, because the Delegation Agreement is no longer in effect, the same entity that fines member organizations is directly subject to the limits of Section 4.05. Accordingly, the proposed deletion is consistent with ensuring that the Exchange is so organized as to have the capacity to be able to carry out the purposes of the Exchange Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members, with the provisions of the Exchange Act, the rules and regulations thereunder, and the rules of the Exchange.
The Exchange notes that the proposed change would have the additional benefit of making the Exchange's rules more consistent with the limitations on the use of regulatory assets and income of other SROs and bringing the Exchange's restrictions on the use of regulatory assets and income into greater conformity with those of its affiliates NYSE MKT LLC and NYSE Arca, Inc. Indeed, no other SRO limits the use of fine income to extra-budgetary use or subjects the use of fine income to specific review and approval by a regulatory oversight committee or any other body.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. The proposed rule change is not intended to address competitive issues but rather is concerned solely with the administration and functioning of the Exchange.
No written comments were solicited or received with respect to the proposed rule change.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2016-37. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to amend the Market Data section of its fee schedule to: (i) Decrease the User fees for the EDGA Top and EDGA Last Sale feeds; and (ii) amend the New External Distributor Credit for the Bats One Feed.
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend the Market Data section of its fee schedule to: (i) Decrease the User fees for the EDGA Top and EDGA Last Sale feeds; and (ii) amend the New External Distributor Credit for the Bats One Feed.
EDGA Top and Last Sale Fees
EDGA Top is a market data feed that includes top of book quotations and execution information for all equity securities traded on the Exchange.
The Exchange does not currently charge an External Distributor
In sum, the Bats One Feed is a data feed that disseminates, on a real-time basis, the aggregate best bid and offer (“BBO”) of all displayed orders for securities traded on EDGA and its affiliated exchanges and for which the Bats Exchanges report quotes under the Consolidated Tape Association (“CTA”) Plan or the Nasdaq/UTP Plan. The Bats One Feed also contains the individual last sale information for the Bats Exchanges (collectively with the aggregate BBO, the “Bats One Summary Feed”). In addition, the Bats One Feed contains optional functionality which enables recipients to receive aggregated two-sided quotations from the Bats Exchanges for up to five (5) price levels (“Bats One Premium Feed”).
The Exchange charges External Distributors of the Bats One Summary Feed a monthly Distribution fee of $5,000. The Exchange also offers a New External Distributor Credit under which new External Distributors of the Bats One Feed will not be charged a Distributor Fee for their first three (3) months in order to allow them to enlist new Users to receive the Bats One Summary Feed. The Exchange now proposes to decrease the time a new External Distributor of the Bats One Feed will not be charged a Distributor Fee from their first three (3) months to their first one (1) month.
The Exchange proposes to implement the proposed changes to its fee schedule on June 1, 2016.
The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,
The Exchange also believes that the proposed rule change is consistent with Section 11(A) of the Act
In addition, the proposed fees would not permit unfair discrimination because all of the Exchange's customers and market data vendors will be subject to the proposed fees on an equivalent basis. EDGA Last Sale, EDGA Top and the Bats One Feed are distributed and purchased on a voluntary basis, in that neither the Exchange nor market data distributors are required by any rule or regulation to make this data available. Accordingly, Distributors and Users can discontinue use at any time and for any reason, including due to an assessment of the reasonableness of fees charged. The Exchange also believes the proposed decrease to the External Distribution fees for EDGA Last Sale and EDGA Top are reasonable and equitable in light of the continued benefits to data recipients. To the extent consumers do purchase the data products, the revenue generated will continue to offset the Exchange's fixed costs of operating and regulating a highly efficient and reliable platform for the trading of U.S. equities. It will also help the Exchange to continue to cover its costs in developing and running that platform, as well as ongoing infrastructure costs. Firms have a wide variety of alternative market data products from which to choose, such as similar proprietary data products offered by other exchanges and consolidated data feeds. Moreover, the Exchange is not required to make any proprietary data products available or to offer any specific pricing alternatives to any customers.
In addition, the fees that are the subject of this rule filing are constrained by competition. As explained below in the Exchange's Statement on Burden on Competition, the existence of alternatives to EDGA Top, EDGA Last Sale, and the Bats One Feed further ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect such alternatives because the Exchange competes with other exchanges (and their affiliates) that provide similar market data products. If another exchange (or its affiliate) were to charge less to consolidate and distribute its similar product than the Exchange charges to consolidate and distribute EDGA Top, EDGA Last Sale, or the Bats One Feed, prospective Users likely would not subscribe to, or would cease subscribing to, the EDGA Top, EDGA Last Sale, or the Bats One Feed.
The Exchange notes that the Commission is not required to undertake a cost-of-service or rate-making approach. The Exchange believes that, even if it were possible as a matter of economic theory, cost-based pricing for non-core market data would
The Exchange believes the proposed Professional and Non-Professional User fees for EDGA Top and EDGA Last Sale are equitable and reasonable because they will continue to result in greater availability to Professional and Non-Professional Users. The Exchange believes that the proposed fees are equitable and not unfairly discriminatory because they will be charged uniformly to recipient firms and Users. In addition, the proposed fees are reasonable when compared to similar fees for comparable products offered by the NYSE. Specifically, NYSE offers NYSE BBO, which includes best bid and offer for NYSE traded securities, for a monthly fee of $4.00 per professional subscriber and $0.20 per non-professional subscriber.
The Exchange also believes that amending the New External Distributor Credit for the Bats One Feed is equitable and reasonable. The Exchange notes that the New External Distributor Credit was initially adopted at the time the Exchange began to offer the Bats One Summary Feed to subscribers. It was intended to incentivize new Distributors to enlist Users to subscribe to the Bats One Summary Feed in an effort to broaden the product's distribution. The Exchange also believes that decreasing the time during which the New External Distributor Credit is available from three (3) to one (1) month for the Bats One Feed is equitable and reasonable because the credit has been available to Distributors since January 2015 providing new Distributors with ample time to grow their subscriber bases during the available three (3) month period. Decreasing the credit period to one (1) month is equitable and reasonable as it would continue to provide new Distributors ample time to grow their subscriber bases.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. The Exchange's ability to price EDGA Last Sale, EDGA Top, and the Bats One Feed are constrained by: (i) Competition among exchanges, other trading platforms, and Trade Reporting Facilities (“TRF”) that compete with each other in a variety of dimensions; (ii) the existence of inexpensive real-time consolidated data and market-specific data and free delayed data; and (iii) the inherent contestability of the market for proprietary data. This competitive pressure is evidenced by the Exchange's proposal to decrease fees as described herein.
The Exchange and its market data products are subject to significant competitive forces and the proposed fees represent responses to that competition. To start, the Exchange competes intensely for order flow. It competes with the other national securities exchanges that currently trade equities, with electronic communication networks, with quotes posted in FINRA's Alternative Display Facility, with alternative trading systems, and with securities firms that primarily trade as principal with their customer order flow.
In addition, EDGA Last Sale, EDGA Top, and the Bats One Feed compete with a number of alternative products. For instance, EDGA Last Sale, EDGA Top, and the Bats One Feed do not provide a complete picture of all trading activity in a security. Rather, the other national securities exchanges, the several TRFs of FINRA, and Electronic Communication Networks (“ECN”) that produce proprietary data all produce trades and trade reports. Each is currently permitted to produce last sale information products, and many currently do, including Nasdaq and NYSE. In addition, market participants can gain access to EDGA last sale prices and top-of-book quotations, though integrated with the prices of other markets, on feeds made available through the SIPs.
In sum, the availability of a variety of alternative sources of information imposes significant competitive pressures on the Exchange's data products and the Exchange's compelling need to attract order flow imposes significant competitive pressure on the Exchange to act equitably, fairly, and reasonably in setting the proposed data product fees. The proposed data product fees are, in part, responses to that pressure. The Exchange believes that the proposed fees would reflect an equitable allocation of its overall costs to users of its facilities.
In addition, when establishing the proposed fees, the Exchange considered the competitiveness of the market for proprietary data and all of the implications of that competition. The Exchange believes that it has considered all relevant factors and has not considered irrelevant factors in order to establish fair, reasonable, and not unreasonably discriminatory fees and an equitable allocation of fees among all Users. The existence of alternatives to EDGA Last Sale, EDGA Top, and the Bats One Feed, including existing similar feeds by other exchanges, consolidated data, and proprietary data from other sources, ensures that the Exchange cannot set unreasonable fees, or fees that are unreasonably discriminatory, when vendors and subscribers can elect these alternatives or choose not to purchase a specific proprietary data product if its cost to purchase is not justified by the returns any particular vendor or subscriber would achieve through the purchase.
The Exchange has neither solicited nor received written comments on the proposed rule change.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposal is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Rule 6.43 (Options Floor Broker Defined). The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Rule 6.43 to update the definition of Floor Broker.
Rule 6.43(a) defines a Floor Broker as “an individual (either an OTP Holder or OTP Firm or a nominee of an OTP Holder or OTP Firm) who is registered with the Exchange for the purpose, while on the Exchange Floor, of accepting and executing option orders received from OTP Holders and OTP Firms [each an “OTP”].” The Rule further provides that “[a] Floor Broker shall not accept an order from any other source unless he has registered his individual for an [OTP] approved to transact business with the public in accordance with Rule 9, in which event he may accept orders for public customers of the [OTP].”
The Exchange notes that Floor Brokers, as registered Broker/Dealers
This proposed rule change would reflect current practice on the Exchange, specifically that a Floor Broker may accept orders from Broker Dealers that are not OTPs. The proposed modification would not alter a Floor Broker's responsibilities. Further, the proposal would have no impact on a Floor Broker's ability to accept orders from the public.
The Exchange believes that the proposed change is consistent with Section 6(b) of the Act,
Specifically, the Exchange believes that the proposal is designed to remove language that could be interpreted as a limitation on orders that may be accepted by Floor Brokers to reflect current practice on the Exchange, which would promote just and equitable principles of trade, and remove impediments to, and perfect the mechanism of a free and open market. The proposed change would make clear to market participants that a Floor Broker may accept an order from a non-OTP that is a Broker Dealer, which adds clarity and transparency to Exchange rules to the benefit of all market participants. Thus, the Exchange believes that the proposal would help prevent confusion and help ensure that floor brokerage services are widely available to various types of market participants, which should, in turn, promote just and equitable principles of trade.
The Exchange does not believe that this proposed rule change would impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. With respect to inter-market competition, the proposed rule change is a competitive change that is substantially similar to rules in place at another competing options exchange.
No written comments were solicited or received with respect to the proposed rule change.
The Exchange has filed the proposed rule change pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Form N-SAR (OMB Control No. 3235-0330, 17 CFR 249.330) is the form used by all registered investment companies with the exception of face amount certificate companies, to comply with the periodic filing and disclosure requirements imposed by Section 30 of the Investment Company Act of 1940 (15 U.S.C. 80a-1
The Commission estimates that the total number of respondents is 3,168 and the total annual number of responses is 5,564 ((2,396 management investment company respondents × 2 responses per year) + (772 unit investment trust respondents × 1 response per year)). The Commission estimates that each registrant filing a report on Form N-SAR would spend, on average, approximately 14.21 hours in preparing and filing reports on Form N-SAR and that the total hour burden for all filings on Form N-SAR would be 79,064 hours.
The collection of information under Form N-SAR is mandatory. Responses to the collection of information will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
Notice is hereby given that, pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 350l-3520), the Securities and Exchange Commission (the “Commission”) has submitted to the Office of Management and Budget a request for extension and approval of the collection of information discussed below.
In Canada, as in the United States, individuals can invest a portion of their earnings in tax-deferred retirement savings accounts (“Canadian retirement accounts”). These accounts, which operate in a manner similar to individual retirement accounts in the United States, encourage retirement savings by permitting savings on a tax-deferred basis. Individuals who establish Canadian retirement accounts while living and working in Canada and who later move to the United States (“Canadian-U.S. Participants” or “participants”) often continue to hold their retirement assets in their Canadian retirement accounts rather than prematurely withdrawing (or “cashing out”) those assets, which would result in immediate taxation in Canada.
Once in the United States, however, these participants historically have been unable to manage their Canadian retirement account investments. Most investment companies (“funds”) that are “qualified companies” for Canadian retirement accounts are not registered under the U.S. securities laws. Securities of those unregistered funds, therefore, generally cannot be publicly offered and sold in the United States without violating the registration requirement of the Investment Company Act of 1940 (“Investment Company Act”).
The Commission issued a rulemaking in 2000 that enabled Canadian-U.S. Participants to manage the assets in their Canadian retirement accounts by providing relief from the U.S. registration requirements for offers of securities of foreign issuers to Canadian-U.S. Participants and sales to Canadian retirement accounts.
Rule 7d-2 contains a “collection of information” requirement within the meaning of the Paperwork Reduction Act of 1995.
Rule 7d-2 requires written offering documents for securities offered or sold in reliance on the rule to disclose prominently that the securities are not registered with the Commission and may not be offered or sold in the United States unless registered or exempt from registration under the U.S. securities laws, and also to disclose prominently that the fund that issued the securities is not registered with the Commission. The burden under the rule associated with adding this disclosure to written offering documents is minimal and is non-recurring. The foreign issuer, underwriter, or broker-dealer can redraft an existing prospectus or other written offering material to add this disclosure statement, or may draft a sticker or supplement containing this disclosure to be added to existing offering materials. In either case, based on discussions with representatives of the Canadian fund industry, the staff estimates that it would take an average of 10 minutes per document to draft the requisite disclosure statement.
The staff estimates that there are 3164 publicly offered Canadian funds that potentially would rely on the rule to offer securities to participants and sell securities to their Canadian retirement accounts without registering under the Investment Company Act.
These burden hour estimates are based upon the Commission staff's experience and discussions with the fund industry. The estimates of average burden hours are made solely for the purposes of the Paperwork Reduction Act. These estimates are not derived from a comprehensive or even a representative survey or study of the costs of Commission rules.
Compliance with the collection of information requirements of the rule is mandatory and is necessary to comply with the requirements of the rule in general. Responses will not be kept confidential. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number.
The public may view the background documentation for this information collection at the following Web site,
On March 24, 2016, NYSE Arca, Inc. (“Exchange” or “NYSE Arca”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1)
As part of a regulatory restructuring, NYSE Arca proposes to: (i) Amend Section 4.01(a) of the NYSE Arca's Bylaws and NYSE Arca Rule 3.3 to establish a Committee for Review as a subcommittee of the Regulatory Oversight Committee (“ROC”)
The Exchange proposes that these rule revisions would be operative no later than June 30, 2016, on a date to be determined by the NYSE Arca Board.
The Exchange proposes to establish a Committee for Review (“CFR”) as a subcommittee of the ROC by amending Section 4.01(a) (Committees of the Board) of the NYSE Arca's Bylaws and NYSE Arca Rule 3.3 (Board Committees), deleting NYSE Arca Rule 3.2(b)(3) (Options Committees) and NYSE Arca Equities Rule 3.2(b)(3) (Equity Committees), and making conforming changes to NYSE Arca Rules 2.4, 10.3, 10.6, 10.8, 10.11, 10.12, 10.14 and NYSE Arca Equities Rules 2.3, 3.3, 5.5, 10.3, 10.6, 10.8, 10.11, 10.12, and 10.13.
NYSE Arca Rule 3.3(a)(2)(A) would provide that the NYSE Arca Board shall annually appoint a CFR as a subcommittee of the ROC. The Exchange notes that proposed Rule 3.3(a)(2) incorporates member organization association requirements of the current NYSE Arca BAC.
The proposed CFR would be comprised of the OTP Director(s),
The proposed CFR would be responsible for reviewing the disciplinary decisions on behalf of the NYSE Arca Board and reviewing determinations to limit or prohibit the continued listing of an issuer's securities on NYSE Arca Equities.
According to the Exchange, member participation on the proposed CFR would be sufficient to provide for the fair representation of members in the administration of the affairs of the Exchange, including rulemaking and the disciplinary process, consistent with Section 6(b)(3) of the Act.
The Exchange further proposes to amend NYSE Arca Rule 3.3(a)(2)(B) and NYSE Arca Equities Rule 3.3(a)(1)(A) to provide that the CFR may, but would not be required to, appoint an appeals panel (“CFR Appeals Panel”) to conduct a review thereunder and make a decision regarding the disposition of the appeal.
The Exchange proposes to make conforming amendments to Article IV, Section 4.01(a) of its Bylaws governing board committees by replacing references to the “Board Appeals Committee” with references to the “Committee for Review as a subcommittee of the Regulatory Oversight Committee” and “its subcommittee, the CFR.” The Exchange also proposes to make conforming amendments to NYSE Arca Rules 2.4, 10.3, 10.6, 10.8, 10.11, 10.12, 10.14 and NYSE Arca Equities Rules 2.3, 5.5, 10.3, 10.6, 10.8, 10.11, 10.12, and 10.13 by generally replacing references to the current NYSE Arca BAC and NYSE Arca Equities BAC with references to the “Committee for Review” or “CFR” and to replace references to the “Appeals Panel” with the “CFR Appeals Panel.”
The Exchange proposes in connection with the its termination of the intercompany RSA pursuant to which NYSE Regulation provided regulatory services to the Exchange, to amend NYSE Arca Rule 0 (Regulation of the Exchange, OTP Holders and OTP Firms) and NYSE Arca Equities Rule 0 (Regulation of the Exchange and Exchange Trading Permit Holders) to delete references to “NYSE Regulation, Inc.” and “NYSE Regulation staff or departments,” and NYSE Arca Equities Rule 5.3(i)(1) (Financial Reports and Related Notices) to delete the reference to “NYSE Regulation” and to replace such reference with “regulatory staff.”
The Exchange proposes to amend NYSE Arca Equities Rule 2.100 (Emergency Powers) to replace a reference to “NYSE Regulation, Inc. Chief Executive Officer” with “Chief Regulatory Officer.”
The Exchange proposes to make certain technical and non-substantive changes to amend NYSE Arca Rules 0 and 10.8, and NYSE Arca Equities Rules 10.3, 10.12, and 10.13.
The Exchange proposes to delete the semi-colon at the end of the heading of NYSE Arca Rule 0; to make grammatical corrections to NYSE Arca Rule 10.8; to replace outdated references to the NYSE Arca Board of Governors in NYSE Arca Equities Rules 10.3, 10.12 and 10.13 with references to the “NYSE Arca Board of Directors”; and to amend the heading of NYSE Arca Equities Rule 10.13 to delete the reference to “the Corporation.”
After careful review, the Commission finds that the proposed rule change, as amended, is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange.
The Exchange represents that the proposed single CFR would be a successor to both the current NYSE Arca BAC and NYSE Arca Equities BAC, which are committees of the NYSE Arca Board and NYSE Arca Equities Board of Directors, respectively, that review appeals of Exchange disciplinary actions in their respective markets.
The Commission also finds that the composition of the proposed CFR ensures the fair representation of members in the administration of the Exchange's affairs.
The Exchange also proposes to amend NYSE Arca Rule 3.3(a)(2)(B) and NYSE Arca Equities Rule 3.3(a)(1)(A) to permit the CFR to appoint a CFR Appeals Panel, consisting of at least three and no more than five individuals.
Finally, the Commission finds that it is consistent with Section 6(b)(5) of the Act for the Exchange to make various technical and conforming revisions to its Rules.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Nasdaq proposes to list and trade the shares of the following under Nasdaq Rule 5735 (“Managed Fund Shares”):
The text of the proposed rule change is available at
In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to list and trade the Shares of each Fund under Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares
First Trust Advisors L.P. will be the investment adviser (“Adviser”) to the Funds. The Funds do not currently intend to use a sub-adviser. First Trust Portfolios L.P. (the “Distributor”) will be the principal underwriter and distributor of each Fund's Shares. The Bank of New York Mellon Corporation (“BNY”) will act as the administrator, accounting agent, custodian and transfer agent to the Funds.
Paragraph (g) of Rule 5735 provides that if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a “fire wall” between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio.
Rule 5735(g) is similar to Nasdaq Rule 5705(b)(5)(A)(i); however, paragraph (g) in connection with the establishment of a “fire wall” between the investment adviser and the broker-dealer reflects the applicable open-end fund's portfolio, not an underlying benchmark index, as is the case with index-based funds. The Adviser is not a broker-dealer, but it is affiliated with the Distributor, a broker-dealer, and has implemented and will maintain a fire wall with respect to its broker-dealer affiliate regarding access to information concerning the composition and/or changes to a portfolio.
In addition, personnel who make decisions on each Fund's portfolio composition will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such Fund's portfolio. In the event (a) the Adviser or any sub-adviser registers as a broker-dealer, or becomes newly affiliated with a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer or becomes affiliated with another broker-dealer, it will implement and will maintain a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, as applicable, regarding access to information concerning the composition and/or changes to a portfolio and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio.
Each Fund intends to qualify each year as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended.
The investment objective of the CEF Income Opportunity Fund will be to seek to provide current income with a secondary emphasis on total return. The investment objective of the Municipal CEF Income Opportunity Fund will be to seek to provide current income. Under normal market conditions,
Each Fund may invest (in the aggregate) up to 20% of its net assets in the following securities and instruments:
Each Fund may invest in the following exchange-traded products: (i) ETFs;
Each Fund may invest in money market mutual funds that will be investment companies registered under the 1940 Act.
Each Fund may invest in short-term debt instruments (described below) or it may hold cash. The percentage of each Fund invested in such instruments or held in cash will vary and will depend on several factors, including market conditions. Each Fund may invest in the following short-term debt instruments:
The Funds will not invest in derivative instruments.
Each Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), deemed illiquid by the Adviser.
The Funds may not invest 25% or more of the value of their respective total assets in securities of issuers in any one industry. This restriction does not apply to (a) obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities or (b) securities of other investment companies.
Each Fund will issue and redeem Shares on a continuous basis at net asset value (“NAV”)
Creations and redemptions must be made by or through an Authorized Participant that has executed an agreement that has been agreed to by the Distributor and BNY with respect to creations and redemptions of Creation Units. All standard orders to create Creation Units must be received by the transfer agent no later than the closing time of the regular trading session on the NYSE (ordinarily 4:00 p.m., Eastern Time) (the “Closing Time”) in each case on the date such order is placed in order for the creation of Creation Units to be effected based on the NAV of Shares as next determined on such date after receipt of the order in proper form. Shares may be redeemed only in Creation Units at their NAV next determined after receipt not later than the Closing Time of a redemption request in proper form by a Fund through the transfer agent and only on a business day.
The Funds' custodian, through the National Securities Clearing
Each Fund's NAV will be determined as of the close of regular trading on the NYSE on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV will be determined as of that time. NAV per Share will be calculated for each Fund by taking the value of such Fund's total assets, including interest or dividends accrued but not yet collected, less all liabilities, including accrued expenses and dividends declared but unpaid, and dividing such amount by the total number of Shares outstanding. The result, rounded to the nearest cent, will be the NAV per Share. All valuations will be subject to review by the Trust Board or its delegate.
The Funds' investments will be valued daily. As described more specifically below, investments traded on an exchange (
If, however, valuations for any of the Funds' investments cannot be readily obtained as provided in the preceding manner, or the Pricing Committee of the Adviser (the “Pricing Committee”)
Certain securities in which a Fund may invest will not be listed on any securities exchange or board of trade. Such securities will typically be bought and sold by institutional investors in individually negotiated private transactions that function in many respects like an over-the-counter secondary market, although typically no formal market makers will exist. Certain securities, particularly debt securities, will have few or no trades, or trade infrequently, and information regarding a specific security may not be widely available or may be incomplete. Accordingly, determinations of the value of debt securities may be based on infrequent and dated information. Because there is less reliable, objective data available, elements of judgment may play a greater role in valuation of debt securities than for other types of securities.
The information summarized below is based on the Valuation Procedures as currently in effect; however, as noted above, the Valuation Procedures are amended from time to time and, therefore, such information is subject to change.
The following investments will typically be valued using information provided by a Pricing Service: Except as provided below, short-term U.S. government securities, commercial paper, and bankers' acceptances, all as set forth under “Other Investments for the Funds” (collectively, “Short-Term Debt Instruments”). Debt instruments may be valued at evaluated mean prices, as provided by Pricing Services. Pricing Services typically value non-exchange-traded instruments utilizing a range of market-based inputs and assumptions, including readily available market quotations obtained from broker-dealers making markets in such instruments, cash flows, and transactions for comparable instruments. In pricing certain instruments, the Pricing Services may consider information about an instrument's issuer or market activity provided by the Adviser.
Short-Term Debt Instruments having a remaining maturity of 60 days or less when purchased will typically be valued at cost adjusted for amortization of premiums and accretion of discounts, provided the Pricing Committee has determined that the use of amortized cost is an appropriate reflection of value given market and issuer-specific conditions existing at the time of the determination.
Repurchase agreements will typically be valued as follows:
Overnight repurchase agreements will be valued at amortized cost when it represents the best estimate of value. Term repurchase agreements (
Certificates of deposit and bank time deposits will typically be valued at cost.
Closed-End Funds, ETFs and ETNs that are listed on any exchange other than the Exchange will typically be valued at the last sale price on the exchange on which they are principally traded on the business day as of which such value is being determined. Closed-End Funds, ETFs and ETNs listed on the Exchange will typically be valued at the official closing price on the business day as of which such value is being determined. If there has been no sale on such day, or no official closing price in the case of securities traded on the Exchange, such securities will typically be valued using fair value pricing. Closed-End Funds, ETFs and ETNs traded on more than one securities exchange will be valued at the last sale price or official closing price, as applicable, on the business day as of which such value is being determined at the close of the exchange representing the principal market for such securities.
Money market mutual funds typically will be valued at their NAVs as reported by such funds' Pricing Services.
The Funds' Web site (
On a daily basis, each Fund will disclose on its Web site the following information regarding each portfolio holding, as applicable to the type of holding: Ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding); quantity held (as measured by, for example, par value or number of shares or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and percentage weighting of the holding in the Fund's portfolio. The Web site information will be publicly available at no charge.
In addition, for each Fund, an estimated value, defined in Rule 5735(c)(3) as the “Intraday Indicative Value,” that reflects an estimated intraday value of the Fund's Disclosed Portfolio, will be disseminated. Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service,
The dissemination of the Intraday Indicative Value, together with the Disclosed Portfolio, will allow investors to determine the value of the underlying portfolio of a Fund on a daily basis and will provide a close estimate of that value throughout the trading day.
Investors will also be able to obtain each Fund's Statement of Additional Information (“SAI”), annual and semi-annual reports (together, “Shareholder Reports”), and Form N-CSR and Form N-SAR, filed twice a year. Each Fund's SAI and Shareholder Reports will be available free upon request from such Fund, and those documents and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded from the Commission's Web site at
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. Information regarding the previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association (“CTA”) plans for the Shares. Quotation and last sale information for the Closed-End Funds, ETFs and ETNs will be available from the exchanges on which they are traded as well as in accordance with any applicable CTA plans.
Pricing information for Short-Term Debt Instruments, repurchase agreements, bank time deposits and certificates of deposit will be available from major broker-dealer firms and/or major market data vendors and/or Pricing Services. Pricing information for Closed-End Funds, ETFs and ETNs will be available from the applicable listing exchange (as indicated above) and from major market data vendors.
Money market mutual funds are typically priced once each business day and their prices will be available through the applicable fund's Web site or from major market data vendors.
The Shares will be subject to Rule 5735, which sets forth the initial and continued listing criteria applicable to Managed Fund Shares. The Exchange represents that, for initial and continued listing, each Fund must be in compliance with Rule 10A-3
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of a Fund. Nasdaq will halt trading in the Shares under the conditions specified in Nasdaq Rules 4120 and 4121, including the trading pauses under Nasdaq Rules 4120(a)(11) and (12).
Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the other assets constituting the Disclosed Portfolio of a Fund; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares also will be subject to Rule 5735(d)(2)(D), which sets forth circumstances under which Shares of a Fund may be halted.
Nasdaq deems the Shares to be equity securities, thus rendering trading in the Shares subject to Nasdaq's existing rules governing the trading of equity securities. Nasdaq will allow trading in the Shares from 4:00 a.m. until 8:00 p.m., Eastern Time. The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in Nasdaq Rule 5735(b)(3), the minimum price variation for quoting and entry of orders in Managed Fund Shares traded on the Exchange is $0.01.
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and also the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns, which could be indicative of manipulative or other violative activity. When such situations are detected, surveillance analysis follows and investigations are opened, where appropriate, to review the behavior of all relevant parties for all relevant trading violations.
FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the Closed-End Funds, ETFs and ETNs held by the Funds with other markets and other entities that are members of the Intermarket Surveillance Group (“ISG”),
For each Fund, all of such Fund's net assets that are invested in Closed-End Funds, ETFs and ETNs will be invested in instruments that trade in markets that are members of ISG or are parties to a comprehensive surveillance sharing agreement with the Exchange.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular for each Fund will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (2) Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in the Shares to customers; (3) how information regarding the Intraday Indicative Value and the Disclosed Portfolio is disseminated; (4) the risks involved in trading the Shares during the Pre-Market and Post-Market Sessions when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (5) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. The Information Circular will also discuss any exemptive, no-action and interpretive relief granted by the Commission from any rules under the Act.
Additionally, the Information Circular for each Fund will reference that such Fund is subject to various fees and expenses described in the Registration Statement. The Information Circular for each Fund will also disclose the trading hours of the Shares of such Fund and the applicable NAV Calculation Time for the Shares. The Information Circular for each Fund will disclose that information about the Shares of such Fund will be publicly available on such Fund's Web site.
All statements and representations made in this filing regarding (a) the description of the portfolios, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange.
In addition, the issuer has represented to the Exchange that it will advise the Exchange of any failure by the Funds to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If a Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Nasdaq 5800 Series.
Nasdaq believes that the proposal is consistent with Section 6(b) of the Act, in general, and Section 6(b)(5) of the Act, in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest.
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in Nasdaq Rule 5735. The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and also FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The Adviser is not a broker-dealer, but it is affiliated with a broker-dealer, and is required to implement a “fire wall” with respect to its broker-dealer affiliate regarding access to information concerning the composition and/or changes to each Fund's portfolio. In addition, paragraph (g) of Nasdaq Rule 5735 further requires that personnel who make decisions on the open-end fund's portfolio composition must be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the open-end fund's portfolio.
FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the Closed-End Funds, ETFs and ETNs held by the Funds with other markets and other entities that are members of ISG, and FINRA may obtain trading information regarding trading in the Shares and such securities held by the Funds from such markets and other entities.
In addition, the Exchange may obtain information regarding trading in the Shares and the Closed-End Funds, ETFs and ETNs held by the Funds from markets and other entities that are members of ISG, which includes securities exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. Moreover, FINRA, on behalf of the Exchange, will be able to access, as needed, trade information for certain fixed income securities held by the Funds reported to FINRA's TRACE. For
The investment objective of the CEF Income Opportunity Fund will be to seek to provide current income with a secondary emphasis on total return. The investment objective of the Municipal CEF Income Opportunity Fund will be to seek to provide current income. Under normal market conditions, (a) the CEF Income Opportunity Fund will seek to achieve its investment objective by investing at least 80% of its net assets (including investment borrowings) in a portfolio of Closed-End Funds and (b) the Municipal CEF Income Opportunity Fund will seek to achieve its investment objective by investing at least 80% of its net assets (including investment borrowings) in a portfolio of municipal Closed-End Funds.
The Funds will not invest in derivative instruments. Each Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), deemed illiquid by the Adviser. Each Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the Fund's net assets are held in illiquid assets. Illiquid assets include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time.
In addition, a large amount of information will be publicly available regarding the Funds and the Shares, thereby promoting market transparency. Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service, will be widely disseminated by one or more major market data vendors and broadly displayed at least every 15 seconds during the Regular Market Session. On each business day, before commencement of trading in Shares in the Regular Market Session on the Exchange, each Fund will disclose on its Web site the Disclosed Portfolio that will form the basis for the Fund's calculation of NAV at the end of the business day.
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last sale information for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the CTA plans for the Shares. Quotation and last sale information for the Closed-End Funds, ETFs and ETNs will be available from the exchanges on which they are traded as well as in accordance with any applicable CTA plans.
Pricing information for Short-Term Debt Instruments, repurchase agreements, bank time deposits and certificates of deposit will be available from major broker-dealer firms and/or major market data vendors and/or Pricing Services. Pricing information for Closed-End Funds, ETFs and ETNs will be available from the applicable listing exchange (as indicated above) and from major market data vendors. Money market mutual funds are typically priced once each business day and their prices will be available through the applicable fund's Web site or from major market data vendors.
Each Fund's Web site will include a form of the prospectus for such Fund and additional data relating to NAV and other applicable quantitative information. Trading in Shares of the Funds will be halted under the conditions specified in Nasdaq Rules 4120 and 4121 or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances under which Shares of a Fund may be halted. In addition, as noted above, investors will have ready access to information regarding each Fund's holdings, the Intraday Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares.
Each Fund's investments will be valued daily. Investments traded on an exchange (
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of additional types of actively managed exchange-traded products that will enhance competition among market participants, to the benefit of investors and the marketplace.
As noted above, FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the Closed-End Funds, ETFs and ETNs held by the Funds with other markets and other entities that are members of ISG, and FINRA may obtain trading information regarding trading in the Shares and such securities held by the Funds from such markets and other entities.
In addition, the Exchange may obtain information regarding trading in the Shares and the Closed-End Funds, ETFs and ETNs held by the Funds from markets and other entities that are members of ISG, which includes securities exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. Moreover, FINRA, on behalf of the Exchange, will be able to access, as needed, trade information for certain fixed income securities held by the Funds reported to FINRA's TRACE.
Furthermore, as noted above, investors will have ready access to information regarding the Funds' holdings, the Intraday Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares. For each Fund, all of such Fund's net assets that are invested in Closed-End Funds, ETFs and ETNs will be invested in instruments that trade in markets that are members of ISG or are parties to a comprehensive surveillance sharing agreement with the Exchange.
For the above reasons, Nasdaq believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed rule change will facilitate the listing and trading of additional types of actively managed exchange-traded funds that will enhance competition among market participants, to the benefit of investors and the marketplace.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
(A) By order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule change should be disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as modified by Amendment No. 1, is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend its Options Pricing at Chapter XV, Section 2, entitled “BX Options Market—Fees and Rebates,” which governs pricing for BX members using the BX Options Market (“BX Options”). The Exchange proposes to modify certain fees (per executed contract) applicable [sic] the Select Symbol Options Tier Schedule for certain Penny Pilot
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to amend its Chapter XV, Section 2, to modify the fees
Currently, Chapter XV, Section 2, subsection (1), contains a Select Symbols Options Tier Schedule that has four tiers; and one fee for BX Options Market Maker to add liquidity in Select Symbols Options in a footnote (the “footnote”).
In Change 1, the Exchange proposes modifications to convert the current footnoted Fee to Add Liquidity to a fifth column in the Select Symbols Options Tier Schedule that is graduated per Tiers 1 through 4. The proposed change will not amend the criteria to qualify for the existing tiers. The proposed change keeps the $0.04 fee that is in the current footnote and makes it applicable to Tier 3, while proposing new graduated fees for the other three Tiers.
Specifically, the Exchange proposes to add a fifth column, Fee to Add Liquidity, to the Select Symbols Options Tier Schedule when BX Options Market Maker trades with Non-Customer or BX Options Market Maker, or Firm. This column will include graduated fees that range from $0.14 for Tier 1 to $0.00 for Tier 4,
Tier 1 in the Select Symbols Options Tier Schedule is currently where a BX Participant (“Participant”) executes less than 0.05% of total industry customer equity and exchange traded fund (“ETF”) option average daily volume (“ADV”) contracts per month. Tier 1 ranges from a $0.00 rebate to a $0.44 fee, with a proposed $0.14 Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm.
Tier 2 in the Select Symbols Options Tier Schedule is currently where Participant executes 0.05% to less than 0.15% of total industry customer equity and ETF option ADV contracts per month. Tier 2 ranges from a $0.25 rebate to a $0.44 fee, with a proposed $0.10 Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm.
Tier 3 in the Select Symbols Options Tier Schedule is currently where Participant executes 0.15% or more of total industry customer equity and ETF option ADV contracts per month. Tier 3 ranges from a $0.37 rebate to a $0.40 fee, with a proposed $0.04 Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm.
Tier 4 in the Select Symbols Options Tier Schedule is currently where Participant executes more than 10,000 BX Price Improvement Auction (“PRISM”)
Chapter XV, Section 2 subsection (1) reflecting the proposed Select Symbols Options Tier Schedule, with a new Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm, will read as follows:
The following charges shall apply to the use of the order execution and routing services of the BX Options market for all securities.
(1) Fees for Execution of Contracts on the BX Options Market:
The following are Select Symbols: ASHR, DIA, DXJ, EEM, EFA, EWJ, EWT, EWW, EWY, EWZ, FAS, FAZ, FXE, FXI, FXP, GDX, GLD, HYG, IWM, IYR, KRE, OIH, QID, QLD, QQQ, RSX, SDS, SKF, SLV, SPY, SRS, SSO, TBT, TLT, TNA, TZA, UNG, URE, USO, UUP, UVXY, UYG, VXX, XHB, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY, XME, XOP, XRT
• Firm fee to add liquidity and fee to remove liquidity in Select Symbols Options will be $0.33 per contract, regardless of counterparty.
• Non-Customer fee to add liquidity and fee to remove liquidity in Select Symbols Options will be $0.46 per contract, regardless of counterparty.
• BX Options Market Maker fee to remove liquidity in Select Symbols Options will be $0.46 per contract when trading with Firm, Non-Customer, or BX Options Market Maker.
• Customer fee to add liquidity in Select Symbols Options when contra to another Customer is $0.33 per contract.
• Volume from all products listed on BX Options will apply to the Select Symbols Options Tiers.
The Exchange is proposing fees changes and adopting in the Select Symbols Options Tier Schedule a graduated Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm. The Exchange believes that this will provide incentives for execution of more contracts, and in particular Select Symbols Options contracts, on the BX Options Market. The proposed Fee to Add Liquidity incentivizes execution of Select Symbol Options Contracts on the Exchange by the fee being lower for each subsequent higher-level Tier.
The Exchange also believes that its proposal should provide increased opportunities for participation in executions on the Exchange, facilitating the ability of the Exchange to bring together participants and encourage more robust competition for orders.
The Exchange believes that its proposal to amend its Pricing Schedule is consistent with Section 6(b) of the Act,
The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues and, also, recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
Likewise, in
Further, “[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers'. . . .”
The Exchange proposes to amend its Chapter XV, Section 2, to modify certain fees to adopt Fee to Add Liquidity in the Select Symbol Options Tier Schedule for certain Penny Pilot Options. The proposed Fee to Add Liquidity in the Select Symbols Options Tier Schedule would, as discussed, apply where BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm. The Exchange believes that its proposal is reasonable, equitable, and not unfairly discriminatory and should provide increased opportunities for participation in executions on the Exchange, facilitating the ability of the Exchange to bring together participants and encourage more robust competition for orders.
In Change 1, the Exchange proposes modifications to convert the current footnoted Fee to Add Liquidity
Specifically, the Exchange proposes four graduated fees that range from $0.14 for Tier 1 to $0.00 for Tier 4.
Tier 1
The proposed rule change is reasonable because it continues to encourage market participant behavior through the fees and rebates system, which is an accepted methodology among options exchanges.
The Exchange believes that the proposed Fee to Add Liquidity in the Select Symbol Options Tier Schedule is reasonable because it is not a novel, untested structure. Rather, the proposed Fee to Add Liquidity is a graduated fees and rebate structure that is similar to what is offered by other options markets
The proposed Fee to Add Liquidity that varies according to Tiers in the Select Symbols Options Tier Schedule clearly reflects the progressively increasing nature of Participant executions structured for the purpose of attracting order flow to the Exchange. This encourages market participant behavior through progressive tiered fees and rebates using an accepted methodology among options exchanges.
The Exchange is proposing changes to its fees schedule and adopting in the Select Symbols Options Tier Schedule a graduated Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm. The Exchange believes that this will provide incentives for execution of more contracts, and in particular Select Symbols Options contracts, on the BX Options Market. The proposed Fee to Add Liquidity incentivizes execution of Select Symbol Options Contracts on the Exchange by such fee being lower for each subsequent higher Tier.
The Exchange also believes that its proposal should provide increased opportunities for participation in executions on the Exchange, facilitating the ability of the Exchange to bring together participants and encourage more robust competition for orders.
Establishing the proposed Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm is equitable and not unfairly discriminatory. This is because the Exchange's proposal to add the noted Fee to Add Liquidity in the Select Symbols Options Tier Schedule will apply uniformly to all similarly situated
The Exchange believes that by making the proposed changes it is continuing to incentivize Participants to execute more volume on the Exchange to further enhance liquidity in this market.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. Specifically, the Exchange does not believe that its proposal to make changes to its Select Symbols Options Tiers Schedule to adopt the Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm will impose any undue burden on competition, as discussed below.
The Exchange operates in a highly competitive market in which many sophisticated and knowledgeable market participants can readily and do send order flow to competing exchanges if they deem fee levels or rebate incentives at a particular exchange to be excessive or inadequate. Additionally, new competitors have entered the market and still others are reportedly entering the market shortly. These market forces ensure that the Exchange's fees and rebates remain competitive with the fee structures at other trading platforms. In that sense, the Exchange's proposal is actually pro-competitive because the Exchange is simply continuing its fees and rebates for Penny Pilot Options in the Select Symbols Options Tier Schedule, and is establishing a graduated Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm in [sic] in order to remain competitive in the current environment.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited.
In terms of intra-market competition, the Exchange notes that price differentiation among different market participants operating on the Exchange (
Moreover, unlike others [sic] market participants each BX Options Market Maker commits to various obligations. These obligations include, for example, transactions of a BX Market Maker must constitute a course of dealings reasonably calculated to contribute to the maintenance of a fair and orderly market, and BX Market Makers should not make bids or offers or enter into transactions that are inconsistent with such course of dealings.
In this instance, the proposed changes to the fees to establish a Fee to Add Liquidity when BX Options Market Maker is trading with Non-Customer or BX Options Market Maker, or Firm in the Select Symbols Options Tiers Schedule, does not impose a burden on competition because the Exchange's execution and routing services are completely voluntary and subject to extensive competition both from other exchanges and from off-exchange venues. If the changes proposed herein are unattractive to market participants, it is likely that the Exchange will lose market share as a result.
Accordingly, the Exchange does not believe that the proposed changes will impair the ability of members or competing order execution venues to maintain their competitive standing in the financial markets. Additionally, the changes proposed herein are pro-competitive to the extent that they continue to allow the Exchange to promote and maintain order executions.
No written comments were either solicited or received.
Pursuant to Section 19(b)(3)(A)(ii) of the Act,
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
Nasdaq proposes to list and trade the shares of the Amplify Dow Theory Forecasts Buy List ETF (the “Fund”) of Amplify ETF Trust (the “Trust”) under Nasdaq Rule 5735 (“Managed Fund Shares”).
The text of the proposed rule change is available at
In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements.
The Exchange proposes to list and trade the Shares of the Fund under Nasdaq Rule 5735, which governs the listing and trading of Managed Fund Shares
Amplify Investments LLC will be the investment adviser (“Adviser”) to the Fund. The following will serve as investment sub-advisers (each, a “Sub-Adviser”) to the Fund: Horizon Investment Services, LLC (“Horizon”) and Penserra Capital Management LLC (“Penserra”). Quasar Distributors LLC
Paragraph (g) of Rule 5735 provides that if the investment adviser to the investment company issuing Managed Fund Shares is affiliated with a broker-dealer, such investment adviser shall erect a “fire wall” between the investment adviser and the broker-dealer with respect to access to information concerning the composition and/or changes to such investment company portfolio.
Rule 5735(g) is similar to Nasdaq Rule 5705(b)(5)(A)(i); however, paragraph (g) in connection with the establishment of a “fire wall” between the investment adviser and the broker-dealer reflects the applicable open-end fund's portfolio, not an underlying benchmark index, as is the case with index-based funds. Neither the Adviser nor any Sub-Adviser is a broker-dealer, although Penserra is affiliated with a broker-dealer.
In addition, personnel who make decisions on the Fund's portfolio composition will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the Fund's portfolio. In the event (a) the Adviser or a Sub-Adviser registers as a broker-dealer, or becomes affiliated with a broker-dealer, or (b) any new adviser or sub-adviser is a registered broker-dealer or becomes affiliated with another broker-dealer, it will implement and will maintain a fire wall with respect to its relevant personnel and/or such broker-dealer affiliate, as applicable, regarding access to information concerning the composition and/or changes to the portfolio and will be subject to procedures designed to prevent the use and dissemination of material non-public information regarding such portfolio.
The Fund intends to qualify each year as a regulated investment company (“RIC”) under Subchapter M of the Internal Revenue Code of 1986, as amended.
The investment objective of the Fund will be to seek long-term capital appreciation. Under normal market conditions,
In general, the Buy List includes 25 to 40 U.S. exchange-traded stocks. All of such stocks are large-cap or mid-cap and are selected based on a proprietary quantitative ranking system known as Quadrix®. Quadrix® ranks approximately 5,000 stocks and scores target stocks based on their operating momentum; valuation; long-term term track record and financial strength; earnings-estimate trends; and share-price performance.
The Fund will seek diversification among the ten economic sectors of the U.S. stock market, and it is not anticipated that more than 45% of the portfolio will be invested in a single sector. Horizon will select the Fund's portfolio securities from the Buy List. Penserra will be responsible for implementing the Fund's investment program by, among other things, trading portfolio securities and performing related services, rebalancing the Fund's portfolio, and providing cash management services in accordance with the investment advice formulated by, and model portfolios delivered by, the Adviser and Horizon.
The Fund may invest the remaining 10% of its net assets in short-term debt securities and other short-term debt instruments (described below), as well as cash equivalents, or it may hold cash. The percentage of the Fund invested in such holdings or held in cash will vary and will depend on several factors, including market conditions. The Fund may invest in the following short-term debt instruments:
The Fund may invest in the securities of other ETFs and non-exchange listed open-end investment companies (referred to as “mutual funds”), including money market funds,
The Fund may hold up to an aggregate amount of 15% of its net assets in illiquid assets (calculated at the time of investment), including securities deemed illiquid by the Adviser or a Sub-Adviser.
The Fund may not invest 25% or more of the value of its total assets in securities of issuers in any one industry or group of industries (other than securities issued or guaranteed by the U.S. government, its agencies or instrumentalities, or securities of other investment companies), except that the Fund may invest 25% or more of the value of its total assets in securities of issuers in a group of industries to approximately the same extent that the Buy List includes the securities of a particular group of industries.
All of the Fund's net assets that are invested in exchange-traded equity securities (including common stocks and ETFs) will be invested in securities that are listed on a U.S. exchange.
The Fund will not invest in derivative instruments. The Fund's investments will be consistent with its investment objective and will not be used to enhance leverage.
The Fund will issue and redeem Shares on a continuous basis at net asset value (“NAV”) only in large blocks of Shares (“Creation Units”) in transactions with authorized participants, generally including broker-dealers and large institutional investors (“Authorized Participants”). Creation Units generally will consist of 50,000 Shares, although this may change from time to time. Creation Units, however, are not expected to consist of less than 50,000 Shares.
As described in the Registration Statement and consistent with the Exemptive Relief, the Fund will issue and redeem Creation Units in exchange for an in-kind portfolio of instruments and/or cash in lieu of such instruments (the “Creation Basket”). In addition, if there is a difference between the NAV attributable to a Creation Unit and the market value of the Creation Basket exchanged for the Creation Unit, the party conveying instruments with the lower value will pay to the other an amount in cash equal to the difference (referred to as the “Balancing Amount”).
Creations and redemptions must be made by or through an Authorized Participant that has executed an agreement with the Distributor with respect to creations and redemptions of Creation Units. All standard orders to create Creation Units must be received by the Distributor no later than the close of the regular trading session on the New York Stock Exchange (“NYSE”) (ordinarily 4:00 p.m., Eastern Time) (the “Closing Time”), in each case on the date such order is placed, in order for the creation of Creation Units to be effected based on the NAV of Shares as next determined on such date after receipt of the order in proper form. Shares may be redeemed only in Creation Units at their NAV next determined after receipt not later than the Closing Time of a redemption request in proper form by the Fund and only on a business day.
Each business day, before the open of trading on the Exchange, the Fund will cause to be published through the National Securities Clearing Corporation the names and quantities of the instruments comprising the Creation Basket, as well as the estimated Balancing Amount (if any), for that day. The published Creation Basket will apply until a new Creation Basket is announced on the following business day.
The Fund's NAV will be determined as of the close of regular trading on the NYSE on each day the NYSE is open for trading. If the NYSE closes early on a valuation day, the NAV will be determined as of that time. NAV per Share will be calculated for the Fund by taking the value of the Fund's total assets, including interest or dividends accrued but not yet collected, less all liabilities, including accrued expenses and dividends declared but unpaid, and dividing such amount by the total number of Shares outstanding. The
The Fund's investments will be valued daily. As described more specifically below, investments traded on an exchange (
Certain securities in which the Fund may invest will not be listed on any securities exchange or board of trade. Such securities will typically be bought and sold by institutional investors in individually negotiated private transactions that function in many respects like an over-the-counter (“OTC”) secondary market, although typically no formal market makers will exist. Certain securities, particularly debt securities, will have few or no trades, or trade infrequently, and information regarding a specific security may not be widely available or may be incomplete. Accordingly, determinations of the value of debt securities may be based on infrequent and dated information. Because there is less reliable, objective data available, elements of judgment may play a greater role in valuation of debt securities than for other types of securities.
The information summarized below is based on the Valuation Procedures as currently in effect; however, as noted above, the Valuation Procedures are amended from time to time and, therefore, such information is subject to change.
Equity securities (including other ETFs) listed on a securities exchange, market or automated quotation system for which quotations are readily available (except for securities traded on NASDAQ) will be valued at the last reported sale price on the primary exchange or market on which they are traded on the valuation date (or at approximately 4:00 p.m., E.T. if a security's primary exchange is normally open at that time). For a security that trades on multiple exchanges, the primary exchange will generally be considered to be the exchange on which the security generally has the highest volume of trading activity. If it is not possible to determine the last reported sale price on the relevant exchange or market on the valuation date, the value of the security will be taken to be the most recent mean between the bid and asked prices on such exchange or market on the valuation date. Absent both bid and asked prices on such exchange, the bid price may be used. For securities traded on NASDAQ, the official closing price will be used. If such prices are not available, the security will be valued based on values supplied by independent brokers or by fair value pricing, as described below.
Open-end investment companies other than ETFs will be valued at NAV.
Except as provided below, short-term U.S. government securities, commercial paper, and bankers' acceptances, all as set forth under “Other Investments” (collectively, “Short-Term Debt Instruments”) will typically be valued using information provided by a Pricing Service. Pricing Services typically value non-exchange-traded instruments utilizing a range of market-based inputs and assumptions, including readily available market quotations obtained from broker-dealers making markets in such instruments, cash flows, and transactions for comparable instruments. In pricing certain instruments, the Pricing Services may consider information about an instrument's issuer or market activity provided by the Adviser.
Short-Term Debt Instruments having a remaining maturity of 60 days or less when purchased will typically be valued at cost adjusted for amortization of premiums and accretion of discounts, provided the Pricing Committee has determined that the use of amortized cost is an appropriate reflection of value given market and issuer-specific conditions existing at the time of the determination.
Certificates of deposit and bank time deposits will typically be valued at cost.
Repurchase agreements will typically be valued as follows: Overnight repurchase agreements will be valued at amortized cost when it represents the best estimate of value. Term repurchase agreements (
The Fund's Web site,
On a daily basis, the Fund will disclose on the Fund's Web site the following information regarding each portfolio holding, as applicable to the type of holding: ticker symbol, CUSIP number or other identifier, if any; a description of the holding (including the type of holding); the identity of the security or other asset or instrument underlying the holding, if any; quantity held (as measured by, for example, par value, notional value or number of shares, contracts or units); maturity date, if any; coupon rate, if any; effective date, if any; market value of the holding; and percentage weighting of the holding in the Fund's portfolio. The Web site information will be publicly available at no charge.
In addition, for the Fund, an estimated value, defined in Rule 5735(c)(3) as the “Intraday Indicative Value,” that reflects an estimated intraday value of the Fund's Disclosed Portfolio, will be disseminated. Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service,
The dissemination of the Intraday Indicative Value, together with the Disclosed Portfolio, will allow investors to determine the value of the underlying portfolio of the Fund on a daily basis and will provide a close estimate of that value throughout the trading day.
Investors will also be able to obtain the Fund's Statement of Additional Information (“SAI”), the Fund's annual and semi-annual reports (together, “Shareholder Reports”), and its Form N-CSR and Form N-SAR, filed twice a year. The Fund's SAI and Shareholder Reports will be available free upon request from the Fund, and those documents and the Form N-CSR and Form N-SAR may be viewed on-screen or downloaded from the Commission's Web site at
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services. Information regarding the previous day's closing price and trading volume information for the Shares will be published daily in the financial section of newspapers. Quotation and last sale information for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the Consolidated Tape Association (“CTA”) plans for the Shares. Quotation and last sale information for U.S. exchange-traded equity securities (including common stocks and ETFs) will be available from the exchanges on which they are traded as well as in accordance with any applicable CTA plans.
Open-end investment companies (other than ETFs) are typically priced once each business day and their prices will be available through the applicable fund's Web site or from major market data vendors.
Pricing information for Short-Term Debt Instruments, repurchase agreements, certificates of deposit and bank time deposits will be available from major broker-dealer firms and/or major market data vendors and/or Pricing Services.
Additional information regarding the Fund and the Shares, including investment strategies, risks, creation and redemption procedures, fees, Fund holdings disclosure policies, distributions and taxes will be included in the Registration Statement.
The Shares will be subject to Rule 5735, which sets forth the initial and continued listing criteria applicable to Managed Fund Shares. The Exchange represents that, for initial and continued listing, the Fund must be in compliance with Rule 10A-3
With respect to trading halts, the Exchange may consider all relevant factors in exercising its discretion to halt or suspend trading in the Shares of the Fund. Nasdaq will halt trading in the Shares under the conditions specified in Nasdaq Rules 4120 and 4121, including the trading pauses under Nasdaq Rules 4120(a)(11) and (12). Trading may be halted because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable. These may include: (1) The extent to which trading is not occurring in the securities and/or the other assets constituting the Disclosed Portfolio of the Fund; or (2) whether other unusual conditions or circumstances detrimental to the maintenance of a fair and orderly market are present. Trading in the Shares also will be subject to Rule 5735(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted.
Nasdaq deems the Shares to be equity securities, thus rendering trading in the Shares subject to Nasdaq's existing rules governing the trading of equity securities. Nasdaq will allow trading in the Shares from 4:00 a.m. until 8:00 p.m., Eastern Time. The Exchange has appropriate rules to facilitate transactions in the Shares during all trading sessions. As provided in Nasdaq Rule 5735(b)(3), the minimum price variation for quoting and entry of orders in Managed Fund Shares traded on the Exchange is $0.01.
The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and also the Financial Industry Regulatory Authority (“FINRA”) on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
The surveillances referred to above generally focus on detecting securities trading outside their normal patterns,
FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund (including common stocks and ETFs) with other markets and other entities that are members of the Intermarket Surveillance Group (“ISG”),
All of the Fund's net assets that are invested in exchange-traded equity securities (including common stocks and ETFs) will be invested in securities that trade in markets that are members of ISG or are parties to a comprehensive surveillance sharing agreement with the Exchange.
In addition, the Exchange also has a general policy prohibiting the distribution of material, non-public information by its employees.
Prior to the commencement of trading, the Exchange will inform its members in an Information Circular of the special characteristics and risks associated with trading the Shares. Specifically, the Information Circular will discuss the following: (1) The procedures for purchases and redemptions of Shares in Creation Units (and that Shares are not individually redeemable); (2) Nasdaq Rule 2111A, which imposes suitability obligations on Nasdaq members with respect to recommending transactions in the Shares to customers; (3) how information regarding the Intraday Indicative Value and the Disclosed Portfolio is disseminated; (4) the risks involved in trading the Shares during the Pre-Market and Post-Market Sessions when an updated Intraday Indicative Value will not be calculated or publicly disseminated; (5) the requirement that members deliver a prospectus to investors purchasing newly issued Shares prior to or concurrently with the confirmation of a transaction; and (6) trading information. The Information Circular will also discuss any exemptive, no-action and interpretive relief granted by the Commission from any rules under the Act.
Additionally, the Information Circular will reference that the Fund is subject to various fees and expenses described in the Registration Statement. The Information Circular will also disclose the trading hours of the Shares of the Fund and the applicable NAV calculation time for the Shares. The Information Circular will disclose that information about the Shares of the Fund will be publicly available on the Fund's Web site.
All statements and representations made in this filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules and surveillance procedures shall constitute continued listing requirements for listing the Shares on the Exchange. In addition, the issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will monitor for compliance with the continued listing requirements. If the Fund is not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under the Nasdaq 5800 Series.
Nasdaq believes that the proposal is consistent with Section 6(b) of the Act in general and Section 6(b)(5) of the Act in particular in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in facilitating transactions in securities, and to remove impediments to and perfect the mechanism of a free and open market and, in general, to protect investors and the public interest.
The Exchange believes that the proposed rule change is designed to prevent fraudulent and manipulative acts and practices in that the Shares will be listed and traded on the Exchange pursuant to the initial and continued listing criteria in Nasdaq Rule 5735. The Exchange represents that trading in the Shares will be subject to the existing trading surveillances, administered by both Nasdaq and also FINRA on behalf of the Exchange, which are designed to detect violations of Exchange rules and applicable federal securities laws.
Neither the Adviser nor any Sub-Adviser is a broker-dealer, although Penserra is affiliated with a broker-dealer and is required to implement a “fire wall” with respect to such broker-dealer affiliate regarding access to information concerning the composition and/or changes to the Fund's portfolio. The Adviser and Horizon are not currently affiliated with a broker-dealer. In addition, paragraph (g) of Nasdaq Rule 5735 further requires that personnel who make decisions on the open-end fund's portfolio composition must be subject to procedures designed to prevent the use and dissemination of material non-public information regarding the open-end fund's portfolio.
FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund (including common stocks and ETFs) with other markets and other entities that are members of ISG, and FINRA may obtain trading information regarding trading in the Shares and such exchange-traded securities held by the Fund from such markets and other entities. In addition, the Exchange may obtain information regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund from markets and other entities that are members of ISG, which includes securities exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. Moreover, FINRA, on behalf of the Exchange, will be able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's TRACE.
All of the Fund's net assets that are invested in exchange-traded equity securities (including common stocks and ETFs) will be invested in securities that trade in markets that are members of ISG or are parties to a comprehensive surveillance sharing agreement with the Exchange.
The investment objective of the Fund will be to seek long-term capital appreciation. Under normal market conditions, the Fund will seek to achieve its investment objective by investing at least 90% of its net assets (including investment borrowings) in
The Fund will monitor its portfolio liquidity on an ongoing basis to determine whether, in light of current circumstances, an adequate level of liquidity is being maintained, and will consider taking appropriate steps in order to maintain adequate liquidity if, through a change in values, net assets, or other circumstances, more than 15% of the Fund's net assets are held in illiquid assets. Illiquid assets include securities subject to contractual or other restrictions on resale and other instruments that lack readily available markets as determined in accordance with Commission staff guidance.
The proposed rule change is designed to promote just and equitable principles of trade and to protect investors and the public interest in that the Exchange will obtain a representation from the issuer of the Shares that the NAV per Share will be calculated daily and that the NAV and the Disclosed Portfolio will be made available to all market participants at the same time.
In addition, a large amount of information will be publicly available regarding the Fund and the Shares, thereby promoting market transparency. Moreover, the Intraday Indicative Value, available on the NASDAQ OMX Information LLC proprietary index data service, will be widely disseminated by one or more major market data vendors and broadly displayed at least every 15 seconds during the Regular Market Session. On each business day, before commencement of trading in Shares in the Regular Market Session on the Exchange, the Fund will disclose on its Web site the Disclosed Portfolio that will form the basis for the Fund's calculation of NAV at the end of the business day.
Information regarding market price and trading volume of the Shares will be continually available on a real-time basis throughout the day on brokers' computer screens and other electronic services, and quotation and last sale information for the Shares will be available via Nasdaq proprietary quote and trade services, as well as in accordance with the Unlisted Trading Privileges and the CTA plans for the Shares. Pricing information for exchange-traded common stocks and ETFs will be available from the applicable listing exchange and from major market data vendors.
Pricing information for Short-Term Debt Instruments, repurchase agreements, certificates of deposit and bank time deposits will be available from major broker-dealer firms and/or major market data vendors and/or Pricing Services. Open-end investment companies (other than ETFs) are typically priced once each business day and their prices will be available through the applicable fund's Web site or from major market data vendors.
The Fund's Web site will include a form of the prospectus for the Fund and additional data relating to NAV and other applicable quantitative information. Trading in Shares of the Fund will be halted under the conditions specified in Nasdaq Rules 4120 and 4121 or because of market conditions or for reasons that, in the view of the Exchange, make trading in the Shares inadvisable, and trading in the Shares will be subject to Nasdaq Rule 5735(d)(2)(D), which sets forth circumstances under which Shares of the Fund may be halted. In addition, as noted above, investors will have ready access to information regarding the Fund's holdings, the Intraday Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares.
In calculating its NAV, the Fund generally will value its investment portfolio at market price. If market prices are not readily available or the Fund reasonably believes they are unreliable, such as in the case of a security value that has been materially affected by events occurring after the relevant market closes, the Fund will price those securities at fair value as determined using methods approved by the Trust Board.
The proposed rule change is designed to perfect the mechanism of a free and open market and, in general, to protect investors and the public interest in that it will facilitate the listing and trading of an additional type of actively-managed exchange-traded product that will enhance competition among market participants, to the benefit of investors and the marketplace.
As noted above, FINRA, on behalf of the Exchange, will communicate as needed regarding trading in the Shares and exchange-traded securities and instruments held by the Fund (including common stocks and ETFs) with other markets and other entities that are members of ISG, and FINRA may obtain trading information regarding trading in the Shares and such exchange-traded securities held by the Fund from such markets and other entities.
In addition, the Exchange may obtain information regarding trading in the Shares and the exchange-traded securities and instruments held by the Fund from markets and other entities that are members of ISG, which includes securities exchanges, or with which the Exchange has in place a comprehensive surveillance sharing agreement. Moreover, FINRA, on behalf of the Exchange, will be able to access, as needed, trade information for certain fixed income securities held by the Fund reported to FINRA's TRACE. Furthermore, as noted above, investors will have ready access to information regarding the Fund's holdings, the Intraday Indicative Value, the Disclosed Portfolio, and quotation and last sale information for the Shares.
For the above reasons, Nasdaq believes the proposed rule change is consistent with the requirements of Section 6(b)(5) of the Act.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange believes that the proposed rule change will facilitate the listing and trading of an additional type of actively-managed exchange-traded fund that will enhance competition among market participants, to the benefit of investors and the marketplace.
Written comments were neither solicited nor received.
Within 45 days of the date of publication of this notice in the
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change, as modified by Amendment No. 1 thereto, is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
SR-NASDAQ-2016-072 on the subject line.
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, Station Place, 100 F Street NE., Washington, DC 20549-9303.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Small Business Administration.
Notice; extension of comment period.
On April 7, 2016, the U.S. Small Business Administration (SBA) published a notice in the
The comment period for the proposed SBIR/STTR Policy Directive is hereby extended from June 6, 2016 until July 6, 2016. You must submit your comments on or before July 6, 2016.
You may submit comments, identified by RIN: 3245-AG64, by any of the following methods:
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SBA will post all comments to this proposed rule on
Edsel Brown, Assistant Director, Office of Innovation, at (202) 401-6365 or
On April 7, 2016, SBA published a notice and request for comments on the referenced proposed SBIR/STTR Policy Directive at 81 FR 20483. SBA received a formal request to extend the comment period by 60 days. After considering the request, SBA decided to extend the comment period an additional 30 days, until July 6. 2016. SBA believes this additional time, coupled with the initial 60-day comment period, will give commenters ample time to consider the proposed changes and submit comments.
The Social Security Administration (SSA) publishes a list of information collection packages requiring clearance by the Office of Management and Budget (OMB) in compliance with Public Law 104-13, the Paperwork Reduction Act of 1995, effective October 1, 1995. This notice includes revisions and one extension of OMB-approved information collections.
SSA is soliciting comments on the accuracy of the agency's burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility, and clarity; and ways to minimize burden on respondents, including the use of automated collection techniques or other forms of information technology. Mail, email, or fax your comments and recommendations on the information collection(s) to the OMB Desk Officer and SSA Reports Clearance Officer at the following addresses or fax numbers.
Or you may submit your comments online through
I. The information collection below is pending at SSA. SSA will submit it to OMB within 60 days from the date of this notice. To be sure we consider your comments, we must receive them no later than August 1, 2016. Individuals can obtain copies of the collection instrument by writing to the above email address.
Application Status—20 CFR 401.45—0960-0763. Application Status provides users with the capability to check the status of their pending Social Security claims via the National 800 Number Automated Telephone Service. Users need their Social Security number and a confirmation number to access this information. SSA's systems determine the type of claim(s) the caller filed based upon the information they provide. Subsequently, the automated telephone system provides callers with the option to choose the claim for which they wish to obtain status. If the caller applied for multiple claims, the automated system allows the caller to select only one claim at a time. Once callers select the claim(s) they are calling about, an automated voice advises them of the status of their claim. The respondents are current Social Security claimants who wish to check on the status of their claims.
II. SSA submitted the information collections below to OMB for clearance. Your comments regarding the information collections would be most useful if OMB and SSA receive them 30 days from the date of this publication. To be sure we consider your comments, we must receive them no later than June 30, 2016. Individuals can obtain copies of the OMB clearance packages by writing to
1. Beneficiary Recontact Report—20 CFR 404.703, 404.705—0960-0502. SSA investigates recipients of disability payments to determine their continuing eligibility for payments. Research indicates recipients may fail to report circumstances that affect their eligibility. Two such cases are: (1) when parents receiving disability benefits for their child marry; and (2) the removal of an entitled child from parents' care. SSA uses Form SSA-1588-SM to ask mothers or fathers about both their marital status and children under their care, to detect overpayments and avoid continuing payment to those who are no longer entitled. Respondents are recipients of mothers' or fathers' Social Security benefits.
2. Technical Updates to Applicability of the Supplemental Security Income (SSI) Reduced Benefit Rate for Individuals Residing in Medical Treatment Facilities—20 CFR 416.708(k)—0960-0758. Section 1611(e)(1)(A) of the Social Security Act states residents of public institutions are ineligible for SSI. However, Sections 1611(e)(1)(B) and (G) list certain exceptions to this provision, making it necessary for SSA to collect information about SSI recipients who enter or leave a medical treatment facility or other public or private institution. SSA's regulation 20 CFR 416.708(k) establishes the reporting guidelines for implementing this legislative requirement. SSA collects the information to determine eligibility for SSI and the payment amount. The respondents are SSI recipients who enter or leave an institution.
Notice of request for public comment and submission to OMB of proposed collection of information.
The Department of State has submitted the information collection described below to the Office of Management and Budget (OMB) for approval. In accordance with the Paperwork Reduction Act of 1995 we are requesting comments on this collection from all interested individuals and organizations. The purpose of this Notice is to allow 30 days for public comment.
Submit comments directly to the Office of Management and Budget (OMB) up to June 30, 2016.
Direct comments to the Department of State Desk Officer in the Office of Information and Regulatory Affairs at the Office of Management and Budget (OMB). You may submit comments by the following methods:
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Direct requests for additional information regarding the collection listed in this notice, including requests for copies of the proposed collection instrument and supporting documents, to David Record at 2401 E Street NW., Fourteenth Floor, Washington, DC 20522, who may be reached on 202-261-8800 or at
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We are soliciting public comments to permit the Department to:
• Evaluate whether the proposed information collection is necessary for the proper functions of the Department.
• Evaluate the accuracy of our estimate of the time and cost burden for this proposed collection, including the validity of the methodology and assumptions used.
• Enhance the quality, utility, and clarity of the information to be collected.
• Minimize the reporting burden on those who are to respond, including the use of automated collection techniques or other forms of information technology.
Please note that comments submitted in response to this Notice are public record. Before including any detailed personal information, you should be aware that your comments as submitted, including your personal information, will be available for public review.
The information collected is needed to ascertain whether respondents are valid interpreting and/or translating candidates, based on their work history and legal work status in the United States. If candidates successfully become contractors for the U.S. Department of State, Office of Language Services, the information collected is used to initiate security clearance background checks and for processing payment vouchers. Respondents are typically members of the general public with varying degrees of experience in the fields of interpreting and/or translating.
OLS makes the “Office of Language Services Contractor Application Form” available via the OLS Internet site. Respondents can submit it via email.
Federal Aviation Administration (FAA), DOT.
The FAA is issuing this notice to advise the public that a meeting of the Federal Aviation Administration Air Traffic Procedures Advisory Committee (ATPAC) will be held to review present air traffic control procedures and practices for standardization, revision, clarification, and upgrading of terminology and procedures.
The meeting will be held Monday, July 11, 2016, from 1 p.m. to 4:30 p.m., and Tuesday, July 12, 2016, from 9 a.m. to 4:30 p.m.
The meeting will be held at the FAA Air Traffic Control System Command Center, 3701 Macintosh Dr., Warrenton, VA 20187.
Ms. Heather Hemdal, ATPAC Executive Director, 600 Independence Avenue SW., Washington, DC 20591.
Pursuant to Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92-463; 5 U.S.C. App.2), notice is hereby given of a meeting of the ATPAC to be held Monday, July 11, 2016, from 1 p.m. to 4:30 p.m., and Tuesday, July 12, 2016, from 9 a.m. to 4:30 p.m.
The agenda for this meeting will cover a continuation of the ATPAC's review of present air traffic control procedures and practices for standardization, revision, clarification, and upgrading of terminology and procedures. It will also include:
1. Call for Safety Items.
2. Approval of minutes of the previous meeting.
3. Introduction of New Areas of Concern or Miscellaneous items.
4. Items of Interest.
5. Discussion and agreement of location and dates for subsequent meetings.
Attendance is open to the interested public but limited to space available. With the approval of the Chairperson, members of the public may present oral statements at the meeting. Persons desiring to attend and persons desiring to present oral statements should notify Ms. Heather Hemdal no later than July 1, 2016. Any member of the public may present a written statement to the ATPAC at any time at the address given above.
Federal Highway Administration (FHWA), Department of Transportation (DOT).
Notice of Funding Opportunity; extension of application submittal date.
The FHWA is extending the period for submitting applications to the Notice of Funding Opportunity (NOFO) published March 29, 2016, for the advanced transportation and congestion management technologies deployment program. The original due date for applications was June 3, 2016. The
The period for submitting applications to the Notice of Funding Opportunity for the Advanced Transportation and Congestion Management Technologies Deployment (ATCMTD) program published on March 29, 2016 (81 FR 17536), is extended. Applications must be submitted by 3 p.m. ET, on June 24, 2016. Applications must be submitted through
Applications must be submitted through
For further information concerning this notice, please contact the FHWA via email at
An electronic copy of this document may be downloaded from the
On March 29, 2016, at 81 FR 17536, FHWA published in the
The original date for submitting applications was June 3, 2016. A number of eligible entities requested additional time to develop and prepare applications for the ATCMTD program. The FHWA recognizes that potential applicants may need additional time to fully prepare applications, therefore, the date for submitting applications for the ATCMTD program is changed from June 3, 2016, to June 24, 2016.
23 U.S.C. 503(c)(4).
Federal Railroad Administration (FRA), U. S. Department of Transportation (DOT).
Notice of Intent (NOI) to prepare an Environmental Impact Statement (EIS).
Through this NOI, FRA announces it will prepare an EIS and Environmental Impact Report (EIR) jointly with the Los Angeles County Metropolitan Transportation Authority (Metro) for the Link Union Station Project (Link US Project). FRA and Metro will develop the EIS/EIR in compliance with the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321
Persons interested in providing written comments on the scope of the Link US Project must do so by June 30, 2016.
A Public scoping meeting is scheduled on Thursday, June 2, 2016.
Interested persons should send written comments to FRA's Office of Program Delivery, 1200 New Jersey Avenue SE., (Mail Stop 20), Washington, DC 20590, or Los Angeles County Metropolitan Transportation Authority (Metro) Headquarters, One Gateway Plaza (Mail Stop 99-13-1), Los Angeles, California, 90012, or via email to Mark Dierking, Community Relations Manager, at
Interested persons may also provide comments orally or in writing at the scoping meeting. FRA and Metro will hold the scoping meeting between 6:00 p.m. and 8:00 p.m. at: Metro Headquarters: One Gateway Plaza, Los Angeles, California, 90012. Metro Headquarters is an Americans with Disabilities Act of 1990 (ADA) accessible facility. Spanish and Mandarin translation will be provided. You may call 213-922-2499 at least 72 hours in advance of the meeting to request other ADA accommodations or translation services.
Ms. Stephanie Perez, Environmental Protection Specialist, Office of Program Delivery, Federal Railroad Administration, 1200 New Jersey Avenue SE., (Mail Stop 20), Washington, DC 20590; Telephone: (202) 493-0388, email:
FRA is an operating administration of DOT and is responsible for overseeing the safety of railroad operations, including the safety of any proposed rail ground transportation system. FRA is also authorized to provide, subject to appropriations, funding for intercity passenger and rail capital investments and to provide loans and other financial support for railroad investment. FRA may provide funding or financing for the Link US Project in the future.
FRA is the lead agency under NEPA. Metro will be the joint lead agency under NEPA and the lead state agency under CEQA. FRA and Metro will prepare the EIS/EIR consistent with NEPA, the Council on Environmental Quality (CEQ) regulations implementing NEPA in 40 CFR parts 1500-1508, and FRA's Procedures for Considering Environmental Impacts in 64 FR 28545, dated May 26, 1999 (Environmental Procedures). FRA and Metro will
The EIS will also document FRA's compliance with other applicable Federal, state, and local laws including, Section 106 of the National Historic Preservation Act (54 U.S.C. 306108), Section 4(f) of the U.S. Department of Transportation Act of 1966 (49 U.S.C. 303(c)), Section 309(a) of the Clean Air Act (42 U.S.C. 7609(a)), and Executive Order 12898 and U.S. DOT Order 5610.2(a) on Environmental Justice.
The Link US Project would improve operational flexibility and expand capacity at Los Angeles Union Station (LAUS). FRA and Caltrans first studied potential capacity improvements in a 2002 EIS/EIR known as the Run-Through Tracks Project. In 2005, FRA issued a Final EIS and Caltrans certified the Final EIR for the Run-Through Tracks Project. Since 2005, Metro identified new components and changes to the local and regional operational and capacity requirements at LAUS. The following new components and changed circumstances now need to be studied in the Link US Project EIS/EIR:
• Coordinated activities between Metro and the California High-Speed Rail Authority (CHSRA) to facilitate the planned High Speed Rail (HSR) system;
• A new passenger concourse as a component of the LAUS Master Plan (LAUSMP). The passenger concourse will include new vertical circulation elements (stairs, escalators, and elevators) and up to 600,000 square feet dedicated for passenger circulation and waiting areas, passenger support functions and amenities (up to 100,000 square feet), and building functional support areas to meet the demands of a multi-modal transit station;
• Integration of run-through tracks on an elevated rail yard to accommodate the new passenger concourse, consistent with the LAUSMP;
• Incorporation of a single loop track;
• Compatibility with other planned or completed Metro and public projects;
• Property ownership and valuation changes; and
• Land use changes since 2005 within the study area.
FRA and Metro will prepare the Link US Project EIS/EIR to analyze these new components and address the changed circumstances.
LAUS is located at 800 North Alameda Street, City of Los Angeles, California 90012. LAUS is generally bounded by U.S. Highway 101 (U.S. 101) to the south, Alameda Street to the west, Cesar E. Chavez Avenue to the north, and Vignes Street to the east and is located in an urban setting, northeast of downtown Los Angeles and west of the Los Angeles River. The Link US Project limits within the railroad corridor extend from Control Point (CP) Chavez in the north (near North Main Street) to CP Olympic in the south (near the Interstate 10/State Route 60/U.S. 101 interchange).
LAUS is a stub-ended terminal station dating from 1939 that is the central hub for regional transportation in Southern California. Metro operates multiple modes of transit including bus, subway (Red and Purple Lines), and light rail transit (Gold Line) at LAUS. Metrolink (the commuter rail operator governed by the Southern California Regional Rail Authority (SCRRA)) and Amtrak are responsible for operating commuter and intercity rail services, respectively, and maintaining a safe and reliable level of service on existing rail lines, including the Los Angeles-San Diego-San Luis Obispo railroad corridor (primarily commuter ridership). CHSRA is responsible for construction and operation of a statewide HSR system in California. FRA and CHSRA are preparing NEPA/CEQA documents for the Burbank to Los Angeles and Los Angeles to Anaheim sections of the HSR System both of which include a common station at LAUS, including consideration of an at-grade concept. However, LAUS's operational functionality is becoming increasingly limited due to a forecasted increase in ridership on multiple transit and rail lines and the potential for new passenger rail and HSR service in the future.
Between 2000 and 2014, the population in the Southern California Association of Governments (SCAG) region increased by 2 million people (approximately 12.3 percent increase). By 2040, employment and population growth within the SCAG region is forecasted to increase by 16 percent. According to a 2015Metro Transforming LAUS Summary Report about LAUS, there are approximately 110,000 passenger trips travelling through LAUS each weekday. Metro anticipates continued increases in population and employment will nearly double the demand on existing and planned modes of transportation; resulting in over 200,000 passenger trips through LAUS each weekday by 2040.
By 2030, Metrolink and Amtrak anticipate they will need to nearly double the number of overall train operations to provide additional commuter and intercity passenger service throughout the region. This includes an increase in “through” trains between Los Angeles and San Diego making all stops; an increase in commuter and intercity passenger service to Ventura and Santa Barbara counties; intercity passenger service to San Luis Obispo; and the addition of a “through” intercity passenger service to San Francisco (California State Rail Plan, Caltrans 2013). In addition, Metro is working with the CHSRA to facilitate the planned HSR system at LAUS.
FRA and Metro have identified Link US Project as a critical transportation project to respond to the forecasted ridership increases in the region. Link US Project also represents a critical first step in the implementation of regional transportation solutions identified in the following SCAG planning documents:
• Federally Approved Transportation Improvement Program, (2015);
• Regional Comprehensive Plan and Guide (2008); and
• Regional Transportation Plan and Sustainable Communities Strategy (2016).
Due to the forecasted increase in ridership on existing transit and rail modes combined with the potential for new passenger rail and HSR service in the future, the overall purpose of the Link US Project is to improve the functionality and operational capacity of LAUS in a cost-effective manner while maintaining existing transit/rail operations during construction. Metro is also working with the CHSRA to facilitate the planned HSR system at LAUS within the limits of the Link US Project. The purpose of the Link US Project is to improve mobility, travel times, and safety in the following ways:
• Improve operational efficiencies and scheduling reliability for trains using LAUS by reducing the train movement constraints that results from “stub-end” operation by constructing new “run-through” tracks and an operational loop;
• Improve pedestrian access to, and functionality of, the passenger platforms while also improving connectivity with other transit serving amenities (retail, food service, and waiting areas) by expanding the passenger concourse;
• Increase the operational capacity of LAUS by over 40 percent to accommodate planned growth of Metrolink and Amtrak train services, and potential HSR service, while not precluding other planned improvements at LAUS by developing an expanded passenger concourse located below the elevated platforms;
• Preserve space and connections for future rail and transit options, including potential HSR service;
• Enhance accessibility to all transit and rail services for passengers with disabilities;
• Minimize service disruptions to existing transit service during construction; and
• Minimize adverse effects to the environment, including historic properties listed on the National Register of Historic Places.
The Link US Project would also reduce greenhouse gas emissions by over 40 percent and thereby meet the air pollution and greenhouse gas emission reduction targets mandated by California Assembly Bill 32, known as the Global Warming Solutions Act of 2006, as amended, and California Senate Bill 375, known as the California's Sustainable Communities and Climate Protection Act of 2008. These two laws establish the basis for SCAG and Metro to accommodate regional growth through increased and more frequent access to alternative modes of transit for local communities.
The Link US Project would transform LAUS from a “stub-end tracks station” into a “run-through tracks station” while increasing operational capacity to meet the demands of the broader rail system. The EIS/EIR will consider the No Action/No Build Alternative and a number of Build Alternatives.
Each of the Build Alternatives would result in enhanced operational capacity from CP Chavez in the north (near North Main Street) to CP Olympic in the south (near the Interstate 10/State Route 60/U.S. 101 interchange). Major project components are described below.
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The Link US Project would also require modifications to existing bridges at city streets to accommodate new elevated tracks; modifications to U.S. 101 and local streets to accommodate the run-through tracks overhead viaducts; railroad signal, Positive Train Control, and communications-related improvements; modifications to the SCRRA West Bank main line tracks; modifications to the existing Keller Yard and BNSF Railway West Bank Yard; modifications to the Amtrak lead track; new access roadways to the railroad right-of-way (ROW); additional ROW; and utility relocations, replacements, and abandonments.
The EIS/EIR will consider the potential environmental effects of the Link US Project alternatives in detail. FRA and Metro will analyze the following environmental issue areas in the EIS/EIR: Air Quality and Global Climate Change; Biological and Wetland Resources; Cultural and Historic Resources; Economic and Fiscal Impacts; Energy; Environmental Justice; Floodplains, Hydrology, and Water Quality; Geology, Soils, and Seismicity; Hazardous Waste and Materials; Land Use, Planning, and Communities; Noise and Vibration; Parklands, Community Services, and Other Public Facilities; Safety and Security; Section 4(f) Resources; Transportation; and Visual Quality and Aesthetics.
FRA encourages broad participation in the EIS process during scoping and review of the resulting environmental documents. FRA invites all interested agencies, Native American Tribes, and the public at large to participate in the scoping process to ensure the EIS/EIR addresses the full range of issues related to the proposed action, reasonable alternatives are addressed, and all significant issues are identified. FRA requests that any public agency having jurisdiction over an aspect of the Link US Project identify the agency's permit or environmental review requirements and the scope and content of the environmental information germane to the agency's jurisdiction over the Link US Project. FRA requests that public agencies advise FRA if they anticipate taking a major action in connection with the proposed project and if they wish to cooperate in the preparation of the Link US Project EIS/EIR.
FRA will coordinate with participating agencies during development of the Draft EIS under 23 U.S.C. 139. FRA will invite all Federal and non-Federal agencies and Native American Tribes that may have an interest in the Link US Project to become participating agencies for the EIS. If an agency or Tribe is not invited and would like to participate, please contact FRA at the contact information listed above. FRA will develop a Coordination Plan summarizing how it will engage the public, agencies, and Tribes in the process. The Coordination Plan will be posted to the Link US Project Web site
FRA and Metro have scheduled a public scoping meeting as an important component of the scoping process for both the state and Federal environmental review. The scoping meeting described in the
Federal Transit Administration.
Correction: Passenger Ferry Grant Program Announcement of Project Selections.
The Federal Transit Administration (FTA) is publishing the list of Fiscal Years 2015-2016 Passenger Ferry Project Selections which was inadvertently omitted from the allocation notice published on May 23, 2016, titled “Fiscal Year 2015 and 2016 Passenger Ferry Grant Program Project Selections” (81 FR 32383).
Project sponsors should contact the appropriate FTA Regional Office for information regarding applying for the funds made available through this notice. A list of Regional Offices can be found at
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
Notice of public meetings.
This notice is to advise interested persons that on Tuesday, June 14, 2016, the Department of Transportation (DOT) and the Pipeline and Hazardous Materials Safety Administration (PHMSA) will conduct a public meeting in preparation for the 49th session of the United Nations Sub-Committee of Experts on the Transport of Dangerous Goods (UN SCOE TDG). The UN SCOE TDG meeting will be held July 27 to July 6, 2016, in Geneva, Switzerland. PHMSA is soliciting comments about potential new work items, which may be considered for inclusion in its international agenda and feedback on issues that PHMSA may put forward for consideration by the Sub-Committee. (See the
Also on Tuesday, June 14, 2016, the Occupational Safety and Health Administration (OSHA) will conduct a public meeting (Docket No. OSHA-2016-0005) to discuss proposals in preparation for the 31st session of the United Nations Sub-Committee of Experts on the Globally Harmonized System of Classification and Labelling of Chemicals (UNSCEGHS), to be held July 5 to 8, 2016, in Geneva, Switzerland.
Then, OSHA will host its public meeting between 1:00 p.m. to 4:00 p.m. EST in Conference Room 4 in DOT Headquarters, West Building.
Conference call-in and “live meeting” capability will be provided for both meetings. Specific information on call-in and live meeting access will be posted when available at
Steven Webb or Aaron Wiener, Office of Hazardous Materials Safety, Department of Transportation, Washington, DC 20590. Phone number: (202) 366-8553.
Following the 49th session of the UN SCOE TDG, a copy of the Sub-Committee's report will be available at the United Nations Transport Division's Web site at
The primary purpose of PHMSA's meeting will be to prepare for the 49th session of the UN SCOE TDG. The 49th session of the UN SCOE TDG is the third of four meetings scheduled for the 2015-2016 biennium. The UN SCOE TDG may also use the information it gathers at the 49th session to use in the 20th Revised Edition of the United Nations Recommendations on the Transport of Dangerous Goods Model Regulations, which may be implemented into relevant domestic, regional, and international regulations from January 1, 2019.
Copies of working documents, informal documents, and the meeting agenda may be obtained from the United Nations Transport Division's Web site at
General topics on the agenda for the UNSCOE TDG meeting include:
• Explosives and related matters;
• Listing, classification, and packing;
• Electric storage systems;
• Transport of gases;
• Global harmonization of transport of dangerous goods regulations with the Model Regulations;
• Guiding principles for the Model Regulations;
• Cooperation with the International Atomic Energy Agency (IAEA);
• New proposals for amendments to the Model Regulations;
• Issues relating to the Globally Harmonized System of Classification and Labeling of Chemicals (GHS); and
• Miscellaneous pending issues.
The
Pipeline and Hazardous Materials Safety Administration (PHMSA), DOT.
List of applications for special permits.
In accordance with the procedures governing the application for, and the processing of, special permits from the Department of
Comments must be received on or before June 30, 2016.
Ryan Paquet, Director, Office of Hazardous Materials Approvals and Permits Division, Pipeline and Hazardous Materials Safety Administration, U.S. Department of Transportation, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington, DC 20590-0001, (202) 366-4535.
Copies of the applications are available for inspection in the Records Center, East Building, PHH-30, 1200 New Jersey Avenue Southeast, Washington DC or at
This notice of receipt of applications for special permit is published in accordance with Part 107 of the Federal hazardous materials transportation law (49 U.S.C. 5117(6); 49 CFR 1.53(b)).
Office of the Comptroller of the Currency (OCC), Treasury.
Notice and request for comment.
The OCC, as part of its continuing effort to reduce paperwork and respondent burden, invites the general-public and other Federal agencies to take this opportunity to comment on the renewal of an information collection, as required by the Paperwork Reduction Act of 1995 (PRA).
In accordance with the requirements of the PRA, the OCC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.
The OCC is soliciting comment concerning the renewal of its information collection titled, “OCC Supplier Registration Form.”
Comments must be submitted on or before August 1, 2016.
Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments by email, if possible. Comments may be sent to: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, Attention: 1557-0316, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219. In addition, comments may be sent by fax to (571) 465-4326 or by electronic mail to
All comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not include any information in your comment or supporting materials that
Shaquita Merritt, OCC Clearance Officer, (202) 649-5490 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597, Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, Mail Stop 9W-11, Washington, DC 20219.
Under the PRA (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the OMB for each collection of information that they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) to include agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A)) requires Federal agencies to provide a 60-day notice in the
The OCC is proposing to extend OMB approval of the following information collection:
In order to comply with the Congressional mandate to develop standards for the fair inclusion and utilization of minority-and women-owned businesses and to provide effective technical assistance to these businesses, the OCC developed an on-going system to collect up-to-date contact information and capabilities statements from potential suppliers. This information allows the OCC to update and enhance its internal database of interested minority- and women-owned businesses. This information also allows the OCC to measure the effectiveness of its technical assistance and outreach efforts and to target areas where additional outreach efforts are necessary.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval. The OCC invites comment on:
(a) Whether the collection of information is necessary for the proper performance of the functions of the OCC, including whether the information shall have practical utility;
(b) The accuracy of the OCC's estimate of the burden of the collection of information;
(c) Ways to enhance the quality, utility, and clarity of the information to be collected;
(d) Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology, and
(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13(44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning Revenue Procedure 98-46 and Revenue Procedure 97-44, LIFO Conformity Requirement.
Written comments should be received on or before August 1, 2016 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the collection tools should be directed to LaNita Van Dyke, Internal Revenue Service, room 6526, 1111 Constitution Avenue NW., Washington, DC 20224, or through the internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
Internal Revenue Service (IRS), Treasury.
Notice and request for comments.
The Department of the Treasury, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995, Public Law 104-13 (44 U.S.C. 3506(c)(2)(A)). Currently, the IRS is soliciting comments concerning EE-111-80 (TD 8019—Final).
Written comments should be received on or before August 1, 2016 to be assured of consideration.
Direct all written comments to Tuawana Pinkston, Internal Revenue Service, room 6526, 1111 Constitution Avenue NW., Washington, DC 20224.
Requests for additional information or copies of the collection tools should be directed to LaNita Van Dyke, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW., Washington, DC 20224, or at (202)622-3634, or through the Internet at
The following paragraph applies to all of the collections of information covered by this notice:
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid OMB control number. Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
The Department of the Treasury will submit the following information collection request to the Office of Management and Budget (OMB) for review and clearance in accordance with the Paperwork Reduction Act of 1995, Public Law 104-13, on or after the date of publication of this notice.
Comments should be received on or before June 30, 2016 to be assured of consideration.
Send comments regarding the burden estimates, or any other aspect of the information collection, including suggestions for reducing the burden, to (1) Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: Desk Officer for Treasury, New Executive Office Building, Room 10235, Washington, DC 20503, or email at
Copies of the submission may be obtained by emailing
As a result of policy changes announced by the President on December 17, 2014, which were implemented in the regulatory changes published by OFAC on January 16, 2015 (80 FR 2291), June 15, 2015 (80 FR 34053), September 21, 2015 (80 FR 56915), January 27, 2016 (81 FR 4583), and March 16, 2016 (81 FR 13989) concerning the Cuban Assets Control Regulations (31 CFR 515), program changes have occurred. These changes, which encourage travel to Cuba coupled with arrangements announced by the Departments of State and Transportation allowing scheduled air service between the United States and Cuba, will significantly increase the ability of U.S. citizens to travel to Cuba to directly engage with the Cuban people, thus resulting in an estimated increase in the number of responses annually.
with the assistance of the Federal Insurance Office. Title 31 CFR 50.8 specifies a rebuttal procedure that requires a written submission by an insurer that seeks to rebut a regulatory presumption of “controlling influence” over another insurer under the TRIP to provide Treasury with necessary information to make a determination.
Office of Energy Efficiency and Renewable Energy, Department of Energy.
Notice of proposed rulemaking and announcement of public meeting.
The Energy Policy and Conservation Act of 1975 (EPCA), as amended, prescribes energy conservation standards for various consumer products and certain commercial and industrial equipment, including commercial water heaters, hot water supply boilers, and unfired hot water storage tanks (hereinafter referred to as “commercial water heating (CWH) equipment”). EPCA also requires that every 6 years, the U.S. Department of Energy (DOE) must determine whether more-stringent, amended standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this action, DOE has tentatively concluded that there is clear and convincing evidence to support more-stringent standards for several classes of the equipment that are the subject of this rulemaking. DOE did not consider more-stringent standards in this action for commercial oil-fired storage water heaters, whose standards were recently amended. Therefore, DOE proposes amended energy conservation standards for certain commercial water heating equipment, and also announces a public meeting to receive comment on these proposed standards and associated analyses and results.
Comments regarding the likely competitive impact of the proposed standards should be sent to the Department of Justice contact listed in the
The public meeting will be held at the U.S. Department of Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at (202) 586-2945. Please note that foreign nationals visiting DOE Headquarters are subject to advance security screening procedures. Any foreign national wishing to participate in the meeting should advise DOE as soon as possible by contacting Ms. Edwards to initiate the necessary procedures. Please also note that any person wishing to bring a laptop computer or tablet into the Forrestal Building will be required to obtain a property pass. Visitors should avoid bringing laptops, or allow an extra 45 minutes. Persons may also attend the public meeting via webinar. For more information, refer to section VII, “Public Participation,” near the end of this notice.
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Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to the Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to
EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at
No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional information on the rulemaking process, see section VII of this document (Public Participation).
A link to the docket Web page can be found at:
For information on how to submit or review public comments and the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email:
Title III, Part C
EPCA, as amended by the Energy Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, requires DOE to conduct an evaluation of its standards for CWH equipment every 6 years and to publish either a notice of determination that such standards do not need to be amended or a notice of proposed rulemaking including proposed amended standards (42 U.S.C. 6313(a)(6)(C)(i)) Pursuant to these statutory requirements, DOE initiated this rulemaking to evaluate the energy conservation standards for covered CWH equipment and to determine whether new or amended standards are warranted.
In addition, EPCA, as amended, also requires DOE to consider amending the existing Federal energy conservation standards for certain types of listed commercial and industrial equipment (generally, commercial water heaters, commercial packaged boilers, commercial air-conditioning and heating equipment, and packaged terminal air conditioners and heat pumps) each time ASHRAE Standard 90.1 is amended with respect to such equipment. (42 U.S.C. 6313(a)(6)(A)) For each type of equipment, EPCA directs that if ASHRAE Standard 90.1 is amended, DOE must publish in the
On October 9, 2013, ASHRAE officially released ASHRAE Standard 90.1-2013, which, among other things, amended standard levels for commercial oil-fired storage water heaters greater than 105,000 Btu/h and less than 4,000 Btu/h/gal, a category of CWH equipment covered under EPCA, thereby triggering DOE's statutory obligation to promulgate an amended uniform national standard at those levels, unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE Standard 90.1 levels. Pursuant to 42 U.S.C. 6313(a)(6), DOE determined in a final rule published on July 17, 2015 (“July 2015 ASHRAE equipment final rule”) that a more-stringent thermal efficiency standard than the ASHRAE 90.1-2013 standard level for commercial oil-fired water heaters is not justified. 80 FR 42614. Therefore, DOE adopted the ASHRAE 90.1-2013 thermal efficiency standard for commercial oil-fired storage water heaters in the Code of Federal Regulations (CFR) at 10 CFR 431.110 with a compliance date of October 9, 2015.
Also relevant here, the American Energy Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012), amended EPCA to require that DOE publish a final rule establishing a uniform efficiency descriptor and accompanying test methods for covered residential water heaters and some CWH equipment. (42 U.S.C. 6295(e)(5)(B)) EPCA further requires the final rule must replace the current energy factor (for residential water heaters) and thermal efficiency and standby loss (for some commercial water heaters) metrics with a uniform efficiency descriptor. (42 U.S.C. 6295(e)(5)(C))
Pursuant to 42 U.S.C. 6295(e), on July 11, 2014, DOE published a final rule for test procedures for residential and certain commercial water heaters (“July 2014 final rule”) that, among other things, established the uniform energy factor (UEF), a revised version of the current residential energy factor metric, as the uniform efficiency descriptor required by AEMTCA. 79 FR 40542, 40578. In addition, the July 2014 final rule defined the term “residential-duty commercial water heater,” an equipment type that is subject to the new UEF metric and the corresponding UEF test procedures. 79 FR 40542, 40586-88 (July 11, 2014). DOE excludes from the UEF covered CWH equipment that is not a residential-duty commercial water heater.
Pursuant to EPCA, any new or amended energy conservation standard that DOE prescribes for CWH equipment shall be designed to achieve significant additional conservation of energy that DOE determines, supported by clear and convincing evidence, is both technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)) In accordance with these and other statutory provisions discussed in this document, DOE has examined all of the CWH equipment classes (except for commercial oil-fired water heaters, which were addressed in a separate rulemaking, as noted above, and unfired hot water storage tanks, which will be examined in a separate rulemaking, as discussed in section III.C.4). Because DOE did not analyze amended energy conservations standards for unfired hot water storage tanks in this rule, DOE proposes to maintain the current R-12.5 minimum thermal insulation requirement for this class. DOE has tentatively concluded that more-stringent standards for commercial gas-fired storage water heaters, residential-duty commercial gas-fired storage water heaters, gas-fired instantaneous water heaters and hot water supply boilers, and electric storage water heaters are warranted. Accordingly, DOE is proposing amended energy conservation standards for these classes of CWH equipment. The proposed standards, if adopted, would apply to all equipment listed in Table I.1 and Table I.2 and manufactured in, or imported into, the United States on and after the compliance date of the standards (
Table I.3 presents DOE's evaluation of the economic impacts of the proposed energy conservation standards on commercial consumers of CWH equipment, as measured by the average life-cycle cost (LCC) savings and the simple payback period (PBP).
DOE's analysis of the impacts of the proposed standards on commercial consumers is described in section IV.F of this document.
The industry net present value (INPV) is the sum of the discounted cash flows to the industry from the base year through the end of the analysis period (2015 to 2048). Using a real discount rate of 9.1 percent,
DOE's analyses indicate that the proposed energy conservation standards for CWH equipment would save a significant additional amount of energy. The cumulative lifetime energy savings for CWH equipment shipped in the 30-year period
The cumulative net present value (NPV) of total commercial consumer costs and savings of the proposed CWH equipment standards in 2014$ ranges from $2.26 billion (at a 7-percent discount rate) to $6.75 billion (at a 3-percent discount rate), respectively. This NPV expresses the estimated total value of future operating-cost savings minus the estimated increased equipment costs for CWH equipment shipped in 2019-2048 discounted back to the current year (2015). Chapter 10 of the NOPR TSD provides more details on the NPV analyses.
In addition, the proposed standards would have significant environmental benefits. The energy savings are estimated to result in cumulative emission reductions (over the same period as for energy savings) of 98 million metric tons (Mt)
The value of the CO
Table I.4 summarizes the national economic benefits and costs expected to result from this NOPR's proposed standards for CWH equipment.
The benefits and costs of the proposed energy conservation standards, for CWH equipment shipped in 2019-2048, can also be expressed in terms of annualized values. The monetary values for the total annualized net benefits are the sum of: (1) The national economic value of the benefits in reduced operating costs, minus (2) the increase in equipment purchase prices and installation costs, plus (3) the value of the benefits of CO
The national operating savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing this equipment. The national operating cost savings is measured for the lifetime of CWH equipment shipped in 2019-2048.
The CO
Estimates of annualized benefits and costs of the proposed standards (over a 30-year period) are shown in Table I.5. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO
DOE has tentatively concluded that, based upon clear and convincing evidence, the proposed standards for the CWH equipment classes evaluated in this rulemaking represent the maximum improvement in energy efficiency that is technologically feasible and economically justified, and would result in the significant additional conservation of energy. DOE further notes that equipment achieving these standard levels is already commercially available for all equipment classes covered by this proposal. Based on the analytical results described in this section, DOE has tentatively concluded that the benefits of the proposed standards to the Nation (
DOE also considered more-stringent energy efficiency levels as trial standard levels, and is still considering them in this rulemaking. However, DOE has tentatively concluded that the potential burdens of the more-stringent energy efficiency levels would outweigh the projected benefits. Based on consideration of the public comments DOE receives in response to this document and related information collected and analyzed during the course of this rulemaking effort, DOE may adopt energy efficiency levels presented in this document that are either higher or lower than the proposed standards, or some combination of level(s) that incorporate the proposed standards in part.
The following section briefly discusses the statutory authority underlying this proposal, as well as some of the relevant historical background related to the establishment of standards for CWH equipment.
Title III, Part C
The initial Federal energy conservation standards and test procedures for CWH equipment were added to EPCA by the Energy Policy Act of 1992 (EPACT 1992), Public Law 102-486. (42 U.S.C. 6313(a)(5) and 42 U.S.C. 6314(a)(4)(A)) These initial CWH standards mirrored the levels and equipment classes in ASHRAE Standard 90.1-1989.
In acknowledgment of technological changes that yield energy efficiency benefits, the U.S. Congress further directed DOE through EPCA to evaluate and consider amending its energy conservation standards for certain commercial and industrial equipment (
In addition, DOE notes that pursuant to the EISA 2007 amendments to EPCA, the agency must periodically review its already-established energy conservation standards for covered ASHRAE equipment and publish either a notice of proposed rulemaking with amended standards or a determination that the standards do not need to be amended. (42 U.S.C. 6313(a)(6)(C)(i)) In December 2012, this provision was further amended by AEMTCA to clarify that DOE's periodic review of ASHRAE equipment must occur “[e]very six years.” (42 U.S.C. 6313(a)(6)(C)(i)) AEMTCA also modified EPCA to specify that any amendments to the design requirements with respect to the ASHRAE equipment would trigger DOE review of the potential energy savings under 42 U.S.C. 6313(a)(6)(A)(i). AEMTCA also added a requirement that DOE must initiate a rulemaking to consider amending the energy conservation standards for any covered equipment for which more than 6 years has elapsed since the issuance of the most recent final rule establishing or amending a standard for the product as of the date of AEMTCA's enactment (
DOE published the most recent final rule for energy conservation standards for CWH equipment on January 12, 2001 (“January 2001 final rule”), which adopted efficiency levels in ASHRAE Standard 90.1-1999. 66 FR 3336, 3356. Because more than 6 years have passed since issuance of the last final rule for CWH equipment, DOE is required to publish either a notice of determination that the current standards for these equipment types do not need to be amended, or a notice of proposed rulemaking proposing amended energy conservation standards for these equipment types.
When setting standards for the equipment addressed by this document, EPCA, as amended by AEMTCA, prescribes specific statutory criteria for DOE to consider when determining whether an amended standard level more stringent than that in ASHRAE Standard 90.1 is economically justified. See generally 42 U.S.C. 6313(a)(6)(A)-(C). First, EPCA requires that any amended standards for CWH equipment must be designed to achieve significant additional conservation of energy that DOE determines, supported by clear and convincing evidence, and be both technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)) Furthermore, DOE may not adopt any standard that would increase the maximum allowable energy use or decrease the minimum required energy efficiency of covered equipment. (42 U.S.C. 6313(a)(6)(B)(iii)(I) and (C)(i)) In deciding whether a proposed standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens by considering, to the maximum extent
(1) The economic impact of the standard on manufacturers and consumers of the products subject to the standard;
(2) The savings in operating costs throughout the estimated average life of the product in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses of the products likely to result from the standard;
(3) The total projected amount of energy savings likely to result directly from the standard;
(4) Any lessening of the utility or the performance of the products likely to result from the standard;
(5) The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the standard;
(6) The need for national energy conservation; and
(7) Other factors the Secretary considers relevant.
(42 U.S.C. 6313(a)(6)(B)(ii) and (C)(i))
Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of covered equipment. (42 U.S.C. 6314) Specifically, EPCA requires that if a test procedure referenced in ASHRAE Standard 90.1 is updated, DOE must update its test procedure to be consistent with the amended test procedure in ASHRAE Standard 90.1, unless DOE determines that the amended test procedure is not reasonably designed to produce test results that reflect the energy efficiency, energy use, or estimated operating costs of the ASHRAE equipment during a representative average use cycle. In addition, DOE must determine that the amended test procedure is not unduly burdensome to conduct. (42 U.S.C. 6314(a)(2) and (4)) Manufacturers of covered equipment must use the prescribed DOE test procedure as the basis for certifying to DOE that their equipment complies with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of such equipment. (42 U.S.C. 6314(d)) Similarly, DOE must use these test procedures to determine whether the equipment complies with standards adopted pursuant to EPCA. The DOE test procedure for CWH equipment currently appears at 10 CFR 431.106.
EPCA, as codified, also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6313(a)(6)(B)(iii)(I) and (C)(i)) Furthermore, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States of any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States at the time of the Secretary's finding. (42 U.S.C. 6313(a)(6)(B)(iii)(II)(aa) and (C)(i))
Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional costs to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and, as applicable, water) savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure.
Additionally, EPCA specifies criteria when promulgating a standard for a type or class of covered equipment that has two or more subcategories that may justify different standard levels. DOE must specify a different standard level than that which applies generally to such type or class of equipment for any group of covered products that has the same function or intended use if DOE determines that products within such group: (A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and which justifies a higher or lower standard. In determining whether a performance-related feature justifies a different standard for a group of products, DOE generally considers such factors as the utility to the commercial consumer of the feature and other factors DOE deems appropriate. In a rule prescribing such a standard, DOE includes an explanation of the basis on which such higher or lower level was established. DOE considered these criteria in the context of this rulemaking.
Other than the exceptions specified in 42 U.S.C. 6316, Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards for covered CWH equipment. (42 U.S.C. 6316(b))
As noted above, DOE most recently amended energy conservation standards for certain CWH equipment in the July 2015 ASHRAE equipment final rule. 80 FR 42614, 42667 (July 17, 2015). The current standards for all CWH equipment classes are set forth in Table II.1.
The Energy Policy Act of 1992 (EPACT), Public Law 102-486, amended EPCA to prescribe mandatory energy conservation standards for CWH equipment, including storage water heaters, instantaneous water heaters, and unfired hot water storage tanks. (42 U.S.C. 6313(a)(5)) These statutory energy conservation standards corresponded to the efficiency levels in ASHRAE Standard 90.1-1989.
As noted in section II.A of this document, on October 29, 1999, ASHRAE released Standard 90.1-1999, which included new efficiency levels for numerous categories of CWH equipment. DOE evaluated these new standards and subsequently amended energy conservation standards for CWH equipment in a final rule published in the
Under those circumstances, DOE could not adopt the new efficiency level for electric storage water heaters in ASHRAE Standard 90.1-1999.
As noted above, ASHRAE increased the thermal efficiency level for commercial oil-fired storage water heaters greater than 105,000 Btu/h and less than 4,000 Btu/h/gal in Standard 90.1-2013, thereby triggering DOE's statutory obligation to promulgate an amended uniform national standard at those levels, unless DOE determines that there is clear and convincing evidence supporting the adoption of more-stringent energy conservation standards than the ASHRAE levels. As a first step in this process, DOE published an energy savings analysis as a Notice of Data Availability (NODA) in the
In addition to requiring rulemaking when triggered by ASHRAE action, EPCA also requires DOE to conduct an evaluation of its standards for CWH equipment every 6 years, and to publish either a notice of determination that such standards do not need to be amended or a notice of proposed rulemaking, including proposed amended standards. (42 U.S.C. 6313(a)(6)(C)(i)) Pursuant to this statutory requirement, DOE initiated this rulemaking to evaluate the energy conservation standards for covered CWH equipment and to determine whether new or amended standards are warranted. As an initial step for reviewing energy conservation standards for CWH equipment, DOE published a request for information for CWH equipment on October 21, 2014 (“October 2014 RFI”). 79 FR 62899. The October 2014 request for information (RFI) solicited information from the public to help DOE determine whether more-stringent energy conservation standards for CWH equipment would result in a significant amount of additional energy savings, and whether those standards would be technologically feasible and economically justified.
DOE received a number of comments from interested parties in response to the October 2014 RFI. These commenters are identified in Table II.3. DOE considered these comments in the preparation of this NOPR. In this document, DOE addresses the relevant public comments it received in the appropriate sections.
In 42 U.S.C. 6313(a), EPCA prescribes a number of compliance dates for any resulting amended standards for CWH equipment. These compliance dates vary depending on specific statutory authority under which DOE is conducting its review (
As noted previously, EPCA requires that at least once every 6 years, DOE must review standards for covered equipment and publish either a notice of determination that standards do not need to be amended or a NOPR proposing new standards. (42 U.S.C 6313(a)(6)(C)(i)) For any NOPR published pursuant to 42 U.S.C. 6313(a)(6)(C), the final rule would apply on the date that is the later of: (1) The date 3 years after publication of the final rule establishing a new standard or (2) the date 6 years after the effective date of the current standard for a covered product. (42 U.S.C. 6313(a)(6)(C)(iv)) For the CWH equipment for which DOE is proposing amended standards, the date 3 years after the publication of the final rule would be later than the date 6 years after the effective date of the current standard. As a result, compliance with any amended energy conservation standards, if adopted by a final rule in this rulemaking, would be required beginning on the date 3 years after the publication of the final rule.
DOE's existing test procedure for CWH equipment is specified at 10 CFR 431.106, and incorporates by reference American National Standards Institute (ANSI) Standard Z21.10.3-2011 (ANSI Z21.10.3-2011), “Gas Water Heaters, Volume III, Storage Water Heaters With Input Ratings Above 75,000 Btu Per Hour, Circulating and Instantaneous.” The test procedure provides mandatory methods for determining the thermal efficiency and standby loss of certain classes of CWH equipment. In 10 CFR 431.104, DOE provides two sources for guidance on how to determine R-value of unfired hot water storage tanks.
On October 21, 2004, DOE published a direct final rule in the
AEMTCA amended EPCA to require that DOE publish a final rule establishing a uniform efficiency descriptor and accompanying test methods for covered residential water heaters and certain CWH equipment. (42 U.S.C. 6295(e)(5)(B)) The final rule must replace the current energy factor (for residential water heaters) and thermal efficiency and standby loss (for commercial water heaters) metrics with a uniform efficiency descriptor. (42 U.S.C. 6295(e)(5)(C)) AEMTCA allowed DOE to provide an exclusion from the uniform efficiency descriptor for specific categories of covered water heaters that do not have residential uses, that can be clearly described, and that are effectively rated using the current thermal efficiency and standby loss descriptors. (42 U.S.C. 6295(e)(5)(F))
EPCA further requires that, along with developing a uniform descriptor, DOE must also develop a mathematical conversion factor to translate the results based upon use of the efficiency metric under the test procedure in effect on December 18, 2012, to the new energy descriptor. (42 U.S.C. 6295(e)(5)(E)(i)) In addition, pursuant to 42 U.S.C. 6295(e)(5)(E)(ii) and (iii), the conversion factor must not affect the minimum efficiency requirements for covered water heaters, including residential-duty commercial water heaters. Furthermore, such conversions must not lead to a change in measured energy efficiency for covered residential and residential-duty commercial water heaters manufactured and tested prior to the final rule establishing the uniform efficiency descriptor.
In the July 2014 final rule, DOE, among other things, established the uniform energy factor (UEF), a revised version of the current residential energy factor metric, as the uniform efficiency descriptor required by AEMTCA. 79 FR 40542, 40578-40579 (July 11, 2014). The uniform efficiency descriptor established in the July 2014 final rule only applies to commercial water heaters that meet the definition of “residential-duty commercial water heater,” which is defined as any gas-fired, electric, or oil-fired storage water heater or instantaneous commercial water heater that meets the following conditions:
(1) For models requiring electricity, uses single-phase external power supply;
(2) Is not designed to provide outlet hot water at temperatures greater than 180 °F; and
(3) Is not excluded by any of the specified limitations regarding rated input and storage volume shown in Table III.1, which reflects the table in 10 CFR 431.102.
CWH equipment not meeting the definition of “residential-duty commercial water heater” was deemed to be sufficiently characterized by the current thermal efficiency and standby loss metrics.
In April, 2016, DOE issued a NOPR proposing to amend the test procedures for certain other CWH equipment (“2016 CWH TP NOPR”). (See Docket No. EERE-2014-BT-TP-0008). In the 2016 CWH TP NOPR, DOE proposed several changes, including: (1) Updating references of industry test standards to incorporate by reference the most recent versions of the industry standards (including updating references from ANSI Z21.10.3-2011 to ANSI Standard Z21.10.3-2015 (ANSI Z21.10.3-2015), “Gas Water Heaters, Volume III, Storage Water Heaters With Input Ratings Above 75,000 Btu Per Hour, Circulating and Instantaneous”; (2) modifying the thermal efficiency and standby loss tests for certain classes of CWH equipment to improve repeatability; (3) developing a test method for determining the efficiency of unfired hot water storage tanks in terms of a standby loss metric; (4) changing the method for setting the thermostat for storage water heaters and storage-type instantaneous water heaters; (5) clarifying the thermal efficiency and standby loss test procedures with regard to stored energy loss and manipulation of settings during efficiency testing; (6) defining “storage-type instantaneous water heaters” and modifying several definitions for consumer water heaters and commercial water heating equipment included at 10 CFR 430.2 and 10 CFR 431.102, respectively; (7) developing a test procedure for measurement of standby loss for flow-activated instantaneous water heaters; (8) establishing temperature-sensing requirements for thermal efficiency and standby loss testing of instantaneous water heaters and hot water supply boilers; (9) modifying the standby loss test procedure for instantaneous water heaters and hot water supply boilers; (10) developing a test procedure for commercial heat pump water heaters; (11) establishing a procedure for determining the fuel input rate of gas-fired and oil-fired CWH equipment and clarifying DOE's enforcement provisions regarding fuel input rate; (12) modifying several definitions included in DOE's regulations for CWH equipment at 10 CFR 431.102; (13) establishing default values for certain testing parameters to be used if these parameters are not specified in product literature or supplemental test instructions; and (14) modifying DOE's certification requirements for CWH equipment. (See EERE-2014-BT-TP-0008) Discussion of DOE's treatment of unfired hot water storage tanks and commercial heat pump water heaters with respect to energy conservation standards can be
For four classes of residential-duty commercial water heaters—electric storage water heaters, heat pump water heaters, gas-fired instantaneous water heaters, and oil-fired instantaneous water heaters—the input criteria established to separate residential-duty commercial water heaters and commercial water heaters are identical to those codified at 10 CFR 430.2 that separate consumer water heaters and commercial water heaters. Because these input criteria are identical, by definition, no models can be classified under these four residential-duty equipment classes. Therefore, to eliminate potential confusion, DOE proposed in the 2016 CWH TP NOPR to remove these classes from the definition for “residential-duty commercial water heater” codified at 10 CFR 431.102. (See EERE-2014-BT-TP-0008) For electric instantaneous water heaters, the rated maximum input criterion for residential-duty commercial water heaters is 58.6 kW, higher than 12 kW, which is the maximum input rate for residential electric instantaneous water heaters as defined in EPCA. (42 U.S.C. 6291(27)(B)) Therefore, there are models on the market that qualify as residential-duty commercial electric instantaneous water heaters. DOE's treatment of electric instantaneous water heaters in this rule is discussed in section III.C.5 of this document.
In response to the 2014 RFI, DOE received several comments on the scope of this rulemaking. These comments cover specific equipment classes, as well as the improvement of overall water heating systems.
The University of Michigan recommended that DOE fund research to develop best concepts for design, installation, and operation standards and codes. (UM, No. 9 at p. 3)
In response, DOE notes that its Office of Energy Efficiency and Renewable Energy (EERE) already supports research and development in multiple areas of water-heating energy efficiency technology, including building codes and roadmaps for emerging water heating technologies.
DOE analyzed equipment classes for commercial water heaters and residential-duty commercial water heaters separately in this rulemaking. This rulemaking, therefore, includes CWH equipment classes that are covered by the UEF metric, as well as CWH equipment classes that continue to be covered by the existing thermal efficiency and standby loss metrics. However, DOE has conducted all analyses for selecting proposed standards in this document using the existing thermal efficiency and standby loss metrics, because there was no efficiency data in terms of UEF available when DOE undertook the analyses for this NOPR.
In the April 2015 NOPR, DOE proposed conversion factors to determine UEF for residential and residential-duty commercial water heaters from their current rated energy factor and thermal efficiency and standby loss values. 80 FR 20116, 20142-43 (April 14, 2015). For residential-duty commercial water heaters, conversion factors for determining UEF were proposed for the four draw patterns specified in the July 2014 test procedure final rule: high, medium, low, and very small.
ASHRAE Standard 90.1-2013 raised the thermal efficiency level for commercial oil-fired storage water heaters from 78 percent to 80 percent. In the July 2015 ASHRAE equipment final rule, DOE adopted the ASHRAE Standard 90.1 efficiency level of 80 percent because DOE determined that there was insufficient potential for energy savings to justify further increasing the standard. 80 FR 42614 (July 17, 2015). Therefore, because thermal efficiency standards for commercial oil-fired storage water heater were just recently addressed in a separate rulemaking under the ASHRAE trigger, DOE did not consider further increasing thermal efficiency standards for commercial oil-fired storage water heaters in this rulemaking, as circumstances have not changed appreciably regarding this equipment during the intervening period. Consequently, this equipment class was not included in any of the analyses described in this document. For this NOPR, DOE also considered whether amended standby loss standards for commercial oil-fired water heaters would be warranted. DOE has tentatively concluded that a change in the maximum standby loss level would likely effect less of a change to energy consumption of oil-fired storage water heaters than would a change in the thermal efficiency. Therefore, an amended standby loss standard is
The current Federal energy conservation standard for unfired hot water storage tanks is expressed as an R-value requirement for the tank thermal insulation. In the 2016 CWH TP NOPR, DOE proposed a new test procedure for unfired hot water storage tanks using a new standby loss metric, which would replace the current R-value requirement. (See EERE-2014-BT-TP-0008) In the October 2014 RFI, DOE stated that any amended energy conservation standards for unfired hot water storage tanks would be in terms of the metric to be established in the noted test procedure rulemaking. 79 FR 62899, 62903 (Oct. 21, 2014). Given the lack of testing data for the new metric and test procedure proposed in the 2016 CWH TP NOPR, DOE plans to consider energy conservation standards for unfired hot water storage tanks in a separate rulemaking. Therefore, DOE did not evaluate potential amendments to standards for unfired hot water storage tanks in this NOPR.
EPCA prescribes energy conservation standards for several classes of commercial water heating equipment manufactured on or after January 1, 1994. (42 U.S.C. 6313(a)(5)) DOE codified these standards in its regulations for commercial water heating equipment at 10 CFR 431.110. However, when codifying these standards from EPCA, DOE inadvertently omitted the standards put in place by EPCA for electric instantaneous water heaters. Specifically, for instantaneous water heaters with a storage volume of less than 10 gallons, EPCA prescribes a minimum thermal efficiency of 80 percent. For instantaneous water heaters with a storage volume of 10 gallons or more, EPCA prescribes a minimum thermal efficiency of 77 percent and a maximum standby loss, in percent/hour, of 2.30 + (67/measured volume [in gallons]). (42 U.S.C. 6313(a)(5)(D) and (E)) Although DOE's regulations at 10 CFR 431.110 do not currently include energy conservation standards for electric instantaneous water heaters, these standards prescribed in EPCA are applicable. Therefore, DOE proposes to codify these standards in its regulations at 10 CFR 431.110.
DOE received several comments on the analysis of commercial electric instantaneous water heaters. A.O. Smith stated that commercial electric instantaneous water heaters should be included in the scope of this rulemaking. (A.O. Smith, No. 2 at p. 1) Similarly, Bradford White and AHRI stated that electric instantaneous units should be included in the scope of this rulemaking, in separate equipment classes. (Bradford White, No. 3 at p. 1; AHRI, No. 5 at p. 2)
Rheem stated that electric instantaneous water heaters should not be included in the scope of this rulemaking because of the limited applications of this equipment. (Rheem, No. 10 at p. 1) Joint Advocates recommended that electric instantaneous water heaters not be included in this rulemaking, unless there is evidence of particularly inefficient models on the market. (Joint Advocates, No. 7 at p. 3)
While it is within the Department's authority to propose amended standards for electric instantaneous water heaters, DOE has tentatively concluded that there is little potential for additional energy savings from doing so. The thermal efficiency of electric instantaneous water heaters is already at nearly 100 percent due to the high efficiency of electric resistance heating elements, thus providing little reason to propose an amended standard for this equipment class. Additionally, DOE tentatively concluded that amending the standby loss standard for this class would result in minimal energy savings.
A.O. Smith also stated that commercial heat pump water heaters, of add-on, integrated, air-source, and water-source categories, should be included in the scope of this rulemaking. (A.O. Smith, No. 2 at p. 1) Similarly, Bradford White, Rheem, and AHRI stated that add-on, integrated, air-source, and water-source heat pump water heaters should be included in this rulemaking. (Bradford White, No. 3 at p. 1; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 2) Rheem also commented that integrated and add-on heat pump water heaters differ by construction, application, life-cycle cost, and energy consumption, and that both air-source and water-source heat pump water heaters are currently available on the market. AHRI also commented that electric instantaneous water heaters and heat pump water heaters should be considered as separate equipment classes, and that if integrated heat pump water heaters are not included, then units falling outside of the definition for residential heat pump water heaters will go unregulated.
Joint Advocates stated that DOE should develop a test procedure for both integrated and add-on commercial heat pump water heaters. Joint Advocates stated that such a test procedure should have low enough operating temperature conditions to gauge whether units operate in electric resistance heating mode during cold weather, and that a DOE test procedure would help grow the market by allowing for greater use of rebate programs. Joint Advocates also commented that air-source units should be included, but that inclusion of water-source units would be complicated due to varying inlet water conditions for water-source and ground-source applications. (Joint Advocates, No. 7 at p. 3)
While DOE agrees that integrated, add-on, and air-source and water-source commercial heat pump water heaters meet EPCA's definitions for commercial storage and instantaneous water heaters, DOE is not proposing amended standards for any of these classes of commercial heat pump water heaters in this NOPR. DOE has found no evidence of any commercial integrated heat pump water heaters on the market. All commercial heat pump water heaters that DOE identified as currently on the market are “add-on” units, which are designed to be paired with either an electric storage water heater or unfired hot water storage tank in the field.
As discussed in section III.B, a test procedure for commercial heat pump water heaters was proposed in the 2016 CWH TP NOPR. (See EERE-2014-BT-TP-0008) Because the test procedure has not yet been established in a final rule and there is not sufficient test data with the proposed test method for units
DOE did not include electric storage water heaters in the analysis of amended thermal efficiency standards. Electric storage water heaters do not currently have a thermal efficiency requirement under 10 CFR 431.110. Electric storage water heaters typically use electric resistance coils as their heating elements, which are highly efficient. The thermal efficiency of these units already approaches 100 percent. Therefore, there are no options for increasing the rated thermal efficiency of this equipment, and the impact of setting thermal efficiency energy conservation standards for these products would be negligible. However, DOE has considered amended standby loss standards for electric storage water heaters.
In its analysis of amended standby loss standards, DOE did not include instantaneous water heaters and hot waters supply boilers other than storage-type instantaneous water heaters.
In each energy conservation standards rulemaking, DOE conducts a screening analysis based on information gathered on all current technology options and prototype designs that could improve the efficiency of the products or equipment that is the subject of the rulemaking. As the first step in such an analysis, DOE conducts a market and technology assessment that develops a list of technology options for consideration in consultation with manufacturers, design engineers, and other interested parties. DOE then determines which of those means for improving efficiency are technologically feasible. DOE considers technologies incorporated in commercially-available equipment or in working prototypes to be technologically feasible. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).
After DOE has determined that particular technology options are technologically feasible, it further evaluates each technology option in light of the following additional screening criteria: (1) Practicability to manufacture, install, and service; (2) adverse impacts on product utility or availability; and (3) adverse impacts on health or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-(iv). Additionally, DOE notes that the four screening criteria do not directly address the propriety status of design options. DOE only considers efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level (
When DOE proposes to adopt an amended standard for a type or class of covered equipment, it must determine the maximum improvement in energy efficiency or maximum reduction in energy use that is technologically feasible for such equipment. Accordingly, in the engineering analysis, DOE determined the maximum technologically feasible (“max-tech”) improvements in energy efficiency for CWH equipment, using the design parameters for the most efficient products available on the market. The max-tech levels that DOE determined for this rulemaking are described in section IV.C.3.b of this proposed rule. Chapter 5 of the NOPR TSD includes more detail on the selected max-tech efficiency levels.
For each TSL, DOE projected energy savings from the classes of equipment that are the subjects of this rulemaking shipped in the 30-year period that begins in the year of compliance with amended standards (2019-2048 for gas-fired CWH equipment and electric CWH equipment).
DOE used its national impact analysis (NIA) spreadsheet model to estimate national energy savings (NES) from potential amended standards for commercial water heating equipment. The NIA spreadsheet model (described in section IV.H of this document) calculates energy savings in terms of site energy, which is the energy directly consumed by equipment at the locations where they are used. For electric commercial water heaters, DOE calculates NES on an annual basis in
In addition to primary energy savings, DOE also calculates full-fuel-cycle (FFC) energy savings. As discussed in DOE's statement of policy and notice of policy amendment, the FFC metric includes the energy consumed in extracting, processing, and transporting primary fuels (
To amend standards for commercial water heating equipment, DOE must determine with clear and convincing evidence that the standards would result in “significant” additional energy savings. (42 U.S.C. 6313(a)(6)(A)(ii)(II) and (C)(i)) Although the term “significant” is not defined in the Act, the U.S. Court of Appeals for the District of Columbia Circuit, in
EPCA provides seven factors to be evaluated in determining whether a potential energy conservation standard for commercial water heating equipment is economically justified. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII) and (C)(i)) The following sections discuss how DOE has addressed each of those seven factors in this rulemaking.
EPCA requires DOE to consider the economic impact of a standard on manufacturers and the commercial consumers of the products subject to the standard. (42 U.S.C. 6313(a)(6)(B)(I) and (C)(i)) In determining the impacts of a potential amended standard on manufacturers, DOE conducts a manufacturer impact analysis (MIA), as discussed in section IV.J of this NOPR. DOE first uses an annual cash-flow approach to determine the quantitative impacts. This step incorporates both a short-term impact assessment (based on the cost and capital requirements during the period between when a regulation is issued and when entities must comply with the regulation) and a long-term impact assessment (over a 30-year period).
For individual commercial consumers, measures of economic impact include the changes in LCC and PBP associated with new or amended standards. These measures are discussed further in the following section. For commercial consumers in the aggregate, DOE also calculates the national net present value of the economic impacts applicable to a particular rulemaking. DOE also evaluates the LCC impacts of potential standards on identifiable subgroups of commercial consumers that may be affected disproportionately by a national standard.
EPCA requires DOE to consider the savings in operating costs throughout the estimated average life of commercial water heating equipment compared to any increase in the price of the equipment that is likely to result from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(II) and (C)(i)) DOE conducts this comparison in its LCC and PBP analysis.
The LCC is the sum of the purchase price of a piece of equipment (including installation cost and sales tax) and the operating expense (including energy, maintenance, and repair expenditures) discounted over the lifetime of the equipment. To account for uncertainty and variability in specific inputs, such as equipment lifetime and discount rate, DOE uses a distribution of values, with probabilities attached to each value. For its analysis, DOE assumes that commercial consumers will purchase the covered equipment in the first year of compliance with amended standards.
The PBP is the estimated amount of time (in years) it takes consumers to recover the increased purchase cost (including installation) of a more-efficient product through lower operating costs. DOE calculates the PBP by dividing the change in purchase cost due to a more-stringent standard by the change in annual operating cost for the year that standards are assumed to take effect.
The LCC savings are calculated relative to a no-new-standards case that reflects projected market trends in the absence of amended standards. DOE identifies the percentage of commercial consumers estimated to receive LCC savings or experience an LCC increase, in addition to the average LCC savings associated with a particular standard level. DOE's LCC analysis is discussed
Although significant conservation of energy is a separate statutory requirement for adopting an energy conservation standard, EPCA requires DOE, in determining the economic justification of a standard, to consider the total projected energy savings that are expected to result directly from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(III) and (C)(i)) As discussed in section IV.H and chapter 10 of the NOPR TSD, DOE uses the NIA spreadsheet to project NES.
In establishing classes of products, and in evaluating design options and the impact of potential standard levels, DOE must consider any lessening of the utility or performance of the considered products likely to result from the standard. (42 U.S.C. 6313(a)(6)(B)(ii)(IV) and (C)(i)) Based on data available to DOE, the standards proposed in this document would not reduce the utility or performance of the CWH equipment under consideration in this rulemaking. Section IV.B of this document and Chapter 4 of the NOPR TSD provide detailed discussion on the potential impact of amended standards on equipment utility and performance.
EPCA directs DOE to consider any lessening of competition that is likely to result from energy conservation standards. It also directs the Attorney General of the United States (Attorney General) to determine the impact, if any, of lessening of competition likely to result from a proposed standard and to transmit such determination in writing to the Secretary, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6313(a)(6)(B)(ii)(V) and (C)(i)) To assist the Attorney General in making such determination, DOE will transmit a copy of this proposed rule and the TSD to the Attorney General for review with a request that the Department of Justice (DOJ) provide its determination on this issue. DOE will publish and address the Attorney General's determination in the final rule. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding these potential impacts. See the
In considering new or amended energy conservation standards, EPCA also directs DOE to consider the need for national energy conservation. (42 U.S.C. 6313(a)(6)(B)(ii)(VII) and (C)(i)) DOE expects that the energy savings from the proposed standards are likely to provide improvements to the security and reliability of the nation's energy system. Reductions in the demand for electricity also may result in reduced costs for maintaining the nation's electricity system. DOE conducts a utility impact analysis to estimate how standards may affect the nation's needed power generation capacity, as discussed in section IV.M.
The proposed standards also are likely to result in environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with energy production. DOE reports the emissions impacts from the proposed standards of this rulemaking, and from each TSL it considered, in sections IV.K and V.B.6 of this NOPR. DOE also reports estimates of the economic value of emissions reductions resulting from the considered TSLs, as discussed in section IV.L of this NOPR.
EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII) and (C)(i)) DOE did not consider other factors for this document.
EPCA creates a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard is less than three times the value of the first year's energy savings resulting from the standard, as calculated under the applicable DOE test procedure. DOE's LCC and PBP analyses generate values used to calculate the effects that proposed energy conservation standards would have on the payback period for commercial consumers. These analyses include, but are not limited to, the 3-year payback period contemplated under the rebuttable-presumption test.
In addition, DOE routinely conducts an economic analysis that considers the full range of impacts to commercial consumers, manufacturers, the Nation, and the environment, as required under 42 U.S.C. 6313(a)(6)(B)(ii) and (C)(i). The results of this analysis serve as the basis for DOE's evaluation of the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification). The rebuttable presumption payback calculation is discussed in section V.B.1.c of this proposed rule.
UM commented that because of the number of issues on which DOE seeks comment, only stakeholders who have staff dedicated to regulatory processes would be able to comment on all issues involved in this rulemaking. (UM, No. 9 at p. 1) UM stated that a large rulemaking like this one favors trade associations over end users who have limited means to respond. UM recommended that DOE break up the rulemaking into smaller, more manageable pieces, thereby allowing more stakeholders to provide comments. (UM, No. 9 at p. 2)
DOE notes that pursuant to EPCA requirements, DOE provides an equal opportunity for the public to provide comment in response to rulemaking notices published in the
In addition, DOE disagrees with UM's assertion that its rulemaking public participation process disproportionally benefits certain groups over end users. All stakeholders' views, data, and other relevant information are taken into account in developing and implementing final regulations. DOE is also statutorily mandated to evaluate the
In response to UM's comments regarding breaking the rulemaking into smaller pieces, DOE clarifies that its rulemaking notices already separate the analysis into analytical subsections as shown in sections III, IV, and V of this document. In each analytical subsection, DOE presents the applicable analytical tools, resources, and data used for the analysis. DOE also clarifies the issues pertaining to the analysis on which it seeks public comment in each subsection. Therefore, DOE views the current structure of its rulemaking notices as sufficient to allow the public to consider and provide comment on specific sections of its rulemaking. As with all rulemakings, DOE encourages stakeholder review and feedback on the analyses described in this NOPR and in the NOPR TSD.
DOE proposes to modify the three notes to the table of energy conservation standards in 10 CFR 431.110. First, DOE proposes to modify the note to the table of energy conservation standards denoted by subscript “a” to maintain consistency with DOE's procedure and enforcement provisions for determining fuel input rate of gas-fired and oil-fired CWH equipment that were proposed in the 2016 CWH TP NOPR. Among these changes, DOE proposed that the fuel input rate be used to determine equipment classes and calculate the standby loss standard. (See EERE-2014-BT-TP-0008) Therefore, in this NOPR, DOE proposes to replace the term “nameplate input rate” with the term “fuel input rate.”
Additionally, DOE proposes to remove the note to the table of energy conservation standards denoted by subscript “b.” This note clarifies the compliance dates for energy conservation standards for units manufactured after 2005 and between 2003 and 2005. DOE has determined that this note is no longer needed because both of these compliance dates are over 10 years before the compliance date of standards proposed in this NOPR.
DOE also proposes to modify the note to the table of energy conservation standards denoted by subscript “c,” which establishes design requirements for water heaters and hot water supply boilers having more than 140 gallons of storage capacity that do not meet the standby loss standard. DOE proposes to replace the phrase “fire damper” with the phrase “flue damper,” because DOE believes that “flue damper” was the intended meaning, and that “fire damper” was a typographical error. DOE believes the intent of this design requirement was to require that any water heaters or hot water supply boilers greater than 140 gallons that do not meet the standby loss standard must have some device that physically restricts heat loss through the flue, either a flue damper or blower that sits atop the flue.
In this NOPR, DOE proposes to make two changes to its certification, compliance, and enforcement regulations at 10 CFR Part 429. First, DOE proposes to add requirements to 10 CFR 429.44 that the rated value of storage tank volume must equal the mean of the measured storage volume of the units in the sample. There are currently no requirements from the Department limiting the amount of difference that is allowable between the tested (
From examination of reported data in the AHRI Directory, DOE observed that many units are rated at storage volumes above the measured storage volume. DOE's maximum standby loss equations for gas-fired and oil-fired CWH equipment are based on the rated storage volume, and the maximum standby loss increases as rated storage volume increases. DOE believes commercial consumers often look to storage volume as a key factor in choosing a storage water heater. Consequently, DOE proposes to adopt rating requirements that the rated storage volume must be equal to the mean of the values measured using DOE's test procedure. In the 2016 CWH TP NOPR, DOE proposed a test procedure for measuring the storage volume of CWH equipment that is similar to the method contained in section 5.27 of ANSI Z21.10.3-2015. (See EERE-2014-BT-TP-0008) In addition, DOE proposes to specify that for DOE-initiated testing, the mean of the measured storage volumes must be within five percent of the rated volume in order to use the rated storage volume in calculation of maximum standby loss. If the mean of the measured storage volumes is more than five percent different than the rated storage volume, then DOE proposes to use the mean of the measured values in calculation of maximum standby loss. DOE notes that similar changes were made to DOE's certification, compliance, and enforcement regulations for residential and residential-duty water heaters in the July 2014 final rule. 79 FR 40542, 40565 (July 11, 2014).
As discussed in section III.I.1, DOE proposes to add requirements to 10 CFR 429.44 that the rated value of storage tank volume must equal the mean of the measured storage volumes of the units in the sample. In addition, DOE proposes to specify that for DOE-initiated testing, a tested value within 5 percent of the rated value would be a valid test result, such that the rated storage volume would then be used in downstream calculations. If the test result of the volume is invalid (
To be consistent with the proposed changes to its certification, compliance, and enforcement regulations, DOE has tentatively concluded that the maximum standby loss equations for CWH equipment should be set in terms of rated volume. The current standby loss standards for water heaters differ in the storage volume metric used in calculation of the standby loss standard (rated storage volume is used for certain classes, while measured storage volume is used for others). Specifically, the
Additionally, DOE proposes to modify the maximum standby loss equation for electric instantaneous water heaters with storage capacity greater than or equal to ten gallons as shown in the following equation. Further discussion of energy conservation standards for electric instantaneous water heaters is included in section III.C.5.
This section addresses the analyses DOE has performed for this rulemaking with regard to CWH equipment. A separate subsection addresses each component of the analyses.
In overview, DOE used several analytical tools to estimate the impact of the standards proposed in this document. The first tool is a spreadsheet that calculates the LCC and PBP of potential amended or new energy conservation standards. The national impacts analysis (NIA) uses a second spreadsheet set that provides shipments forecasts and calculates national energy savings and net present value resulting from potential new or amended energy conservation standards. DOE uses the third spreadsheet tool, the Government Regulatory Impact Model (GRIM), to assess manufacturer impacts of potential new or amended standards. These three spreadsheet tools are available on the DOE Web site for this rulemaking:
Additionally, DOE estimated the impacts on electricity demand and air emissions from utilities due to the amended energy conservation standards for CWH equipment. DOE used a version of EIA's National Energy Modeling System (NEMS) for the electricity and air emissions analyses. The NEMS model simulates the energy sector of the U.S. economy. EIA uses NEMS
For the market and technology assessment for CWH equipment, DOE gathered information that provides an overall picture of the market for the equipment concerned, including the purpose of the equipment, the industry structure, manufacturers, market characteristics, and technologies used in the equipment. This activity included both quantitative and qualitative assessments, based primarily on publicly-available information. The subjects addressed in the market and technology assessment for this rulemaking include: (1) A determination of equipment classes; (2) manufacturers and industry structure; (3) types and quantities of CWH equipment sold; (4) existing efficiency programs; and (5) technologies that could improve the energy efficiency of CWH equipment. The key findings of DOE's market assessment are summarized below. Chapter 3 of the NOPR TSD provides further discussion of the market and technology assessment.
EPCA includes the following categories of CWH equipment as covered industrial equipment: storage water heaters, instantaneous water heaters, and unfired hot water storage tanks. EPCA defines a “storage water heater” as a water heater that heats and stores water internally at a thermostatically controlled temperature for use on demand. This term does not include units that heat with an input rating of 4,000 Btu per hour or more per gallon of stored water. EPCA defines an “instantaneous water heater” as a water heater that heats with an input rating of at least 4,000 Btu per hour per gallon of stored water. Lastly, EPCA defines an “unfired hot water storage tank” as a tank that is used to store water that is heated external to the tank. (42 U.S.C. 6311(12)(A)-(C))
DOE codified the following more specific definitions for CWH equipment in 10 CFR 431.102 in a final rule published in the
Specifically, DOE defined “hot water supply boiler” as a packaged boiler that is industrial equipment and that: (1) Has an input rating from 300,000 Btu/h to 12,500,000 Btu/h and of at least 4,000 Btu/h per gallon of stored water, (2) is suitable for heating potable water, and (3) has the temperature and pressure controls necessary for heating potable water for purposes other than space heating, and/or the manufacturer's product literature, product markings, product marketing, or product installation and operation instructions indicate that the boiler's intended uses include heating potable water for purposes other than space heating.
DOE also defined an “instantaneous water heater” as a water heater that has an input rating not less than 4,000 Btu/h per gallon of stored water, and that is industrial equipment, including products meeting this description that are designed to heat water to temperatures of 180 °F or higher.
DOE defined a “storage water heater” as a water heater that heats and stores water within the appliance at a thermostatically controlled temperature for delivery on demand and that is industrial equipment, and does not include units with an input rating of 4,000 Btu/h or more per gallon of stored water.
Lastly, DOE defined an “unfired hot water storage tank” as a tank used to store water that is heated externally, and that is industrial equipment.
When evaluating and establishing energy conservation standards, DOE generally divides covered equipment into equipment classes by the type of energy used or by capacity or other performance-related features that justify a different standard. In determining whether a performance-related feature justifies a different standard, DOE considers such factors as the utility to the commercial consumers of the feature and other factors DOE determines are appropriate.
DOE currently divides CWH equipment classes based on the energy source, equipment category (
Table IV.2 presents the proposed equipment classes for CWH equipment. The following text provides additional details, discussion of comments relating to the equipment classes, proposed definitions, as well as issues on which DOE is seeking comments.
In the October 2014 RFI, DOE sought comment on several issues regarding the equipment class structure for CWH equipment. 79 FR 62899, 62904-09 (Oct. 21, 2014). In response, A.O. Smith, Bradford White, and AHRI all recommended that the equipment class structure be simplified by establishing the following equipment classes: (1) Commercial gas-fired water heaters and hot water supply boilers <10 gallons; (2) commercial-fired gas water heaters and hot water supply boilers ≥10 gallons; (3) commercial oil-fired water heaters and hot water supply boilers <10 gallons; and (4) commercial oil-fired water heaters and hot water supply boilers ≥10 gallons. (A.O. Smith, No. 2 at p. 1; Bradford White, No. 3 at p. 1; AHRI, No. 5 at p. 1)
DOE disagrees that the equipment class structure should be simplified in the manner the commenters suggested because commercial instantaneous water heaters and hot water supply boilers with a storage volume greater than 10 gallons would include units with significant variation in design and utility. Specifically, this equipment class currently contains both hot water supply boilers and storage-type water heaters with greater than 4,000 Btu/h per gallon of water stored, which DOE believes may require separate equipment classes for reasons detailed in the discussion immediately below. Therefore, DOE has tentatively concluded that instantaneous water heaters with a storage volume greater than 10 gallons and storage water heaters should remain in separate equipment classes.
In the 2016 CWH TP NOPR, DOE noted that the “gas-fired instantaneous water heaters and hot water supply boilers” equipment class with a storage volume greater than or equal to 10 gallons encompasses both instantaneous water heaters and hot water supply boilers with large volume heat exchangers, as well as instantaneous water heaters with storage tanks (but with at least 4,000 Btu/h of input per gallon of water stored). (See EERE-2014-BT-TP-0008) Therefore, DOE proposed to separate these units into classes—storage-type instantaneous water heaters with greater than 4,000 Btu/h per gallon of stored water, and instantaneous water heaters (other than storage-type) and hot water supply boilers with greater than 10 gallons of stored water, with the following definition for “storage-type instantaneous water heater”:
It is DOE's understanding that gas-fired storage-type instantaneous water heaters are very similar to gas-fired storage water heaters, but with a higher ratio of input rating to tank volume. This higher input-volume ratio is achieved with a relatively larger heat exchanger paired with a relatively smaller tank. Increasing either the input capacity or storage volume increases the recovery capacity of the water heater. However, through a review of product literature, DOE noted no significant design differences that would warrant different energy conservation standard levels (for either thermal efficiency or standby loss) between models in these two proposed equipment classes. Therefore, DOE grouped the two equipment classes together in its analyses for this rulemaking. As a result, DOE proposes the same standard levels for commercial gas-fired storage water heaters and commercial gas-fired storage-type instantaneous water heaters.
DOE notes that there are also significant differences in design and application between equipment within the “gas-fired instantaneous water heaters and hot water supply boilers” equipment class with storage volume less than 10 gallons. Specifically, DOE has identified two kinds of equipment within this class: Tankless water heaters and hot water supply boilers. From examination of equipment literature and discussion with manufacturers, DOE understands that tankless water heaters are typically used without a storage tank, flow-activated, wall-mounted, and capable of higher temperature rises. Hot water supply boilers, conversely, are typically used with a storage tank and recirculation loop, thermostatically-activated, and not wall-mounted. However, despite these differences, tankless water heaters and hot water supply boilers share basic similarities: both kinds of equipment supply hot
DOE only considered gas-fired instantaneous water heaters and hot water supply boilers with an input capacity greater than 200,000 Btu/h in its analysis, because EPCA includes gas-fired instantaneous water heaters with an input capacity less than or equal to 200,000 Btu/h in its definition of consumer “water heater.” (42 U.S.C. 6291(27)(b))
A.O. Smith, Bradford White, Rheem, and AHRI commented that the current separation of commercial gas and oil storage water heaters into classes with input capacity less than or equal to 155,000 Btu/h and greater than 155,000 Btu/h is not needed, arguing that such distinction should be eliminated. (A.O. Smith, No. 2 at p. 1; Bradford White, No. 3 at p. 1; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 2)
DOE agrees with the commenters, and proposes to consolidate commercial gas-fired and oil-fired storage equipment classes that are currently divided by input rates of 155,000 Btu/h. DOE is now proposing the following two equipment classes without an input rate distinction: (1) Gas-fired storage water heaters and (2) oil-fired storage water heaters. The input rate of 155,000 Btu/h was first used as a dividing criterion for storage water heaters in the EPACT 1992 amendments to EPCA, which mirrored the standard levels and equipment classes in ASHRAE Standard 90.1-1989. (42 U.S.C. 6313(a)(5)(B)-(C)) ASHRAE has since updated its efficiency levels for oil-fired and gas-fired storage water heaters in ASHRAE Standard 90.1-1999 by consolidating equipment classes that were divided by input rate of 155,000 Btu/h. Pursuant to requirements in EPCA, DOE adopted the increased standards in ASHRAE Standard 90.1-1999, but did not correspondingly consolidate the equipment classes above and below 155,000 Btu/h. As a result, DOE's current standards are identical for the equipment classes that are divided by input rate of 155,000 Btu/h. Therefore, DOE tentatively concluded that eliminating the dividing criterion for commercial gas-fired and oil-fired storage water heaters at 155,000 Btu/h would simplify the equipment class structure and make the structure more consistent with that in ASHRAE Standard 90.1.
A. O. Smith, Rheem, and AHRI suggested that DOE should adopt a separate equipment class for grid-enabled electric storage water heaters. (A.O. Smith, No. 2 at p. 1; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 1) NRECA stated that DOE should not adopt any standards that effectively eliminate water heating technologies used for demand response and thermal storage. (NRECA, No. 11 at p. 2) Steffes recommended establishing a sub-class for grid-interactive electric storage units, due to their different operating schedules and economic considerations. (Steffes, No. 6 at p. 2)
DOE tentatively concludes that a separate equipment class for grid-enabled commercial electric storage water heaters is not warranted. First, as discussed in section III.B, there are no units in the residential-duty electric storage equipment class, as the dividing criteria for residential and commercial electric storage units match those for residential-duty and commercial electric storage units. Therefore, electric storage water heaters can only be classified as residential or commercial, and an equipment class of grid-enabled residential-duty water heaters would comprise no units. Second, for commercial electric storage water heaters, DOE only prescribes a standby loss standard. DOE does not believe an increased standby loss standard level would be likely to affect grid-enabled technology because the more-stringent standby loss level analyzed for electric storage water heaters is most commonly met by increasing insulation thickness, which would not differentially affect grid-enabled technology. Therefore, DOE is not proposing a separate equipment class for grid-enabled commercial electric storage water heaters in this rulemaking.
AGA suggested that DOE should analyze commercial gas condensing and non-condensing water heaters as separate equipment classes. (AGA, No. 4 at p. 2) AGA stated that replacement of non-condensing gas water heaters with condensing gas water heaters can be problematic due to the separate venting needed and condensate disposal issues. AGA opined that the ability of non-condensing gas water heaters to be common-vented with other gas appliances into chimneys is a performance feature that justifies analyzing non-condensing and condensing gas water heaters separately. AGA also cited precedent for such a separation in analysis in the residential clothes dryer energy conservation standards rulemaking.
Regarding the separation of vented and vent-less clothes dryers into two product classes in the residential clothes dryer rulemaking as cited by AGA, DOE has found the circumstances in that rulemaking to be distinguishable from the present rulemaking. More specifically, in a direct final rule for energy conservation standards for residential clothes dryers and room air conditioners published on April 21, 2011 (“April 2011 final rule”), DOE established separate product classes for vented and vent-less clothes dryers because of the unique utility they offer consumers (
DOE reiterates that disparate equipment may have very different consumer utilities, thereby making direct comparisons difficult and potentially misleading. For instance, in the April 2011 final rule, DOE
Tying the concept of “feature” to a specific technology would effectively lock-in the currently existing technology as the ceiling for product efficiency and eliminate DOE's ability to address technological advances that could yield significant consumer benefits in the form of lower energy costs while providing the same functionality for the consumer. DOE is very concerned that determining features solely on product technology could undermine the Department's Appliance Standards Program. If DOE is required to maintain separate product classes to preserve less-efficient technologies, future advancements in the energy efficiency of covered products would become largely voluntary, an outcome which seems inimical to Congress's purposes and goals in enacting EPCA.
DOE tentatively concludes that both non-condensing and condensing commercial gas-fired CWH equipment provide the same hot water for use by commercial consumers. Furthermore, DOE has tentatively concluded that condensing gas-fired water heaters could replace non-condensing gas-fired water heaters in all commercial settings, although in certain instances this may lead to significant installation costs. DOE recognizes the potential increased installation costs that a proposed condensing standard might impose on some subset of consumers, and has factored such installation costs in its LCC analysis. However, the possibility that installing a non-condensing commercial water heater may be less costly than a condensing commercial water heater because of the difference in venting methods does not justify separating the two kinds of equipment. Condensing technology is discussed in more detail in the screening analysis at section IV.B, and installation costs for all equipment classes are discussed in more detail in section IV.F.2.b of this NOPR and in chapter 8 of the NOPR TSD.
In order to gather information needed for the market assessment for CWH equipment, DOE consulted a variety of sources, including manufacturer literature, manufacturer Web sites, the AHRI Directory of Certified Product Performance,
As part of the market and technology assessment, DOE uses information about commercially-available technology options and prototype designs to help identify technologies the manufacturers could use to improve energy efficiency for CWH equipment. This effort produces an initial list of all the technologies that DOE believes are technologically feasible. This assessment provides the technical background and structure on which DOE bases its screening and engineering analyses. Chapter 3 of the NOPR TSD includes descriptions of all technology options identified for this equipment.
In the October 2014 RFI, DOE listed twelve technology options and requested comment regarding their applicability to the current market and their impact on energy efficiency of CWH equipment. 79 FR 62899, 62904 (Oct. 21, 2014). The technology options identified in the October 2014 RFI were as follows:
DOE also solicited information on potential additional energy-efficiency-improving technology options that DOE should consider for the purposes of this rulemaking in the October 2014 RFI. 79 FR 62899, 62904 (Oct. 21, 2014). Several parties commented on the list of technologies. A.O. Smith, Bradford White, Rheem, and AHRI all commented that self-cleaning should not be included in the list because it is a feature that improves maintenance of storage water heaters, not efficiency. (A.O. Smith, No. 2 at p. 2; Bradford White, No. 3 at p. 2; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 2) Bradford White, Rheem, and AHRI also commented that heat traps should not be included because heat traps are installed in external piping for commercial water heater installations. (Bradford White, No. 3 at p. 2; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 2) AHRI added that ASHRAE Standard 90.1 requires inclusion of heat traps for CWH equipment when installed, not when manufactured. (AHRI, No. 5 at p. 2) A. O. Smith also stated that fully condensing technology should not be considered for oil-fired units, as it is not feasible to develop given the size of the market. (A.O. Smith, No. 2 at p. 2)
DOE agrees with the commenters that self-cleaning technology would not affect the thermal efficiency or standby loss of a storage water heater. DOE also agrees that heat traps are most commonly installed in piping, not in CWH equipment. Section 7.4.6 of ASHRAE Standard 90.1-2013 requires heat traps be installed either integral to the water heater or storage tank, or in both the inlet and outlet piping as close as possible to the storage tank, if not part of a recirculating system.
Steffes recommended that grid-interactive technology for electric storage water heaters be added to the list of technologies, as they achieve significant system efficiency improvements and carbon reductions. (Steffes, No. 6 at p. 2) Because the efficiency examined in this rulemaking is that of CWH equipment at the point of manufacture as measured by the DOE test procedure, and not of the entire energy grid, DOE has tentatively concluded that grid-interactive technology would not improve the efficiency of CWH equipment as measured by its test procedure.
Because thermal efficiency, standby loss, and UEF are the relevant performance metrics in this rulemaking, DOE did not consider technologies that have no effect on these metrics. However, DOE does not discourage manufacturers from using these other technologies because they might reduce annual energy consumption. The following list includes the technologies that DOE did not consider because they do not affect efficiency as measured by the DOE test procedure. Chapter 3 of the NOPR TSD provides details and reasoning of exclusion for each technology option not considered further, as listed here.
DOE also did not consider technologies as options for increasing efficiency if they are included in baseline equipment, as determined from an assessment of units on the market. DOE's research suggests that electromechanical flue dampers and electronic ignition are technologies included in baseline equipment for commercial gas-fired storage water heaters; therefore, they were not included as technology options for that equipment class. However, electromechanical flue dampers and electronic ignition were not identified on baseline units for residential-duty gas-fired storage water heaters, and these options were, therefore, considered for increasing efficiency of residential-duty gas-fired storage water heaters. DOE also considered insulation of fittings around pipes and ports in the tank to be included in baseline equipment; therefore, such insulation was not considered as a technology option for the analysis. While insulation of pipes does reduce heat losses, DOE does not consider CWH equipment to include external piping; therefore, piping insulation was not considered as a technology option for CWH equipment.
After considering the comments above, DOE below lists all of the technology options considered for improving the energy efficiency of CWH equipment as part of this NOPR. This list includes those options identified in the October 2014 RFI (discussed previously), with the exception of those subsequently determined not to improve energy efficiency. In addition, DOE has identified electromechanical flue dampers as a technology option that can increase the efficiency of water heaters. DOE also included three separate technology options often used in condensing CWH equipment: (1) Mechanical draft; (2) condensing heat exchangers, and (3) premix burners. DOE did not consider CO
DOE uses the following four screening criteria to determine which technology
1.
2.
3.
4.
10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
These four screening criteria do not include the proprietary status of design options. As noted previously in section III.D.1, DOE only considers efficiency levels achieved through the use of proprietary designs in the engineering analysis if they are not part of a unique path to achieve that efficiency level. DOE's research has not shown any of the technologies identified in the technology assessment to be proprietary, and thus, DOE did not eliminate any technologies for that reason.
Technologies that pass through the screening analysis are subsequently examined in the engineering analysis for consideration in DOE's downstream cost-benefit analysis. Based upon a review under the above factors, DOE screened out the design options listed in Table IV.3 for the reasons provided. Chapter 4 of the NOPR TSD contains additional details on the screening analysis, including a discussion of why each technology option was screened out.
After screening out or otherwise removing from consideration certain technologies, the remaining technologies are passed through for consideration in the engineering analysis. Table IV.4 presents identified technologies for consideration in the engineering analysis. Chapter 3 of the NOPR TSD contains additional details on the technology assessment and the technologies analyzed.
The engineering analysis establishes the relationship between an increase in energy efficiency of the equipment and the increase in manufacturer selling price (MSP) associated with that efficiency level. This relationship serves as the basis for the cost-benefit calculations for commercial consumers, manufacturers, and the Nation. In determining the cost-efficiency relationship, DOE estimates the increase in manufacturer cost associated with increasing the efficiency of equipment above the baseline up to the maximum technologically feasible (“max-tech”) efficiency level for each equipment class.
DOE typically structures its engineering analysis using one of three approaches: (1) Design-option; (2) efficiency-level; or (3) reverse engineering (or cost-assessment). A design-option approach identifies individual technology options (from the market and technology assessment) that can be used alone or in combination with other technology options to increase the energy efficiency of a baseline unit of equipment. Under this approach, cost estimates of the baseline equipment and more-efficient equipment that incorporates design options are modeled based on manufacturer or component supplier data or engineering computer simulation models. Individual design options, or combinations of design options, are added to the baseline model in descending order of cost-effectiveness. An efficiency-level approach establishes the relationship between manufacturer cost and increased efficiency at predetermined efficiency levels above the baseline. Under this approach, DOE typically assesses increases in manufacturer cost for incremental increases in efficiency, rather than the technology or design options that would be used to achieve such increases. The efficiency level approach uses estimates of cost and efficiency at distinct levels of efficiency from publicly-available information, and information gathered in manufacturer interviews that is supplemented and verified through technology reviews. A reverse-engineering, or cost-assessment, approach involves disassembling representative units of CWH equipment, and estimating the manufacturing costs based on a “bottom-up” manufacturing cost assessment; such assessments use detailed data to estimate the costs for parts and materials, labor, shipping/packaging, and investment for models that operate at particular efficiency levels. The reverse-engineering approach involves testing products for efficiency and determining costs from a detailed bill of materials (BOM) derived from reverse engineering representative equipment.
DOE conducted this engineering analysis for CWH equipment using a combination of the efficiency-level and cost-assessment approaches. For the analysis of thermal efficiency levels for commercial and residential-duty storage and instantaneous water heaters, DOE identified the efficiency levels for the analysis based on market data and then used the cost-assessment approach to determine the manufacturing costs at those levels. For the analysis of standby loss levels for storage water heaters, DOE identified efficiency levels for analysis based on market data and commonly used technology options (
DOE received several comments from interested parties on the approach to the engineering analysis. A.O. Smith, Bradford White, Rheem, and AHRI all agreed with the use of the reverse-engineering approach, but stated that appropriate cost estimates for components, materials, and labor should be used. (A.O. Smith, No. 2 at p. 2; Bradford White, No. 3 at p. 2; Rheem, No. 10 at p. 2; AHRI, No. 5 at p. 3) DOE notes that it solicited input from manufacturers during manufacturer interviews on the above cost estimates, other relevant engineering assumptions, and other issues regarding this rulemaking. The manufacturer interview process is described in more detail in section IV.J.3 and chapter 12 of the NOPR TSD.
For the engineering analysis, DOE reviewed all CWH equipment classes analyzed in this rulemaking. Because the storage volume and input capacity can affect the energy efficiency of CWH equipment, DOE examined each equipment class separately. Within each equipment class, DOE analyzed the distribution of models available on the market and held discussions with manufacturers to determine appropriate representative equipment for each equipment class.
For storage water heaters, the volume of the tank is a significant factor for costs and efficiency. Water heaters with larger volumes have higher materials, labor, and shipping costs. A larger tank volume is likely to lead to a larger tank surface area, thereby increasing the standby loss of the tank (assuming other factors are held constant,
The current standby loss standards for commercial storage water heaters differ in the storage volume metric used in calculation of the standby loss standard (rated storage volume is used for certain classes, while measured storage volume is used for others). Specifically, the standby loss standard for gas-fired and oil-fired storage water heaters depends on the rated storage volume of the water heater. However, the standby loss standard for electric storage water heaters depends on the measured storage volume of the water heater. DOE notes there is often a difference between the measured and rated volumes of water heaters, as reported in data in the AHRI Directory. Therefore, to calculate standby loss levels for a representative electric storage water heater, a representative measured storage volume is needed. In section III.I of this NOPR, DOE proposes to require that the rated storage volume equal the measured storage volume. Therefore, DOE selected a representative measured storage volume for electric storage water heaters based upon data for measured volumes for units at the selected representative rated storage volume in the AHRI Directory. Table IV.5 shows both selected representative storage volumes for electric storage water heaters.
For all CWH equipment classes, the input capacity is also a significant factor for cost and efficiency. Fossil-fuel-fired water heaters with higher input capacities have higher materials costs, and may also have higher labor and shipping costs. Fossil-fuel-fired storage water heaters with higher input capacities may have additional heat exchanger length to transfer more heat. This leads to higher material costs, and may require the tank to expand to compensate for the displaced volume. Tankless water heaters and hot water supply boilers require larger heat exchangers to transfer more heat with a higher input capacity. Electric storage water heaters with higher input capacities have higher-wattage resistance heating elements, which can increase the cost of purchased parts for the water heater manufacturer. DOE examined input capacities for units in all CWH equipment classes to determine representative input capacities. Because DOE did not receive any shipments data for specific input capacities, DOE considered the number of models at each input capacity in the database of models it compiled (based on the AHRI Directory, CEC Appliance Database, and manufacturer literature) as well as feedback from manufacturer interviews. DOE used this information to select representative input capacities for each equipment class, which are shown in Table IV.5.
For each equipment class, DOE analyzed multiple efficiency levels and estimated manufacturer production costs at each efficiency level. The following subsections provide a description of the full efficiency level range that DOE analyzed from the baseline efficiency level to the maximum technologically feasible (“max-tech”) efficiency level for each equipment class. DOE conducted a survey of its CWH equipment database and manufacturers' Web sites to determine the highest thermal efficiency levels on the market for each equipment class. DOE identified the most stringent standby loss level for each class by consideration of rated standby loss values of units currently on the market as well as technology options that DOE believes to be feasible but may not currently be included in units on the market in each equipment class. Thermal efficiency levels were analyzed for all CWH equipment considered in this rulemaking except for electric storage water heaters. Standby loss levels were analyzed for all commercial and residential-duty storage water heaters and storage-type instantaneous water heaters.
Baseline equipment is used as a reference point for each equipment class in the engineering analysis and the life-cycle cost and payback-period analyses, which provides a starting point for analyzing potential technologies that provide energy efficiency improvements. Generally, DOE considers “baseline” equipment to refer to a model or models having features and technologies that just meet, but do not exceed, the Federal energy conservation standard and provide basic consumer utility. In establishing the baseline thermal efficiency levels for this analysis, DOE used the current energy conservation standards for CWH equipment to identify baseline units.
The baseline thermal efficiency levels used for analysis for each equipment class are presented in Table IV.6.
DOE used the current energy conservation standards for standby loss to set the baseline standby loss levels. Table IV.7 shows these baseline standby loss levels for representative equipment for each equipment class.
In the October 2014 RFI, DOE sought comment on approaches to consider when establishing baseline efficiency levels for equipment classes transitioning to the UEF metric. 79 FR 62899, 62905 (Oct. 21, 2014). A.O. Smith, Bradford White, Rheem, and AHRI commented that DOE should convert the current thermal efficiency and standby loss standards to UEF to use as the baseline levels. (A.O. Smith, No. 2 at p. 2; Bradford White, No. 3 at p. 2; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 3) DOE has conducted an analysis for residential-duty water heaters using thermal efficiency and standby loss. Because UEF rating data were not available when this analysis was conducted, DOE is using the mathematical conversion factors proposed in the April 2015 NOPR to translate the results of the analyzed thermal efficiency and standby loss levels to UEF levels. 80 FR 20116, 20143 (April 14, 2015). This conversion of the existing standards to UEF is described in more detail in section IV.C.9. Therefore, the current thermal efficiency and standby loss standards were used as baseline levels.
For each equipment class, DOE analyzes several efficiency levels and determines the manufacturing cost at each of these levels. For this NOPR, DOE developed efficiency levels based on a review of available equipment. As noted previously, DOE compiled a database of CWH equipment to determine what types of equipment are currently available to commercial consumers. For each representative equipment type, DOE surveyed various manufacturers' equipment offerings to identify the commonly available efficiency levels. By identifying the most prevalent energy efficiency levels in the range of available equipment and examining models at these levels, DOE can establish a technology path that manufacturers would typically use to increase the thermal efficiency of CWH equipment.
DOE established intermediate thermal efficiency levels for each equipment class. The intermediate thermal efficiency levels are representative of the most common efficiency levels and those that represent significant technological changes in the design of CWH equipment. For commercial gas-fired storage water heaters, DOE chose four thermal efficiency levels between the baseline and max-tech levels for analysis. For residential-duty gas-fired storage water heaters, DOE chose three thermal efficiency levels between the baseline and max-tech levels for analysis. For commercial gas-fired instantaneous water heaters and hot water supply boilers, DOE chose four thermal efficiency levels between the baseline and max-tech levels for analysis. DOE also selected the highest thermal efficiency level identified on the market for each equipment class (
In response to the October 2014 RFI, A. O. Smith stated that max-tech efficiency levels should be condensing for gas-fired storage water heaters, heat pump for electric storage water heaters, and “near condensing” for oil-fired storage water heaters. (A. O. Smith, No. 2 at p. 2) Bradford White stated that the max-tech efficiency levels are condensing for gas-fired storage water heaters and heat pump for electric storage water heaters (Bradford White, No. 3 at p. 2) Rheem responded that max-tech efficiency levels within Rheem products are 98 percent thermal efficiency and 325 Btu/h standby loss for electric storage water heaters, 97 percent thermal efficiency and 960 Btu/h for gas-fired storage water heaters, and 94 percent thermal efficiency for gas-fired instantaneous water heaters. (Rheem, No. 10 at p. 3) AHRI commented that max-tech efficiency levels should be determined for each equipment class individually, as condensing would not be an achievable max-tech level for oil-fired storage water heaters. (AHRI, No. 5 at p. 3)
DOE notes that the analyzed max-tech level for commercial gas-fired storage water heaters is condensing as suggested by A. O. Smith and Bradford White. DOE did not consider commercial integrated heat pump water heaters as the max-tech for electric storage water heaters because DOE did not identify any such units on the market. DOE selected higher max-tech thermal efficiency levels than suggested by Rheem, because DOE identified equipment for sale at even higher thermal efficiency levels, which does not appear to make use of any proprietary technology. Given the commercial availability of designs at higher thermal efficiency levels than suggested by Rheem as max-tech, DOE has tentatively concluded that such efficiency levels should be included in the engineering analysis. In response to AHRI, DOE notes that it established max-tech efficiency levels separately for each equipment class, only considering the highest efficiency level on the market within each equipment class. DOE also notes that it did not consider amended energy conservation standards for oil-fired storage water heaters in this NOPR; therefore, these units were not included in the engineering analysis.
EEI commented that DOE should adopt the amended efficiency levels in ASHRAE Standard 90.1-2013 for all CWH equipment classes, arguing this would prevent confusion in the marketplace and allow for earlier compliance dates than if higher standards are proposed. (EEI, No. 8 at p. 2) In response, DOE notes that ASHRAE Standard 90.1-2013 only raised efficiency standards for commercial oil-fired storage water heaters, but DOE also has an independent statutory obligation to review standards for the other CWH equipment classes. In the July 2015 ASHRAE equipment final rule, DOE determined that a thermal efficiency level for oil-fired storage water heaters more stringent than that adopted in ASHRAE Standard 90.1-2013 would not be economically justified and technologically feasible according to the seven criteria outlined in section II.A. 80 FR 42614 (July 17, 2015). Therefore, DOE adopted the amended thermal efficiency level from ASHRAE Standard 90.1-2013 for commercial oil-fired storage water heaters with a compliance date of October 9, 2015, as required by the statute.
Joint Advocates commented that the max-tech efficiency levels should be identified by examining the most efficient technologies on the global market as opposed to just the U.S. market. (Joint Advocates, No. 7 at p. 3) As an example, Joint Advocates stated that CO
DOE established intermediate and max-tech standby loss efficiency levels for each equipment class of storage water heaters. Standby loss is a function of rated volume for gas-fired storage water heaters; however, in section III.I of this NOPR, DOE proposes changes to its certification, compliance, and enforcement regulations that would require the rated volume to be based on the mean of the measured volumes in the sample. DOE believes that to be compliant with these proposed changes, most manufacturers with units having a rated storage volume that does not equal the measured volume will re-rate the storage volumes of their current models based on the measured volumes, as opposed to changing their designs so that the measured storage volume increases to the current rated volume. Therefore, in analyzing market standby loss data for this NOPR, DOE accounted for this change by calculating the maximum standby loss levels under consideration using the measured volume as reported in the AHRI Directory for each model.
Standby loss is a function of storage volume (and input for gas-fired and oil-fired storage water heaters) and is affected by many aspects of the design of a water heater. Additionally, standby loss is not widely reported in manufacturer literature. DOE was not able to find any CWH equipment literature that reported standby loss, and, therefore, relied on data obtained from the AHRI Directory. However, there is significant variation in reported standby loss values in the AHRI Directory—
One possible source of variation in reported standby loss values is variation in unreported technology options, as previously discussed. Additionally, during manufacturer interviews, manufacturers explained that the current standby loss test procedure leads to significant variation in test results from lab to lab, and sometimes even within the same lab. Several reasons given for this variation include the air draft in the area around the water heater, the wide tolerance for ambient temperature, lack of humidity specification, and variation in venting and insulation of connections. DOE addressed some of these sources of variation in the revised standby loss test procedure for commercial water heaters proposed in the 2016 CWH TP NOPR. (See EERE-2014-BT-TP-0008)
DOE developed its incremental and max-tech standby loss levels by considering levels currently on the market, designs detailed in publicly-available equipment literature, observations from equipment teardowns, and feedback from manufacturer interviews. For commercial gas-fired storage water heaters, DOE determined that the current minimum Federal standard can be met with installation of 1 inch of fiberglass insulation around the walls of the tank. Therefore, DOE considered 1 inch of fiberglass insulation to correspond to the baseline standby loss efficiency level. DOE then considered the next incremental standby loss level to correspond to the use of sprayed polyurethane foam insulation instead of fiberglass insulation. From a survey of units on the market, DOE considers switching from 1 inch of fiberglass insulation to 1 inch of foam insulation a more commonly used pathway to decrease standby loss than using 2 inches of fiberglass insulation. From equipment teardowns and manufacturer interviews, DOE found the highest insulation thickness available for commercial gas-fired water heaters to be 2 inches. Therefore, DOE considered the next incremental standby loss level, SL EL2, to correspond to 2 inches of polyurethane foam. While more-stringent standby loss levels than SL EL2 exist on the market, these more-stringent values are only rated for condensing units with specific heat exchanger designs. Because DOE does not wish to mandate specific heat exchanger designs for achieving condensing thermal efficiency levels, standby loss levels more stringent than SL EL2 were not analyzed. Therefore, DOE considered SL EL2 as the max-tech standby loss level for commercial gas-fired storage water heaters. Table IV.9 shows the technology options identified for each standby loss level for commercial gas-fired storage water heaters.
Based on a review of available equipment on the market and feedback from manufacturers, DOE analyzed all non-condensing commercial gas-fired storage water heaters (
For residential-duty gas-fired storage water heaters, DOE has tentatively concluded that the current Federal standard may be met through use of 1 inch of polyurethane foam insulation. From surveying commercially-available equipment, DOE notes that all baseline residential-duty gas-fired storage water heaters have a standing pilot and do not use flue dampers. Therefore, in addition to increasing the thickness of foam insulation, DOE also considered electromechanical flue dampers and electronic ignition as technology options for reducing standby loss. Electromechanical flue dampers were only considered as a technology option for non-condensing residential-duty gas-fired storage water heaters, because flue dampers are not used with mechanical draft systems. Therefore, for residential-duty gas-fired storage water heaters, DOE considered electromechanical flue dampers to be a technology option not featured in baseline non-condensing equipment, and considered mechanical draft systems to be featured in all condensing equipment. Similarly to commercial gas-fired storage water
For condensing residential-duty gas-fired storage water heaters, rated standby loss market data show that the most-efficient standby levels are only achieved by models with particular condensing heat exchanger designs. Specifically, DOE observed that the most-efficient standby loss level on the market is only achieved by a model with 90-percent thermal efficiency. It is not evident that this standby level can be reached by heat exchanger designs that also yield more-efficient condensing thermal efficiency levels. DOE chose not to analyze standby loss levels that have not been demonstrated to be achievable with more-efficient thermal efficiency level designs, because thermal efficiency typically will have a greater impact on the energy use of CWH equipment than standby loss. To ensure the continued availability of condensing CWH equipment with thermal efficiencies above 90 percent, DOE has considered an amended standby loss level that is reduced to 48 percent of the current standby loss standard as the max-tech standby loss level. DOE's market assessment shows that this standby loss level can be achieved by all condensing residential-duty gas-fired storage water heaters currently on the market. To inform the selection of SL EL0 for condensing residential-duty gas-fired storage water heaters, DOE considered the increase in standby loss that would occur from reducing the thickness of polyurethane foam insulation from 2 inches to 1 inch. Table IV.10 shows the technology options corresponding to each standby loss level selected for residential-duty gas-fired storage water heaters. As previously discussed, electromechanical flue dampers were only considered as a technology option for non-condensing equipment; therefore, SL EL2 and SL EL3 were only analyzed for non-condensing residential-duty gas-fired storage water heaters.
For electric storage water heaters, DOE determined that the current Federal standard may be met through use of 2 inches of polyurethane foam insulation. Therefore, this design was selected to represent the baseline standby loss level. The more-stringent standby loss level that DOE considered, representing the max-tech efficiency level, corresponds to 3 inches of polyurethane foam insulation. Table IV.11 shows the standby loss levels and technology options identified at each level for electric storage water heaters.
To inform the selection of standby loss levels, DOE performed heat loss calculations for representative equipment for each equipment class. These calculations yielded more stringent standby loss levels corresponding to the identified technology options. Chapter 5 of the NOPR TSD provides details on these heat loss calculations. Standby loss levels are shown in Table IV.12, Table IV.13, and Table IV.14 in terms ofBtu/h for the representative equipment. However, to modify the current Federal standard, factors were developed to multiply by the current maximum standby loss equation for each equipment class, based on the ratio of standby loss at each efficiency level to the current standby loss standard. The translation from standby loss values to maximum standby loss equations is described in further detail in section IV.C.8.
For commercial and residential-duty gas-fired storage water heaters, standby loss is measured predominantly as a function of fuel flow used to heat the stored water during the standby loss test, with a small contribution of electric power consumption (if the unit requires a power supply). Because standby loss is calculated using the fuel consumed during the test to maintain the water temperature, the standby loss is dependent on the thermal efficiency of the water heater. DOE used data from independent testing of CWH equipment at a third-party laboratory to estimate the fraction of standby loss that can be attributed to fuel consumption or electric power consumption. For a given standby loss level (
DOE notes that because of its use of heat loss calculations corresponding to commonly used technology options to inform the selection of standby loss levels in addition to rated standby loss market data, the most stringent analyzed standby loss levels do not necessarily reflect the current market max-tech level for each equipment class. For some equipment thermal efficiency levels, the most stringent analyzed standby loss level may be less efficient than that of the most efficient unit on the market, and for other levels, it may be more efficient. While there may not be units on the market with a rated standby loss as efficient as some of the examined standby loss levels, DOE has determined these levels would be achievable through various technology options, including, but not limited to, those DOE examined for this analysis. Chapter 5 of the NOPR TSD includes a discussion of the following technology options with the potential to reduce standby loss that DOE did not consider for this analysis and the reasons for their exclusion: (1) Changing tank aspect ratio; (2) improved insulation on tank top and bottom; (3) greater coverage of foam insulation; and (4) improved baffling. DOE did not include standby loss reduction from baffling because of insufficient data for estimating the reduction, and therefore, DOE requests input on this matter as well as DOE's estimated standby loss reduction for electromechanical flue dampers and mechanical draft.
After selecting a representative input capacity and representative storage volume (for storage water heaters) for each equipment class, DOE selected equipment near both the representative values and the selected efficiency levels for its teardown analysis. DOE gathered information from these teardowns to create detailed BOMs that included all components and processes used to manufacture the equipment. To assemble the BOMs and to calculate the manufacturing product costs (MPCs) of CWH equipment, DOE disassembled multiple units into their base
DOE also used a supplementary method called a “catalog teardown,” which examines published manufacturer catalogs and supplementary component data to allow DOE to estimate the major differences between a unit of equipment that was physically disassembled and a similar unit of equipment that was not. For catalog teardowns, DOE gathered product data such as dimensions, weight, and design features from publicly-available information (
The teardown analysis allowed DOE to identify the technologies that manufacturers typically incorporate into their equipment, along with the efficiency levels associated with each technology or combination of technologies. The end result of each teardown is a structured BOM, which DOE developed for each of the physical and catalog teardowns. The BOMs incorporate all materials, components, and fasteners (classified as either raw materials or purchased parts and assemblies) and characterize the materials and components by weight, manufacturing processes used, dimensions, material, and quantity. The BOMs from the teardown analysis were then used to calculate the MPCs for each type of equipment that was torn down. The MPCs resulting from the teardowns were then used to develop an industry average MPC for each equipment class analyzed. Chapter 5 of the NOPR TSD provides more details on BOMs and how they were used in determining the manufacturing cost estimates.
During the manufacturer interviews, DOE requested feedback on the engineering analysis and the assumptions that DOE used. DOE used the information it gathered from those interviews, along with the information obtained through the teardown analysis, to refine the assumptions and data used to develop MPCs. Chapter 5 of the NOPR TSD provides additional details on the teardown process.
During the teardown process, DOE gained insight into the typical technology options manufacturers use to reach specific efficiency levels. DOE can also determine the efficiency levels at which manufacturers tend to make major technological design changes. Table IV.15, Table IV.16, Table IV.17, and Table IV.18 show the major technology options DOE observed and analyzed for each thermal efficiency level and equipment class. Technology options that manufacturers use to reach each standby loss level are discussed in section IV.C.3.b. DOE notes that in equipment above the baseline, and sometimes even at the baseline efficiency, additional features and functionalities that do not impact efficiency are often used to address non-efficiency-related consumer demands (
DOE notes from surveying units currently on the market that the only design change for many efficiency levels is an increased heat exchanger surface area. Based upon heat exchanger calculations and feedback from manufacturer interviews, DOE determined a factor by which heat exchangers would need to expand to reach higher thermal efficiency levels. This factor was higher for condensing efficiency levels than for non-condensing efficiency levels. Chapter 5 of the NOPR TSD provides more information on these heat exchanger sizing calculations, as well as on the technology options DOE considered at each efficiency level.
After calculating the cost estimates for all the components in each teardown unit, DOE totaled the cost of materials, labor, depreciation, and direct overhead used to manufacture each type of equipment in order to calculate the manufacturing production cost (MPC). DOE used the results of the teardowns on a market-share weighted average basis to determine the industry average cost increase to move from one efficiency level to the next. DOE reported the MPCs in aggregated form to maintain confidentiality of sensitive component data. DOE obtained input from manufacturers during the manufacturer interview process on the MPC estimates and assumptions. Chapter 5 of the NOPR TSD contains additional details on how DOE developed the MPCs and related results.
DOE estimated the MPC at each combination of thermal efficiency and standby loss levels considered for representative equipment of each equipment class. Table IV.19, Table IV.20, Table IV.21, and Table IV.22 show the MPC for each efficiency level for each equipment class. DOE calculated the percentages attributable to each element of total production costs (
To account for manufacturers' non-production costs and profit margin, DOE applies a non-production cost multiplier (the manufacturer markup) to the full MPC. The resulting MSP is the price at which the manufacturer can recover all production and non-production costs and earn a profit. To meet new or amended energy conservation standards, manufacturers often introduce design changes to their equipment lines that result in increased MPCs. Depending on the competitive pressures, some or all of the increased production costs may be passed from manufacturers to retailers and eventually to commercial consumers in the form of higher purchase prices. As production costs increase, manufacturers typically incur additional overhead. The MSP should be high enough to recover the full cost of the equipment (
To calculate the manufacturer markups, DOE used 10-K reports
Manufacturers of CWH equipment typically pay for shipping to the first step in the distribution chain. Freight is not a manufacturing cost, but because it
In this rulemaking, shipping costs for all classes of CWH equipment were determined based on the area of floor space occupied by the unit. Most CWH equipment units are typically too tall to be double-stacked in a vertical fashion, and they cannot be shipped in any other orientation other than vertical. To calculate these shipping costs, DOE calculated the cost per area of a trailer, based on the standard dimensions of a 53-foot trailer and an estimated 5-year average cost per shipping load that approximates the cost of shipping the equipment from the middle of the country to either coast. Next, DOE examined the average sizes of equipment in each equipment class at each efficiency level and determined the number of units that would fit in a trailer. DOE then calculated the market-weighted average shipping cost per unit using the cost per trailer load. For gas-fired tankless water heaters, DOE assumed units could be double-stacked, due to the smaller size and weight of these units. DOE also assumed tankless water heaters would be manufactured overseas, and, therefore, costs of shipping a 40-foot container on both a cargo ship and a truck were included. Chapter 5 of the NOPR TSD contains additional details about DOE's shipping cost assumptions and DOE's shipping cost estimates.
As part of the engineering analysis for commercial storage water heaters and residential-duty commercial storage water heaters, DOE reviewed the maximum standby loss equations that define the existing Federal energy conservation standards for gas-fired and electric storage water heaters. The equations allow DOE to expand the analysis on the representative rated input capacity and storage volume to the full range of values covered under the existing Federal energy conservation standards.
DOE uses equations to characterize the relationship between rated input capacity, rated storage volume, and standby loss. The equations allow DOE to account for the increases in standby loss as input capacity and tank volume increase. As the tank storage volume increases, the tank surface area increases. The larger surface area results in higher heat transfer rates that result in higher jacket losses. As the input capacity increases for gas-fired and oil-fired water heaters, the surface area of flue tubes may increase, thereby providing additional area for heat loss through the flue tubes. The current equations show that for each storage water heater equipment class, the allowable standby loss increases as the rated storage volume increases, and also as the input rating increases for gas-fired and oil-fired water heaters. The current form of the standby loss standard (in Btu/h) for commercial and residential-duty commercial gas-fired and oil-fired water heaters is shown in the multivariable equation below, depending upon both rated input (
The current form of the standby loss standard (in %/h) for electric storage water heaters is shown below, dependent only on measured storage volume (
In order to consider amended standby loss standards for CWH equipment, which are in equation form, DOE would need to consider revising the current standards equations. However, in the October 2014 RFI, DOE identified two potential issues with considering amended maximum standby loss standards equations for commercial gas-fired and oil-fired storage water heaters, and requested comment on approaches for amending the equations. 79 FR 62899, 62905 (Oct. 21, 2014). The first potential issue DOE recognized was how to modify the equation given that there is no intercept in the equation. Because the current standard depends on both volume and input without an intercept, it is only possible to change the slopes for each variable when modifying the standard to fit the analyzed efficiency levels. Changing the slopes could be undesirable if shifting the standard up or down (while maintaining the slopes) would better fit the distribution of units outside the representative input and volume. DOE sought feedback on this issue including the proposal of establishing discrete bins for one variable (volume or input), thereby yielding single-variable equations in each bin. The second issue raised in the RFI was that DOE observed that standby loss is dependent on thermal efficiency (as discussed in section IV.C.3.b of this document) and sought comment on whether thermal efficiency should be taken into account in the standby loss standard.
A.O. Smith, Bradford White, Rheem, and AHRI all commented that the structure of the current standby loss standard should not be changed, as it was developed as the result of deliberate, technical discussions. All of these commenters also stated that any changes to the existing structure would bring unnecessary complexity to the analysis, and could require test procedure changes. (A.O. Smith, No. 2 at p. 3; Bradford White, No. 3 at p. 2; Rheem, No. 10 at p. 1; AHRI, No. 5 at p. 3) Joint Advocates suggested that the use of discrete bins would be problematic, due to discontinuities at the bin boundaries. (Joint Advocates, No. 7 at p. 4) Joint Advocates also mentioned allowing the use of rated volume for classification but measured volume for standby loss calculation as an advantage of using continuous equations over bins. Further, Joint Advocates suggested that a standby loss standard should be set that requires some kind of design option that limits flue losses in standby mode. (Joint Advocates, No. 7 at p. 4)
DOE agrees with the commenters that bringing unnecessary complexity to the analysis is not desirable. Therefore, DOE has tentatively decided to consider more-stringent standby loss standards by multiplying the current maximum standby loss equations by reduction factors. The use of reduction factors maintains the structure of the current maximum standby loss equations and does not require the creation of bins or an intercept for altering the equations. This approach does not change the dependence of maximum standby loss on input and rated storage volume or introduce undesirable complexity to the equation, but still allows DOE to consider increased stringency for standby loss energy conservation
In response to Joint Advocates, DOE notes that although the proposed standby loss equations depend on rated volume, DOE proposes changes in section III.I of this NOPR to its certification, compliance, and enforcement regulations that require that the rated volume must equal the mean of the measured storage volumes of the units in the sample. DOE also notes that it has selected standby loss levels for analysis of non-condensing residential-duty commercial gas-fired storage water heaters that DOE believes would be achieved through the incorporation of electromechanical flue dampers, despite the fact that DOE observed no residential-duty gas-fired storage water heaters with electromechanical flue dampers currently on the market. However, pursuant to EPCA, DOE can establish energy conservation standards that set either a single performance standard or a single design requirement, not both. (42 U.S.C. 6311(18)) Therefore, DOE has not proposed a design requirement for a feature that decreases flue standby losses. After examining the market, DOE has tentatively concluded that all commercial gas-fired storage water heaters on the market currently use electromechanical flue dampers. DOE also notes that a flue damper would not be used with a condensing gas-fired water heater.
As part of the analysis in this rulemaking, DOE analyzed efficiency levels for residential-duty commercial water heaters in terms of the thermal efficiency and standby loss metrics. However, in the July 2014 final rule, DOE established that residential-duty commercial water heaters would be covered by the new UEF metric. 79 40542, 40586 (July 11, 2014). Further, DOE proposed a method for converting the thermal efficiency and standby loss ratings to UEF using conversion factors in the April 2015 NOPR. 80 FR 20116, 20143 (April 14, 2015). In this NOPR, DOE converted the efficiency levels analyzed for residential-duty commercial gas-fired water heaters from thermal efficiency and standby loss to UEF using the conversion factors proposed in the April 2015 NOPR for residential-duty water heaters for all four draw patterns: High, medium, low, and very small.
For residential-duty commercial storage water heaters, DOE applied each analyzed standby loss level to each unit on the market, calculating the allowed maximum standby loss. The UEF was then calculated for each unit for each draw pattern using this standby loss level and each thermal efficiency level. Because the energy conservation standards for residential-duty commercial water heaters proposed in
Table IV.26 shows the UEF levels calculated for each combination of thermal efficiency level and standby loss level, using the conversion factors proposed in the April 2015 NOPR.
The markups analysis develops appropriate markups in the distribution chain (
Four different markets exist for commercial water heating equipment: (1) New construction in the residential buildings sector, (2) new construction in the commercial buildings sector, (3) replacements in the residential buildings sector, and (4) replacements in the commercial buildings sector. DOE developed eight distribution channels to address these four markets.
For the residential and commercial buildings sectors, DOE characterizes the replacement distribution channels as follows:
DOE characterizes the new construction distribution channels for the residential and commercial buildings sectors as follows:
In addition to these distribution channels, there are scenarios in which manufacturers sell commercial water heating equipment directly to a commercial consumer through a national account, or a commercial consumer purchases the equipment directly from a retailer. These scenarios occur in both new construction and replacements markets and in both the residential and commercial sectors. In these instances, installation is typically accomplished by site personnel. These distribution channels are depicted as follows:
In response to the October 2014 RFI, several stakeholders commented on distribution channels. First, stakeholders provided inputs regarding the types of distribution channels for commercial water heating equipment. Rheem agreed that the distribution channel types outlined in the October 2014 RFI were appropriate and sufficient to describe the existing U.S. market. (Rheem, No. 10 at p. 4) AHRI and Bradford White suggested that DOE should address a distribution channel that goes from a manufacturer to a manufacturer's representative, who then sells to the commercial consumer. (AHRI, No. 5 at p. 4; Bradford White, No. 3 at p. 2) DOE addressed this comment by incorporating a manufacturer's representative distribution channel in its markups analysis for the NOPR.
In the October 2014 RFI, DOE also sought input on the percentage of equipment distributed through the various types of distribution channels. 79 FR 62899, 62906 (Oct. 21, 2014). Rheem stated that the vast majority of
Last, DOE asked in the October 2014 RFI for recent data and recommendations to establish the markups for the parties involved with the distribution of the equipment. 79 FR 62899, 62906 (Oct. 21, 2014). In response, Rheem stated that the markups varied within each market, making it difficult to roll up to a total market analysis. Distributors and their commercial consumers were reticent to provide Rheem with markup data. (Rheem, No. 10 at p. 4) DOE acknowledges that private businesses were reticent to provide potentially sensitive information about pricing to other market participants or DOE. To develop markups for this NOPR, DOE utilized several sources, including: (1) The Heating, Air-Conditioning & Refrigeration Distributors International (HARDI) 2013 Profit Report
In addition to markups of distribution channel costs, DOE derived State and local taxes from data provided by the Sales Tax Clearinghouse.
The purpose of the energy use analysis is to assess the energy requirements (
In the October 2014 RFI, DOE indicated that it would estimate the annual energy consumption of CWH equipment at specified energy efficiency levels across a range of applications, building types, and climate zones. 79 FR 62899, 62906-62907 (Oct. 21, 2014). DOE developed representative hot water volumetric loads and water heating energy usage for the selected representative products for each equipment class and building type combination analyzed. This approach captures the variability in CWH equipment use due to factors such as building activity, schedule, occupancy, tank losses, and distribution system piping losses.
For commercial building types, DOE used the daily load schedules and normalized peaks from the 2013 DOE Commercial Prototype Building Models
DOE converted daily volumetric hot water loads into daily Btu energy loads
DOE developed a maximum hot water loads methodology for buildings using the calculations from a major water heater manufacturer's sizing calculators,
Given the hot water load requirements as well as the equipment needs of the sampled buildings, DOE was able to calculate the hours of operation to serve hot water loads and the hours of standby mode for the representative model of each equipment class to service each sampled building. Since the number of water heaters allocated to a specific building was held constant at the baseline efficiency level, a water heater's hours of operation decreased as its thermal efficiency improved. This decrease in operation, in combination with standby loss performance, led to the energy savings achieved at each efficiency level above the baseline. For storage water heaters, DOE used the standby loss levels identified in the engineering analysis to estimate energy savings from more-stringent standby loss levels. Section IV.C.3.b and Chapter 5 of the NOPR TSD include additional details on the standby loss levels analyzed in the engineering analysis.
For this NOPR, DOE also consulted the ASHRAE
In response to the proposed method of determining water heating energy use in the RFI, stakeholders expressed concerns regarding the climate zones in DOE's annual energy consumption analysis for commercial water heating equipment. In general, the commenters emphasized the importance of appropriately sizing the equipment under analysis for water heating energy use. A.O. Smith commented that “analysis across climate zones is unnecessary except for air-source HPWH's, as incoming water temperature is a more determinate parameter for other technology classes.” (A.O. Smith, No. 2 at p. 3) Along the same lines, AHRI commented that it was overly complicated to have the proposed annual energy consumption analysis consider a range of applications of building types and climate zones. According to AHRI, the analysis should assume that the water heating equipment had been sized to meet the building load, regardless of building type or location. (AHRI, No. 5 at p. 4) In addition, Bradford White commented that the approach of the Energy Use Analysis was too involved and needed to be simplified. (Bradford White, No. 3 at p. 2) AHRI also commented that DOE could use manufacturers' sizing tools to size water heaters to the right application. (AHRI, No. 5, at pp. 4-5) AHRI cautioned that sizing methods are different than overall usage profiles. (AHRI, No. 5 at pp. 4-5) Rheem Manufacturing Company commented that commercial water heating equipment should be sized to meet the building's peak demand. (Rheem, No. 10 at p. 5) Lastly, Steffes recommended that DOE should use RECS 2009 in its analysis (particularly Table CE4.6). (Steffes, No. 6 at p. 2)
In the October 2014 RFI, DOE sought input and sources of data or
DOE considered these comments in designing its energy use analysis. As recommended by Steffes, DOE utilized 2009 RECS building characteristics data for determining residential building hot water loads and maximum load sizing requirements. DOE also used 2003 CBECS building characteristics data for determining commercial building hot water loads and maximum load sizing requirements. While recognizing AHRI and Bradford White's concern for the complexity of the analysis, DOE determined that assessing the energy use of CWH equipment across a range of operating applications and climates specific to the building types and locations in the 2009 RECS and 2003 CBECS data improves the estimated hot water load associated with equipment sized for the applications. This analytical approach enables DOE to evaluate the impacts of the proposed energy conservation standards comprehensively, accounting for the hot water requirements of U.S. commercial consumers across a multitude of scenarios.
A.O. Smith and AHRI expressed concerns about analyzing the energy use of CWH equipment across climate zones. Based on the comment received, DOE believes that this concern was unfounded. As discussed previously, DOE's analysis utilized climate zone data, in the form of location-based dry bulb temperature data, which was then used to estimate the inlet water temperature specific to each sampled building's location, a key parameter identified by A.O. Smith. This approach captured the effect of inlet water temperature on CWH equipment hot water loads and maximum load sizing. As recommended by AHRI, Rheem, A.O. Smith, and Bradford White, DOE used a major manufacturer's peak sizing calculators as the basis for sizing CWH equipment to the maximum hot water loads predicted for the sampled CBECS and RECS building records.
For details of DOE's energy use analysis, see chapter 7 of the NOPR TSD.
The purpose of the LCC and PBP analysis is to analyze the effects of potential amended energy conservation standards on commercial consumers of CWH equipment by determining how a potential amended standard affects their operating expenses (usually decreased) and their total installed costs (usually increased). DOE used the following two metrics to measure commercial consumer impacts:
• The LCC (life-cycle cost) is the total consumer cost of an appliance or equipment over the life of the equipment. The LCC calculation includes total installed cost (equipment manufacturer selling price, distribution chain markups, sales tax, and installation costs), operating costs (energy, repair, and maintenance costs), product lifetime, and discount rate. DOE discounts future operating costs to the time of the purchase using a commercial consumer discount rate.
• The PBP (payback period) is the estimated amount of time (in years) it takes commercial consumers to recover the increased total installed cost (including equipment and installation costs) of a more-efficient type of equipment through reduced operating costs. DOE calculates the PBP by dividing the change in total installed cost (normally higher) due to a proposed new or amended energy conservation standard by the change in annual operating cost (normally lower) that results from that potential standard. For a given efficiency level, DOE measures the change in LCC, or the LCC savings, relative to an estimate of the no-new-standards-case efficiency level. The no-new-standards-case estimates reflect the market in the absence of amended energy conservation standards, including market trends for equipment that exceed the current energy conservation standards.
For the NOPR, DOE analyzed the potential for variability by performing the LCC and PBP calculations on a nationally representative sample of individual commercial and residential buildings. DOE utilized the sample of buildings developed for the energy use analysis and the corresponding simulations results.
DOE modeled uncertainty for specific inputs to the LCC and PBP analysis by using Monte Carlo simulation coupled with the corresponding probability distributions, including distributions describing efficiency of units shipped in the no-new-standards case. The Monte Carlo simulations, performed by Crystal Ball (a commercially-available software program), randomly sampled input values from each of the probability distributions. Then, the model calculated the LCC and PBP for equipment at each efficiency level for the 10,000 simulations. More details on the incorporation of uncertainty and variability in the LCC are available in appendix 8B of the NOPR TSD.
DOE conducted the LCC and PBP analyses using a commercially-available spreadsheet tool and a purpose-built spreadsheet model, available on DOE's Web site.
EPCA establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and, as applicable, water) savings during the first year that the consumer will receive
DOE calculated the LCC and PBP for all commercial consumers as if each would purchase a new CWH unit in the year that compliance with amended standards is required. As discussed above, DOE is conducting this rulemaking pursuant to its 6-year-lookback authority under 42 U.S.C. 6313(a)(6)(C), and EPCA directs DOE to publish a final rule amending the standard for the equipment covered in this document no later than 2 years after a NOPR is issued. (42 U.S.C. 6313(a)(6)(C)(iii)) At the time of preparation of the NOPR analyses, the expected issuance date was 2015, leading to an anticipated final rule publication in 2016. EPCA also states that amended standards prescribed under this subsection shall apply to equipment manufactured after a date that is later of: (I) The date that is 3 years after publication of the final rule establishing a new standard; or (II) the date that is 6 years after the effective date of the current standard for a covered equipment. (42 U.S.C. 6313(a)(6)(C)(iv)) The date under clause (I), currently projected to be 2019, is later than the date under clause (II), which is 2009. Therefore, for the purposes of its analysis for this NOPR, DOE used January 1, 2019 as the beginning of compliance with potential amended standards for CWH equipment.
As noted above, DOE's LCC and PBP analyses generate values that calculate the PBP for commercial consumers of potential energy conservation standards, which includes, but is not limited to, the 3-year PBP contemplated under the rebuttable presumption test. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6313(a)(6)(ii). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level (thereby supporting or rebutting the results of any preliminary determination of economic justification).
In the October 2014 RFI, DOE requested comment from stakeholders on the overall method that it intended to use in conducting the LCC and PBP analysis for CWH equipment. 79 FR 62899, 62907 (Oct. 21, 2014). In response to this request, several stakeholders provided comment. A. O. Smith and Rheem stated that the LCC and PBP methods were acceptable but were dependent upon accurate assumptions and data. (A. O. Smith, No. 2 at p. 3; Rheem, No. 10 at p. 6) AHRI agreed, and mentioned potential issues in selecting the inputs for the analysis. (AHRI, No. 5 at p. 4) Bradford White further stated that while it had no issue with the proposed method for the LCC and PBP analyses, it would like representative cost estimates to be used. (Bradford White, No. 3 at p. 3)
Recognizing that each business that uses CWH equipment is unique, DOE analyzed variability and uncertainty by performing the LCC and PBP calculations on a nationally representative stock of commercial and residential buildings. Commercial buildings can be categorized based on their specific activity, and DOE considered commercial buildings such as offices (small, medium, and large), stand-alone retail and strip-malls, schools (primary and secondary), hospitals and outpatient healthcare facilities, hotels (small and large), warehouses, restaurants (quick service and full service), assemblies, nursing homes, and dormitories. These encompass 89.1 percent of the total sample of commercial building stock in the United States. The residential buildings can be categorized based on the type of housing unit, and DOE considered single-family (attached and detached) and multi-family (with 2-4 units and 5+ units) buildings in its analysis. This encompassed 95.5 percent of the total sample of residential building stock in the United States, though not all of this sample would use CWH equipment. DOE developed financial data appropriate for the commercial consumers in each business and building type. Each type of building has typical commercial consumers who have different costs of financing because of the nature of the business. DOE derived the financing costs based on data from the Damodaran Online Web site.
The LCC analysis used the estimated annual energy use for every unit of CWH equipment described in section IV.C. Aside from energy use, other important factors influencing the LCC and PBP analyses are energy prices, installation costs, and equipment distribution markups. At the national level, the LCC spreadsheets explicitly model both the uncertainty and the variability in the model's inputs, using probability distribution functions.
As mentioned earlier, DOE generated LCC and PBP results for commercial consumers using business type data aligned with building type and by geographic location, and DOE developed weighting factors to generate national average LCC savings and PBPs for each efficiency level. As there is a unique LCC and PBP for each calculated combination of building type and geographic location, the outcomes of the analysis can also be expressed as probability distributions with a range of LCC and PBP results. A distinct advantage of this type of approach is that DOE can identify the percentage of commercial consumers achieving LCC savings or attaining certain PBP values due to an increased efficiency level, in addition to the average LCC savings or average PBP for that efficiency level.
For each efficiency level that DOE analyzed, the LCC analysis required input data for the total installed cost of the equipment, its operating cost, and the discount rate. Table IV.27 summarizes the inputs and key assumptions DOE used to calculate the commercial consumer economic impacts of all energy efficiency levels analyzed in this rulemaking. A more detailed discussion of the inputs follows.
The price of CWH equipment reflects the application of distribution channel markups (mechanical contractor markups) and sales tax to the MSP, which is the cost established in the engineering analysis. As described in section IV.D, DOE determined distribution channel costs and markups for commercial water heating equipment. For each equipment class, the engineering analysis provided contractor costs for the baseline equipment and up to five higher equipment efficiencies. DOE examined whether equipment prices for CWH equipment would change over time. DOE tentatively determined that there is no clear historical price trend for CWH equipment. Therefore, DOE used costs established in the engineering analysis directly for determining 2019 equipment prices and future equipment prices (equipment is purchased by the commercial consumer during the first year in 2019 at the estimated equipment price, after which the equipment price remains constant). See section IV.H.3 of this document and appendix 10B of the NOPR TSD for more details.
The markup is the percentage increase in price as the CWH equipment passes through distribution channels. As explained in section IV.D, CWH equipment is assumed to be delivered by the manufacturer through a variety of distribution channels. There are several distribution pathways that involve different combinations of the costs and markups of commercial water heating equipment. The overall markups used in the LCC analysis are weighted averages of all of the relevant distribution channel markups.
UM was concerned that this rulemaking would quickly drive up the cost of water heaters without addressing the inefficiencies of related systems. (UM, No. 9 at p. 2) In response, DOE does address the inefficiencies of
The primary inputs for establishing the total installed cost are the baseline commercial consumer price, standard-level commercial consumer price increases, and installation costs (labor and material costs), where the primary installation costs changes, by efficiency level, are the venting costs for high-efficiency gas-fired products. Baseline commercial consumer prices and standard-level commercial consumer price increases will be determined by applying markups to manufacturer selling price estimates, including sales tax where appropriate. For new installations, the installation cost is added to the commercial consumer price to arrive at a total installed cost. For replacement installations, the cost to remove the previous equipment (including venting when necessary) and the installation cost for new equipment are added to the commercial consumer price to arrive at the total replacement installation cost.
In the October 2014 RFI, DOE stated that it intended to develop installation costs using the most recent RS Means data.
To summarize DOE's approach, DOE derived national average installation costs for commercial equipment from data provided in RS Means 2015 data books.
For products requiring venting, DOE calculated venting costs for each building in the Commercial Building Energy Consumption Survey (CBECS) and Residential Energy Consumption Survey (RECS). A variety of installation parameters impact venting costs; among these, DOE simulated the type of installation (new construction or retrofit), draft type (atmospheric venting or power venting), water heater fuel type, building vintage, number of stories, and presence of a chimney. A logic sequence was applied to the identified variables in order to accurately determine the venting costs for each instance of equipment and building within the Monte Carlo analysis. The primary assumptions used in this logic are listed below:
• 25 percent of commercial buildings built prior to 1980 were assumed to have a masonry chimney, and 25 percent of masonry chimneys required relining.
• Condensing products with vent diameters smaller than 5 inches were modeled using PVC (polyvinyl chloride) as the vent material.
• Condensing products with vent diameters larger than 8 inches were modeled using AL29-4C as the vent material.
• Condensing products with vent diameters of 5 inches and up to and including 8 inches were modeled using a random selection process where on average 50 percent of installations use PVC as the vent material and the remaining use AL29-4C.
• 5 percent of all condensing water heater installations were modeled as direct vent installations, where flue lengths would allow. The intake air pipe material for condensing products was modeled as PVC.
DOE recognized that basic installation costs are higher for larger units, but did not identify any significant basic installation cost increases for higher-efficiency CWH equipment. These relationships were consistent in the RS Means data. Therefore, DOE utilized RS Means installation cost data to derive installation cost curves by equipment size. As the data sources available to DOE did not have data to calibrate the extent to which installation costs might change as efficiency increased, DOE assumed for the NOPR LCC analysis that basic installation cost would not increase as a function of increased efficiency.
Rheem argued that the labor cost to remove a product was equal to the labor cost to install an identical appliance. (Rheem, No. 10 at p. 7) Determination of the amount of labor was expected to be either a constant percentage based upon the installation cost, as suggested by Rheem, or a linear relationship of the percentage of the installation cost related to the volume of the tank in question. However, inspection of the available RS Means data demonstrated that the labor required for removing a storage tank smaller than approximately 250 gallons required approximately 20 percent of the labor necessary to complete the installation. The percentage of labor required for removal, compared to the labor required for installation, continued to increase with the storage volume until it reached approximately 54 percent of installation labor at a volume of 1,200 gallons. This relationship was observed to be non-linear in nature, which would significantly complicate the analysis, and did not agree with stakeholder feedback or DOE's understanding of the costs.
Therefore, DOE estimated the labor required to remove CWH equipment by averaging the calculated percentage of labor to remove a water heater compared to the amount of labor required to install the water heater with respect to the storage volume. As reported in RS Means data, the average percentage of removal labor hours in terms of installation labor hours was found to be 37.5 percent of the labor to install a water heater, and this percentage was used to determine the amount of labor required to remove a given unit of CWH equipment at the end of service condition.
DOE did not find a source of data on the cost for venting system removal. However, DOE understands that removal of venting requires many similar tasks in handling components as installation does, but without the same necessary care to ensure vent integrity. As found in the equipment removal cost, the amount of labor required for removing venting is less than the amount of labor required to install said venting. Furthermore, DOE notes that the amount of labor required for removal of the venting will increase significantly as the venting diameter increases due to the difficulty of managing the components during removal. Therefore, DOE modeled the labor required to remove an existing venting system as 50 percent of the labor required to complete an installation of a new venting system, as this presents a conservative estimate of the amount of labor required for removal.
DOE estimated the annual electricity and natural gas consumed by each class of CWH equipment, by efficiency and standby loss level, based on the energy use analysis described in section IV.E and in chapter 7 of the NOPR TSD.
Electricity and natural gas prices are used to convert changes in the energy consumption from higher-efficiency equipment into energy cost savings. It is important to consider regional differences in electricity and natural gas prices, because the variation in those prices can impact electricity and natural gas consumption savings and equipment costs across the country. DOE determined average effective commercial electricity prices
CBECS and RECS report data based on different geographic scales. The various States in the United States are aggregated into different geographic scales such as Census Divisions (for CBECS) and reportable domains (for RECS). Hence, DOE weighted electricity and natural gas prices in each State based on the cumulative population in the cluster of one or more States that comprise each Census Division or reportable domain respectively. See chapter 8 of the NOPR TSD for further details.
The electricity and natural gas price trends provide the relative change in electricity and natural gas costs for future years. DOE used the
Several stakeholders suggested further items to consider for the electricity and gas price analysis. Steffes stated that using average electric rates where demand and energy charges were bundled together in LCC and PBP calculations would often fail to capture financial impact. (Steffes, No. 6 at p. 2) Bradford White recommended that DOE reach out to the Energy Solutions Center for natural gas pricing. (Bradford White, No. 3 at p. 3) AGA recommended that DOE use marginal gas-price analysis when evaluating monetary savings in the LCC, arguing that a shift from a non-condensing water heater to a condensing water heater would not alter fixed costs. (AGA, No. 4 at p. 5) DOE considered each of these comments carefully, and in response, developed the LCC analysis using a marginal fuel price approach to convert fuel savings into corresponding financial benefits for the different equipment classes. This approach was based on the development of marginal price factors for gas and electric fuels based on historical data relating monthly expenditures and consumption. For details of DOE's
Maintenance costs are the routine annual costs to the commercial consumer of ensuring continued equipment operation. DOE utilized The Whitestone Facility Maintenance and Repair Cost Reference 2012-2013
Because data were not available to indicate how maintenance costs vary with equipment efficiency, DOE used preventive maintenance costs that remain constant as equipment efficiency increases. Additional information relating to maintenance of CWH equipment can be found in Chapter 8 of the TSD.
The repair cost is the cost to the commercial consumer of replacing or repairing components that have failed in the CWH equipment.
In the October 2014 RFI, DOE sought input on its intention to use the most recent RS Means Facilities Maintenance & Repair Cost data for developing maintenance costs. 79 FR 62899, 62908 (Oct. 21, 2014). Joint Advocates stated they were not aware of studies with independent calibration of RS Means Facilities Maintenance & Repair Cost data and suggested that DOE could survey a metropolitan area to perform such a calibration. (Joint Advocates, No. 7 at p. 4) Rheem commented that RS Means Facilities Maintenance & Repair Cost data presented best practices but stated that there are a wide range of practices in the field. (Rheem, No. 10 at p. 7) A.O. Smith and AHRI commented that each was not familiar enough with the development process of the RS Means Facilities Maintenance & Repair Cost Data to be confident in its accuracy. (A.O. Smith, No. 2 at p. 4; AHRI, No. 5 at p. 5)
In response to these comments, DOE conducted further research to identify alternative sources of data relating to the repair of CWH equipment and identified The Whitestone Facility Maintenance and Repair Cost Reference 2012-2013
The labor required to replace a component was estimated as 2 hours for combustion systems, 1 hour for combustion controls, and
In the October 2014 RFI, DOE asked if repair costs vary as a function of equipment efficiency. 79 FR 62899, 62908 (Oct. 21, 2014). Several stakeholders commented on the relationship between equipment efficiency and repair costs. Bradford White, A.O. Smith, and AHRI commented that to the extent that higher-efficiency equipment incorporates additional components and more complex controls, the repair costs would likely be higher. (Bradford White, No. 3 at p. 3; A.O. Smith, No. 2 at p. 4; AHRI, No. 5 at p. 5) Along the same line, Rheem stated that repair costs could be greater for new, more-efficient technologies. These repairs were more frequent, required more labor hours, and had parts that were less likely to be available and may require the cost of premium freight. (Rheem, No. 10 at p. 7)
DOE considered the feedback from the stakeholders and undertook further research to identify components and subsystems commonly replaced in order to evaluate differences in repair costs relative to efficiency levels.
The combustion systems and controls used in gas-fired CWH equipment were found to have different costs related to the efficiency levels of these products. This is in agreement with comments provided by AHRI, Bradford White,
A simpler analysis was used to account for repair costs in the LCC model for electric water heaters. Component costs used in repairs were taken from average prices found on manufacturers' Web sites, Grainger.com, and Internet searches.
The repair cost of equipment with multiple service parts was estimated as the average cost of all of the components identified in the Internet search. This cost was applied at the frequency identified earlier in this section. DOE understands that this approach may conservatively estimate the total cost of repair for purposes of DOE's analysis, but the percentage of total repair cost remains small compared to the commercial consumer price and the total installation price. Additionally, DOE prefers to use this component level approach to understand the incremental repair cost difference between efficiency levels of equipment. Additional details of this analysis are found in Chapter 8 of the NOPR TSD and Appendix 8E of the NOPR TSD.
Equipment lifetime is the age when a unit of CWH equipment is retired from service. In the October 2014 RFI, DOE presented various sources that estimate the average lifetime for CWH equipment to be between 7 and 25 years based on the application and equipment class. 79 FR 62899, 62908 (Oct. 21, 2014). In addition, DOE stated in the October 2014 RFI that it intended to determine average lifetime for each CWH equipment class as the primary input for developing a Weibull probability distribution to characterize CWH lifetime. DOE sought comment on its approach of using a Weibull probability distribution to characterize equipment lifetime.
In response to DOE's request for comment, Joint Advocates stated that Weibull survivorship was the “least bad” option for lifetime estimation. However, that method also assumed that changing water heater-related materials and processes relative to water heaters that have already died would not affect the lifetime of future units. Joint Advocates further pointed out that this assumption may not be valid, particularly for early generation of technologies. (Joint Advocates, No. 7 at p. 4) Lastly, Rheem agreed with DOE's approach of using Weibull probability distribution for lifetime analysis but cautioned that applications impact lifetime considerably. (Rheem, No. 10 at p. 8)
In response to the Joint Advocates' comment on Weibull survivorship, DOE acknowledges that changing equipment, water heater-related materials, and design processes may have an impact on future product life. DOE has not been able to obtain any information (nor have commenters provided such information) to assess how possible new designs and processes may impact future equipment life or how the use of early generation technologies informs or influences the life of equipment analyzed in this rule. Without such information, consistent with the Joint Advocates comment, DOE continued to assess lifetime of equipment in its analysis using historical data and a Weibull approach to allow for variability in equipment life within the LCC. Based on the parameters of the Weibull distribution, the lifetime for the equipment varies within each simulation run.
For the analysis of this NOPR, DOE did not obtain additional data that conflicted with its findings of an average lifetime between 10 and 25 years for different classes of CWH equipment. Consequently, DOE used a distribution of lifetimes, with the weighted averages ranging between 10 years and 25 years as shown in Table IV.29, based on a review of a range of CWH equipment lifetime estimates found in published studies and online documents. DOE applied a distribution to all classes of CWH equipment analyzed. Chapter 8 of the NOPR TSD contains a detailed discussion of CWH equipment lifetimes.
The discount rate is the rate at which future expenditures are discounted to establish their present value. DOE determined the discount rate by estimating the cost of capital for purchasers of CWH equipment. Most purchasers use both debt and equity capital to fund investments. Therefore, for most purchasers, the discount rate is the weighted-average cost of debt and equity financing, or the weighted-average cost of capital (WACC), less the expected inflation.
To estimate the WACC of CWH equipment purchasers, DOE used a sample of more than 340 companies grouped to be representative of operators of different businesses, drawn from a database of 7,766 U.S. companies presented on the Damodaran Online Web site.
DOE used the final sample of companies to represent purchasers of CWH equipment. For each company in the sample, DOE derived the cost of debt, percentage of debt financing, and systematic company risk from information on the Damodaran Online Web site. Damodaran estimated the cost of debt financing from the nominal long-term Federal government bond rate and the standard deviation of the stock price. DOE then determined the weighted average values for the cost of debt, range of values, and standard deviation of WACC for each category of the sample companies. Deducting expected inflation from the cost of capital provided estimates of the real discount rate by ownership category.
For most educational buildings and a portion of the office buildings occupied by public schools, universities, and State and local government agencies, DOE estimated the cost of capital based on a 40-year geometric mean of an index of long-term tax-exempt municipal bonds (>20 years).
Based on this database, DOE calculated the weighted-average, after-tax discount rate for CWH equipment purchases, adjusted for inflation. Chapter 8 of the NOPR TSD contains the detailed calculations related to discount rates.
DOE also determined the economic impact of potential amended energy conservation standards on commercial consumers by calculating the PBP of more-stringent efficiency levels relative to the baseline efficiency levels. The PBP measures the amount of time it takes the commercial consumer to recover the assumed higher purchase expense of more-efficient equipment through lower operating costs. Similar to the LCC, the PBP is based on the total installed cost and the operating expenses for all building types and purchase locations for the water-heating equipment. Because the simple PBP does not take into account changes in operating expense over time or the time value of money, DOE considered only the first year's operating expenses, including annualized repair and maintenance expenses, to calculate the PBP, unlike the LCC, which is calculated over the lifetime of the equipment. Chapter 8 of the NOPR TSD provides additional details about the PBP.
In its shipments analysis, DOE developed shipment projections for commercial water heating equipment and, in turn, calculated equipment stock over the course of the analysis period. DOE uses the shipments projection and the equipment stock to calculate the national impacts of potential amended energy conservation standards on energy use, NPV, and future manufacturer cash flows. DOE develops shipment projections based on historical data and an analysis of key market drivers for each type of equipment.
To develop the shipments model, DOE started with known information on shipments of commercial electric and gas-fired storage water heaters collected for the years 1994-2013 from the AHRI Web site,
No historical shipment information was available for residential-duty gas-fired storage water heaters, gas-fired tankless waters, or gas-fired hot water supply boilers. The stock accounting model requires historical stock and shipments, so DOE estimated past shipments for these equipment classes. The stock of equipment for each equipment class was developed in the same manner described for the gas-fired and electric storage water heaters.
For residential-duty gas-fired storage equipment, DOE assumed equivalency in shipments per basic model between the commercial and the residential-duty gas-fired storage water heaters. The ratio of the number of unique residential-duty gas-fired water heaters (67) to commercial gas-fired water heaters (328) listed in the analysis database was applied to the gas-fired water heater shipments, with the result being an estimated historical series of residential-duty gas-fired water heaters.
For gas-fired tankless water heaters, DOE used an estimation method discussed in industry sources (
To estimate historical shipments of instantaneous water heaters and hot water supply boilers, DOE started with an estimate of the total stock of instantaneous equipment in commercial buildings for the year 2008.
To project shipments and stock for 2014 through the end of the 30-year analysis period (2048), DOE relied on a stock accounting model. For each class of equipment, DOE projected replacement shipments based on the historical shipments, the expected useful lifetime of each equipment class, and a Weibull distribution that identifies a percentage of units still in existence from a prior year that will fail and need to be replaced in the current year. In each year, DOE assumed a fraction of the replacement market will be retired rather than replaced due to the demolition of buildings in which this CWH equipment resides. This retirement fraction was derived from building stock data from the
To project shipments of commercial water heating equipment for new construction, DOE relied on building stock data obtained from the
The final component in the stock accounting model is shifts to or away from particular equipment classes. Based on the historic data, there is an apparent shift toward electric storage water heaters. The historical shipments summarized in Table IV.30 showed a fairly steady growth in commercial electric storage water heaters, with shipments growing from 22,288 in 1994 to 69,160 in 2013. Over the same time period, commercial gas-fired storage water heaters have seen a decline in shipments from 91,027 in 1994, to a low of 75,487 in 2009, and to the higher value of 88,539 in 2013. Thus, there is an apparent shift away from gas-fired storage units, and because residential-
For each equipment class, there are factors that influence the magnitude of the apparent shifts, including relative fuel prices and the resultant energy cost of competing products, relative equipment and installation costs, repair and maintenance costs, commercial consumer preferences, and outside influences such as ENERGY STAR and utility conservation or marketing programs. If the slope of the apparent shifts in shipments is held constant at the values developed for 2013, the last year of historical data, over the study period commercial gas-fired storage water heater shipments would continue to decline, falling to 79,000 units by 2048, while over the same time period the commercial electric storage water heater shipments would climb to over 200,000 units. Nothing in the long term historical data indicates that such a wide disparity between gas-fired and electric storage water heater equipment shipments would develop. The historical data summarized in Table IV.30 show the growth rate in commercial gas-fired storage water heater equipment shipments over time to be flat, or increasing if one looks at the last 5 years. Rather than showing shifts that result in the wide disparity between commercial gas-fired and electric storage units, for the NOPR analyses DOE used a shift value equal to the 2013 shift values adjusted downward by 50 percent. The resulting shipment projection continues the observed trends of electric storage water heater shipments increasing over time at a rate faster than the commercial gas-fired water heater equipment. The resulting projection shows commercial electric storage water heater shipments exceeding commercial gas-fired storage shipments by 2030. The commercial electric storage water heater shipments exceed commercial gas-fired storage water heater shipments by approximately 25 percent in final year of the study period (2048).
For all equipment classes, DOE assumed that the apparent shift is most likely to occur in new installations rather than in the replacement installations. As described in chapter 9 of the TSD, DOE assumed that a shift is twice as likely to take place in a new installation as in a replacement installation. For example, if DOE estimated that in 2014, 20 percent of shipments for an equipment class went to new installations and 80 percent went for replacements in the absence of switching, DOE multiplied the 20 percent multiplied by 2 (40 percent) and added the 80 percent (which equals 120 percent). Both the 40 percent for new and the 80 percent for replacement were then divided by 120 percent to normalize to 100 percent.
The resulting shipment projection is shown in Table IV.32.
Because the estimated energy usage of CWH equipment differs by commercial and residential setting, the NIA employs the same fractions of shipments (or sales) to commercial and to residential commercial consumers used by the LCC analysis. The fractions of shipments by type of commercial consumer are shown in Table IV.33.
For the NIA model, shipments must be disaggregated by efficiency levels that correspond to the levels analyzed in the engineering and LCC analyses. To identify the percentage of shipments corresponding to each efficiency level, DOE compiled and analyzed a database of equipment currently produced and sold by manufacturers. The sources of information for this database included the AHRI Certification Directory,
Pursuant to DOE's October 2014 RFI, stakeholders commented on inputs to the shipment analysis and offered support. AHRI mentioned that it was consulting with its members to develop information that addressed efficiency market shares of shipments and would provide the findings to DOE once they were collated. (AHRI, No. 5 at p. 6) Rheem stated that over the last 3 years, the shipments mix had increased towards high-efficiency gas-fired condensing water heaters. (Rheem, No. 10 at p. 8) Bradford White stated that it would work with AHRI to respond on current and historical efficiency shares of shipments. (Bradford White, No. 3 at p. 3) DOE appreciates the offer of assistance from AHRI and manufacturers. DOE notes that this information was not received (or at least, not received in time for use in this NOPR), but DOE remains hopeful that AHRI and manufacturers can provide information on shipments, generally, and on shipment efficiency distributions for use in the next phase of this rulemaking.
Rheem stated that the percentage of commercial water heaters used in single-family residential-duty applications is minimal. (Rheem, No. 10 at p. 6) DOE's LCC analysis estimated the fraction of each equipment type that is applied to residential or commercial building types. For the shipment analysis, the distinction between single-family and multifamily construction would have a second-order impact on the estimates of shipments. DOE uses the building stock estimates to derive annual saturation rates, which are then applied to estimated new construction. For the NOPR, DOE used total residential building stocks. If DOE used only multifamily stocks, the saturation rates would be higher, but the stock against which it is applied would be smaller, so from a mathematical perspective, the results would be similar. The main difference would derive from the fact that multifamily construction would be projected to grow at different rates by EIA than would total residential construction. Over the 30-year analysis period, total residential stock grows at 1.0 percent while multifamily stock grows at 0.8 percent.
In terms of evaluating shipment growth, DOE used the projected number of millions of square feet of floor space additions and new residential construction to drive the new additions forecast. A number of the topics discussed in the Joint Advocates comment, such as the impact of increased equipment height or diameter on the ease with which the equipment can physically be carried into a building, were considered in the estimation of installation costs in the LCC analysis.
The national impact analysis (NIA) analyzes the effects of a potential energy conservation standard from a national perspective. The NIA assesses the NES and the NPV of total commercial consumer costs and savings that would be expected to result from the amended standards. The NES and NPV are analyzed at specific efficiency levels (
DOE evaluates the impacts of the new and amended standards by comparing no-new-standards-case projections with standards-case projections. The no-new-standards-case projections characterize energy use and commercial consumer costs for each equipment class in the absence of any new or amended energy conservation standards. DOE compares these no-new-standards-case projections with projections characterizing the market for each equipment class if DOE adopted the amended standards at each TSL. For the standards cases, DOE assumed a “roll-up” scenario in which equipment at efficiency levels that do not meet the standard level under consideration would “roll up” to the efficiency level that just meets the proposed standard level, and equipment already being purchased at efficiency levels at or above the proposed standard level would remain unaffected.
DOE uses a computer spreadsheet model to calculate the energy savings and the national commercial consumer costs and savings from each TSL. Chapter 10 and appendix 10A of the NOPR TSD explain the models and how to use them, and interested parties can review DOE's analyses by interacting with these spreadsheets. The models and documentation are available on DOE's Web site.
Unlike the LCC analysis, the NES analysis does not use distributions for inputs or outputs, but relies on national average equipment costs and energy costs. DOE used the NES spreadsheet to perform calculations of energy savings and NPV using the annual energy consumption, maintenance and repair costs, and total installed cost data from the LCC analysis. The NIA also uses
A detailed description of the procedure to calculate NES and NPV and inputs for this analysis are provided in chapter 10 of the NOPR TSD.
DOE uses a no-new-standards-case distribution of efficiency levels to project what the CWH equipment market would look like in the absence of amended standards. DOE developed the no-new-standards-case distribution of equipment by thermal efficiency levels, and by standby loss efficiency levels, for CWH equipment by analyzing a database
This rulemaking is examining potential improvements for both thermal efficiency of equipment and in the standby energy usage. Thus, two sets of efficiency distributions for the no-new standards-case scenario were developed for these classes. Table IV.34 shows the distribution of equipment by thermal efficiency level. The standby loss efficiency distribution is summarized in Table IV.35.
For each efficiency level analyzed, DOE used a “roll-up” scenario to establish the market shares by efficiency level for the year that compliance would be required with amended standards. The analysis starts with the no-new-standards-case distributions wherein shipments are assumed to be distributed across thermal efficiency levels as shown in Table IV.34. When potential standard levels above the base level are analyzed, as the name implies, the shipments in the no-new-standards case that did not meet the thermal efficiency standard level being considered would roll up to meet the amended standard level. This information also suggests that equipment efficiencies in the no-new-standards case that were above the standard level under consideration would not be affected.
For the equipment classes for which standby loss standards are being considered, the analysis takes into account a two-dimensional rollup. Equipment is distributed across the thermal efficiency levels, and for 3 classes, across the SL efficiency levels. Thus, in the analysis, a second roll-up
The inputs for determining the NES are: (1) Annual energy consumption per unit; (2) shipments; (3) equipment stock; and (4) site-to-source and full-fuel-cycle conversion factors.
DOE calculated the NES associated with the difference between the per-unit energy use under a standards-case scenario and the per-unit energy use in the no-new-standards case. The average energy per unit used by the commercial water heating equipment stock gradually decreases in the standards case relative to the no-new-standards case as more-efficient commercial water heating units gradually replaces less-efficient units.
Unit energy consumption values for each equipment class are taken from the LCC spreadsheet for each efficiency level and weighted based on market efficiency distributions. To estimate the total energy savings for each efficiency level, DOE first calculated the per-unit energy reduction (
DOE has historically presented NES in terms of primary energy savings. In the case of electricity use and savings, primary energy savings include the energy lost in the power system in the form of losses as well as the energy input required at the electric generation station in order to convert and deliver the energy required at the site of consumption. DOE uses a multiplicative factor called the “site-to-source conversion factor” to convert site energy consumption to primary energy consumption.
In response to the recommendations of a committee on “Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards” appointed by the National Academy of Sciences, DOE announced its intention to use full-fuel-cycle (FFC) measures of energy use and greenhouse gas and other emissions in the national impact analyses and emissions analyses included in future energy conservation standards rulemakings. 76 FR 51281 (August 18, 2011). While DOE stated in that notice that it intended to use the Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) model to conduct the analysis, it also said it would review alternative methods, including the use of NEMS. After evaluating both models and the approaches discussed in the August 18, 2011 notice, DOE published a statement of amended policy in the
The approach used for this NOPR, the site-to-source ratios, and the FFC multipliers that were applied are described in appendix 10D of the NOPR TSD. NES results are presented in both primary and FFC savings in section V.B.3.a.
DOE considered whether a rebound effect is applicable in its NES analysis for commercial water heating equipment. A rebound effect occurs when an increase in equipment efficiency leads to increased demand for its service. For example, when a commercial consumer realizes that a more-efficient water heating device will lower the energy bill, that person may opt to increase his or her amenity level, for example, by taking longer showers and thereby consuming more hot water. In this way, the commercial consumer gives up a portion of the energy cost savings in favor of the increased amenity. For the CWH equipment market, there are two ways that a rebound effect could occur: (1) Increased use of hot water within the buildings in which such units are installed; and (2) additional hot water outlets that were not previously installed. Because the CWH equipment that are the subject of this notice are commercial equipment, the person owning the equipment (
In the October 2014 RFI, DOE sought comments and data on any rebound effect that may be associated with more efficient commercial water heaters. 79 FR 62908 (October 21, 2014). DOE received two comments. Both A. O. Smith and Joint Advocates did not believe a rebound effect would be significant. A.O. Smith commented that water usage is based on demand and more efficient water heaters won't change the demand. (A. O. Smith, No. 2 at p. 4) Joint Advocates commented that with the marginal change in energy bill for small business owners, they would expect little increased hot water usage, and that for tenant-occupied buildings it would be “difficult to infer that more tenants will wash their hands longer because the hot water costs the building owner less.” Thus, Joint Advocates thought the likelihood of a strong rebound effect is very low. (Joint Advocates, No. 7 at p. 5) Based on its understanding of CWH equipment use as well as comments received from stakeholders, DOE concurs that the likelihood of a rebound effect is small and has not included a rebound effect in the analysis.
American Gas Association suggested that DOE use full-fuel-cycle measurements in its analysis. (AGA, No. 4 at p. 2) DOE agrees with the suggestion.
To estimate the NPV, DOE calculated the net impact as the difference between total operating cost savings and increases in total installed costs. DOE calculated the NPV of each considered standard level over the life of the equipment using the following three steps.
First, DOE determined the difference between the equipment costs under the standard-level case and the no-new-standards case in order to obtain the net equipment cost increase resulting from the higher standard level. As noted in section IV.F.2.a, DOE used a constant real price assumption as the default price projection; the cost to manufacture a given unit of higher efficiency neither increases nor decreases over time. The analysis of the price trends is described in appendix 10B of the NOPR TSD.
Second, DOE determined the difference between the no-new-standards-case operating costs and the standard-level operating costs in order to obtain the net operating cost savings from each higher efficiency level. Third, DOE determined the difference between the net operating cost savings and the net equipment cost increase in order to obtain the net savings (or expense) for each year. DOE then discounted the annual net savings (or expenses) to 2015 for CWH equipment bought on or after 2019 and summed the discounted values to provide the NPV for an efficiency level.
In accordance with the OMB's guidelines on regulatory analysis,
American Gas Association recommended that DOE include a fuel switching analysis to ensure that standards would not result in switching to less-efficient energy sources. (AGA, No. 4 at p. 2) As part of the analysis, DOE examined the possibility of fuel switching by using NIA inputs to examine commercial consumer payback periods in situations where commercial consumers switch from gas-fired to electric water heaters. In an attempt to make the values comparable, DOE adjusted values using ratios based on the first-hour ratings shown in Table IV.36. In the case of moving from a commercial gas-fired to an electric storage water heater, the electric water heater would cost more to purchase and install and cost more to operate. In the comparison of residential-duty gas-fired to electric storage water heaters, the electric water heater would be less expensive to purchase and install, but sufficiently more expensive to operate, such that the upfront cost savings would be outweighed by higher operating costs in 3 years. Based on the comparison of storage water heating equipment, DOE does not believe fuel switching from gas to electricity to be an issue.
DOE did not consider instantaneous gas-fired equipment and electric storage to be likely objects of gas-to-electric fuel switching, largely due to the disparity in hot water delivery capacity between the instantaneous gas-fired equipment and commercial electric storage equipment. As the first-hour ratings indicate in Table IV.36, a commercial consumer would need to purchase between 2 and 4 electric storage water heaters to switch from instantaneous gas-fired equipment to the electric storage equipment. While feasible for commercial consumers not facing space constraints, DOE considered it unlikely that these consumers would chose to replace one wall-mounted tankless unit with two much larger floor-mounted electric storage water heaters. It also seemed unlikely that consumers would replace one hot water supply boiler with multiple electric storage water heaters.
Accordingly, for the NOPR, DOE did not explicitly include fuel switching beyond the continuation of historical trends discussed in section IV.G.
In analyzing the potential impact of new or amended standards on commercial consumers, DOE evaluates the impact on identifiable groups (
Hence, to analyze the influence of a national standard on the low-income group population, DOE conducted a (residential) subgroup analysis where only the 0-20% income percentile samples were included for the entire simulation run. Subsequently, the results of the subgroup analysis are compared to the results from all commercial consumers.
The results of DOE's LCC subgroup analysis for both subgroups are summarized in section V.B.1.b of this notice and described in detail in chapter 11 of the NOPR TSD.
DOE performed a manufacturer impact analysis (MIA) to determine the financial impact of amended energy conservation standards on manufacturers of CWH equipment and to estimate the potential impact of amended standards on employment and manufacturing capacity. The MIA has both quantitative and qualitative aspects. The quantitative part of the MIA primarily relies on the Government Regulatory Impact Model (GRIM), an industry cash-flow model with inputs specific to this rulemaking. The key GRIM inputs are industry cost structure data, shipment data, equipment costs, and assumptions about markups and conversion costs. The key output is the industry net present value (INPV). DOE used the GRIM to calculate cash flows using standard accounting principles and to compare changes in INPV between a no-new-standards case and various TSLs (the standards cases). The difference in INPV between the no-new-standards case and standards cases represents the financial impact of amended energy conservation standards on manufacturers of CWH equipment. DOE used different sets of assumptions (markup scenarios) to represent the uncertainty surrounding potential impacts on prices and manufacturer profitability as a result of amended standards. These different assumptions produce a range of INPV results. The qualitative part of the MIA addresses the proposed standard's potential impacts on manufacturing capacity and industry competition, as well as any differential impacts the proposed standard may have on any particular subgroup of manufacturers. The qualitative aspect of the analysis also addresses product characteristics, as well as any significant market or product trends. The complete MIA is outlined in chapter 12 of the NOPR TSD.
DOE conducted the MIA for this rulemaking in three phases. In the first phase of the MIA, DOE prepared an industry characterization based on the market and technology assessment, preliminary manufacturer interviews, and publicly-available information. As part of its profile of the CWH industry, DOE also conducted a top-down cost analysis of manufacturers in order to derive preliminary financial inputs for the GRIM (
In the second phase of the MIA, DOE prepared an industry cash-flow analysis to quantify the potential impacts of amended energy conservation standards. In general, energy conservation standards can affect manufacturer cash flow in three distinct ways. These include: (1) Creating a need for increased investment; (2) raising production costs per unit; and (3) altering revenue due to higher per-unit prices and due to possible changes in sales volumes. DOE estimated industry cash flows in the GRIM at various potential standard levels using industry financial parameters derived in the first phase and the shipment scenario used in the NIA. DOE used the GRIM to model impacts from proposed energy conservation standards for both thermal efficiency and standby loss. The GRIM results for the standards for both metrics were analyzed together because the examined trial standard levels include both thermal efficiency and standby loss levels (see section V.A for more detail).
In the third phase of the MIA, DOE conducted structured, detailed interviews with a variety of manufacturers that represent approximately 88 percent of domestic sales of CWH equipment covered by this rulemaking. During these interviews, DOE discussed engineering, manufacturing, procurement, and financial topics to validate assumptions used in the GRIM. DOE also solicited information about manufacturers' views of the industry as a whole and their key concerns regarding this rulemaking. Section IV.J.3 includes a description of the key issues manufacturers raised during the interviews.
Additionally, in the third phase, DOE evaluated subgroups of manufacturers that may be disproportionately impacted by amended standards or that may not be accurately represented by the average cost assumptions used to develop the industry cash-flow analysis. For example, small manufacturers, niche players, or manufacturers exhibiting a cost structure that largely
To identify small businesses for this analysis, DOE applied the small business size standards published by the Small Business Administration (SBA) to determine whether a company is considered a small business. 65 FR 30836, 30848 (May 15, 2000), as amended at 77 FR 49991, 50000, 50011 (August 20, 2012) and codified at 13 CFR part 121. The small business size standards are listed by North American Industry Classification System (NAICS) code and industry description and are available at:
DOE uses the GRIM to quantify the potential changes in cash flow due to amended standards that result in a higher or lower industry value. The GRIM is used to conduct an annual cash-flow analysis using standard accounting principles that incorporates manufacturer costs, markups, shipments, and industry financial information as inputs. DOE thereby calculated a series of annual cash flows, beginning in 2015 (the base year of the analysis) and continuing to 2048. DOE summed the stream of annual discounted cash flows during this period to calculate INPVs at each TSL. For CWH equipment manufacturers, DOE used a real discount rate of 9.1 percent, which was derived from industry financial information and then modified according to feedback received during manufacturer interviews. DOE also used the GRIM to model changes in costs, shipments, investments, and manufacturer margins that could result from amended energy conservation standards.
After calculating industry cash flows and INPV, DOE compared changes in INPV between the no-new-standards case and each standards case. The difference in INPV between the no-new-standards case and a standards case represents the financial impact of the amended energy conservation standard on manufacturers at a particular TSL. As discussed previously, DOE collected this information on GRIM inputs from a number of sources, including publicly-available data and confidential interviews with a number of manufacturers. GRIM inputs are discussed in more detail in the next section. The GRIM results are discussed in section V.B.2. Additional details about the GRIM, the discount rate, and other financial parameters can be found in chapter 12 of the NOPR TSD.
For consideration of amended standby loss standards, DOE modeled the impacts to manufacturers of adapting their currently-offered equipment to comply with each potential standby loss level analyzed in the engineering analysis. The GRIM analysis incorporates the incremental increases in MPC at each standby loss level and the resulting impacts on markups. Section IV.C.3 and chapter 5 of the NOPR TSD include further discussion of efficiency levels and equipment classes analyzed.
Manufacturing higher-efficiency equipment is typically more expensive than manufacturing baseline equipment due to the use of more complex and costly components. The changes in the MPCs of the analyzed equipment can affect the revenues, gross margins, and cash flow of the industry. As a result, MPCs are key GRIM inputs for DOE's analysis.
In the MIA, DOE used the MPCs for each considered efficiency level calculated in the engineering analysis, as described in section IV.C and further detailed in chapter 5 of the NOPR TSD. In addition, DOE used information from its teardown analysis (described in chapter 5 of the TSD) to disaggregate the MPCs into material, labor, depreciation, and overhead costs. To calculate the MPCs for equipment at and above the baseline, DOE performed teardowns and cost analysis that allowed DOE to estimate the incremental material, labor, depreciation, and overhead costs for equipment above the baseline. These cost breakdowns and equipment markups were validated and revised with input from manufacturers during manufacturer interviews.
The GRIM estimates manufacturer revenues based on total unit shipment forecasts and the distribution of these values by efficiency level. Changes in sales volumes and efficiency mix over time can significantly affect manufacturer finances. For this analysis, the GRIM uses the NIA's annual shipment forecasts derived from the shipments analysis from 2015 (the base year) to 2048 (the end year of the analysis period). The shipments model divides the shipments of CWH equipment into specific market segments. The model starts from a historical base year and calculates retirements and shipments by market segment for each year of the analysis period. This approach produces an estimate of the total equipment stock, broken down by age or vintage, in each year of the analysis period. In addition, the equipment stock efficiency distribution is calculated for the no-new-standards case and for each standards case for each equipment class. The NIA shipments forecasts are based on a roll-up scenario. The forecast assumes that equipment in the no-new-standards case that does not meet the standard under consideration would “roll up” to meet the amended standard beginning in the compliance year of 2019. Section IV.G and chapter 9 of the NOPR TSD include additional details on the shipments analysis.
Amended energy conservation standards would cause manufacturers to incur one-time conversion costs to bring their production facilities and equipment designs into compliance. DOE evaluated the level of conversion-related expenditures that would be needed to comply with each considered efficiency level for each equipment class. For the MIA, DOE classified these conversion costs into two major groups: (1) Capital conversion costs; and (2) product conversion costs. Capital conversion costs are one-time investments in property, plant, and equipment necessary to adapt or change existing production facilities such that new compliant equipment designs can be fabricated and assembled. Product conversion costs are one-time investments in research, development, testing, marketing, and other non-capitalized costs necessary to make equipment designs comply with amended energy conservation standards.
To develop conversion cost estimates, DOE used feedback received during manufacturer interviews, as well as data on manufacturing and equipment development costs derived from the equipment teardowns and engineering analysis discussed in chapter 5 of the NOPR TSD. DOE estimated conversion costs required to meet higher thermal efficiency levels for each equipment class and also evaluated conversion costs required to achieve higher standby loss levels, where applicable.
To evaluate the level of capital conversion expenditures manufacturers would likely incur to comply with amended thermal efficiency levels, DOE used data derived from the engineering analysis and equipment teardowns. DOE used these analyses to estimate investments in property, plant, and equipment that would be necessary to achieve higher thermal efficiency levels. DOE also used results from the engineering analysis to estimate capital expenditures manufacturers may have to make to upgrade their R&D and testing facilities.
To evaluate the level of product conversion costs manufacturers would likely incur to comply with amended thermal efficiency standards, DOE estimated the number of platforms each manufacturer would have to modify in order to move their equipment lines to each incremental efficiency level. These platform number estimates were based on the variation of units by input capacity offered by each manufacturer. DOE then developed the product conversion costs by estimating the amount of labor per platform manufacturers would need for research and development to raise models to each incremental efficiency level.
To evaluate the level of conversion costs manufacturers would likely incur to comply with amended standby loss standards, DOE used feedback received during manufacturer interviews, as well as data derived from the engineering analysis. For both commercial gas-fired storage water heaters and electric storage water heaters, DOE estimated that manufacturers would incur approximately $1.1 million in capital conversion costs at all standby loss levels above the baseline. For residential-duty gas-fired storage water heaters, DOE did not include capital conversion costs at the analyzed standby loss levels, because DOE has tentatively concluded that manufacturers already possess the machinery and tooling necessary to achieve those levels as part of their current production capabilities for either residential water heaters or residential-duty commercial water heaters. DOE does not expect manufacturers to incur any product conversion costs related to amended standby loss standards, because DOE expects no substantial redesign work or research and development would be necessary to achieve the standby loss levels analyzed in the engineering analysis. Section IV.C.3.b of this NOPR and Chapter 5 of the NOPR TSD include additional details on the efficiency levels analyzed in the engineering analysis.
In general, DOE assumes that all conversion-related investments occur between the year of publication of the final rule and the year by which manufacturers must comply with the amended standards. The conversion cost figures used in the GRIM can be found in section V.B.2 of this notice. For additional information on the estimated product and capital conversion costs, see chapter 12 of the NOPR TSD.
As discussed in the previous section, MSPs include direct manufacturing production costs (
Under the preservation of gross margin percentage markup scenario, DOE applied a single uniform “gross margin percentage” markup across all efficiency levels, which assumes that following amended standards, manufacturers would be able to maintain the same amount of profit as a percentage of revenue at all efficiency levels within an equipment class. As production costs increase with efficiency, this scenario implies that the absolute dollar markup will increase as well. Because manufacturers are able to fully pass through additional costs due to standards to commercial consumers, the preservation of gross margin percentage markup scenario represents the upper bound of the CWH industry's profitability in the standards case.
To estimate the average non-production cost markup used in the preservation of gross margin percentage markup scenario, DOE analyzed publicly-available financial information for manufacturers of CWH equipment. DOE then requested feedback on its initial markup estimates during manufacturer interviews. The revised markups, which are used in DOE's quantitative analysis of industry financial impacts, are presented in Table IV.37. These markups capture all non-production costs, including SG&A expenses, R&D expenses, interest expenses, and profit.
DOE also models the preservation of per-unit operating profit scenario because manufacturers stated that they do not expect to be able to mark up the full cost of production in the standards case, given the highly competitive nature of the CWH market. In this scenario, manufacturer markups are set so that operating profit one year after the compliance date of amended energy conservation standards is the same as in the no-new-standards case on a per-unit basis. In other words, manufacturers are not able to garner additional operating profit from the higher production costs and the investments that are required to comply with the amended standards; however, they are able to maintain the same operating profit in the standards case that was earned in the no-new-standards case. Therefore, operating margin in percentage terms is reduced between the no-new-standards case and standards case. DOE adjusted the manufacturer markups in the GRIM at each TSL to yield approximately the same per-unit earnings before interest and taxes in the standards case as in the no-new-standards case. The preservation of per-unit operating profit markup scenario represents the lower bound of industry profitability in the standards case. This is because manufacturers are not able to fully pass through to commercial consumers the additional costs necessitated by amended standards for CWH equipment, as they are able to do in the preservation of gross margin percentage markup scenario.
DOE interviewed manufacturers representing approximately 88 percent of the CWH market by revenue. DOE contractors endeavor to conduct interviews with a representative cross-section of manufacturers (including large and small manufacturers, covering all equipment classes and product offerings). DOE contractors reached out to all the small business manufacturers that were identified as part of the analysis, as well as larger manufacturers that have significant market share in the CWH market. As part of these interviews, DOE gathered manufacturer feedback regarding both the engineering analysis and MIA for this rulemaking. The information gathered during these interviews enabled DOE to tailor the GRIM to reflect the unique financial characteristics of the CWH industry. All interviews provided information that DOE used to evaluate the impacts of potential amended energy conservation standards on manufacturer cash flows, manufacturing capacities, and employment levels.
In interviews, DOE asked manufacturers to describe their major concerns with potential standards arising from a rulemaking involving CWH equipment. Manufacturer interviews are conducted under non-disclosure agreements (NDAs), so DOE does not document these discussions in the same way that it does public comments in the comment summaries and DOE's responses throughout the rest of this notice. The following sections highlight the most significant of manufacturers' statements that helped shape DOE's understanding of potential impacts of an amended standard on the industry. Common issues raised by manufacturers in interviews included: the magnitude of conversion costs and the complexity and cost of retrofits.
Manufacturers stated in interviews that an increase in the stringency of energy conservation standards may cause them to face significant capital and product conversion costs to bring their equipment into compliance if DOE were to propose a standard that necessitates condensing technology. While all major CWH manufacturers currently produce condensing equipment, most also offer a wide range of non-condensing equipment that they stated is important in serving the replacement market. Manufacturers stated that eliminating non-condensing equipment would strand production assets and could result in manufacturers having to make capital investments in machinery and tooling to increase their condensing equipment production capacity.
Manufacturers also stated that shifting their entire product line to condensing equipment would require significant product conversion costs for R&D and testing. Most manufacturers currently offer a less diverse product line of condensing equipment, compared to their non-condensing equipment offerings. Several stated that in order to serve the replacement market and remain competitive, they would need to develop a range of sizes and capacities of condensing equipment that they currently only offer at non-condensing thermal efficiency levels. Manufacturers stated that this would require a substantial engineering effort.
In interviews, several manufacturers pointed out that approximately 85 percent of CWH equipment sales are conducted in the replacement channel, rather than the new construction channel. They stated that the majority of the CWH market is structured around the legacy venting infrastructure designed for non-condensing equipment. Manufacturers stated that these venting systems are not designed to handle the acidic condensate that develops in condensing equipment. Manufacturers were concerned that commercial consumers would have to make expensive retrofits to install condensing products. According to manufacturers, this may result in commercial consumers repairing water heaters, rather than replacing them, which manufacturers argued would not save energy.
Manufacturers expressed concern that more-stringent energy conservation standards may stifle innovation in the industry by causing manufacturers to spend funds set aside for product innovation on compliance efforts instead. Several manufacturers pointed out that it is important for them to continually develop unique and innovative products in order to differentiate their brands in the market. They pointed out that it is difficult to accomplish this when engineering resources are diverted to focus on compliance with amended DOE standards. Manufacturers stated that this concern is particularly important for small manufacturers' ability to compete in the market. Small manufacturers generally have fewer resources to devote to compliance, and so may be at a disadvantage if DOE amends energy conservation standards.
The emissions analysis consists of two components. The first component estimates the effect of potential energy conservation standards on power sector and site (where applicable) combustion emissions of CO
The analysis of power sector emissions uses marginal emissions factors calculated using a methodology based on results published for the
Combustion emissions of CH
The emissions intensity factors are expressed in terms of physical units per MWh or MMBtu of site energy savings. Total emissions reductions are estimated using the energy savings calculated in the national impact analysis.
For CH
Because the on-site operation of some CWH equipment requires use of fossil fuels and results in emissions of CO
The
SO
EIA was not able to incorporate CSAPR into
The attainment of emissions caps is typically flexible among EGUs and is enforced through the use of emissions allowances and tradable permits. Under existing EPA regulations, any excess SO
Beginning around 2016, however, SO
CAIR established a cap on NO
The MATS limit mercury emissions from power plants, but they do not include emissions caps, and as such, DOE's energy conservation standards would likely reduce Hg emissions. DOE estimated mercury emissions reduction using emissions factors based on
As part of the development of this NOPR, DOE considered the estimated monetary benefits from the reduced emissions of CO
For this NOPR, DOE is relying on a set of values for the social cost of carbon (SCC) that was developed by an interagency process. A summary of the basis for those values is provided in the following subsection, and a more detailed description of the methodologies used is provided as an appendix to chapter 14 of the NOPR TSD.
The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services. Estimates of the SCC are provided in dollars per metric ton of carbon dioxide. A domestic SCC value is meant to reflect the value of damages in the United States resulting from a unit change in carbon dioxide emissions, while a global SCC value is meant to reflect the value of damages worldwide.
Under section 1(b)(6) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), agencies must, to the extent permitted by law, assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. The purpose of the SCC estimates presented here is to allow agencies to incorporate the monetized social benefits of reducing CO
As part of the interagency process that developed the SCC estimates, technical experts from numerous agencies met on a regular basis to consider public comments, explore the technical literature in relevant fields, and discuss key model inputs and assumptions. The main objective of this process was to develop a range of SCC values using a defensible set of input assumptions grounded in the existing scientific and economic literatures. In this way, key uncertainties and model differences transparently and consistently inform the range of SCC estimates used in the rulemaking process.
When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analyst faces a number of challenges. A recent report from the National Research Council
Despite the limits of both quantification and monetization, SCC estimates can be useful in estimating the social benefits of reducing carbon dioxide emissions. The agency can estimate the benefits from reduced (or costs from increased) emissions in any future year by multiplying the change in emissions in that year by the SCC value appropriate for that year. The net present value of the benefits can then be calculated by multiplying the future benefits by an appropriate discount factor and summing across all affected years.
It is important to emphasize that the interagency process is committed to updating these estimates as the science and economic understanding of climate change and its impacts on society improves over time. In the meantime, the interagency group will continue to explore the issues raised by this analysis and consider public comments as part of the ongoing interagency process.
In 2009, an interagency process was initiated to offer a preliminary assessment of how best to quantify the benefits from reducing carbon dioxide emissions. To ensure consistency in how benefits are evaluated across agencies, the Administration sought to develop a transparent and defensible method, specifically designed for the rulemaking process, to quantify avoided climate change damages from reduced CO
After the release of the interim values, the interagency group reconvened on a regular basis to generate improved SCC estimates. Specifically, the group considered public comments and further explored the technical literature in relevant fields. The interagency group relied on three integrated assessment models commonly used to estimate the SCC: the FUND, DICE, and PAGE models. These models are frequently cited in the peer-reviewed literature and were used in the last assessment of the Intergovernmental Panel on Climate Change (IPCC). Each model was given equal weight in the SCC values that were developed.
Each model takes a slightly different approach to model how changes in emissions result in changes in economic damages. A key objective of the interagency process was to enable a consistent exploration of the three models, while respecting the different approaches to quantifying damages taken by the key modelers in the field. An extensive review of the literature was conducted to select three sets of input parameters for these models: Climate sensitivity, socio-economic and emissions trajectories, and discount rates. A probability distribution for climate sensitivity was specified as an input into all three models. In addition, the interagency group used a range of scenarios for the socio-economic parameters and a range of values for the discount rate. All other model features were left unchanged, relying on the model developers' best estimates and judgments.
In 2010, the interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC from three integrated assessment models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The fourth set, which represents the 95th-percentile SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from climate change further out in the tails of the SCC distribution. The values grow in real terms over time. Additionally, the interagency group determined that a range of values from 7 percent to 23 percent should be used to adjust the global SCC to calculate domestic effects,
The SCC values used for this document were generated using the most recent versions of the three integrated assessment models that have been published in the peer-reviewed literature, as described in the 2013 update from the interagency working group (revised July 2015).
It is important to recognize that a number of key uncertainties remain, and that current SCC estimates should be treated as provisional and revisable since they will evolve with improved scientific and economic understanding. The interagency group also recognizes that the existing models are imperfect and incomplete. The National Research Council report mentioned above points out that there is tension between the goal of producing quantified estimates of the economic damages from an incremental ton of carbon and the limits of existing efforts to model these effects. There are a number of analytical challenges that are being addressed by the research community, including research programs housed in many of the Federal agencies participating in the interagency process to estimate the SCC. The interagency group intends to periodically review and reconsider those estimates to reflect increasing knowledge of the science and economics of climate impacts, as well as improvements in modeling. Although uncertainties remain, the revised estimates used for this NOPR are based on the best available scientific information on the impacts of climate change. The current estimates of the SCC have been developed over many years, and with input from the public. In November 2013, OMB announced a new opportunity for public comments on the interagency technical support document underlying the revised SCC estimates. 78 FR 70586 (Nov. 26, 2013). In July 2015, OMB published a detailed summary and formal response to the many comments that were received.
In summary, in considering the potential global benefits resulting from reduced CO
DOE multiplied the CO
As noted previously, DOE has estimated how the considered energy conservation standards would reduce site NO
DOE estimated the monetized value of NO
DOE multiplied the emissions reduction (tons) in each year by the associated $/ton values, and then discounted each series using discount rates of 3 percent and 7 percent as appropriate. DOE will continue for evaluate the monetization of avoided NO
DOE is evaluating appropriate monetization of avoided SO
The utility impact analysis estimates several effects on the electric power generation industry that would result from the adoption of new or amended energy conservation standards. The utility impact analysis estimates the changes in installed electrical capacity and generation that would result for each TSL. The analysis is based on published output from NEMS, associated with
The output of this analysis is a set of time-dependent coefficients that capture the change in electricity generation, primary fuel consumption, installed capacity, and power sector emissions due to a unit reduction in demand for a given end use. These coefficients are multiplied by the stream of electricity savings calculated in the NIA to provide estimates of selected utility impacts of new or amended energy conservation standards.
Employment impacts from new or amended energy conservation standards include direct and indirect impacts. Direct employment impacts are any changes in the number of employees of manufacturers of the equipment subject to standards; the MIA addresses those impacts. Indirect employment impacts are changes in national employment that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more-efficient appliances. Indirect employment impacts from standards consist of the jobs created or eliminated in the national economy, other than in the manufacturing sector being regulated, due to: (1) Reduced spending by end users on energy; (2) reduced spending on new energy supply by the utility industry; (3) increased commercial consumer spending on the purchase of new equipment; and (4) the effects of those three factors throughout the economy.
One method for assessing the possible effects on the demand for labor of such shifts in economic activity is to compare sector employment statistics developed by the Labor Department's Bureau of Labor Statistics (BLS). BLS regularly publishes its estimates of the number of jobs per million dollars of economic activity in different sectors of the economy, as well as the jobs created elsewhere in the economy by this same economic activity. Data from BLS indicate that expenditures in the utility sector generally create fewer jobs (both directly and indirectly) than expenditures in other sectors of the economy.
For the amended standard levels considered in this NOPR, DOE estimated indirect national employment impacts using an input/output model of the U.S. economy called Impact of Sector Energy Technologies version 3.1.1 (ImSET).
For more details on the employment impact analysis, see chapter 16 of the NOPR TSD.
The following section addresses the results from DOE's analyses with respect to potential amended energy conservation standards for the CWH equipment that is the subject of this rulemaking. It addresses the TSLs examined by DOE, the projected impacts of each of these levels if adopted as energy conservation standards for CWH equipment, and the proposed standard levels that DOE sets forth in this NOPR. Additional details regarding DOE's analyses are contained in the TSD chapters supporting this document.
DOE developed trial standard levels (TSLs) that combine efficiency levels for each analyzed equipment class of CWH equipment. DOE developed TSLs so that each TSL is composed of energy efficiency levels from each equipment class that exhibit similar characteristics, such as efficiency, or meet certain economic criteria. For example, one of the TSLs consists of the max-tech efficiency levels from each equipment class being considered for this rulemaking. DOE attempted to limit the number of TSLs considered for the NOPR by only considering efficiency levels that exhibit significantly different economic and/or engineering characteristics from the efficiency levels already selected as a TSL. DOE developed TSLs that include efficiency levels for both thermal efficiency and standby loss because standby loss is dependent upon thermal efficiency. This dependence of standby loss on thermal efficiency is discussed in detail in section IV.C.3.b and chapter 5 of the NOPR TSD. DOE developed the efficiency levels for thermal efficiency and standby loss for each equipment class in each TSL that DOE has identified for CWH equipment, as described below and as presented in Table V.1.
TSL 4 consists of the max-tech efficiency levels. The efficiency levels in TSL 4 also provide the highest NPV using a 7-percent discount rate.
TSL 3 consists of intermediate condensing efficiency levels for each gas-fired equipment class with the exception of the residential-duty gas-fired storage water heater equipment class, which has a minimum condensing level. All equipment classes have positive life-cycle cost savings at TSL 3. For this TSL, DOE selected thermal efficiency levels closest to the current
TSL 2 consists of minimum condensing thermal efficiency levels for each gas-fired equipment class. For this TSL, all selected standby loss levels maximize both energy savings and NPV using a 7-percent discount rate.
TSL 1 consists of maximum non-condensing thermal efficiency levels for each gas-fired equipment class. For this TSL, all selected standby loss levels maximize energy savings and have a positive NPV using a 7-percent discount rate.
Table V.1 presents the efficiency levels for thermal efficiency and standby loss for each equipment class in each TSL that DOE has identified for CWH equipment. Table V.2 presents the thermal efficiency value and standby loss reduction factor for each equipment class in each TSL that DOE considered, with the exception of residential-duty gas-fired storage water heaters. The standby loss reduction factor is a multiplier representing the reduction in allowed standby loss relative to the current standby loss standard. For residential-duty gas-fired storage water heaters, DOE must set standards in terms of the uniform efficiency descriptor (UEF) metric established in the July 2014 final rule. 79 FR 40542, 40578-79 (July 11, 2014). Table V.3 presents the UEF equations for residential-duty gas-fired storage water heaters corresponding to each TSL that DOE considered, developed using the conversion factors proposed in the April 2015 NOPR. 80 FR 20116, 20143 (April 14, 2015).
DOE analyzed the economic impacts on CWH commercial consumers by looking at the effects potential amended standards would have on the LCC and PBP. DOE also examined the impacts of potential standards on commercial consumer subgroups. These analyses are discussed in the following subsections.
To evaluate the net economic impact of potential amended energy conservation standards on commercial consumers of CWH equipment, DOE conducted LCC and PBP analyses for each TSL. In general, higher-efficiency equipment would affect commercial consumers in two ways: (1) Annual operating expenses would decrease, and (2) purchase price would increase. The results of the LCC analysis for each TSL were obtained by comparing the installed and operating costs of the equipment in the no-new-standards-case scenario (see section IV.F for a discussion of no-new-standards-case efficiency distribution) against the standards-case scenarios at each TSL. Inputs used for calculating the LCC and PBP include total installed costs (
The LCC analysis is carried out using Monte Carlo simulations. Consequently, the results of the LCC analysis are distributions covering a range of values, as opposed to a single deterministic value. DOE presents the mean values calculated from the distributions of results. The LCC analysis also provides information on the percentage of commercial consumers for whom an increase in the minimum efficiency standard would have a positive impact (net benefit), a negative impact (net cost), or no impact.
DOE also performed a PBP analysis as part of the LCC analysis. The PBP is the number of years it would take for the commercial consumer to recover the increased costs of higher-efficiency equipment as a result of energy savings based on the operating cost savings. The PBP is an economic benefit-cost measure that uses benefits and costs without discounting. Chapter 8 of the NOPR TSD provides detailed information on the LCC and PBP analyses.
As described in section IV.H of this document, DOE used a “roll-up” scenario in this rulemaking. Under the roll-up scenario, DOE assumes that the market shares of the efficiency levels in the no-new-standards case that do not meet the new or amended standard level under consideration would “roll up” into (meaning “be added to”) the market share of the efficiency level at the standard level under consideration, and the market shares of efficiency levels that are above the standard level under consideration would remain unaffected. Commercial consumers in the no-new-standards-case scenario who buy the equipment at or above the TSL under consideration, would be unaffected if the standard were to be set at that TSL. Commercial consumers in the no-new-standards-case scenario who buy equipment below the TSL under consideration would be affected if the standard were to be set at that TSL. Among these affected commercial consumers, some may benefit from lower LCCs of the equipment, and some may incur net cost due to higher LCCs, depending on the inputs to the LCC analysis such as electricity prices, discount rates, installation costs, and markups.
DOE's LCC and PBP analyses provided key outputs for each efficiency level above the baseline for each equipment class, as reported in Table V.4 to Table V.15. Two tables are presented for each equipment class, with separate pairs of tables shown for tankless gas-fired water heaters and for gas-fired hot water supply boilers, two product groups within the class of gas-fired instantaneous water heaters and hot water supply boilers. LCC results for this class as a whole are also shown based on shipment weighting of both equipment groups. The first table in each pair presents the results of the LCC analysis by efficiency level and TSL and shows installed costs, first year's operating cost, lifetime operating cost, and mean LCC, as well as simple PBP. The second table presents the percentage of commercial consumers who experience a net cost, as well as the mean LCC savings for all commercial consumers.
Analysis of all equipment classes showed positive mean LCC savings values at TSL 4, the max-tech efficiency level. The percentage of consumers experiencing net cost at TSL 4 varied from 14 percent for electric storage water heaters to 36 percent for residential duty gas-fired storage water heaters.
For commercial gas-fired storage and residential-duty gas-fired storage water heaters, the trend is generally an increase in LCC savings from TSL 2 to 4, going from lowest to highest condensing efficiency level examined. Average LCC savings are positive at TSL 1 through TSL 4 for all equipment classes.
For commercial gas-fired storage water heaters, and gas-fired instantaneous water heaters and hot water supply boilers, TSL 2 showed positive mean LCC savings, with between 22 and 38 percent of commercial consumers showing negative LCC savings. For residential-duty gas-fired storage water heaters, 42 percent of consumers experienced net cost at TSL 2. TSL 1 showed positive LCC savings for all equipment classes.
The simple PBP values for TSLs 2 through 4 are generally less than 7 years, except for residential-duty gas-fired storage water heater class, which has a simple payback ranging from 10.2 to 11.9 years, depending on TSL. Analyzed payback periods for the equipment group of gas-fired tankless water heaters were immediate at TSL 2 through TSL 4, resulting from reduced venting costs that offset equipment cost increases, particularly in new construction. The PBP was less than the average lifetime in all cases.
As described in section IV.I, DOE estimated the impact of amended energy conservation standards for commercial water heating equipment. Using the LCC spreadsheet model, DOE estimated the impacts of the TSLs on the following commercial consumer subgroups: Low-income residential population (0-20 percent percentile gross annual household income) and small businesses. DOE estimated the average LCC savings and PBP for the low-income subgroup compared with average CWH commercial consumers, as shown in Table V.16 through Table V.21. DOE also estimated LCC savings and PBP for small businesses, presenting the results in Table V.16 through Table V.21.
The results of the life-cycle cost subgroup analysis indicate that for CWH equipment, the low-income residential subgroup in general had a slightly higher LCC savings when compared to the general commercial consumer population, due in part to greater hot water use than the average commercial consumer for all equipment classes with the exception of residential-duty. However, for both residential-duty gas-fired commercial storage water heaters and for tankless water heating equipment, the low-income residential subgroup analyzed had somewhat lower hot water usage than the average commercial consumer of this equipment, which contributed to lower LCC savings for some TSLs. In particular, the low-income residential subgroup for the Residential-Duty Low-Income Gas-Fired Storage Water Heaters equipment class at TSL 2/3 would experience negative LCC savings and an associated payback period longer than the estimated 12 year lifetime of the product. DOE requests comment on any potential impacts of the estimated increased costs of the proposed standards on the low-income residential subgroup and whether this would impact the rate of replacement of the existing products due to low-income consumers choosing to repair as opposed to replace their water heater. In addition, DOE requests comment on the assumptions used in the LCC and PBP analysis such as the estimated installation costs of $3,361, which includes all applicable costs and markups for this equipment class. DOE also requests comment on the potential for product switching from either smaller Residential (>55 gallon, ≤75,000 Btu/h) or larger commercial (>105,000 Btu/h) gas storage hot water heaters to the Residential-Duty Gas-Fired Storage Water Heaters (>75,000 Btu/h and ≤105,000 Btu/h) equipment class if the agency were to adopt a less costly alternative for the Residential-Duty Gas-Fired Storage Water Heaters equipment class.
For the small business subgroups, the LCC savings were consistently lower than those of the average commercial consumer. Chapter 11 of the NOPR TSD provides more detailed discussion on the LCC subgroup analysis and results.
As discussed in section III.F.2, EPCA establishes a rebuttable presumption that an energy conservation standard is economically justified if the increased purchase cost for a product that meets the standard is less than three times the value of the first-year energy savings resulting from the standard. Accordingly, DOE calculated a rebuttable presumption payback period for each TSL for commercial water heating equipment using average installed cost to the commercial consumer and first-year energy savings. However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the commercial consumer, manufacturer, Nation, and environment, as required by EPCA under 42 U.S.C. 6313(a)(6)(B)(ii) and (C)(i). The results of this more detailed analysis serve as the basis for DOE to definitively evaluate the economic justification for a potential standard level, thereby supporting or rebutting the results of any preliminary determination of economic justification. Table V.22 shows the rebuttable presumption payback periods for each CWH equipment class by TSL level. Rebuttable payback periods were greater than 3 years for all CWH equipment except the tankless water heaters subclass. Tankless water heaters had rebuttable presumption payback periods of less than 3 years at all TSL levels.
As noted previously, DOE performed an MIA to estimate the impact of amended energy conservation standards on manufacturers of CWH equipment. The following section describes the expected impacts on manufacturers at each considered TSL. Chapter 12 of the NOPR TSD explains the analysis in further detail.
Table V.23 and Table V.24 depict the estimated financial impacts (represented by changes in INPV) of amended energy conservation standards on CWH equipment manufacturers, as well as the conversion costs that DOE expects manufacturers would incur for all equipment classes at each TSL. To evaluate the range of cash-flow impacts on the CWH industry, DOE modeled two markup scenarios using different assumptions that correspond to the range of anticipated market responses to amended energy conservation standards: (1) The preservation of gross margin percentage markup scenario; and (2) the preservation of per-unit operating profit markup scenario. Each of these scenarios is discussed immediately below.
To assess the less severe end of the range of potential impacts, DOE modeled a preservation of gross margin percentage markup scenario, in which a uniform “gross margin percentage” markup is applied across all potential efficiency levels. In this scenario, DOE assumed that a manufacturer's absolute dollar markup would increase as production costs increase in the standards case.
To assess the more severe end of the range of potential impacts, DOE modeled the preservation of per-unit operating profit markup scenario, which assumes that manufacturers would not be able to generate greater operating profit on a per-unit basis in the standards case as compared to the no-new-standards case. Rather, as manufacturers make the necessary investments required to convert their facilities to produce new standards-compliant equipment and incur higher costs of goods sold, their percentage markup decreases. Operating profit does not change in absolute dollars and decreases as a percentage of revenue.
As noted in the MIA methodology discussion (see section IV.J.2), in addition to markup scenarios, the MPCs, shipments, and conversion cost assumptions also affect INPV results.
The results in Table V.23 and Table V.24 show potential INPV impacts for CWH equipment manufacturers. Table V.23 reflects the less severe set of potential impacts, and Table V.24 represents the more severe set of potential impacts. In the following discussion, the INPV results refer to the difference in industry value between the no-new-standards case and each standards case that results from the sum of discounted cash flows from the base
To provide perspective on the short-run cash flow impact, DOE discusses the change in free cash flow between the no-new-standards case and the standards case at each TSL in the year before new standards take effect. These figures provide an understanding of the magnitude of the required conversion costs at each TSL relative to the cash flow generated by the industry in the no-new-standards case.
At TSL 1, DOE estimates impacts on INPV for CWH equipment manufacturers to range from −2.7 percent to 0.7 percent, or a change of −$4.7 million to $1.2 million. At this level, DOE estimates that industry free cash flow would decrease by approximately 15.5 percent to $10.9 million, compared to the no-new-standards-case value of $12.8 million in the year before compliance (2018).
DOE estimates that in the year of compliance (2019), 27 percent of CWH shipments in the no-new-standards case would already meet or exceed the thermal efficiency and standby loss standards at TSL 1. At this level, DOE expects CWH equipment manufacturers to incur $3.6 million in product conversion costs to redesign and test their equipment. DOE does not expect the modest increases in thermal efficiency standards at this TSL to require major equipment redesigns or capital investments. However, DOE expects manufacturers to incur approximately $2.2 million in capital conversion costs in order to comply with the proposed standby loss levels at this TSL. DOE expects manufacturers will incur these costs to purchase new tooling for the machinery used to make the jackets for storage water heaters, which would need to expand to enclose a thicker tank insulation layer.
At TSL 1, under the preservation of gross margin percentage scenario, the shipment-weighted average price per unit increases by 4.5 percent relative to the no-new-standards-case price per unit in the year of compliance (2019). In this scenario, manufacturers are able to fully pass on this cost increase to commercial consumers. This slight price increase would mitigate the $5.8 million in total conversion costs estimated at TSL 1, resulting in slightly positive INPV impacts at TSL 1 under this scenario. Under the preservation of per-unit operating profit markup scenario, manufacturers earn the same operating profit as would be earned in the no-new-standards case, but do not earn additional profit from their investments. A weighted-average price increase of 4.1 percent in this scenario is outweighed by the expected $5.8 million in total conversion costs, resulting in slightly negative impacts at TSL 1.
At TSL 2, DOE estimates impacts on INPV for CWH manufacturers to range from −9.9 percent to 6.6 percent, or a change in INPV of −$17.4 million to $11.6 million. At this potential standard level, industry free cash flow would decrease by approximately 56.7 percent to $5.6 million, compared to the base-case value of $12.8 million in the year before compliance (2018).
DOE estimates that in the year of compliance (2019), 19 percent of CWH shipments in the no-new-standards case would already meet or exceed the thermal efficiency and standby loss standards at TSL 2. DOE estimates that conversion costs would increase significantly at this TSL because manufacturers would meet these
At TSL 2, under the preservation of gross margin percentage scenario, the shipment-weighted average price per unit increases by 20.9 percent relative to the no-new-standards-case price per unit in the year of compliance (2019). In this scenario, INPV impacts are positive because manufacturers' ability to pass higher production costs onto commercial consumers outweighs the $20.9 million in expected total conversion costs. However, under the preservation of per-unit operating profit markup scenario, a lower markup means the weighted average price per unit increases by only 18.9 percent compared to the no-new-standards case price per unit in the year of compliance (2019). In this case, conversion costs outweigh the gain in weighted average price per unit, resulting in moderately negative impacts at TSL 2.
At TSL 3, DOE estimates impacts on INPV for CWH manufacturers to range from −13.3 percent to 5.0 percent, or a change in INPV of −$23.4 million to $8.8 million. At this potential standard level, DOE estimates industry free cash flow would decrease by approximately 80.4 percent to $2.5 million compared to the no-new-standards-case value of $12.8 million in the year before compliance (2018).
The impacts on INPV at TSL 3 are slightly more negative than at TSL 2. DOE estimates that in the year of compliance (2019), 16 percent of CWH shipments in the no-new-standards case would meet or exceed the thermal efficiency and standby loss standards at TSL 3. At this level, DOE estimates that product conversion costs would increase as manufacturers would have to redesign a larger percentage of their offerings to meet the higher thermal efficiency levels, which would require increased engineering resources. Additionally, capital conversion costs would increase as manufacturers may have to upgrade their laboratories and test facilities to increase capacity for research, development, and testing for their gas-fired storage water heater offerings. Overall, DOE estimates that manufacturers would incur $18.1 million in product conversion costs and $11.7 million in capital conversion costs to bring their CWH equipment portfolios into compliance with a standard set to TSL 3.
At TSL 3, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit in the year of compliance (2019) increases by 23.1 percent relative to the no-new-standards case price per unit. In this scenario, INPV impacts are positive because manufacturers' ability to pass higher production costs onto commercial consumers outweighs the $29.8 million in total conversion costs. However, under the preservation of per-unit operating profit markup scenario, a lower markup means the weighted average price per unit increases by only 20.9 percent compared to the no-new-standards case price per unit in the year of compliance (2019). In this case, conversion costs outweigh the gain in weighted average price per unit, resulting in moderately negative impacts at TSL 3.
TSL 4 represents the max-tech thermal efficiency and standby loss levels for all equipment classes analyzed. At TSL 4, DOE estimates impacts on INPV for CWH equipment manufacturers to range from −27.0 percent to −5.5 percent, or a change in INPV of −$47.6 million to −$9.7 million. At this TSL, DOE estimates industry free cash flow in the year before compliance (2018) would decrease by approximately 179.8 percent to −$10.2 million compared to the no-new-standards case value of $12.8 million.
The impacts on INPV at TSL 4 are negative under both markup scenarios. DOE estimates that in 2019, only 4 percent of CWH equipment shipments would already meet or exceed the efficiency levels prescribed at TSL 4. DOE expects conversion costs to continue to increase at TSL 4, as almost all equipment on the market would have to be redesigned and many new products would have to be developed. DOE estimates that product conversion costs would increase to $48.2 million, as manufacturers would have to redesign a larger percentage of their offerings to meet max-tech for all classes. In particular, manufacturers of commercial gas-fired storage water heaters would need to extensively redesign almost all of their product offerings. This extensive redesign would likely include many rounds of research and development and testing across most equipment platforms. DOE estimates that manufacturers would also incur $21.3 million in capital conversion costs. In addition to upgrading production lines, DOE has tentatively concluded that manufacturers would likely be required to make extensive modifications and upgrades to their laboratories and possibly add laboratory space in order to develop and test products that meet max-tech efficiency levels, particularly for commercial gas-fired storage water heaters.
At TSL 4, under the preservation of gross margin percentage markup scenario, the shipment-weighted average price per unit in the year of compliance (2019) increases by 27.1 percent relative to the no-new-standards case price per unit. In this scenario, INPV impacts are negative because manufacturers' ability to pass higher production costs onto consumers is outweighed by the $69.6 million in total conversion costs. Under the
To quantitatively assess the impacts of energy conservation standards on direct employment in the CWH industry, DOE used the GRIM to estimate the domestic labor expenditures and number of employees in the no-new-standards case and at each TSL in 2019. DOE used statistical data from the U.S. Census Bureau's 2013 Annual Survey of Manufacturers (ASM),
The total labor expenditures in the GRIM are converted to domestic production employment levels by dividing production labor expenditures by the annual payment per production worker (production worker hours times the labor rate found in the U.S. Census Bureau's 2013 ASM). The estimates of production workers in this section cover workers, including line-supervisors who are directly involved in fabricating and assembling a product within the manufacturing facility. Workers performing services that are closely associated with production operations, such as materials handling tasks using forklifts, are also included as production labor. DOE's estimates only account for production workers who manufacture the specific products covered by this rulemaking. The total direct employment impacts calculated in the GRIM are the sum of the changes in the number of production workers resulting from the amended energy conservation standards for CWH equipment, as compared to the no-new-standards case.
To estimate an upper bound to direct employment under amended standards, DOE assumes all domestic manufacturers would choose to continue producing CWH equipment in the United States and would not move production to foreign countries. To estimate a lower bound to direct employment under amended standards, DOE considers a case where some manufacturers choose to relocate some production overseas rather than make the necessary conversions at domestic production facilities. To establish the lower bound employment under amended standards, DOE estimated the maximum potential job loss due to manufacturers either leaving the industry or moving production to foreign locations as a result of amended standards. Due to shipping costs, most manufacturers agreed that more-stringent energy conservation standards for CWH equipment would probably not push their production overseas. Some manufacturers stated that producing higher-efficiency equipment is generally a more labor-intensive process and may cause them to hire additional production employees. They also noted, however, that higher efficiency standards could potentially shift the production of some of the value content of CWH equipment overseas, causing U.S. manufacturers to become less vertically integrated. In particular, manufacturers of hot water supply boilers could choose to source condensing heat exchangers, most of which are made overseas, rather than manufacture them at domestic production facilities.
DOE estimates that 90 percent of CWH equipment sold in the United States is currently manufactured domestically. In the absence of amended energy conservation standards, DOE estimates that there would be 377 domestic production workers in the CWH industry in 2019, the year of compliance. Table V.25 presents the range of potential impacts of amended energy conservation standards on U.S. production workers of CWH equipment.
At the upper end of the range, all examined TSLs show positive impacts on domestic employment levels. Producing more-efficient CWH equipment tends to require more labor, and DOE estimates that if CWH equipment manufacturers chose to keep their current production in the United States, domestic employment could increase at each TSL. In interviews, several manufacturers that produce high-efficiency CWH equipment stated that a standard that went to condensing levels could cause them to hire more employees to increase their production capacity. Others stated that a condensing standard would require additional engineers to redesign CWH equipment and production processes.
Regarding potential negative impacts on domestic direct employment, DOE does not expect significant changes at TSL 1. Most manufacturers agreed that these efficiency levels would require minimal changes to their production processes and that most employees would be retained. DOE estimates that there could be a more significant loss of domestic employment at TSLs 2, 3, and 4 due to the fact that these TSLs require condensing technology for gas-fired equipment classes. The lower bound of employment under amended standards assumes manufacturers choose to lay off some employees who work on their lower-efficiency, commodity products. At these TSLs, CWH manufacturers could also choose to source more components from overseas, limiting their need for production employees. To derive the lower bound of direct employment under amended standards, DOE estimated the percentage of CWH models that manufacturers would have to redesign at each TSL and assumed
DOE notes that the employment impacts discussed here are independent of the indirect employment impacts to the broader U.S. economy, which are documented in chapter 15 of the NOPR TSD.
Based on manufacturer feedback, DOE estimates that the average CWH equipment manufacturer's current production is running at approximately 60-percent capacity. Most manufacturers stated in interviews that they generally did not anticipate production capacity constraints associated with this rulemaking. Some noted that condensing equipment is generally more labor-intensive and takes longer to build; however, most agreed they could increase capacity by implementing a second shift with the current machinery they have, or by expanding production capacity. Some manufacturers did express concerns about engineering and laboratory resources if standards were set at a high level. However, given the compliance period, DOE believes that because most manufacturers already make equipment that meets the efficiency levels proposed in this NOPR, manufacturers would have time to redesign their product lines and production processes.
Small manufacturers, niche equipment manufacturers, and manufacturers exhibiting a cost structure substantially different from the industry average could be affected disproportionately. Using average cost assumptions developed for an industry cash-flow estimate is inadequate to assess differential impacts among manufacturer subgroups.
For the CWH equipment industry, DOE identified and evaluated the impact of amended energy conservation standards on one subgroup—small manufacturers. The SBA defines a “small business” as having 1,000 employees or fewer for NAICS code 333318, “Other Commercial and Service Industry Machinery Manufacturing.” Based on this definition, DOE identified 13 domestic manufacturers in the CWH equipment industry that qualify as small businesses. For a discussion of the impacts on the small manufacturer subgroup, see the regulatory flexibility analysis in section VI.B of this notice and chapter 12 of the NOPR TSD.
While any one regulation may not impose a significant burden on manufacturers, the combined effects of recent or impending regulations may have serious consequences for some manufacturers, groups of manufacturers, or an entire industry. Assessing the impact of a single regulation may overlook this cumulative regulatory burden. In addition to energy conservation standards, other regulations can significantly affect manufacturers' financial operations. Multiple regulations affecting the same manufacturer can strain profits and lead companies to abandon product lines or markets with lower expected future returns than competing products. For these reasons, DOE conducts an analysis of cumulative regulatory burden as part of its rulemakings pertaining to energy conservation standards for commercial equipment.
For the cumulative regulatory burden analysis, DOE looks at other regulations that could affect CWH equipment manufacturers that will take effect approximately three years before or after the 2019 compliance date of amended energy conservation standards for these equipment types. In interviews, manufacturers cited Federal regulations on equipment other than CWH equipment that contribute to their cumulative regulatory burden. The compliance years and expected industry conversion costs of relevant amended energy conservation standards are indicated in Table V.26.
In addition to Federal energy conservation standards, DOE identified another regulatory burden that would affect manufacturers of CWH equipment:
Several manufacturers raised concerns in interviews about EPA's SNAP program and, in particular, a proposed rule to modify the listings for certain hydrofluorocarbons in various end-uses in the aerosols, refrigeration and air conditioning, and foam blowing sectors. 79 FR 46126 (August 6, 2014). On July 20, 2015, the EPA published a final rule under the SNAP program that adopts modifications similar to those outlined in the August 6, 2014 proposed rule. 80 FR 42870, 42923-24. Specifically, the final rule changed the status of several hydrofluorocarbons to
For each TSL, DOE projected energy savings for CWH equipment shipped in the 30-year period that begins in the year of anticipated compliance with amended standards (2019-2048). The savings are measured over the entire lifetime of equipment shipped in the 30-year period. DOE quantified the energy savings attributable to each TSL as the difference in energy consumption between each standards case and the no-new-standards case.
Table V.27 presents the estimated primary energy savings for each considered TSL, and Table V.28 presents the estimated FFC energy savings for each TSL. The approach for estimating national energy savings is further described in section IV.H. Table V.29 shows cumulative primary national energy savings by TSL as a percentage of the no-new-standards-case primary energy usage.
Circular A-4
DOE estimated the cumulative NPV of the total costs and savings for commercial consumers that would result from the TSLs considered for CWH equipment. In accordance with OMB's guidelines on regulatory analysis,
The NPV results based on the aforementioned nine-year analytical period are presented in Table V.33 and Table V.34. The impacts are counted over the lifetime of equipment shipped in 2019-2027. As mentioned previously, such results are presented for informational purposes only and are not indicative of any change in DOE's analytical methodology or decision criteria.
The results presented in this section reflect an assumption of no change in CWH equipment prices by efficiency level over the forecast period. For this NOPR, DOE conducted sensitivity analyses to examine NIA results with varying inputs. The main reason for assuming no change in CWH equipment prices was data limitations, and the same limitations made alternative price trends problematic as well, so in the sensitivity analyses, the high and low price trends were also assumed to be “no change” trends. Sensitivity analyses are described in appendix 10B of the NOPR TSD.
DOE expects that amended energy conservation standards for CWH equipment would reduce energy costs for equipment owners, with the resulting net savings being redirected to other forms of economic activity. Those shifts in spending and economic activity could affect the demand for labor. As described in section IV.N, DOE used an input/output model of the U.S. economy to estimate indirect employment impacts of the TSLs that DOE considered in this rulemaking. DOE understands that there are uncertainties involved in projecting employment impacts, especially changes in the later years of the analysis. Therefore, DOE generated results for near-term time frames (2019-2025), where these uncertainties are reduced.
The results suggest that these proposed standards would be likely to have a negligible impact on the net demand for labor in the economy. The net change in jobs is so small that it would be imperceptible in national labor statistics and might be offset by other, unanticipated effects on employment. Chapter 16 of the NOPR TSD presents more detailed results about anticipated indirect employment impacts.
DOE has tentatively concluded that the amended standards it is proposing in this NOPR would not lessen the utility or performance of CWH equipment.
DOE has also considered any lessening of competition that is likely to result from new and amended standards. The Attorney General determines the impact, if any, of any lessening of competition likely to result from a proposed standard, and transmits such determination in writing to the Secretary, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6313(a)(6)(B)(ii)(V) and (C)(i))
To assist the Attorney General in making such determination, DOE has provided the Department of Justice (DOJ) with copies of this NOPR and the TSD for review. DOE will consider DOJ's comments on the proposed rule in preparing the final rule, and DOE will publish and respond to DOJ's comments in that document. DOE invites comment from the public regarding the competitive impacts that are likely to result from this proposed rule. In addition, stakeholders may also provide comments separately to DOJ regarding those potential impacts. See the
An improvement in the energy efficiency of the equipment subject to this rule is likely to improve the security of the nation's energy system by reducing overall demand for energy. Reduced energy demand may also improve the reliability of the energy system. DOE evaluated the impact on national electric generating capacity for each considered TSL. Chapter 15 of the NOPR TSD provides more details of the TSLs' impact on the electricity and natural gas utilities.
Potential energy savings from the proposed amended standards for the considered CWH equipment classes could also produce environmental benefits in the form of reduced emissions of air pollutants and greenhouse gases associated with electricity production. Table V.35 provides DOE's estimate of cumulative emissions reductions projected to result from the TSLs considered in this rulemaking. The table includes both power sector emissions and upstream emissions. The upstream emissions were calculated using the multipliers discussed in section IV.K. DOE reports annual CO
As part of the analysis for this NOPR, DOE estimated monetary benefits likely to result from the reduced emissions of CO
Table V.36 presents the global value of CO
DOE is well aware that scientific and economic knowledge continues to evolve rapidly regarding the contribution of CO
DOE also estimated the cumulative monetary value of the economic benefits associated with NO
The NPV of the monetized benefits associated with emissions reductions can be viewed as a complement to the NPV of the consumer savings calculated for each TSL considered in this rulemaking. Table V.38 presents the NPV values that result from adding the estimates of the potential economic benefits resulting from reduced CO
In considering the above results, two issues are relevant. First, the national operating cost savings are domestic U.S. commercial consumer monetary savings that occur as a result of market transactions, while the value of CO
The Secretary of Energy, in determining whether a standard is economically justified, may consider any other factors that the Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII) and (C)(i)) No other factors were considered in this analysis.
To adopt national standards more stringent than the current standards for CWH equipment, DOE must determine that such action would result in significant additional conservation of energy and is technologically feasible and economically justified. (42 U.S.C. 6313(a)(6)(A)(ii) and (C)(i)) In determining whether a standard is economically justified, the Secretary must determine whether the benefits of the standard exceed its burdens by, to the greatest extent practicable, considering the seven statutory factors discussed previously. (42 U.S.C. 6313(a)(6)(B)(ii)(I)-(VII) and (C)(i))
For this NOPR, DOE considered the impacts of amended standards for CWH equipment at each TSL, beginning with the maximum technologically feasible level, to determine whether that level was economically justified. Where the max-tech level was not justified, DOE then considered the next most efficient level and undertook the same evaluation until it reached the highest efficiency level that is both technologically feasible and economically justified and saves a significant additional amount of energy.
To aid the reader in understanding the benefits and/or burdens of each TSL, tables in this section present a summary of the results of DOE's quantitative analysis for each TSL. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of commercial consumers who may be disproportionately affected by a national standard and impacts on employment.
Table V.39, Table V.40, and Table V.41 summarize the quantitative impacts estimated for each TSL for CWH equipment. The national impacts are measured over the lifetime of CWH equipment shipped in the 30-year period that begins in the year of compliance with amended standards (2019-2048). The energy savings, emissions reductions, and value of emissions reductions refer to full-fuel-cycle results.
DOE also notes that the economics literature provides a wide-ranging discussion of how consumers trade off upfront costs and energy savings in the absence of government intervention. Much of this literature attempts to explain why consumers appear to undervalue energy efficiency improvements. There is evidence that consumers undervalue future energy savings as a result of: (1) A lack of information; (2) a lack of sufficient salience of the long-term or aggregate benefits; (3) a lack of sufficient savings to warrant delaying or altering purchases (
While DOE is not prepared at present to provide a fuller quantifiable framework for estimating the benefits and costs of changes in consumer purchase decisions due to an amended energy conservation standard, DOE is committed to developing a framework that can support empirical quantitative tools for improved assessment of the consumer welfare impacts of appliance standards. DOE has posted a paper that discusses the issue of consumer welfare impacts of appliance energy efficiency standards, and potential enhancements to the methodology by which these impacts are defined and estimated in the regulatory process.
First, DOE considered TSL 4, which corresponds to the max-tech level for all the equipment classes and offers the potential for the highest cumulative energy savings through the analysis period from 2019 through 2048. The estimated energy savings from TSL 4 are 2.2 quads of energy, an amount DOE considers significant. TSL 4 has an estimated NPV of commercial consumer benefit of $2.96 billion using a 7-percent discount rate, and $8.55 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 4 are 119 million metric tons of CO
At TSL 4, the average LCC savings range from $47 to $4,046, and the simple PBP ranges from 3.8 to 10.2 years, depending on equipment class. The fraction of commercial consumers incurring a net LCC cost ranges from 14 percent for electric storage water heaters to 36 percent for residential-duty gas-fired storage water heaters.
At TSL 4, the projected change in INPV ranges from a decrease of $47.6 million to a decrease of $9.7 million. If the lower bound of the range of impacts is reached, as DOE expects, TSL 4 could result in a net loss of up to 27.0 percent in INPV for manufacturers of covered CWH equipment.
Accordingly, the Secretary tentatively concludes that at TSL 4 for CWH equipment, the benefits of energy savings, positive NPV of commercial consumer benefits, emission reductions, and the estimated monetary value of the CO
Next DOE considered TSL 3, which would save an estimated 1.8 quads of energy, an amount DOE considers significant. TSL 3 has an estimated NPV of commercial consumer benefit of $2.26 billion using a 7-percent discount rate, and $6.75 billion using a 3-percent discount rate.
The cumulative emissions reductions at TSL 3 are 98 million metric tons of CO
At TSL 3, the average LCC savings ranges from $47 to $3,488, and the simple PBP ranges from 4.3 to 11.9 years, depending on equipment class. The fraction of commercial consumers incurring a net LCC cost ranges from 14 percent for electric storage water heaters to 42 percent for residential-duty gas-fired storage water heaters.
At TSL 3, the projected change in INPV ranges from a decrease of $23.4 million to an increase of $8.8 million. At TSL 3, DOE recognizes the risk of negative impacts if manufacturers' expectations concerning reduced profit margins are realized. If the lower bound of the range of impacts is reached, as DOE expects, TSL 3 could result in a net loss of up to 13.3 percent in INPV for manufacturers of covered CWH equipment.
After carefully considering the analytical results and weighing the benefits and burdens, DOE has tentatively concluded that at TSL 3 for CWH equipment, the benefits of energy savings, positive NPV of commercial consumer benefit, positive impacts on commercial consumers through reduced life-cycle costs, emissions reductions, and the estimated monetary value of emissions reductions would outweigh the potential reductions in INPV for manufacturers. Accordingly, the Secretary of Energy has tentatively concluded that TSL 3 would save a significant additional amount of energy and is technologically feasible and economically justified.
Therefore, based upon the above considerations, DOE proposes to adopt amended energy conservation standards for commercial water heating equipment at TSL 3. Table V.42 and Table V.43 present the proposed energy conservation standards for commercial water heating equipment.
The benefits and costs of the proposed standards in this document can also be expressed in terms of annualized values. The annualized monetary values are the sum of: (1) The annualized national economic value (expressed in 2014$) of the benefits from operating equipment that meets the proposed standards (consisting primarily of operating cost savings from using less energy, minus increases in equipment purchase costs, which is another way of representing commercial consumer NPV), and (2) the annualized monetary value of the benefits of emission reductions,
The national operating savings are domestic private U.S. consumer monetary savings that occur as a result of purchasing these equipment. The national operating cost savings is measured for the lifetime of CWH equipment shipped in 2019-2048.
The CO
Table V.44 shows the annualized benefit and cost values for the proposed standards for CWH equipment under TSL 3, expressed in 2014$. The results under the primary estimate are as follows.
Using a 7-percent discount rate for benefits and costs other than CO
Using a 3-percent discount rate for benefits and costs and the average SCC series that has a value of $40.0 per metric ton in 2015, the estimated cost of the CWH standards proposed in this NOPR is $141 million per year in increased equipment costs, while the estimated benefits are $517 million per year in reduced operating costs, $166 million per year from CO
Section 1(b)(1) of Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993), requires each agency to identify the problem that it intends to address, including, where applicable, the failures of private markets or public institutions that warrant new agency action, as well as to assess the significance of that problem. The problems that this document's proposed standards address are as follows:
(1) Insufficient information and the high costs of gathering and analyzing relevant information lead some commercial consumers to miss opportunities to make cost-effective investments in energy efficiency.
(2) In some cases, the benefits of more-efficient equipment are not realized due to misaligned incentives between purchasers and users. An example of such a case is when the equipment purchase decision is made by a building contractor or building owner who does not pay the energy costs of operating the equipment.
(3) There are external benefits resulting from improved energy efficiency of CWH equipment that are not captured by the users of such equipment. These benefits include externalities related to public health, environmental protection, and energy security that are not reflected in energy prices, such as reduced air pollutants and emissions of greenhouse gases that impact human health and global warming. DOE attempts to quantify some of the external benefits through use of Social Cost of Carbon values.
The Administrator of the Office of Information and Regulatory Affairs (OIRA) in the OMB has determined that the regulatory action proposed in this document is a “significant regulatory action” under section (3)(f) of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(B) of the Executive Order, DOE has provided to OIRA: (i) The text of the draft regulatory action, together with a reasonably detailed description of the need for the regulatory action and an explanation of how the regulatory action will meet that need; and (ii) An assessment of the potential costs and benefits of the regulatory action, including an explanation of the manner in which the regulatory action is consistent with a statutory mandate. DOE has included these documents in the rulemaking record.
In addition, the Administrator of OIRA has determined that the proposed regulatory action is an “economically significant regulatory action” under section (3)(f)(1) of Executive Order 12866. Accordingly, pursuant to section 6(a)(3)(C) of the Executive Order, DOE has provided to OIRA a regulatory impact analysis (RIA), including the underlying analysis, of benefits and costs anticipated from the regulatory action, together with, to the extent feasible, a quantification of those costs; and an assessment, including the underlying analysis, of costs and benefits of potentially effective and reasonably feasible alternatives to the planned regulation, and an explanation why the planned regulatory action is preferable to the identified potential alternatives. These assessments prepared pursuant to Executive Order 12866 can be found in the technical support document for this rulemaking. These documents have also been included in the rulemaking record.
DOE has also reviewed this regulation pursuant to Executive Order 13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). Executive Order 13563 is supplemental to and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, agencies are required by Executive Order 13563 to: (1) Propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs (recognizing that some benefits and costs are difficult to quantify); (2) tailor regulations to impose the least burden on society, consistent with obtaining regulatory objectives, taking into account, among other things, and to the extent practicable, the costs of cumulative regulations; (3) select, in choosing among alternative regulatory approaches, those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity); (4) to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt; and (5) identify and assess available alternatives to direct regulation, including providing economic incentives to encourage the desired behavior, such as user fees or marketable permits, or providing information upon which choices can be made by the public.
DOE emphasizes as well that Executive Order 13563 requires agencies to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible. In its guidance, the Office of Information and Regulatory Affairs has emphasized that such techniques may include identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes. For the reasons stated in the preamble, DOE believes that this NOPR is consistent with these principles, including the requirement that, to the extent permitted by law, benefits justify costs and that net benefits are maximized.
The Regulatory Flexibility Act (5 U.S.C. 601
For manufacturers of CWH equipment, the Small Business Administration (SBA) has set a size threshold, which defines those entities classified as “small businesses” for the purposes of the statute. DOE used the SBA's small business size standards to determine whether any small entities would be subject to the requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 77 FR 49991, 50000, 50011 (August 20, 2012) and codified at 13 CFR part 121. The size standards are listed by North American Industry Classification System (NAICS) code and industry description and are available at
To estimate the number of companies that could be small business manufacturers of equipment covered by this rulemaking, DOE conducted a market survey using publicly-available information to identify potential small manufacturers. DOE's research involved industry trade association membership directories (including AHRI
DOE identified 25 manufacturers of commercial water heaters sold in the U.S. Of these 25, DOE identified 13 as domestic small businesses. Twelve of the 13 domestic small businesses are original equipment manufacturers (OEMs) of CWH equipment covered by this rulemaking, while one rebrands equipment manufactured by other OEMs.
Before issuing this NOPR, DOE attempted to contact all the small business manufacturers of CWH equipment it had identified. Two of the small businesses agreed to take part in an MIA interview. DOE also obtained information about small business impacts while interviewing large manufacturers.
DOE estimates that small manufacturers control approximately 7 percent of the CWH market. Based on DOE's research, six small businesses are primarily boiler manufacturers that produce hot water supply boilers covered under this rulemaking. Two of these manufacturers primarily produce high-efficiency condensing equipment, while the remaining four do not produce equipment that meet the efficiency level at the proposed TSL (TSL 3). DOE notes, however, that three of these four manufacturers offer condensing commercial packaged boilers. DOE believes the condensing heat exchanger designs for commercial packaged boilers could be adapted for use in hot water supply boilers. Five of the small businesses primarily manufacture commercial gas-fired storage and electric storage water heaters. Three of these five companies produce primarily high-efficiency condensing gas-fired equipment, while two of the five primarily produce baseline equipment. However, both of the latter companies offer at least one condensing model. Of the remaining small businesses, one exclusively manufacturers condensing gas-fired tankless water heaters, and one rebrands equipment that is produced by other CWH equipment manufacturers.
As previously mentioned, in addition to direct interviews of small manufacturers, DOE also used feedback from other manufacturer interviews to help evaluate the potential impacts of potential amended standards on small businesses. In addition, DOE used product listings data to better understand the percentage of models small manufacturers may have to convert in order to comply with standards.
In interviews, small manufacturers stated that they may be disproportionately affected by product conversion costs. Product redesign, testing, and certification costs tend to be fixed and do not scale with sales volume. When confronted with new or amended energy conservation standards, small businesses must make investments in research and development to redesign their equipment, but because they often have lower sales volumes, they may need to spread these costs across fewer units. Small manufacturers also stated that they have limited lab space, personnel, and equipment to test their CWH equipment. They argued that they would experience higher testing costs relative to larger manufacturers, as they would need to outsource some or all of their testing at a higher per-unit cost. Small manufacturers pointed out that in general, because they have fewer engineers and product development resources, they would likely have to divert engineering resources from customer and new product initiatives for a longer period of time than would their larger competitors.
These product conversion cost and engineering resource considerations are particularly applicable to the two small manufacturers that primarily offer baseline commercial gas-fired storage water heaters and the four manufacturers that only offer lower-efficiency hot water supply boilers. DOE estimates that approximately 57 percent of commercial gas-fired storage models produced by small CWH equipment manufacturers do not meet the thermal efficiency level proposed in TSL 3. For the two manufacturers that primarily offer baseline commercial gas-fired storage water heaters, DOE estimates that 88 percent of their models do not meet the proposed efficiency levels at TSL 3. For reference, DOE estimates that large commercial gas-fired storage water heater manufacturers would have to convert approximately 76 percent of their commercial gas-fired storage water heater models at TSL 3. For hot water supply boilers, DOE estimates that small and large manufacturers would need to redesign similar proportions of their product offerings. Approximately 86 percent of the models currently
Smaller manufacturers also stated that they lack the purchasing power of larger manufacturers. The purchasing power issue may be of particular concern to the four manufacturers that produce lower-efficiency hot water supply boilers, because many manufacturers would purchase heat exchangers to comply with the thermal efficiency level proposed in TSL 3. Few hot water supply boiler manufacturers produce condensing boiler heat exchangers domestically, and most condensing boiler heat exchangers are sourced from European companies. A condensing standard, as proposed in TSL 3, could require small manufacturers to purchase a greater proportion of their components. This could exacerbate any pricing disadvantages small businesses experience due to lower purchasing volumes.
DOE is not aware of any rules or regulations that duplicate, overlap, or conflict with the rule being proposed in this document.
The discussion in section V.B.2.d analyzes impacts on small businesses that would result from DOE's proposed rule. In addition to the other TSLs being considered, the NOPR TSD includes a regulatory impact analysis (RIA) which addresses the following policy alternatives: (1) No change in standard; (2) consumer rebates; (3) consumer tax credits; (4) voluntary energy efficiency programs; and (5) early replacement.
Additional compliance flexibilities may be available through other means. For example, individual manufacturers may petition for a waiver of the applicable test procedure. (See 10 CFR 431.401.) Further, EPCA provides that a manufacturer whose annual gross revenue from all of its operations does not exceed $8,000,000 may apply for an exemption from all or part of an energy conservation standard for a period not longer than 24 months after the effective date of a final rule establishing the standard. Additionally, Section 504 of the Department of Energy Organization Act, 42 U.S.C. 7194, provides authority for the Secretary to adjust a rule issued under EPCA in order to prevent “special hardship, inequity, or unfair distribution of burdens” that may be imposed on that manufacturer as a result of such rule. Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003 for additional details.
Manufacturers of CWH equipment must certify to DOE that their equipment complies with any applicable energy conservation standards. In certifying compliance, manufacturers must test their equipment according to the applicable DOE test procedures for CWH equipment, including any amendments adopted for those test procedures on the date that compliance is required. DOE has established regulations for the certification and recordkeeping requirements for all covered commercial consumer products and commercial equipment, including CWH equipment. 76 FR 12422 (March 7, 2011); 80 FR 5099 (Jan. 30, 2015). The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been approved by OMB under OMB Control Number 1910-1400. Public reporting burden for the certification is estimated to average 30 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.
Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB Control Number.
Pursuant to the National Environmental Policy Act (NEPA) of 1969, DOE has determined that the proposed rule fits within the category of actions included in Categorical Exclusion (CX) B5.1 and otherwise meets the requirements for application of a CX. See 10 CFR part 1021, App. B, B5.1(b); 1021.410(b) and App. B, B(1)-(5). The proposed rule fits within this category of actions because it is a rulemaking that establishes energy conservation standards for consumer products or industrial equipment, and for which none of the exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX determination for this rulemaking, and DOE does not need to prepare an Environmental Assessment or Environmental Impact Statement for this proposed rule. DOE's CX determination for this proposed rule is available at
Executive Order 13132, “Federalism,” 64 FR 43255 (August 10, 1999), imposes certain requirements on Federal agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process that it will follow in the development of such regulations. 65 FR 13735. DOE has examined this proposed rule and has tentatively determined that it would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and
With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. 61 FR 4729 (Feb. 7, 1996). Regarding the review required by section 3(a), section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this proposed rule meets the relevant standards of Executive Order 12988.
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a proposed regulatory action likely to result in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect them. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy statement is also available at
Although this proposed rule, which proposes amended energy conservation standards for CWH equipment, does not contain a Federal intergovernmental mandate, it may require annual expenditures of $100 million or more by the private sector. Specifically, the proposed rule would likely result in a final rule that could require expenditures of $100 million or more, including: (1) Investment in research and development and in capital expenditures by CWH equipment manufacturers in the years between the final rule and the compliance date for the amended standards, and (2) incremental additional expenditures by consumers to purchase higher-efficiency CWH equipment, starting at the compliance date for the applicable standard.
Section 202 of UMRA authorizes a Federal agency to respond to the content requirements of UMRA in any other statement or analysis that accompanies the proposed rule. (2 U.S.C. 1532(c)) The content requirements of section 202(b) of UMRA relevant to a private sector mandate substantially overlap the economic analysis requirements that apply under section 325(o) of EPCA and Executive Order 12866. The
Under section 205 of UMRA, the Department is obligated to identify and consider a reasonable number of regulatory alternatives before promulgating a rule for which a written statement under section 202 is required. (2 U.S.C. 1535(a)) DOE is required to select from those alternatives the most cost-effective and least burdensome alternative that achieves the objectives of the proposed rule unless DOE publishes an explanation for doing otherwise, or the selection of such an alternative is inconsistent with law. As required by 42 U.S.C. 6313(a), this proposed rule would establish amended energy conservation standards for CWH equipment that are designed to achieve the maximum improvement in energy efficiency that DOE has determined to be both technologically feasible and economically justified. A full discussion of the alternatives considered by DOE is presented in the “Regulatory Impact Analysis” section of the TSD for this proposed rule.
Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.
Pursuant to Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 15, 1988), DOE has determined that this proposed rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.
Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for Federal agencies to review most disseminations of information to the public under information quality guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this NOPR under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.
Executive Order 13211, “Actions Concerning Regulations That
DOE has tentatively concluded that the regulatory action in this document, which sets forth proposed amended energy conservation standards for CWH equipment, is not a significant energy action because the proposed standards are not likely to have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as such by the Administrator at OIRA. Accordingly, DOE has not prepared a Statement of Energy Effects on this proposed rule.
On December 16, 2004, OMB, in consultation with the Office of Science and Technology Policy (OSTP), issued its Final Information Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 2005). The Bulletin establishes that certain scientific information shall be peer reviewed by qualified specialists before it is disseminated by the Federal Government, including influential scientific information related to agency regulatory actions. The purpose of the bulletin is to enhance the quality and credibility of the Government's scientific information. Under the Bulletin, the energy conservation standards rulemaking analyses are “influential scientific information,” which the Bulletin defines as “scientific information the agency reasonably can determine will have or does have a clear and substantial impact on important public policies or private sector decisions.”
In response to OMB's Bulletin, DOE conducted formal in-progress peer reviews of the energy conservation standards development process and analyses and has prepared a Peer Review Report pertaining to the energy conservation standards rulemaking analyses. Generation of this report involved a rigorous, formal, and documented evaluation using objective criteria and qualified and independent reviewers to make a judgment as to the technical/scientific/business merit, the actual or anticipated results, and the productivity and management effectiveness of programs and/or projects. The “Energy Conservation Standards Rulemaking Peer Review Report,” dated February 2007, has been disseminated and is available at the following Web site:
The time, date, and location of the public meeting are listed in the
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The public meeting will be conducted in an informal, conference style. DOE will present summaries of comments received before the public meeting, allow time for prepared general statements by participants, and encourage all interested parties to share their views on issues affecting this rulemaking. Each participant will be allowed to make a general statement (within time limits determined by DOE), before the discussion of specific topics. DOE will allow, as time permits, other participants to comment briefly on any general statements.
At the end of all prepared statements on a topic, DOE will permit participants to clarify their statements briefly and comment on statements made by others. Participants should be prepared to answer questions by DOE and by other participants concerning these issues. DOE representatives may also ask questions of participants concerning other matters relevant to this rulemaking. The official conducting the public meeting will accept additional comments or questions from those attending, as time permits. The presiding official will announce any further procedural rules or modification of the above procedures that may be needed for the proper conduct of the public meeting.
A transcript of the public meeting will be included in the docket, which can be viewed as described in the
DOE will accept comments, data, and information regarding this proposed rule before or after the public meeting, but no later than the date provided in the
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Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.
Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1)
It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).
Although DOE welcomes comments on any aspect of this proposal, DOE is particularly interested in receiving comments and views of interested parties concerning the following issues:
The Secretary of Energy has approved publication of this notice of proposed rulemaking.
Confidential business information, Energy conservation, Imports, Measurement standards, Reporting and recordkeeping requirements.
Administrative practice and procedure, Confidential business information, Test procedures, Reporting and recordkeeping requirements.
For the reasons set forth in the preamble, DOE proposes to amend parts 429 and 431 of chapter II, subchapter D of title 10, Code of Federal Regulations, as set forth below:
42 U.S.C. 6291-6317.
The additions and revisions read as follows:
(b) * * *
(1) * * *
(ii) * * *
(C) Any represented value of the rated storage volume must be equal to the mean of the measured storage volumes of all the units within the sample.
(c) * * *
(2) Pursuant to § 429.12(b)(13), a certification report for equipment manufactured before (
(i) Commercial electric storage water heaters: The standby loss in percent per hour (%/h) and the measured storage volume in gallons (gal).
(ii) Commercial gas-fired and oil-fired storage water heaters: The thermal efficiency in percent (%), the standby loss in British thermal units per hour (Btu/h), the rated storage volume in gallons (gal), and the fuel input rate in Btu/h rounded to the nearest 1,000 Btu/h.
(iii) Commercial water heaters and hot water supply boilers with storage capacity greater than 140 gallons: The thermal efficiency in percent (%); whether the storage volume is greater than 140 gallons (Yes/No); whether the tank surface area is insulated with at least R-12.5 (Yes/No); whether a standing pilot light is used (Yes/No); for gas or oil-fired water heaters, whether the basic model has a flue damper or fan assisted combustion (Yes/No); and, if applicable, pursuant to 10 CFR 431.110 of this chapter, the standby loss in British thermal units per hour (Btu/h) and measured storage volume in gallons (gal).
(iv) Commercial gas-fired and oil-fired instantaneous water heaters with storage capacity greater than or equal to 10 gallons and gas-fired and oil-fired hot water supply boilers with storage capacity greater than or equal to 10 gallons: The thermal efficiency in percent (%); the standby loss in British thermal units per hour (Btu/h); the rated storage volume in gallons (gal); the fuel input rate in Btu/h rounded to the nearest 1,000 Btu/h; whether a submerged heat exchanger is used (Yes/No); and whether flow through the water heater is required to initiate burner ignition (Yes/No).
(v) Commercial gas-fired and oil-fired instantaneous water heaters with storage capacity less than 10 gallons and gas-fired and oil-fired hot water supply boilers with storage capacity less than 10 gallons: The thermal efficiency in percent (%), the rated storage volume in gallons (gal), and the fuel input rate in British thermal units per hour (Btu/h) rounded to the nearest 1,000 Btu/h.
(vi) Commercial electric instantaneous water heaters with storage capacity greater than or equal to 10 gallons: The thermal efficiency in percent (%), the standby loss in percent per hour (%/h), and the measured storage volume in gallons (gal).
(vii) Commercial electric instantaneous water heaters with storage capacity less than 10 gallons: The thermal efficiency in percent (%) and the measured storage volume in gallons (gal).
(viii) Commercial unfired hot water storage tanks: The thermal insulation (
(3) Pursuant to § 429.12(b)(13), a certification report for equipment manufactured on or after (
(i) Commercial electric storage water heaters: The standby loss in percent per hour (%/h) and the rated storage volume in gallons (gal).
(ii) Commercial gas-fired and oil-fired storage water heaters: The thermal efficiency in percent (%), the standby loss in British thermal units per hour (Btu/h), the rated storage volume in gallons (gal), and the fuel input rate in British thermal units per hour (Btu/h) rounded to the nearest 1,000 Btu/h.
(iii) Commercial water heaters and hot water supply boilers with storage capacity greater than 140 gallons: The thermal efficiency in percent (%), whether the storage volume is greater than 140 gallons (Yes/No); whether the tank surface area is insulated with at least R-12.5 (Yes/No); whether a standing pilot light is used (Yes/No); for gas or oil-fired water heaters, whether the basic model has a flue damper or fan assisted combustion (Yes/No); and, if applicable, pursuant to 10 CFR 431.110 of this chapter, the standby loss in British thermal units per hour (Btu/h) and rated storage volume in gallons (gal).
(iv) Commercial gas-fired and oil-fired instantaneous water heaters with storage capacity greater than or equal to 10 gallons and gas-fired and oil-fired hot water supply boilers with storage capacity greater than or equal to 10 gallons: The thermal efficiency in percent (%), the standby loss in British thermal units per hour (Btu/h), the rated storage volume in gallons (gal), and the fuel input rate in Btu/h rounded to the nearest 1,000 Btu/h; whether a submerged heat exchanger is used (Yes/No); and whether flow through the water heater is required to initiate burner ignition (Yes/No).
(v) Commercial gas-fired and oil-fired instantaneous water heaters with storage capacity less than 10 gallons and gas-fired and oil-fired hot water supply boilers with storage capacity less than 10 gallons: The thermal efficiency in percent (%), the rated storage volume in gallons (gal), and the fuel input rate in British thermal units per hour (Btu/h) rounded to the nearest 1,000 Btu/h.
(vi) Commercial electric instantaneous water heaters with storage capacity greater than or equal to 10 gallons: The thermal efficiency in percent (%), the standby loss in percent per hour (%/h), and the rated storage volume in gallons (gal).
(vii) Commercial electric instantaneous water heaters with storage capacity less than 10 gallons: The thermal efficiency in percent (%) and the rated storage volume in gallons (gal).
(viii) Commercial unfired hot water storage tanks: The thermal insulation (
(m) * * *
(2) Verification of rated storage volume. The following provisions apply to commercial water heating equipment manufactured on or after (
(i) If the rated storage volume is found to be within 5 percent of the mean of the measured value of storage volume, then that value will be used as the basis for calculation of the maximum standby loss for the basic model.
(ii) If the rated storage volume is found to vary more than 5 percent from the mean of the measured values, then the mean of the measured values will be used as the basis for calculation of the maximum standby loss for the basic model.
42 U.S.C. 6291-6317.
(a) Each commercial storage water heater, instantaneous water heater, and hot water supply boiler
(b) Each unfired hot water storage tank manufactured on or after October 29, 2003, must have a minimum thermal insulation of R-12.5.
(c) Each commercial water heater, instantaneous water heater, unfired hot water storage tank and hot water supply boiler
(d) Each residential-duty commercial water heater manufactured prior to (
(e) Each residential-duty commercial water heater manufactured on and after (
Office of Elementary and Secondary Education, Department of Education.
Notice of proposed rulemaking.
The Secretary proposes to amend the regulations implementing programs under title I of the Elementary and Secondary Education Act of 1965 (ESEA) to implement changes to the ESEA by the Every Student Succeeds Act (ESSA) enacted on December 10, 2015. The Secretary also proposes to update the current ESEA general regulations to include requirements for the submission of State plans under ESEA programs, including optional consolidated State plans.
We must receive your comments on or before August 1, 2016.
Submit your comments through the Federal eRulemaking Portal or via postal mail, commercial delivery, or hand delivery. We will not accept comments submitted by fax or by email or those submitted after the comment period. To ensure that we do not receive duplicate copies, please submit your comments only once. In addition, please include the Docket ID at the top of your comments.
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Meredith Miller, U.S. Department of Education, 400 Maryland Avenue SW., Room 3C106, Washington, DC 20202-2800.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.
In particular, the ESSA significantly modified the accountability requirements of the ESEA. Whereas the ESEA, as amended by the NCLB, required a State educational agency (SEA) to hold schools accountable based on results on statewide assessments and one other academic indicator, the ESEA, as amended by the ESSA, requires each SEA to have an accountability system that is State-determined and based on multiple measures, including at least one measure of school quality or student success and, at a State's discretion, a measure of student growth. The ESSA also significantly modified the requirements for differentiating among schools and the basis on which schools must be identified for further comprehensive or targeted support and improvement. Additionally, the ESEA, as amended by the ESSA, no longer requires a particular sequence of escalating interventions in title I schools that are identified and continue to fail to make adequate yearly progress (AYP). Instead, it gives SEAs and local educational agencies (LEAs) discretion to determine the evidence-based interventions that are appropriate to address the needs of identified schools.
In addition to modifying the ESEA requirements for State accountability systems, the ESSA also modified and expanded upon the ESEA requirements for State and LEA report cards. The ESEA, as amended by the ESSA, continues to require that report cards be concise, presented in an understandable and uniform format, and, to the extent practicable, in a language that parents can understand, but now also requires that they be developed in consultation with parents and that they be widely accessible to the public. The ESEA, as amended by the ESSA, also requires that report cards include certain information that was not required to be included on report cards under the ESEA, as amended by the NCLB, such as information regarding per-pupil expenditures of Federal, State, and local funds; the number and percentage of students enrolled in preschool programs; where available, the rate at which high school graduates enroll in postsecondary education programs; and information regarding the number and percentage of English learners achieving English language proficiency. In addition, the ESEA, as amended by the ESSA, requires that report cards include certain information for subgroups for which information was not previously required to be reported, including homeless students, students in foster care, and students with a parent who is a member of the Armed Forces.
Further, the ESEA, as amended by the ESSA, authorizes an SEA to submit, if it so chooses, a consolidated State plan or consolidated State application for covered programs, and authorizes the Secretary to establish, for each covered program, the descriptions, information, assurances, and other material required to be included in a consolidated State plan or consolidated State application.
We are proposing these regulations to provide clarity and support to SEAs, LEAs, and schools as they implement the ESEA, as amended by the ESSA—particularly, the ESEA requirements regarding accountability systems, State and LEA report cards, and consolidated State plans—and to ensure that key requirements in title I of the ESEA, as amended by the ESSA, are implemented consistent with the purpose of the law: “to provide all children significant opportunity to receive a fair, equitable, and high-quality education, and to close educational achievement gaps.”
• Establish requirements for accountability systems under section 1111(c) and (d) of the ESEA, as amended by the ESSA, including requirements regarding the indicators
• Establish requirements for State and LEA report cards under section 1111(h) of the ESEA, as amended by the ESSA, including requirements regarding the timeliness and format of such report cards, as well as requirements that clarify report card elements that were not required under the ESEA, as amended by the NCLB; and
• Establish requirements for consolidated State plans under section 8302 of the ESEA, as amended by the ESSA, including requirements for the format of such plans, the timing of submission of such plans, and the content to be included in such plans.
Please refer to the
We invite you to assist us in complying with the specific requirements of Executive Orders 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from these proposed regulations. Please let us know of any further ways we could refine estimates of the rule's impacts, reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the Department's programs and activities.
During and after the comment period, you may inspect all public comments about these proposed regulations by accessing Regulations.gov. You may also inspect the comments in person in room 3C106, 400 Maryland Ave. SW., Washington, DC, between 8:30 a.m. and 4:00 p.m., Washington, DC time, Monday through Friday of each week except Federal holidays. Please contact the person listed under
• Whether the suggested options for States to identify “consistently underperforming” subgroups of students in proposed § 200.19 would result in meaningful identification and be helpful to States; whether any additional options should be considered; and which options, if any, in proposed § 200.19 should not be included or should be modified. (§ 200.19)
• Whether we should include additional or different options, beyond those proposed in this NPRM, to support States in how they can meaningfully address low assessment participation rates in schools that do not assess at least 95 percent of their students, including as part of their State-designed accountability system and as part of plans schools develop and implement to improve, so that parents and teachers have the information they need to ensure that all students are making academic progress. (§ 200.15)
• Whether, in setting ambitious long-term goals for English learners to achieve English language proficiency, States would be better able to support English learners if the proposed regulations included a maximum State-determined timeline (
• Whether we should retain, modify, or eliminate in the title I regulations the provision allowing a student who was previously identified as a child with a disability under section 602(3) of the Individuals with Disabilities Education Act (IDEA), but who no longer receives special education services, to be included in the children with disabilities subgroup for the limited purpose of calculating the Academic Achievement indicator, and, if so, whether such students should be permitted in the subgroup for up to two years consistent with current title I regulations, or for a shorter period of time. (§ 200.16)
• Whether we should standardize the criteria for including children with disabilities, English learners, homeless children, and children who are in foster care in their corresponding subgroups within the adjusted cohort graduation rate, and suggestions for ways to standardize these criteria. (§ 200.34)
On December 10, 2015, President Barack Obama signed the ESSA, which reauthorizes the ESEA, into law. Through the reauthorization, the ESSA made significant changes to the ESEA, including significant changes to title I of the ESEA. In particular, the ESSA significantly modified the accountability requirements of the ESEA, and modified and expanded upon the ESEA requirements for State and LEA report cards.
Further, the ESEA, as amended by the ESSA, authorizes an SEA to submit, if it so chooses, a consolidated State plan or consolidated State application for covered programs and authorizes the Secretary to establish, for each covered program, the descriptions, information, assurances, and other material required
The Department is proposing these regulations to provide clarity and support to SEAs, LEAs, and schools as they implement the ESEA requirements regarding accountability systems, State and LEA report cards, and consolidated State plans. The proposed regulations are further described under the
On December 22, 2015, the Department published a request for information in the
The Secretary proposes to amend the regulations implementing programs under title I of the ESEA (part 200) and to amend the ESEA general regulations to include requirements for the submission of State plans under ESEA programs, including optional consolidated State plans (part 299).
To implement the changes made to the ESEA by the ESSA, we propose to remove certain sections of the current regulations and replace those regulations, where appropriate, with the proposed regulations. Specifically, we are proposing to—
• Remove and reserve § 200.7;
• Remove §§ 200.12 to 200.22 of the current regulations, replace them with proposed §§ 200.12 to 200.22, and add proposed §§ 200.23 and 200.24;
• Remove §§ 200.30 to 200.42 of the current regulations and replace them with proposed §§ 200.30 to 200.37; and
• Add proposed §§ 299.13 to 299.19.
We discuss the proposed substantive changes by section. The section numbers in the headings of the following discussion are the section numbers in the proposed regulations. Generally, we do not address proposed changes that are technical or otherwise minor in effect.
• Long-term goals and measurements of interim progress, in accordance with section 1111(c)(4)(A);
• Indicators, in accordance with section 1111(c)(4)(B);
• Annual meaningful differentiation of all public schools, in accordance with section 1111(c)(4)(C); and
• Identification of schools to implement comprehensive or targeted support and improvement plans, in accordance with section 1111(c)(4)(D) and (d)(2)(A)(i).
Section 1111(c) also requires that State systems include long-term goals and measurements of interim progress for all students and specific subgroups of students, indicators that are applied to all students and specific subgroups of students, and a system of annual meaningful differentiation that is based on all indicators in the system, for all students and specific subgroups of students; that a State determine a minimum number of students necessary to carry out any title I, part A requirements that require disaggregation of information by each subgroup of students; and that the State annually measure the academic achievement of at least 95 percent of all students and 95 percent of the students in each subgroup of students on the State's reading/language arts and mathematics assessments required under section 1111(b)(2). Section 1111(c)(5) also specifies that accountability provisions for public charter schools must be overseen in accordance with State charter school law. Finally, section 1111(d) requires States to ensure LEAs and schools develop and implement school improvement plans in schools that are identified for comprehensive or targeted support and improvement by the State accountability system.
• Long-term goals and measurements of interim progress under proposed § 200.13;
• Indicators under proposed § 200.14;
• Inclusion of all students and each subgroup of students, and all public elementary and secondary schools consistent with proposed §§ 200.15 through 200.17;
• Annual meaningful differentiation of schools under proposed § 200.18;
• Identification of schools for comprehensive and targeted support and improvement under proposed § 200.19; and
• The process for ensuring development and implementation of comprehensive and targeted support and improvement plans, including evidence-based interventions, consistent with proposed §§ 200.21 through 200.24.
Finally, proposed § 200.12 would include the statutory requirement that the ESEA's accountability provisions for public charter schools be overseen in accordance with State charter school law.
These clarifications are necessary to ensure that States clearly understand the fundamental components of the new accountability systems under the ESSA that will take effect for the 2017-2018 school year, and that a description of each such component will be required in their State plans submitted to the Department.
Section 1111(c)(4)(A)(i)(II) also requires that the State's ambitious long-term goals for achievement and graduation rates use the same multi-year length of time for all students and each subgroup of students. This is explained further below.
Finally, section 1111(c)(4)(A)(i)(III) specifies that a State's goals for subgroups of students must take into account the improvement needed among subgroups that must make greater progress in order to close achievement and graduation rate gaps in the State.
Proposed § 200.13 would require each State to—
• Establish ambitious long-term goals and measurements of interim progress for academic achievement that are based on grade-level proficiency on the State's academic assessments and set separately for reading/language arts and mathematics;
• In setting long-term goals and measurements of interim progress for academic achievement, apply the same high standards of academic achievement to all students and each subgroup of students, except students with the most significant cognitive disabilities who are assessed based on alternate academic achievement standards, consistent with section 1111(b)(1);
• Establish ambitious long-term goals and measurements of interim progress for graduation rates that are based on the four-year adjusted cohort graduation rate and, if a State chooses to use an extended-year rate as part of its Graduation Rate indicator under proposed § 200.14, the extended-year adjusted cohort graduation rate, except that goals based on the extended-year rate must be more rigorous than goals based on the four-year rate;
• Set long-term goals and measurements of interim progress for academic achievement and graduation rates for all students and separately for each subgroup of students that expect greater rates of improvement for subgroups that need to make more rapid progress to close proficiency and graduation rate gaps in the State; and
• Use the same multi-year timeline in setting long-term goals for academic achievement and graduation rates for all students and for each subgroup (
The proposed regulations would require each State to—
• Establish ambitious long-term goals and measurements of interim progress for English learners toward attaining English language proficiency, as measured by the State's English language proficiency assessment, that set expectations for each English learner to make annual progress toward attaining English language proficiency and to attain English language proficiency; and
• Determine the State's long-term goals and measurements of interim progress for English learners by developing a uniform procedure for setting such goals and measurements of interim progress that would be applied consistently to all English learners in the State, must take into account the student's English language proficiency level, and may also consider one or more of the following student-level factors at the time of a student's identification as an English learner: (1) Time in language instruction educational programs; (2) grade level; (3) age; (4) Native language proficiency level; and (5) limited or interrupted formal education, if any.
Under section 1111(b)(2)(B)(ii), State assessments must provide information to students, parents, and educators about whether individual students are performing at their grade level. This determination provides valuable information about whether a student is receiving the support he or she needs to meet the challenging State academic standards and is on track to graduate ready to succeed in college and career, and if not, to help identify areas in which the student would benefit from additional support. This information also helps States and LEAs identify statewide proficiency gaps when establishing the State's goals and measurements of interim progress, as required under section 1111(c)(4)(A)(i)(III). Goals based on grade-level proficiency would provide consistency across the accountability system, as the statute requires the Academic Achievement indicator described in section 1111(c)(4)(B)(i)(I) to be based on a measure of proficiency against the challenging State academic standards. Therefore, the proposed regulations would clarify that the long-term goals a State establishes must be based on a measure of grade-level proficiency on the statewide assessments required under section 1111(b)(2) and must be set separately for reading/language arts and mathematics.
Section 1111(b)(1) also requires that all students be held to the same challenging State academic standards, except for students with the most significant cognitive disabilities who are assessed based on alternate academic achievement standards, as permitted under section 1111(b)(2)(D)(i). To ensure that all students are treated equitably and expected to meet the same high standards, and that all schools are held accountable for meeting these requirements, proposed § 200.13 would clarify that long-term goals must be based on the same academic achievement standards and definition of “proficiency” for all students, with the exception of students with the most significant cognitive disabilities who take an alternate assessment aligned with alternate academic achievement standards.
Finally, to provide relevant, meaningful information to districts, schools, and the public about the level of performance and improvement that is expected, proposed § 200.13 would require a State to set long-term goals and measurements of interim progress for graduation rates that are based on the four-year adjusted cohort graduation rate, as well as the extended-year adjusted cohort graduation rate if such a rate were used in the State's Graduation Rate indicator described in section 1111(c)(4)(B)(iii). Given that the graduation rate could impact whether a school is identified for support and improvement, and related interventions, it is critical to require the State to set long-term goals and measurements of interim progress for this measure in order to establish clear expectations and support all schools in the State in increasing the percentage of students graduating high school.
Because the requirement for progress in achieving English language proficiency goals has been added to title I in the ESEA, as amended by the ESSA, we propose to explain and clarify how States can meet this requirement in proposed § 200.13. For English learners to succeed in meeting the challenging State academic standards, it is critical for these students to attain proficiency in speaking, listening, reading, and writing in English, as recognized in section 1111(b)(1)(F), including the ability to successfully make academic progress in classrooms where the language of instruction is English, as recognized in the definition of “English learner” in section 8101(20). For these reasons, proposed § 200.13 would clarify that States' long-term goals must include both annual progress toward English language proficiency and actual attainment of English language proficiency for all English learners.
Recent data have highlighted the growing numbers of school-aged English learners, particularly in States and LEAs with relatively little experience in serving such students previously. The Census Bureau's American Community Survey (ACS) data from 2013 show that California, Florida, Illinois, New York, and Texas enroll 60 percent of the Nation's English learners, but the growth rate in the English learner population in other States has exceeded that of these five. For example, ACS data show that from 2010 to 2013, the English learner population increased by 21 percent in West Virginia, 13 percent in Hawaii and North Dakota, and 12 percent in Iowa. In addition, some States have experienced large increases of certain English learner subgroups over a short period of time. Alaska, the District of Columbia, New Hampshire, Oklahoma, South Dakota, Iowa, Maine, and Nebraska all experienced more than a 16-percent increase in their immigrant population during the 2010 to 2013 timeframe.
Given the diversity of the English learner population, illustrated in the examples above, a reasonable timeframe for schools to support one English learner in attaining proficiency in English may be too rigorous or too lenient an expectation for another English learner. Setting the same long-term goals and measurements of interim progress for all English learners in the State may fail to account for these differences in the English learner population and would result in goals that are inappropriate for some students. Furthermore, the time it takes an English learner to attain proficiency can be affected by multiple factors, such as age, level of English proficiency, and educational experiences in a student's native language.
For these reasons, proposed § 200.13(c) would require each State to establish a uniform procedure for setting long-term goals and measurements of interim progress for English learners
Finally, proposed § 200.13 would require a State's long-term goals to expect each English learner to attain English language proficiency within a period of time after the student's identification as an English learner. This period of time could be informed by existing academic research on the typical time necessary for English learners to attain English language proficiency,
• For all public schools in the State, section 1111(c)(4)(B)(i) requires an indicator of academic achievement, based on the long-term goals established under section 1111(c)(4)(A), that measures proficiency on the statewide assessments in reading/language arts and mathematics required under section 1111(b)(2)(B)(v)(I). At the State's discretion, this indicator may also include a measure of student growth on such assessments, for high schools only.
• For elementary and middle schools in the State, section 1111(c)(4)(B)(ii) requires an indicator that measures either student growth or another valid and reliable statewide academic indicator that allows for meaningful differentiation in school performance.
• For all high schools in the State, section 1111(c)(4)(B)(iii) requires an indicator, based on the long-term goals established under section 1111(c)(4)(A), that measures the four-year adjusted cohort graduation rate, and, at the State's discretion, the extended-year adjusted cohort graduation rate.
• For all public schools in the State, section 1111(c)(4)(B)(iv) requires an indicator measuring progress in achieving English language proficiency, within a State-determined timeline, for all English learners. This indicator must be measured using the English language proficiency assessments required under section 1111(b)(2)(G), for all English learners in each of grades 3 through 8, and in the grade in which English learners are assessed to meet the requirements of section 1111(b)(2)(B)(v)(I) to assess students once in high school.
• For all public schools in the State, section 1111(c)(4)(B)(v) requires at least one valid, reliable, and comparable indicator of school quality or student success. Such an indicator may include measures of student or educator engagement, student access to and completion of advanced coursework, postsecondary readiness, school climate and safety, or any other measure a State chooses that meets the requirements of section 1111(c)(4)(B)(v). Section 1111(c)(4)(B)(v)(I)(aa) requires that any school quality or student success indicator chosen by the State allow for meaningful differentiation of school performance, and section 1111(c)(4)(B)(v)(I)(bb) requires that the school quality or success indicator(s) be valid, reliable, comparable, and statewide (except that such indicator(s) may vary for each grade span).
Proposed § 200.14(a)(2) would clarify that each State must use the same measures within each indicator for all schools, except that States may vary the measures within the Academic Progress indicator and the School Quality or Student Success indicator or indicators by grade span as would be described in proposed § 200.14(c)(2). Proposed § 200.14 also would describe each of the five indicators that are required, at a minimum, as part of a State's accountability system under section 1111(c) of the ESEA, as amended by the ESSA.
Proposed § 200.14(b)(1) would:
• Require, for all schools, the Academic Achievement indicator to equally measure grade-level proficiency on the reading/language arts and mathematics assessments required under section 1111(b)(2)(B)(v)(I);
• Reiterate that the indicator must include the performance of at least 95 percent of all students and 95 percent of all students in each subgroup consistent with proposed § 200.15; and
• Clarify that, for high schools, this indicator may also measure, at the State's discretion, student growth based on the reading/language arts and mathematics assessments required under section 1111(b)(2)(B)(v)(I).
Proposed § 200.14(b)(2) would require, for all elementary and middle schools, the Academic Progress indicator to measure either student growth based on the reading/language arts and mathematics assessments required under section 1111(b)(2)(B)(v)(I), or another academic measure that meets the requirements of proposed § 200.14(c).
Proposed § 200.14(b)(3) would:
• Require, for all high schools, the Graduation Rate indicator to measure the four-year adjusted cohort graduation rate; and
• Allow States to also measure the extended-year adjusted cohort graduation rate as part of the Graduation Rate indicator.
Proposed § 200.14(b)(4) would:
• Require, for all schools, the Progress in Achieving English Language Proficiency indicator to be based on English learner performance on the English language proficiency assessment required under section 1111(b)(2)(G) in each of grades 3 through 8 and in the grades for which English learners are assessed in high school to meet the requirements of section 1111(b)(2)(B)(v)(I);
• Require that the Progress in Achieving English Language Proficiency indicator take into account a student's English language proficiency level and, at a State' discretion, additional student-level characteristics of English learners in the same manner used by the State under proposed § 200.13; use objective and valid measures of student progress such as student growth percentiles (although the indicator may also include a measure of English language proficiency); and align with the State-determined timeline for attaining English language proficiency under proposed § 200.13.
Proposed § 200.14(b)(5) would:
• Require, for all schools, the School Quality or Student Success indicator or indicators to meet the requirements of proposed § 200.14(c); and
• Reiterate the statutory language that the indicator or indicators may differ by each grade span and may include one or more measures of: (1) Student access to and completion of advanced coursework, (2) postsecondary readiness, (3) school climate and safety, (4) student engagement, (5) educator engagement, or any other measure that meets the requirements in the proposed regulations.
Additionally, under proposed § 200.14(c), a State would be required to ensure that each measure it selects to include within an indicator:
• Is valid, reliable, and comparable across all LEAs in the State;
• Is calculated the same for all schools across the State, except that the measure or measures selected within the indicator of Academic Progress or any indicator of School Quality or Student Success may vary by grade span;
• Can be disaggregated for each subgroup of students; and
• Includes a different measure than the State uses for any other indicator.
Under proposed § 200.14(d), a State would be required to ensure that each measure it selects to include as an Academic Progress or School Quality or Student Success indicator is supported by research finding that performance or progress on such measure is likely to increase student academic achievement or, for measures used within indicators at the high school level, graduation rates. Finally, under proposed § 200.14(e), a State would be required to ensure that each measure it selects to include as an Academic Progress or School Quality or Student Success indicator aids in the meaningful differentiation among schools under proposed § 200.18 by demonstrating varied results across all schools.
Although the statute provides a brief description of each indicator, States will need additional guidance as they consider how to design and implement school accountability systems that will meet their intended purpose of improving student academic achievement and school success. Because the indicators are used to identify schools for comprehensive and targeted support and improvement, including interventions to support improved student outcomes in these schools, it is essential to ensure that the requirements for each indicator are clear so that differentiation and identification of schools is unbiased, accurate, and consistent across the State.
Proposed § 200.14(a) would reinforce and clarify the statutory requirement that all indicators must measure performance for all students and separately for each subgroup of students, and that the State must use the same measures within each indicator for all schools, except for the Academic Progress indicator and the indicator(s) of School Quality or Student Success, which may use different measures among elementary, middle, and high schools. These proposed requirements would ensure that indicators include all students similarly across the State, including historically underserved populations, so that all students are held to the same high expectations. Further, these proposed requirements would ensure the indicators remain comparable across the State in order to promote fairness and validity, as schools will be held accountable on the basis of their students' performance on each indicator.
While the proposed regulations would require all States to include all of the required indicators, disaggregated by each subgroup, for annual meaningful differentiation of schools in the 2017-2018 school year, including the new indicators under the ESSA (
Under section 1111(b)(2)(B)(ii) of the ESEA, as amended by the ESSA, State
In order for English learners to succeed in meeting the challenging State academic standards, it is critical for them to attain proficiency in speaking, listening, reading, and writing in English, as recognized in section 1111(b)(1)(F), including academic English proficiency (
Similarly, proposed § 200.14(b)(4) would clarify how a State measures progress in achieving English language proficiency for all English learners for annual meaningful differentiation. The proposed regulation would provide States flexibility to develop a specific measure for this purpose, while ensuring that States use objective, valid, and consistent measures of student progress. Critically, the proposed regulations would require an objective and valid measure that English learners are attaining, or are on track to attain, English language proficiency in a reasonable time period, consistent with the State-determined timeline in proposed § 200.13. As the Progress in Achieving English Language Proficiency indicator would receive substantial weight in annual meaningful differentiation under proposed § 200.18 and could affect which schools are identified for support, it is important for States to design this indicator in ways that are valid and reliable and provide an accurate determination of English learners' progress toward achieving proficiency in English. Finally, the indicator chosen by the State must include a student's English language proficiency level, as well as additional student characteristics that are used, at a State's discretion, in the English learner-specific long-term goals and measurements of interim progress, for the reasons discussed previously in proposed 200.13(c) and to provide consistency across the components of State accountability systems.
Proposed § 200.14(c) would reiterate that all indicators included in the accountability system must be valid, reliable, and comparable across all LEAs in the State, and that each included measure must be calculated in the same way for all schools. It would also prevent a State from using the same indicators more than once. For example, a State must choose a different indicator to measure school quality or student success than it uses to measure academic achievement.
Proposed § 200.14(e) would require that the Academic Progress and School Quality or Student Success indicator produce varied results across all schools in order to support the statutory requirements for meaningful differentiation and long-term student success. These proposed requirements are designed to ensure that the indicators provide meaningful information about a school's performance, enhancing the information provided by other indicators and improving the ability of the system to differentiate between schools. In this way, the Academic Progress and School Quality or Student Success indicators can provide a more holistic picture of a school's performance and, when selected thoughtfully, support a State in meeting the statutory requirement that these indicators allow for “meaningful differentiation.” The proposed parameters would help improve the validity of annual meaningful differentiation and support States' identification of schools most in need of support and improvement. If a State chose an indicator that led to consistent results across schools—such as average daily attendance, which is often quite high even in the lowest-performing schools—it would not allow states to meaningfully differentiate between schools for the purposes of identifying schools in need of comprehensive and targeted support and improvement.
Finally, proposed § 200.14(d) would ensure that a State selects indicators of Academic Progress and School Quality or Student Success that are supported by research showing that performance or progress on such measures is positively related to student achievement or, in the case of measures used within indicators at the high school level, graduation rates. For example, a State might include at least one of the following School Quality or Student Success indicators that examine, for all students and disaggregated for each subgroup of students:
• “Student access to and completion of advanced coursework” through a measure of advanced mathematics course-taking (
• “Postsecondary readiness” through a measure of college enrollment following high school graduation or the rate of non-remedial postsecondary courses taken;
• “School climate and safety” through a robust, valid student survey that measures multiple domains (
• “Student engagement” through a measure of chronic absenteeism based on the number of students that miss a significant portion (
Further, since measures of “postsecondary readiness” may not be available as an indicator in elementary schools, a State could consider using an analogous measure in its accountability system, such as “kindergarten readiness” or another measure that would capture important outcomes or learning experiences in the early grades.
These requirements would support the purpose of title I—to “provide all children significant opportunity to receive a fair, equitable, and high-quality education and to close educational achievement gaps”—by requiring States to use measures that are
Finally, proposed § 200.15(d) would require a State to include in its report card a clear explanation of how it will factor the 95 percent participation rate requirement into its accountability system. This section would also retain current regulatory requirements related to: (1) Not allowing the systematic exclusion of students from required assessments; (2) counting as participants students with the most significant cognitive disabilities who take alternate assessments based on alternate academic achievement standards; and (3) counting as participants recently arrived English learners who take either the State's English language proficiency assessment or the reading/language arts assessment.
The proposed regulations would provide States with options to ensure that they meet the requirement in section 1111(c)(4)(E)(iii) by taking meaningful action to factor the 95 percent participation requirement into their accountability systems. Such action is essential to protect the credibility of a State's system of identifying schools in need of comprehensive or targeted support, enhance the validity of academic achievement information, and, most importantly, provide parents and educators with information to support all students in meeting the challenging State academic standards. These options suggest ways States may provide greater transparency and accurate, meaningful differentiation of schools to the public regarding low participation rates. In particular, the proposed options would ensure that failure to meet the 95 percent participation rate requirement is factored in the State's accountability system in a meaningful, publicly visible manner through a significant impact on a school's performance level or summative rating, identification for targeted support and improvement, or another equally rigorous, State-determined action, thus providing an incentive for the school to ensure that all students participate in annual State assessments. In addition to these options for factoring the participation rate requirement into the accountability system, the proposed regulations would ensure that all schools that miss the 95 percent participation rate develop plans to meaningfully address and improve assessment participation. The proposed regulations also would support State efforts to improve low participation rates by requiring LEAs with a significant number of schools that miss the 95 percent participation rate to develop separate LEA improvement plans that include additional actions to ensure the effective implementation of school-level plans.
Given the critical importance of assessing all students and subgroups of students as part of providing a strong foundation for each component of a State's accountability system, and in ensuring that parents and educators have information to support all students in meeting the challenging State academic standards, we are especially interested in receiving public comment on additional or different ways than those articulated in the proposed regulations to support States in ensuring that low assessment participation rates are meaningfully addressed as part of the State's accountability system, either as part of annual meaningful differentiation of schools to increase transparency around assessment participation rates or as part of school-level actions to improve such rates.
• Economically disadvantaged students;
• Students from major racial and ethnic groups;
• Children with disabilities; and
• English learners.
Under the ESEA, as amended by the ESSA, subgroups of students are included for multiple purposes in a statewide accountability system. States are required to:
• Establish long-term goals and measurements of interim progress for achievement and graduation rates for each subgroup of students, as well as for progress in attaining English language proficiency for English learners, that take into account the improvement necessary to make progress in closing proficiency and graduation rate gaps as described in section 1111(c)(4)(A);
• Produce disaggregated subgroup data for each required accountability indicator and annually differentiate among all public schools based on these indicators as described in section 1111(h)(1)(C); and
• Identify schools with one or more consistently underperforming subgroups of students and schools in which one or more subgroups of students perform as poorly as any title I school that is among the lowest-performing in the State for targeted support and improvement as described in section 1111(c)(4)(C)(iii) and 1111(d)(2)(A)(i).
The ESEA, as amended by the ESSA, also includes accountability requirements that apply only to English learners, including specific provisions for recently arrived English learners who have been enrolled in a school in the United States for less than 12 months, and students who were previously identified as English learners.
Section 1111(b)(3)(A) provides a State that chooses not to include results on academic assessments for recently arrived English learners in the statewide accountability system in their first year enrolled in schools in the United States with two options:
•Under section 1111(b)(3)(A)(i), a State may exclude a recently arrived English learner from one administration of the reading/language arts assessment required under section 1111(b)(2)(A) and exclude a recently arrived English learner's results on the reading/language arts (if applicable), mathematics, or English language proficiency assessment for accountability purposes in the first year of the student's enrollment in schools in the United States; or
• Under section 1111(b)(3)(A)(ii), a State may assess and report a recently arrived English learner's results on the reading/language arts and mathematics assessments required under section 1111(b)(2)(A), but exclude those results for accountability purposes in the student's first year of enrollment in schools in the United States. In the second year of a recently arrived English learner's enrollment in schools in the United States, the State must include a measure of such student's growth on the reading/language arts and mathematics assessments for accountability purposes. In the third and each succeeding year of a recently arrived English learner's enrollment, a State must include a measure of such student's proficiency on the reading/language arts and mathematics assessments for accountability purposes.
The ESEA, as amended by the ESSA, also specifies a limited exception to the requirement that a subgroup of students include only students who meet the definition for inclusion in that subgroup. Under section 1111(b)(3)(B), a State may include, for up to four years after exiting the English learner subgroup, the assessment results of such a student previously identified as an English learner in calculating the Academic Achievement indicator in reading/language arts and mathematics for the English learner subgroup in its statewide accountability system.
Section 200.13 specifies that, as part of its definition of AYP, each State must apply the same AMOs to all required statutory subgroups of students (economically disadvantaged students, students from major racial and ethnic groups, students with disabilities, and students with limited English proficiency), consistent with the regulations in § 200.7 for setting a minimum number of students, or n-size, for accountability and reporting that protects student privacy and produces valid and reliable accountability results. Section 200.19 requires disaggregated reporting on the other academic indicator in elementary and middle schools and on graduation rates, but does not require a State to use disaggregated subgroup data on the other academic indicator in elementary and middle schools for AYP determinations.
Current § 200.6 permits a State to exempt recently arrived English learners from one administration of the State's reading/language arts assessment. This section further defines a “recently arrived limited English proficient student” as a limited English proficient student who has attended schools in the United States (not including Puerto Rico) for less than 12 months. The regulations also require that a State and its LEAs report on State and district report cards the number of recently arrived English learners who are not assessed on the State's reading/language arts assessment, and clarify that a State must still include recently arrived English learners in its annual English language proficiency and mathematics assessments annually.
Section 200.20 permits a State to exclude the performance of a recently arrived English learner on a reading/language arts assessment (if administered to these students), mathematics assessment, or both, in determining AYP for a school or LEA. In other words, the performance of recently arrived English learners on content assessments may be excluded for accountability purposes for one administration of the content assessments.
Section 200.20 provides that in determining AYP for English learners and students with disabilities, a State may include in the English learner and students with disabilities subgroup, respectively, for up to two AYP determinations, scores of students who were previously English learners, but who have exited English learner status, and scores of students who were previously identified as students with a disability under section 602(3) of the IDEA, but who no longer receive services. The regulations require that, if a State includes students who were previously identified as English learners or students who were previously identified as students with a disability under section 602(3) of the IDEA in the respective subgroups in determining AYP, the State must include the scores of all such students. A State may, however, exclude such students from determining whether a subgroup meets the State's n-size within a particular school. A State also cannot include such former students in those subgroups for reporting on other data beyond AYP determinations (
• Economically disadvantaged students;
• Students from each major racial and ethnic group;
• Children with disabilities, as defined in section 8101(4) of the ESEA, as amended by the ESSA; and
• English learners, as defined in section 8101(20) of the ESEA, as amended by the ESSA.
The proposed regulations would require each State to—
• Include each subgroup of students, separately, and the all students group, consistent with the State's minimum number of students, or n-size, when establishing long-term goals and measurements of interim progress under proposed § 200.13, measuring school performance on each of the indicators under proposed § 200.14, annually meaningfully differentiating schools under proposed § 200.18, and identifying schools for comprehensive and targeted support and improvement under proposed § 200.19.
• Include, at the State's discretion, for not more than four years after a student exits the English learner subgroup, the performance of a student previously identified as an English learner on the Academic Achievement indicator within the English learner subgroup for purposes of annual meaningful differentiation and identification of schools for support and improvement under proposed §§ 200.18 and 200.19, if the State includes all such students previously identified as English learners and does so for the same State-determined number of years.
• Include, with respect to an English learner with a disability for whom there are no appropriate accommodations for one or more domains of the English language proficiency assessment required under section 1111(b)(2)(G) because the disability is directly related to that particular domain (
• Select a single statutory exemption from the two options included in section 1111(b)(3)(A) for the inclusion of recently arrived English learners in its accountability system and apply that exemption uniformly to all recently arrived English learners in the State; or
• Establish a uniform statewide procedure for determining how to apply the statutory exemption(s), if the State chooses to utilize either, or both, of the additional options included in section 1111(b)(3)(A) for the inclusion of recently arrived English learners in its accountability system. The proposed regulations would require a State, in establishing its uniform procedure, to take into account English language proficiency level and at its discretion, other student-level characteristics: Grade level, age, native language proficiency level, and limited or interrupted formal education. Each State's uniform procedure must be used to determine which, if any, exemption is appropriate for an individual English learner.
• Report annually on the number and percentage of recently arrived English learners included in accountability under the options described in section 1111(b)(3)(A).
Proposed § 200.16 would clarify that a State must include each of the required subgroups of students separately when establishing long-term goals and measurements of interim progress, measuring school performance
Permitting the inclusion of former English learners in the English learner subgroup for up to four years after they have exited the English learner subgroup recognizes that the population of English learners in a school changes over time, as new English learners enter and others are reclassified as English language proficient. Including students previously identified as English learners in the subgroup would allow schools to be recognized for the progress they have made in supporting such students toward meeting the challenging State academic standards over time. However, selecting which former English learners to include, for which purposes, and for how long could undermine the fairness of accountability determinations across the State by encouraging the inclusion of higher-achieving former English learners only, or encouraging the inclusion of higher-achieving former English learners for longer periods of time than their lower-achieving peers. Further, the inclusion of former English learners should be used to increase school-level accountability and recognition for supporting the English learner subgroup, which is possible only if such students are counted within the subgroup for purposes of meeting the State's n-size.
For these reasons, proposed § 200.16 would clarify that if a State chooses to include former English learners in the English learner subgroup for up to four years, it must include all such former English learners in the subgroup for the same period of time. Further, former English learners must be included in determining whether the English learner subgroup meets the State's n-size in a particular school if a State chooses to include former English learners in the Academic Achievement indicator. The proposed regulations in § 200.16 would prohibit States from including former English learners in the English learner subgroup for purposes other than calculating and reporting on the Academic Achievement indicator. However, the proposed regulations would not prohibit States from establishing their own additional subgroups of students that include former English learners; we are aware that some States track the performance of “ever English learners”—students who have at any time been classified as English learners—and the proposed regulations would not prevent that practice.
The proposed regulations also would clarify that a State must include in the Progress in Achieving English Language Proficiency indicator the composite score of an English learner who has a disability that prevents that student from taking, even with appropriate accommodations, one or more domains of the English language proficiency assessment (speaking, listening, reading, or writing). The statute requires that each State assess all English learners annually in all four domains with the English language proficiency assessment, provide appropriate accommodations to an English learner who is also a child with a disability, and hold schools accountable for the performance of all English learners. We propose this regulation in recognition that, in a limited number of situations, the nature of a student's disability may make it impossible to validly assess the student in a particular domain of the English language proficiency assessment, even with appropriate accommodations. For example, it may not be possible, even with appropriate accommodations, to administer the speaking domain of the English language proficiency assessment to a non-verbal English learner. The purpose of the proposed regulation is to ensure that such a student is still included within the accountability system based on his or her performance on the remaining domains of the English language proficiency assessment.
To ensure that this exception is used only where necessary, proposed 200.16(b)(2) would require a State to include the performance of such a student in the Progress in Achieving English Language Proficiency indicator based on fewer than all four domains of language only where, as determined by the student's IEP or 504 team on an individualized basis, it is not possible, even with appropriate accommodations, for the student to participate in one or more domains of the English language proficiency assessment. A State may not adopt categorical rules for excluding English learners with certain disabilities from corresponding domains of the English language proficiency assessment; rather, just as the IEP or 504 team makes the decision about accommodations on an individualized basis, so too the decision as to domain participation would be made by the IEP or 504 team on an individualized basis, and only for this limited subset of English learners.
The ESSA provides new flexibility in how States may include the performance of recently arrived English learners on academic assessments in the statewide accountability system by their second year of enrollment in schools in the United States. Proposed § 200.16 would clarify that recently arrived English learners must be included in meaningful and appropriate ways, acknowledging the diversity and varying needs of this population. Research has demonstrated that a student's language proficiency, age, and educational background (such as amount of formal education and native language proficiency) have an impact on that student's development of English language proficiency and academic achievement.
Although the statute specifically states that the scores of students previously identified as an English learner may be included for up to four years for the calculation of the Academic Achievement indicator, the statute is silent about whether States may include the scores of a student who was previously identified as a child with a disability under section 602(3) of the IDEA. Accordingly, proposed § 200.16 would differ from the current title I regulations, which allow States to count the scores of students who were previously identified as a child with a disability for the purposes of making accountability determinations for up to two years. Unlike English learners, who all share a goal of attaining English language proficiency and exiting the English learner subgroup, the goal for all children with disabilities is not always or necessarily to exit special education services. The flexibility in the current title I regulations is intended to allow school assessment results for the student with disabilities subgroup to reflect the gains that students exiting the subgroup had made in academic achievement. As a result, however, the academic achievement results used for accountability for the students with disabilities subgroup in a particular school may not fully reflect the achievement of students receiving special education services. Because this provision was not included in the ESEA, as amended by ESSA, we seek specific comments on whether the provision to allow a student who was previously identified as a child with a disability under section 602(3) of the IDEA, but who no longer receives special education services, to be included in the children with disabilities subgroup for the limited purpose of calculating the Academic Achievement indicator should be retained or modified in proposed § 200.16, and if so, whether such students should be permitted in the subgroup for up to two years consistent with the current title I regulations, or for a shorter proposed period of time.
Section 200.7(a)(2)(i) requires a State, in determining its minimum subgroup size, to consider statistical reliability in setting such number to ensure, to the maximum extent practicable, that all students are included, particularly at the school level, for purposes of making accountability decisions. Section 200.7(a)(2)(ii) requires each State to revise its Consolidated State Application Accountability Workbook to include: (1) An explanation of how the State's minimum subgroup size meets the requirements of § 200.7(a)(2)(i); (2) an explanation of how other components of the State's AYP definition, in addition to the State's minimum subgroup size, interact to affect the statistical reliability of the data and to ensure maximum inclusion of all students and subgroups of students; and (3) information on the number and percentage of students and subgroups of students excluded from school-level accountability determinations. Section 200.7(a)(2)(iii) requires each State to submit a revised Consolidated State Application Accountability Workbook that incorporates the information required in § 200.7(a)(2)(ii) for technical assistance and peer review.
The section also clarifies that students excluded from disaggregation and accountability at the school level must be included at the level (LEA or State) for which the number of students is reliable. It stipulates that a State must apply section 444 of the General Education Provisions Act (the Family Educational Rights and Privacy Act of 1974) in determining whether disaggregated data would reveal personally identifiable information.
Proposed § 200.17 would also clarify data disaggregation requirements. Specifically, proposed § 200.17(a)(2)(iii) would clarify that, for the purposes of the statewide accountability system under section 1111(c), a State's n-size may not exceed 30 students, unless the State is approved to use a higher number after providing a justification, including data on the number and percentage of schools that are not held accountable for the results of each required subgroup of students in the State's system of annual meaningful differentiation, in its State plan. Proposed § 200.17(a)(2)(iv) would further clarify that the n-size sufficient to yield statistically reliable information for purposes of reporting under section 1111(h) may be lower than the n-size used for purposes of the statewide accountability system under section 1111(c).
A State's n-size should be no larger than necessary to ensure the protection of privacy for individuals and to allow for statistically reliable results of the aggregate performance of the students who make up a subgroup. The n-size must also be small enough to ensure the maximum inclusion of each student subgroup in accountability decisions and school identification, including measuring student progress against the State's long-term goals and indicators and notifying schools with consistently underperforming subgroups of students for targeted support and improvement, consistent with the statutory requirements to disaggregate data for such purposes.
Setting an n-size that is statistically reliable has been a challenge for States. Previous approaches have, at times, prioritized setting a conservative n-size (
Other analyses have shown that an n-size of 60 can potentially exclude all students with disabilities from a State's accountability system.
For these reasons, proposed § 200.17(a)(2) would allow states to establish a range of n-sizes, not to exceed 30, so that States may select an n-size that is both valid and reliable. The proposed regulations would also allow a State to set an n-size that exceeds 30 students if it demonstrates how the higher number promotes sound, reliable accountability decisions and the use of disaggregated data in making those decisions in its State plan, including data on the number and percentage of schools that would not be held accountable for the results of students in each subgroup under its proposed n-size.
• Academic achievement;
• Graduation rates for high schools;
• A measure of student growth, if determined appropriate by the State, or another valid and reliable academic indicator that allows for meaningful differentiation in school performance for elementary and secondary schools that are not high schools; and
• Progress in achieving English language proficiency.
These indicators, combined, must also be afforded much greater weight than the indicator or indicators of school quality or student success.
The proposed regulations would require each State's system of annual meaningful differentiation to—
• Include the performance of all students and each subgroup of students in a school on all of the indicators, consistent with proposed regulations for inclusion of subgroups in § 200.16, for disaggregation of data in § 200.17, and for inclusion of students that attend the same school for only part of the year in § 200.20(c);
• Include at least three distinct levels of performance for schools on each indicator that are clear and understandable to the public, and set those performance levels in a way that is consistent with the school's attainment of the State's long-term goals and measurements of interim progress in proposed § 200.13;
• Provide information on each school's level of performance on each indicator in the accountability system separately as part of the description of the State's accountability system under
• Result in a single rating from among at least three distinct rating categories for each school, based on a school's level of performance on each indicator, to describe a school's summative performance and include such a rating as part of the description of the State's system for annual meaningful differentiation on LEA report cards consistent with proposed §§ 200.31 and 200.32;
• Meet the requirements of proposed § 200.15 to annually measure the achievement of not less than 95 percent of all students and 95 percent of all students in each subgroup of students on the assessments under section 1111(b)(2)(B)(v)(I); and
• Inform the State's methodology to identify schools for comprehensive and targeted support and improvement described in proposed § 200.19.
To annually meaningfully differentiate among all public schools in the State, including determining the summative rating for each school, proposed § 200.18 would require States to use consistent weighting among the indicators for all schools within each grade span. In particular, proposed § 200.18 would require States to give substantial weight to each of the Academic Achievement, Academic Progress, Graduation Rate, and Progress in English Language Proficiency indicators, consistent with the statutory requirements in section 1111(c)(4)(C)(ii)(I). Proposed § 200.18 would also require States to give much greater weight to those indicators, in the aggregate, than to the indicator or indicators of school quality or student success, consistent with the statutory requirements in section 1111(c)(4)(C)(ii)(II).
Further, to show that its system of annual meaningful differentiation meets these requirements for providing substantial and much greater weight to certain indicators, under proposed § 200.18 each State would be required to:
• Demonstrate that school performance on the School Quality or Student Success indicator(s) may not be used to change the identity of schools that would otherwise be identified for comprehensive support and improvement, unless such schools are making significant progress for the all students group under proposed § 200.16(a)(1) on at least one of the indicators that is afforded substantial weight and can be measured for all students; and
• Demonstrate that school performance on the School Quality or Student Success indicator(s) may not be used to change the identity of schools that would otherwise be identified for targeted support and improvement, unless each consistently underperforming or low-performing subgroup is making significant progress on at least one of the indicators that is afforded substantial weight.
In other words, the four substantially weighted indicators, together, would not be deemed to have much greater weight in the system if performance on the other, not substantially weighted indicator could remove a school from identification. Thus, in order for the school to be removed from identification it must also be making progress for the relevant subgroup of students on an indicator that receives substantial weight.
Similarly, under proposed § 200.18 each State would be required to demonstrate, based on the performance of all students and each subgroup of students, that a school performing in the lowest performance level on any of the substantially weighted indicators does not receive the same summative rating as a school performing in the highest performance level on all of the indicators. In other words, an indicator would not be considered to have substantial weight, and the overall system would not be meaningfully differentiating among schools, if low performance on that indicator failed to result in a school being rated differently than a school performing at the highest level on every indicator.
Finally, proposed § 200.18 would clarify that a State would not be required to afford the same substantial weight to each of the indicators that are required to receive a substantial weight in the system of annual meaningful differentiation. Further, it would clarify that if a school did not meet the State's n-size for English learners, a State must exclude the Progress in English Language Proficiency indicator from annual meaningful differentiation for the school and afford all of the remaining indicators for such a school the same relative weight that is afforded to those indicators in schools that meet the State's n-size for the English learner subgroup. It would not necessarily, however, relieve a school from its reporting requirements for English learners under the law if a State selects an n-size that is lower for reporting purposes than for purposes of annual meaningful differentiation consistent with proposed § 200.17.
Without successful annual meaningful differentiation of schools, low-performing schools may not be identified for needed resources and interventions, and States and LEAs may be unable to provide appropriate supports and recognition that are tailored to schools' and students' needs based on their performance. Additionally, parents and the public will lack access to transparent information about the quality of schools in their communities and how well schools are educating all students. Providing information for each of these purposes is particularly difficult, given that accountability systems must include multiple indicators, disaggregated by multiple subgroups. For these reasons, proposed § 200.18 would further clarify the statutory requirements to ensure that annual meaningful differentiation results in actionable, useful information for States, LEAs, educators, parents, and the public.
First, proposed § 200.18(b) would require States to establish at least three distinct performance levels for schools on each indicator and ensure that LEAs include how each school fared against these performance levels, separately by indicator, as part of the description of the accountability system on annual LEA report cards. To ensure that differentiation of schools is meaningful, the accountability system should allow for more than two possible outcomes for each school, and a requirement for at least three performance levels on each indicator would enable the system to recognize both high-performing and low-performing schools that are outliers, and distinguish them from more typical school performance.
Second, proposed § 200.18(b) would require each State to set performance levels on each indicator in a way that is consistent with attainment of the State's long-term goals and measurements of interim progress. If a school is
In addition, proposed § 200.18(b) would require the performance levels to be clear and understandable to parents and the public. For example, creating three levels of performance that are all synonyms for “meeting expectations” would likely be unhelpful, confusing, and fail to differentiate between schools in a meaningful way. Instead, the levels should indicate distinct differences in performance in user-friendly terms that the local community, especially students' parents, can understand.
These performance levels would need to be reported separately for each indicator under proposed § 200.14, because each measures a distinct aspect of school quality and performance, as well as reported together in a single summative rating, from among at least three overall school rating categories. Many schools may excel on some indicators, and struggle on other indicators—information that could be hidden if only an aggregate rating were reported, or if performance levels were reported on some, but not all, of the indicators. This also serves as an important safeguard to ensure that the Academic Achievement, Academic Progress, Graduation Rates, and Progress in Achieving English Language Proficiency indicators—the substantially weighted indicators in the system—are not overshadowed in a summative rating by School Quality or Student Success indicators that States may add. Further, by presenting the performance level on each indicator separately, States and districts would be better equipped to customize supports, technical assistance, and resources to meet the needs of each school.
However, there is significant value in providing a summative rating for each school that considers the school's level of performance across all of the indicators, and many States have already chosen to aggregate multiple measures into a single rating (
Proposed § 200.18(c) and (d) would clarify the requirements for four indicators—Academic Achievement, Academic Progress, Graduation Rates, and Progress in Achieving English Language Proficiency, as described in proposed § 200.14—to be afforded substantial weight separately, and much greater weight together, than the State's indicator or indicators of School Quality or Student Success in the summative rating by specifying three checks that States must meet to demonstrate that their systems comply with this requirement. Taken together, these checks would help ensure that the indicators that are required in the statute to receive much greater weight, in the aggregate, ultimately drive annual determinations of school quality and identification of schools for support and improvement. Similarly, they would help ensure that each substantially weighted indicator is not overshadowed by indicators that are not afforded that distinction by the statute. In addition to clarifying the statute, the checks required in proposed § 200.18(d) would provide critical parameters to help ensure that State accountability systems will emphasize student academic outcomes, like academic achievement, graduation rates, and English language proficiency, and will help close achievement gaps, consistent with the purpose of title I of the ESEA.
Proposed § 200.18(c) and (e) would clarify that in meeting the requirement to use consistent weighting across all schools within a grade span and for particular indicators to be afforded substantial weight, each indicator does not have to receive the same substantial weight. This would allow States to prioritize among the substantially weighted indicators, based on their unique goals and challenges, and customize their systems of annual meaningful differentiation to emphasize certain indicators more heavily within a particular grade span.
Further, proposed § 200.18(e) would clarify how a State must meet the requirements that they afford indicators substantial weight when a school does not enroll sufficient numbers of English learners to include the Progress in Achieving English Language Proficiency indicator. By requiring the same relative weighting among the remaining indicators in such a school as the weighting used in schools that meet the State's n-size for the English learner subgroup, the proposed regulation would help promote fair, comparable differentiation among all public schools, regardless of variation in the demographics of a school's student population. If the Academic Achievement indicator typically receives twice the weight of School Quality or Student Success indicators, as determined by the State, in schools that meet the State's n-size for English learners, the Academic Achievement indicator would continue to receive twice the weight of the School Quality or Student Success indicators in schools that do not meet the State's n-size for English learners. In this way, the proposed regulations would ensure that the weight that would have otherwise been given to the Progress in Achieving English Language Proficiency indicator is distributed among the other indicators in an unbiased and consistent way, so that the overall accountability system does not place relatively more, or less, emphasis on a particular
Overall, proposed § 200.18 would provide clarity to States, support consistency in how terms are defined, and help ensure that key indicators, especially those most directly related to student learning outcomes, receive the emphasis required by the statute in the accountability system. The terms “substantial” and “much greater” are ambiguous, especially when States could employ various approaches in order to differentiate schools. The proposed regulations would give consistent meaning to these terms and help protect subgroups of students whose performance could be overlooked, and whose schools could go unidentified, if certain indicators were afforded insufficient weight. For example, if Progress in Achieving English Language Proficiency received less than “substantial” weight in a State's system of annual meaningful differentiation, it is possible that schools failing to support their English learners in attaining English language proficiency would go unidentified for targeted support and improvement, and students in those schools would not receive the supports, resources, and services they would have otherwise been eligible for as a school identified for improvement.
• The lowest-performing five percent of all title I schools in the State;
• Any public high school in the State failing to graduate one-third or more of its students; and
• Title I schools with a consistently underperforming subgroup that, on its own, is performing as poorly as all students in the lowest-performing five percent of title I schools and that has failed to improve after implementation of a targeted support and improvement plan.
Section 1111(c)(4)(C)(iii) and section 1111(d)(2)(A)(i) also require a State to use its method for annual meaningful differentiation, based on all indicators in the accountability system, to identify any public school in which one or more subgroups of students is consistently underperforming, as determined by the State, and to notify each LEA in the State of any public school served by the LEA of such identification so that the LEA can ensure the school develops a targeted support and improvement plan. The notification must also specify, beginning with the 2017-2018 school year as described in section 1111(d)(2)(D), if a subgroup of students in the school, on its own, has performed as poorly as all students in the bottom five percent of title I schools that have been identified for comprehensive support and improvement. This type of targeted support and improvement schools must implement additional targeted supports, as described in section 1111(d)(2)(C).
Section 1111(c)(4)(D)(ii) specifies that a State may also add other statewide categories of schools in addition to the categories of schools described above.
With regard to identification for comprehensive support and improvement, the proposed regulations would require each State to establish a methodology, based on its system of annual meaningful differentiation under proposed § 200.18, to identify a statewide category of schools for comprehensive support and improvement, which must include three types of schools: The lowest-performing schools, high schools with low graduation rates, and schools with chronically low-performing subgroups.
The proposed regulations would require that each State identify the lowest-performing schools to include at least five percent of title I elementary, middle, and high schools in the State, taking into account—
• A school's summative rating among all students on the State's accountability indicators, averaged over no more than three years consistent with proposed § 200.20(a), which describes data procedures for annual meaningful differentiation and identification of schools; and
• The statutory requirement to assign substantial weight individually, and much greater weight overall, to the indicators of Academic Achievement, Academic Progress, Graduation Rates, and Progress in Achieving English Language Proficiency.
Proposed § 200.19 would require low graduation rate high schools to include any high school in the State with a four-year adjusted cohort graduation rate among all students below 67 percent, or below a higher percentage selected by the State, averaged over no more than three years consistent with proposed § 200.20(a).
Proposed § 200.19 would also require States to identify schools with chronically low-performing subgroups of students, which are defined as any title I school with one or more subgroups that performs as poorly as all students in any of the lowest-performing five percent of title I schools under proposed § 200.19(a)(1) and that have not sufficiently improved, as defined by the State, after implementation of a targeted support and improvement plan over no more than three years.
With regard to identification of schools for targeted support and improvement, the proposed regulations would establish requirements for identifying two types of schools. First, a State would be required to identify under proposed § 200.19(b)(2) each school with at least one low-performing subgroup of students, which is defined as a subgroup of students that is performing at a level at or below the summative performance of all students in any of the lowest-performing five percent of title I schools in comprehensive support and improvement. Second, each State would establish a methodology, based on its system of annual meaningful differentiation under proposed § 200.18, to identify schools with consistently underperforming subgroups for targeted
• Include any school with at least one consistently underperforming subgroup of students; and
• Take into account (1) a school's performance on the accountability indicators, over no more than two years, and (2) the statutory requirement to assign substantial weight individually, and much greater weight overall, to the indicators of Academic Achievement, Academic Progress, Graduation Rates, and Progress in Achieving English Language Proficiency. This methodology could also, at the State's discretion, include schools with low participation rates consistent with proposed § 200.15(b)(2)(iii).
In addition, proposed § 200.19(c) would require each State to identify subgroups of students that are consistently underperforming using a uniform definition across all LEAs, which may include:
• A subgroup of students that is not on track to meet the State's long-term goals or is not meeting the State's measurements of interim progress under proposed § 200.13;
• A subgroup of students that is performing at the lowest performance level in the system of annual meaningful differentiation on at least one indicator, or is particularly low performing on measures within an indicator (
• A subgroup of students that is performing at or below a State-determined threshold compared to the average performance among all students, or the highest-performing subgroup, in the State;
• A subgroup of students that is performing significantly below the average performance among all students, or the highest-performing subgroup, in the State, such that the performance gap is among the largest in the State; or
• Another definition, determined by the State, which the State demonstrates in its State plan would meet all proposed requirements for identification of schools for targeted support and improvement.
Proposed § 200.19 would also establish the timeline for identification of schools for comprehensive and targeted support and improvement, as follows:
• The lowest-performing title I schools, low graduation rate high schools, and title I schools with chronically low-performing subgroups would be identified for comprehensive support and improvement at least once every three years, beginning with the 2017-2018 school year, except that schools with chronically low-performing subgroups of students would not be required to be identified the first time a State identifies its lowest-performing and low graduation rate high schools in the 2017-2018 school year.
• Schools with consistently underperforming subgroups of students would be identified for targeted support and improvement annually, beginning with the 2018-2019 school year.
• Schools with low-performing subgroups of students that are performing at a level at or below the summative performance of all students in any of the lowest-performing five percent of title I schools would be identified at least once every three years, with identification occurring in each year that the State identifies the lowest-performing five percent of title I schools for comprehensive support and improvement, beginning with the 2017-2018 school year.
Finally, proposed § 200.19 would require that each State identify schools for comprehensive and targeted support and improvement by the beginning of the school year for which such school is identified. Specifically, the year of identification would be defined as the school year immediately following the year in which the State most recently measured the school's performance on the indicators under proposed § 200.14 that resulted in the school's identification. In other words, schools identified for the 2017-2018 school year would be identified, at a minimum, on the basis of their performance in the 2016-2017 school year and schools identified for the 2018-2019 school year would be identified, at a minimum, on the basis of their performance in the 2017-2018 school year, consistent with proposed § 200.20(a) regarding uniform procedures for averaging data.
Appropriate, accurate, and timely identification of low-performing schools is critical to ensuring that State accountability systems work and help improve student academic achievement and school success, as intended in the statute. LEAs are eligible to receive additional funding from their States, as described in proposed § 200.24, to support these schools. If low-performing schools are misidentified and excluded from comprehensive or targeted support and improvement, students who are struggling may not receive the additional resources and support they need. In addition, research has demonstrated that accountability systems with meaningful consequences for poor school performance are more effective at improving student outcomes than systems that rely primarily on reporting of school-level data to encourage improvement.
The proposed regulations would also clarify statutory school improvement provisions through additional requirements that align identification for school improvement with other accountability requirements, help ensure appropriate and timely identification of schools with low-performing students and subgroups of students, and create a cohesive system of school accountability and improvement, with distinct reasons for school identification and clear timelines for identification.
Proposed § 200.19 would clarify that identification of title I schools in the lowest-performing five percent of title I schools in the State and identification of high schools with low graduation rates
Similarly, proposed § 200.19 would clarify that identification of each type of school in comprehensive support and improvement must be based on a school's performance over no more than three years, consistent with the statutory requirement to identify these schools once every three years and with proposed regulations regarding averaging data across years under proposed § 200.20(a). If data were considered over a longer period of time, it may not reflect the school's current learning conditions, potentially leading to inappropriate identification of schools that have improved dramatically, or non-identification of schools that have experienced significant declines, since the last time the State identified these schools. Limiting the window over which performance may be considered at three years would help ensure identification is timely and accurate, and that improvement plans are developed for schools most in need of support.
The proposed regulations would help ensure annual meaningful differentiation and school identification work together, creating a coherent accountability system that parents, the public, and other stakeholders can understand and that provides consistent information to schools regarding the progress and outcomes they are expected to achieve. For these reasons, proposed § 200.19 would ensure the lowest-performing schools are identified school summative ratings. For similar reasons, proposed § 200.19 would clarify that identification of the lowest-performing schools would be consistent with the statutory requirement that the Academic Achievement, Academic Progress, Graduation Rate, and Progress in Achieving English Language Proficiency indicators be given substantial weight individually, and much greater weight together, than indicator(s) of School Quality or Student Success.
Proposed § 200.19 would specify that any high school with a four-year adjusted cohort graduation rate below 67 percent, averaged over no more than three years, must be identified due to low graduation rates, consistent with the statutory requirements in section 1111(c)(4)(d)(i)(II). However, the proposed regulations also would permit a State to set a threshold that is higher than 67 percent for identifying low graduation rate high schools, in recognition of the wide range of average graduation rates across different States.
Although the statute permits the use of an extended-year adjusted cohort graduation rate within the Graduation Rate indicator, the four-year adjusted cohort graduation rate is the only measure within the Graduation Rate indicator required for all schools. Relying exclusively on the four-year adjusted cohort graduation rate for identification would provide a consistent benchmark for holding schools accountable across States and LEAs, and signal the importance of on-time high school graduation as a key determinant of school and student success. If extended-year rates were considered in the identification of such high schools, the performance of students failing to graduate on-time could compensate for low on-time graduation rates, as calculated by the four-year adjusted cohort graduation rate, and prevent identification of high schools with low on-time graduation rates.
Proposed § 200.19 would also support States in accurately identifying schools for targeted support and improvement by aligning the methodology for identifying these schools with other components of the State accountability system. Specifically, proposed § 200.19(b) would clarify the two types of schools identified for targeted support and improvement: Schools with low-performing subgroups of students and schools with consistently underperforming subgroups of students. First, a State would be required under proposed § 200.19(b)(2) to identify schools with one or more subgroups of students performing, as an individual subgroup, as poorly as all students in any school in the lowest-performing five percent of title I schools based on the State's summative ratings. These schools would be referred to as schools with low-performing subgroups in proposed § 200.19 and would receive additional targeted support under proposed § 200.22. The proposed regulations are needed to clarify how identification of these schools enables the State to meet the statutory requirement to identify, at least once every three years, any school with low-performing subgroups of students for comprehensive support and improvement if such a school receives title I funds and does not meet the State's exit criteria after implementing a targeted support and improvement plan (described further in proposed § 200.22).
Second, proposed § 200.19(c) would require States, in identifying schools with consistently underperforming subgroups of students for targeted support and improvement, to consider a school's level of performance on the indicators described in proposed § 200.14. Further, a State's methodology for identifying such schools would need to be consistent with the statutory requirement for the Academic Achievement, Academic Progress, Graduation Rate, and Progress in Achieving English Language Proficiency indicators to be given substantial weight individually, and much greater weight, in the aggregate, than indicator(s) of School Quality or Student Success. This clarification would help ensure a State's system of annual meaningful differentiation and system of identification are coherent to parents and the public, and send a consistent signal to educators and schools regarding what level of student progress and achievement is considered sufficient.
Proposed § 200.19(c) would further clarify the methodology States would use to identify schools with consistently underperforming subgroups of students by specifying that identification of these schools must be based on school performance in the system of annual meaningful differentiation over no more than two years. If data were considered over a longer period of time, it may not reflect the most current level of subgroup performance in the school, leading to inappropriate identification. Further, by ensuring identification following no more than two years of low subgroup performance, schools can receive the supports needed to help the subgroup improve prior to that particular cohort of students exiting the
Proposed § 200.19(c) would also provide parameters around how a State must define “consistently underperforming,” with multiple suggested approaches. The accountability systems established in the ESSA require disaggregated information by subgroup in each of its components: long-term goals and measurements of interim progress, indicators, assessment participation rates, and annual meaningful differentiation. In this way, the statute signals the importance of including subgroups of students to the maximum extent possible. However, identification of schools specifically based on subgroup performance, and subsequent interventions to support improved outcomes for all students in the school, depends on a robust definition of “consistently underperforming.” For these reasons, proposed § 200.19(c) would suggest ways for States to define “consistently underperforming” to help ensure that each State system of identification meaningfully considers performance for subgroups of students. Given that there likely are numerous ways to establish a methodology for identifying consistently underperforming subgroups, we are especially interested in receiving public comment on whether the suggested methods in § 200.19 would result in meaningful differentiation and identification of schools; which additional options should be considered, if any; and which options, if any, in proposed § 200.19 should not be included or should be modified because they do not adequately identify underperforming subgroups of students.
Finally, proposed § 200.19 would clarify the timeline for identification of schools under the ESEA, as amended by the ESSA. The statute is clear that identification begins with the 2017-2018 school year and that a State must identify schools for comprehensive support and improvement at least once every three years, but does not indicate at which point during the year such identification must occur. Because a clear, regular timeline for identification of schools is critical to meet the needs of students, allow sufficient time for planning meaningful interventions, and permit full and effective implementation of support and improvement plans, proposed § 200.19 would require identification of all schools by the beginning of each school year for which the school is identified and would clarify that the year for which the school is identified (
Further, proposed § 200.19 clarifies when State accountability systems under the ESEA, as amended by the ESSA, take effect, with the lowest-performing schools, high schools with low graduation rates, and schools with chronically low-performing subgroups in comprehensive support and improvement and schools with low-performing subgroups in targeted support and improvement identified at least once every three years starting in 2017-2018, and with schools that have consistently underperforming subgroups of students identified annually starting in 2018-2019. However, because identification of a school with chronically low-performing subgroups only occurs after such a school has implemented a targeted support and improvement plan and failed to meet the State's exit criteria under proposed § 200.22, a State could not identify such schools in 2017-2018. Accordingly, proposed § 200.19 requires identification of schools with chronically low-performing subgroups for comprehensive support and improvement the second time a State identifies its lowest performing schools for comprehensive support and improvement, no later than the 2020-2021 school year, as title I schools with low-performing subgroups would have had an opportunity to implement a targeted support and improvement plan and demonstrate that they met the exit criteria at that time.
Section 1111(c)(4)(F) contains requirements for including students that do not attend the same school in an LEA for the entire school year in State accountability systems. The statute indicates that the performance of any student enrolled for at least half of the school year must be included on each indicator in the accountability system; students enrolled for less than half of the school year in the same school may be excluded. For graduation rates, if a high school student enrolled for less than half of the school year drops out and does not transfer to another high school, such student must be included in the denominator for calculating the four-year adjusted cohort graduation rate and assigned either to the school the student most recently attended, or to the school where the student was enrolled for the greatest proportion of school days during grades 9 through 12.
Section 200.20(e) requires a State to include all students that have been enrolled in schools in an LEA for a full academic year in determining AYP for each LEA, but students that are not enrolled in the same school for the full academic year may be excluded from AYP determinations for the school. The current title I regulations do not define “full academic year.”
Proposed § 200.20(a)(1)(ii)(A)-(B) would clarify that, if a State averages data across years, the State must continue to report data for a single year, without averaging, on State and LEA report cards under section 1111(h). Further, under proposed § 200.20(a)(1)(ii)(C), a State that averages data across years would be required to explain its uniform procedure for averaging data in its State plan and specify the use of such procedure in its description of the indicators used for annual meaningful differentiation in its accountability system on the State report card under section 1111(h)(1)(C)(i)(III).
Proposed § 200.20(a)(2) would retain requirements from the current regulations on combining data across grades and further clarify that a State choosing to combine data across grades must, consistent with the requirements for averaging data across years, use the same uniform procedure for all public schools; report data for each grade in the school on State and LEA report cards under section 1111(h); and, consistent with proposed § 200.20(a)(1)(ii)(C), explain its uniform procedure in its State plan and specify the use of such procedure on its State report card.
Proposed § 200.20(b) would restate, and restructure, the requirements on partial enrollment from section 1111(c)(4)(F). Section 200.20(b)(2)(ii) would clarify that the approach used by an LEA for assigning high school students who exit without a diploma and who do not transfer to another high school must be consistent with the approach established by the State for calculating the denominator of the four-year adjusted cohort graduation rate under proposed § 200.34(f). Additionally, proposed § 200.20(b)(2)(iii) would clarify that all students, regardless of their length of enrollment in a school within an LEA during the academic year, must be included for purposes of reporting on the State and LEA report cards under section 1111(h) for such school year.
Proposed § 200.20(a)(1)(ii) would also require that a State explain its uniform procedure for averaging data in its State plan and specify the use of such procedure on its annual State report card in order to increase transparency. Such information is important to help stakeholders understand how accountability determinations are made.
To be consistent with the proposed requirements for averaging data across years and create a coherent system, proposed § 200.20(a)(2) would clarify that States choosing to combine data across grades must report data individually for each grade in a school, use the same uniform procedure for combining data across grades in all schools, and explain the procedure in the State plan and specify its use in the State report card.
Proposed § 200.20(b) would clarify that the inclusion of students for accountability must be based on time enrolled in a school, rather than attendance, which we believe is more consistent with the new statutory requirements under section 1111(c)(4)(F) of the ESEA, as amended by the ESSA, which are intended to ensure accountability systems and reporting are maximally inclusive of all students and each subgroup of students, while promoting fairness in school accountability determinations by excluding students whose performance had little to do with a particular school because they were only enrolled for a short period of time. Furthermore, basing the inclusion of students on attendance could create a perverse incentive to discourage students who are low-performing from attending schools—contrary to the purpose of title I to provide all children significant opportunity to receive a fair, equitable, and high-quality education, and to close educational achievement gaps.
With respect to any high school identified for comprehensive support and improvement due to low graduation rates, as described in section 1111(c)(4)(D)(i)(II), the State may permit differentiated improvement activities under section 1111(d)(1)(C) that utilize evidence-based interventions for schools that predominately serve students returning to school after exiting without a regular diploma or who are significantly off track to accumulate sufficient academic credits to meet high school graduation requirements. Section 1111(d)(1)(C) also allows a State to exempt high schools with less than 100 students that are identified for comprehensive support and improvement due to low graduation rates from implementing the required improvement activities.
Section 1111(d)(1)(D) allows an LEA to provide all students enrolled in a school identified by the State for comprehensive support and improvement with the option to transfer to another public school served by the LEA, unless such an option is prohibited by State law.
Section 1111(d)(3)(A)(i)(I) also requires a State to establish statewide exit criteria for comprehensive support and improvement schools, which, if not satisfied within a State-determined number of years (not to exceed four years), must result in more rigorous State-determined action in the school, such as the implementation of interventions (which may address school-level operations).
Proposed § 200.21 would require that each State notify any LEA that serves a school identified for comprehensive support and improvement no later than the beginning of the school year for which the school is identified. Proposed § 200.21 would also require that an LEA that receives such a notification from the State promptly notify the parents of each student enrolled in the identified school, including, at a minimum, the reason or reasons for the school's identification and an explanation for how parents can be involved in developing and implementing the school's improvement plan. This notice must—
• Be in an understandable and uniform format;
• Be, to the extent practicable, written in a language that parents can understand or, if it is not practicable to provide written translations to a parent with limited English proficiency, be orally translated for such parent; and
• Be, upon request by a parent or guardian who is an individual with a disability as defined by the Americans with Disabilities Act, 42 U.S.C. 12102, provided in an alternative format accessible to that parent.
Proposed § 200.21 would require that an LEA with a school identified for comprehensive support and improvement complete, in partnership with stakeholders (including principals and other school leaders, teachers, and parents), a needs assessment for the school that examines—
• Academic achievement information based on the performance, on the State assessments in reading/language arts and mathematics, of all students and each subgroup of students in the school;
• The school's performance, including among subgroups of students, on all indicators and on the State's long-term goals and measurements of interim progress described in proposed §§ 200.13 and 200.14;
• The reason or reasons the school was identified for comprehensive support and improvement; and
• At the LEA's discretion, the school's performance on additional, locally selected indicators that are not included in the State's system of annual meaningful differentiation that affect student outcomes in the school.
The proposed regulations would require an LEA with a school identified for comprehensive support and improvement to develop and implement a comprehensive support and improvement plan to improve student outcomes in the school. Specifically, the proposed regulations would require that the comprehensive support and improvement plan—
• Be developed in partnership with stakeholders (including principals and other school leaders, teachers, and parents);
• Describe how early stakeholder input was solicited and taken into account in the plan's development, and how stakeholders will participate in the plan's implementation;
• Incorporate the results of the school-level needs assessment;
• Include one or more interventions (
• Identify and address resource inequities by including, at a minimum, a review of LEA- and school-level resources among schools and, as applicable, within schools with respect to disproportionate rates of ineffective, out-of-field, or inexperienced teachers identified by the State and LEA under sections 1111(g)(1)(B) and 1112(b)(2) and per-pupil expenditures of Federal, State, and local funds reported annually under section 1111(h)(1)(C)(x), and, at the LEA's discretion, a review of LEA and school-level budgeting and resource allocation with respect to disproportionate rates of ineffective, out-of-field, or inexperienced teachers and per-pupil expenditures and any other resource, including access and availability of advanced coursework, preschool programs, and instructional materials and technology;
• Be made publicly available by the LEA, including to parents consistent with the notice requirements described above; and
• Be approved by the school, the LEA, and the State.
Additionally, an LEA may have a planning year for a school identified for comprehensive support and improvement, during which the LEA must carry out the needs assessment and develop the school's comprehensive support and improvement plan to prepare for the successful implementation of the school's interventions. Such a planning year is limited to the school year in which the school was identified.
Proposed § 200.21 would require that a State review and approve each comprehensive support and improvement plan in a timely manner, as determined by the State, and take all actions necessary to ensure that each school and LEA develops and implements a plan that meets all of the requirements of proposed § 200.21 within the required timeframe. Further, the proposed regulations would require that the State monitor and periodically review each LEA's implementation of its plan.
Proposed § 200.21 would also require that the State establish uniform statewide exit criteria for schools implementing comprehensive support and improvement plans to help ensure continued progress to improve student
The proposed regulations would specify that, if a school does not meet the exit criteria, the State would require the LEA to conduct a new school-level needs assessment and, based on its results, amend its comprehensive support and improvement plan to—
• Address the reasons the school did not meet the exit criteria, including whether the school implemented the interventions with fidelity and sufficient intensity, and the results of the new needs assessment;
• Update how it will continue to address previously identified resource inequities and identify and address any new resource inequities consistent with the requirements to review those inequities in its original plan; and
• Implement additional interventions in the school that (1) must be determined by the State; (2) must be more rigorous and based on strong or moderate levels of evidence; (3) must be supported, to the extent practicable, by evidence from a sample population or setting that overlaps with the population or setting of the school to be served; and (4) may address school-level operations, such as changes to budgeting, staffing, or the school day and year.
The proposed regulations would require that the LEA submit the amended plan to the State in a timely manner, as determined by the State. Upon receipt of the LEA's amended plan, proposed § 200.21 would require that the State review and approve the plan in a timely manner, as determined by the State, and take all actions necessary to ensure that each school and LEA meets the requirements of proposed § 200.21 to develop and implement the amended plan within the required timeframe. The proposed regulations would also require that the LEA make the amended plan publicly available, including to parents, consistent with the manner in which they provided the required notice described above.
Finally, the proposed regulations would require that a State increase its monitoring, support, and periodic review of each LEA's implementation of an amended comprehensive support and improvement plan based on a school's failure to meet the exit criteria.
Proposed § 200.21 would incorporate the flexibility in section 1111(d)(1)(C) for States with respect to certain high schools identified for low graduation rates. First, the proposed regulations would permit differentiated school improvement activities, as long as those activities still meet the requirements for schools in comprehensive support and improvement described above, including in a high school that predominantly serves students who (1) have returned to education after having exited high school without a regular high school diploma and (2) based on their grade or age, are significantly off track to earn sufficient academic credits to meet the State's graduation requirements. Second, the proposed regulations would permit a State to allow an LEA to forgo implementation of a comprehensive support and improvement plan in a high school that was identified under proposed § 200.19 for low graduation rates, but has a total enrollment of less than 100 students.
Proposed § 200.21 would clarify the option for students to transfer to a different public school included in section 1111(d)(1)(D) by precluding the option to transfer from a school identified for comprehensive support and improvement to another school identified for comprehensive support and improvement and specifying that, if such an option is inconsistent with a federal desegregation order, the LEA must petition and obtain court approval for such transfers.
Before a comprehensive support and improvement plan is implemented in an identified school, the statute requires the LEA to develop such a plan in partnership with stakeholders, including parents. In order to ensure that parents are meaningfully included in this process, proposed § 200.21 would require an LEA to provide notice to parents of the school's identification in order to ensure that the notice is not only understandable and clear about why a school was identified, but also enables parents to be engaged in development and implementation of the comprehensive support and improvement plan, as required by the statute. These requirements would provide greater transparency and help parents understand the need for, and the process for developing, a school's comprehensive support and improvement plan, including the needs assessment, so that they can be meaningful participants in school improvement activities and take an active role in supporting their child's education. Parents and guardians with disabilities or limited English proficiency have the right to request notification in accessible formats. We encourage States and LEAs to proactively make all information and notices they provide to parents and families accessible, helping to ensure that parents are not routinely requesting States and LEAs to make information available in alternative formats. For example, one way to ensure accessibility would be to provide orally interpreted and translated notifications and to follow the requirements of section 508 of the Rehabilitation Act.
To inform the development of a comprehensive support and improvement plan, an LEA with a school identified for comprehensive support and improvement must complete a needs assessment for the school. The proposed regulations would specify certain elements that must be part of the school-level needs assessment, ensuring that a needs assessment is conducted in partnership with stakeholders; is informed by relevant data, including student performance on the State academic assessments and other measures the LEA determines are relevant to their local context; and examines the reason the school was identified for comprehensive support and improvement. These elements would provide a sound basis for a comprehensive support and improvement plan, and would increase the likelihood that such a plan would be effective, by examining multiple dimensions of school performance and specifically analyzing the reason or reasons the school was identified.
Proposed § 200.21 would also clarify requirements for the development of the comprehensive support and improvement plan. First, the regulations would require (1) meaningful, ongoing stakeholder input in the development and implementation of plans, and (2) that the plans, and any amendments to the plans, be made publicly available in a manner that will ensure parents can access them. A plan cannot be implemented in partnership with parents, teachers, and principals if the plan itself is not easily accessible.
Second, the proposed regulations would clarify that the evidence requirements for comprehensive support and improvement plans are based on the definition of “evidence-based” in section 8101(21) of the ESEA, as amended by the ESSA. Specifically, proposed § 200.21 would specify that one or more of a school's activities and interventions, as opposed to all activities and interventions, must be evidence-based, and would require an LEA to take into consideration, in selecting an evidence-based intervention, the strongest level of evidence that is available and appropriate and its relevance to the context in which the intervention will be implemented, if practicable. Schools implementing comprehensive support and improvement plans are more likely to see improvements if they employ particular strategies that are grounded in evidence. Because the evidence base for interventions in low-performing schools is relatively nascent and still growing, proposed § 200.21 would help support LEAs in making prudent, smart choices when selecting among evidence-based interventions by encouraging the use of interventions that are supported by the strongest level of evidence that is available and appropriate to meet the needs of the school, including, where possible, evidence suggesting that the intervention was effective for an overlapping population or in an overlapping setting to those of the identified school.
Third, proposed § 200.21 would specify minimum requirements for the LEA's efforts to review and address resource inequities, which may include LEA- and school-level budgeting. Specifically, at a minimum, the identification of resource inequities must include a review of disproportionate rates, among schools and, as applicable, within schools, of ineffective, out-of-field, or inexperienced teachers and per-pupil expenditures of Federal, State, and local funds—using data already required to be collected and reported under the ESEA, as amended by the ESSA. In addition, we propose clarifications that would emphasize the importance of equity and access in other areas (
Finally, the proposed regulations would clarify an LEA may have, with respect to each school identified for comprehensive support and improvement, a planning year limited to the school year in which the school was identified. This would allow time to prepare for the successful implementation of interventions specified in the plan by, for example, consulting with stakeholders, conducting a needs assessment, and identifying resource inequities and evidence-based interventions, and to ensure that such planning does not inordinately delay the full implementation of interventions that are needed to support improved student achievement and school success.
The proposed regulations would clarify the State's responsibilities regarding plan approval. Specifically, the State would be required to conduct a timely review of the LEA's plan and take necessary actions to ensure that each school and LEA is able to meet all of the requirements of proposed § 200.21 to develop and implement the plan within the required timeframe. These clarifications would ensure plans are approved expeditiously and meet key statutory requirements, and prevent significant delays at the LEA or school level in implementation of activities and interventions that will help improve student achievement and outcomes in identified schools.
Further, to ensure continued progress in student academic achievement and school success, proposed § 200.21 would require the State to establish uniform statewide exit criteria for any school implementing a comprehensive support and improvement plan, including that the school no longer meets the criteria for identification under proposed § 200.19(a) and demonstrates improved student outcomes. Requiring improved student outcomes would help ensure that schools do not exit improvement status before making meaningful gains in performance, consistent with the statutory requirement in section 1111(d)(3), that a State ensure schools identified for comprehensive support and improvement achieve continued progress to improve student academic achievement and school success.
Proposed § 200.21 also would clarify additional actions a school identified for comprehensive support and improvement must take if it does not meet the exit criteria. In particular, as noted above, schools implementing comprehensive support and improvement plans are more likely to see improvements if they employ strategies that are grounded in research. In addition, the proposed regulations would ensure the State has a larger role in supporting an LEA in the development and oversight of an amended comprehensive support and improvement plan after its initial plan was unsuccessful, which is necessary when an LEA's plan for improvement has been ineffective.
Section 1111(d) requires additional targeted support for schools with any subgroup of students performing at or below the level of students in the lowest-performing five percent of all title I schools identified for comprehensive support and improvement under section 1111(c)(4)(D)(i)(I). In addition to implementing targeted support and
Section 1111(d) also requires a State to establish statewide exit criteria for schools requiring additional targeted support, as described in section 1111(d)(2)(C). If these exit criteria are not met within a State-determined number of years, the State must identify title I schools requiring additional targeted support as comprehensive support and improvement schools.
Proposed § 200.22 would require a State to notify each LEA that serves one or more schools identified for targeted support and improvement of the identification, and would then require each LEA to notify each identified school, no later than the beginning of the school year for which the school is identified, including notice of the subgroup or subgroups that have been identified by the State as consistently underperforming or low-performing, or, at the State's discretion, the subgroup or subgroups that are identified under proposed § 200.15(b)(2)(iii) for low assessment participation rates.
Proposed § 200.22 would also require that an LEA that receives such a notification from the State promptly notify the parents of each student enrolled in the identified school so that parents may be meaningfully involved in improvement efforts. The parental notice would be required to be understandable and accessible in the same manner as the notice under proposed § 200.21(b)(1)-(3) and include at a minimum, the reason or reasons for identification and an explanation of how parents can be involved in developing and implementing the school's support and improvement plan, consistent with the statutory requirement that parents serve as partners in the development of such plans.
The proposed regulations would require a school identified for targeted support and improvement to develop and implement a plan that addresses the reason or reasons for identification and that will improve student outcomes for the lowest-performing students in the school. Specifically, the proposed regulations would require that the targeted support and improvement plan—
• Be developed in partnership with stakeholders (including principals and other school leaders, teachers, and parents);
• Describe, at a minimum, how early stakeholder input was solicited and taken into account in the plan's development, and how stakeholders will participate in the plan's implementation;
• Be designed to improve student performance for the lowest-performing students on each of the indicators in the statewide accountability system that led to the school's identification, or, in the case of a school identified under proposed § 200.15(b)(2)(iii) to improve assessment participation rates in the school;
• Take into consideration the school's performance on all indicators in the statewide accountability system and student performance against the State's long-term goals and measurements of interim progress, including student academic achievement on each of the assessments required under section 1111(b)(2)(B)(v), and, at the school's discretion, locally selected indicators that are not included in the State's system of annual meaningful differentiation that affect student outcomes in the school;
• For any school operating a schoolwide program under section 1114 of the ESEA, as amended by the ESSA, address the needs identified by the needs assessment required under section 1114(b)(6);
• Include one or more interventions that (1) must be evidence-based; (2) must be appropriate to address the reason or reasons for identification and to improve student outcomes for the lowest-performing students in the school, consistent with the requirement in section 1111(d)(2)(B) of the ESEA, as amended by the ESSA; (3) must be, to the extent practicable, supported by research conducted on a sample population or setting that overlaps with the population or setting of the school to be served; and (4) may be selected from a State-approved list of evidence-based interventions;
• Be submitted by the school to the LEA for review and approval; and
• For a school with low-performing subgroups as described under proposed regulations in § 200.19(b)(2), identify and address resource inequities that affect the low-performing subgroup by including, at a minimum, a review of LEA- and school-level resources among schools and, as applicable, within schools with respect to disproportionate rates of ineffective, out-of-field, or inexperienced teachers identified by the State and LEA under sections 1111(g)(1)(B) and 1112(b)(2) and per-pupil expenditures of Federal, State, and local funds reported annually under section 1111(h)(1)(C)(x), and, at the LEA's discretion, a review of LEA- and school-level budgeting and resource allocation with respect to disproportionate rates of ineffective, out-of-field, or inexperienced teachers and per-pupil expenditures and any other resource, including access and availability of advanced coursework, preschool programs, and instructional materials and technology.
Additionally, a school identified for targeted support and improvement due to consistently underperforming or low-performing subgroups of students may have a planning year during which the school must carry out stakeholder engagement, selection of interventions, and other activities necessary to prepare for successful implementation of the plan. The planning year is limited to the school year in which the school was identified.
The proposed regulations would also require that an LEA review and approve each targeted support and improvement plan in a timely manner and take all actions necessary to ensure that each school is able to meet all of the requirements of proposed § 200.22 to develop and implement the plan within the required timeframe. Further, the proposed regulations would require that the LEA monitor each school's implementation of its plan. Finally, the proposed regulations would require that the LEA make each targeted support and improvement plan, and any amendments to the plan, publicly available, including to parents
The proposed regulations would require that the LEA establish uniform exit criteria for schools implementing targeted support and improvement plans, except for title I schools with low-performing subgroups as described in proposed § 200.19(b)(2), and make the exit criteria publicly available. The proposed regulations would require that, in establishing the exit criteria, an LEA ensure that a school meeting the exit criteria successfully implemented its targeted support and improvement plan such that it no longer meets the criteria for identification and has improved student outcomes for its lowest-performing students, including each subgroup of students that was identified as consistently underperforming, or in the case of a school identified under proposed § 200.15(b)(2)(iii), met the requirement for student participation in assessments, within an LEA-determined number of years.
If a school does not meet the exit criteria within an LEA-determined number of years, the proposed regulations specify that the LEA would:
• Require the school to amend its targeted support and improvement plan to include additional actions that address the reasons the school did not meet the exit criteria and encourage the school to include interventions that meet a higher level of evidence consistent with section 8101(21) than the interventions required to be included in the school's original plan or to increase the intensity of effective interventions included in the school's original plan;
• Review and approve, in the same manner in which the LEA reviewed and approved the original plan, the amended targeted support and improvement plan; and
• Increase its monitoring and support of the school's implementation of the plan.
For a school with one or more low-performing subgroups (
Further, for a title I school with one or more low-performing subgroups that is identified for targeted support and improvement, the proposed regulations would require that the State establish uniform statewide exit criteria that, at a minimum, ensure that each such school meeting the exit criteria has improved student outcomes for its lowest-performing students, including each subgroup identified as low-performing, and no longer meets the criteria for identification as a targeted support and improvement school. If such a school does not meet the uniform statewide exit criteria for low-performing targeted support and improvement title I schools after a State-determined number of years not to exceed three years, the State would be required to identify that school as a comprehensive support and improvement school, consistent with the requirement in section 1111(c)(3)(D) that a State identify such schools for comprehensive support and improvement at least every three years.
Before a targeted support and improvement plan is implemented, the LEA must provide notice to parents of the school's identification. The proposed regulations would clarify the requirements of such notice, specifically that the notice is timely, understandable, and accessible to all parents, including those with limited English language proficiency and disabilities. Moreover, the proposed regulations would require the notice to clearly explain to parents why a school was identified and how parents can be involved in developing and implementing the school's targeted support and improvement plan, consistent with the statutory requirement for parents to serve as partners in developing these plans. The proposed requirements would enable parents to become meaningfully and actively engaged in efforts to improve their child's school by creating a mechanism for parents to learn how they can become involved in the development and administration of the plan and the issues the plan will be designed to address.
Proposed § 200.22 would also clarify the requirements for the development of the targeted support and improvement plan. First, these requirements would require meaningful, ongoing stakeholder input in the development and implementation of targeted support and improvement plans, as well as that the plans be made available to the public, particularly to ensure transparency for parents of enrolled students and those who are members of consistently underperforming or low-performing subgroups. Plans cannot be implemented in partnership with parents, teachers, and principals if the plan itself is not easily accessible.
Second, the proposed regulations would clarify that the evidence requirements for targeted support and improvement plans are based on the definition of “evidence-based” in section 8101(21) of the ESEA, as amended by the ESSA. Specifically, proposed § 200.22 would require that one or more of a school's activities and interventions, as opposed to all activities, be evidence-based and would require certain considerations regarding the selection of evidence, if practicable. Schools implementing targeted support and improvement plans are more likely to see improvements for low-performing students, including low-performing subgroups of students, if they employ strategies that are grounded in research. Because the evidence base for interventions in low-performing schools that will support the lowest-performing
Finally, the proposed regulations would clarify that a school identified for targeted support and improvement due to low-performing or consistently underperforming subgroups of students may have a planning year limited to the school year in which the school was identified. This would allow time for the activities necessary to prepare for the successful implementation of interventions specified in the plan, including consulting with stakeholders, analyzing the reasons the school was identified for targeted support, and selecting appropriate evidence-based interventions to address those reasons, and to ensure that such planning does not inordinately delay the full implementation of interventions that are needed to support improved student achievement and school success.
The proposed regulations would clarify that the targeted support and improvement plan must be submitted by the school to the LEA for review and approval. The LEA would be required to conduct a timely review of the plan and take all actions necessary to ensure that each school is able to meet all of the requirements of proposed § 200.22 to develop and implement the plan within the required timeframe. Further, LEAs would be required to make the approved plans and all approved amendments to the plans publicly available. These clarifications are intended to ensure that plans are approved expeditiously, meet key statutory requirements, and are transparent and widely available to the public, and to prevent significant delays in the implementation of activities and interventions that will help improve student achievement and outcomes for low-performing students, including consistently underperforming subgroups, in identified schools.
Proposed § 200.22 would make clear that each LEA must establish and make public exit criteria for schools implementing targeted support and improvement plans in order to meet the statutory requirement that an LEA must require a school that unsuccessfully implements its targeted support and improvement plan to take additional action. These exit criteria must, at a minimum, require that the school no longer meet the criteria for identification as a school for targeted support and improvement and demonstrate improved academic achievement for its lowest-performing students, including underperforming subgroups. These criteria must also be tailored to consider participation in statewide assessments in States that choose to identify schools with low participation rates for targeted support and improvement under proposed § 200.15(b)(2)(iii). Overall, this structure is similar to the parameters for exit criteria for comprehensive support and improvement so that there is consistency across the accountability system. Further, these clarifications would help make clear that schools improving educational outcomes are able to exit targeted support and improvement status, while providing safeguards to ensure that consistently underperforming subgroups do not struggle indefinitely if plans are inadequate or ineffectively implemented, and that schools are provided with additional help and support, when needed.
Proposed § 200.22 would clarify and reorganize the statutory requirements that, in the case of a school with low-performing subgroups that are performing as poorly as all students in the lowest-performing five percent of title I schools, the school's targeted support and improvement plan also identifies and reviews resource inequities and their effect on each low-performing subgroup in the school. The proposed regulations would ensure this review is aligned with the review that would be required in comprehensive support and improvement plans, creating coherence across the statewide accountability system. Further, these clarifications are intended to emphasize the importance of equity and encourage LEAs and schools to correct resource disparities (
Additionally, proposed § 200.22 would clarify the State-developed exit criteria for title I schools with low-performing subgroups and ensure that such a school that has not improved is identified for comprehensive support and improvement on the same timeline on which the State identifies schools in need of comprehensive support and intervention, consistent with 200.19(d)(1)(i). If the targeted support and improvement plan developed by the school has not helped its lowest-performing students, including low-performing subgroups, improve, it is imperative that these students receive the same supports, resources, and attention as similarly performing students in the bottom five percent of schools—those provided by the LEA for schools in comprehensive support and improvement. While many schools identified for comprehensive support and improvement demonstrate low performance among all students, LEAs and the State must also take responsibility and rigorous action to improve student outcomes for schools with low-performing subgroups, particularly when a school-developed improvement plan has not been effective. By providing for comprehensive support and improvement in schools with chronically low-performing subgroups, proposed § 200.22 would help States and LEAs meet the purpose of title I: “providing all children significant opportunity to receive a fair, equitable, and high-quality education, and to close educational achievement gaps.”
Proposed § 200.23(a) would require each State to periodically review resource allocations for each LEA serving significant numbers of schools identified either for comprehensive or targeted support and improvement. The proposed regulations would further specify that the required review must consider allocations between LEAs and between schools and any inequities identified in school support and improvement plans consistent with proposed § 200.21(d)(4) and § 200.22(c)(7), and would require each State to take action, to the extent practicable, to address any resource inequities identified during its review.
Proposed § 200.23(b) would require each State to describe in its State plan the technical assistance it will provide to each of its LEAs serving significant numbers of schools identified for either comprehensive support and improvement or targeted support and improvement. The proposed regulations would specify minimum requirements for such technical assistance, including a requirement that the State describe how it will assist LEAs in developing and implementing comprehensive support and improvement plans and ensuring that schools develop and implement targeted support and improvement plans, conducting school-level needs assessments, selecting evidence-based interventions, and reviewing and addressing resource inequities.
The proposed regulations also would permit a State to take certain additional improvement actions consistent with section 1111(d)(3)(B) of the ESEA, as amended by the ESSA. Proposed § 200.23(c)(1) would permit a State to take additional improvement actions in (1) any LEA, or authorized public chartering agency consistent with State charter school law, serving a significant number of schools identified for comprehensive support and improvement and not meeting State-established exit criteria, or (2) any LEA, or authorized public chartering agency consistent with State charter school law, serving a significant number of schools implementing targeted support and improvement plans. Such actions could include, for each school that does not meet State-established exit criteria following implementation of a comprehensive support and improvement plan, reorganizing the school to implement a new instructional model; replacing school leadership; converting the school to a public charter school; changing school governance; closing the school; or, in the case of a public charter school, revoking or non-renewing the school's charter consistent with State charter school law.
In addition, proposed § 200.23(c)(2) would allow a State to establish an exhaustive or non-exhaustive list of State-approved, evidence-based interventions for use in schools implementing comprehensive or targeted support and improvement plans. Proposed § 200.23(c)(3) would permit a State to establish, or to use previously developed and established, evidence-based, State-determined interventions, which may include whole-school reform models, for use by LEAs to assist schools identified for comprehensive support and improvement. Proposed § 200.23(c)(4) would allow a State to establish a process for review and approval of amended targeted support and improvement plans developed following a school's unsuccessful implementation of its targeted support and improvement plan, consistent with proposed § 200.22(e)(2).
The proposed regulations also would help ensure that the technical assistance provided by States is aligned with the statutory school improvement requirements, including those related to conducting needs assessments for schools identified for comprehensive support and improvement, the use of evidence-based interventions, and review of resource inequities. Such technical assistance is essential to building local capacity at both the LEA and school levels to carry out critical new responsibilities under the ESSA, including greater use of evidence-based interventions.
In addition, the proposed regulations would clarify State authority to take additional actions aimed at ensuring effective local implementation of comprehensive and targeted support and improvement plans. For example, the proposed regulations specify that States may take additional improvement actions in LEAs, as well as in authorized public chartering agencies consistent with State charter school law, so that States have tools to support the capacity of these entities to help improve low-performing schools. Further, permitting States to establish or maintain lists of evidence-based interventions would facilitate the selection and implementation of evidence-based improvement actions by LEAs with schools identified for improvement. The proposed regulations also would clarify that the alternative, evidence-based,
Finally, the proposed regulation recognizes the critical role of States in providing additional support to schools that were identified for targeted support and improvement and did not implement their plans successfully, by permitting States to establish a review and approval process for such schools' amended targeted support and improvement plans. Implementation of a State-level review and approval process would help ensure that LEAs and affected schools benefit from the State's experience in working with schools facing similar challenges and increase the likelihood that the additional actions proposed for such schools are of sufficient rigor to ensure meaningful improvement for consistently underperforming and low-performing subgroups of students.
Under section 1003(a), States must reserve seven percent of title I, part A allocations for school improvement, at least 95 percent of which must be distributed to LEAs either competitively or by formula to serve schools implementing comprehensive or targeted support and improvement activities, including the implementation of evidence-based interventions, under section 1111(d). Section 1003(c) allows States to award subgrants for up to four years, which may include one planning year.
Under section 1003, States must prioritize funds for LEAs that serve high numbers, or a high percentage, of schools identified for comprehensive support and improvement; LEAs with the greatest need for such funds, as defined by the State; and LEAs with the strongest commitment to improving student achievement and outcomes. Additionally, subgrants must be of sufficient size to enable an LEA to effectively implement selected strategies, and LEAs receiving a subgrant must represent the geographic diversity of the State.
Section 1003(b)(1)(B) allows a State, with the approval of the LEA, to directly provide for the improvement activities required under section 1111(d) or to arrange for their provision through other entities such as school support teams, educational service agencies, or nonprofit or for-profit external providers with expertise in using evidence-based strategies to improve student achievement, instruction, and schools. Additionally, under section 1003(b)(2), States are required to use any funds not distributed to LEAs to establish a method to allocate funds under section 1003, to monitor and evaluate the use of such funds by LEAs, and, as appropriate, to reduce barriers and provide operational flexibilities for schools in the implementation of comprehensive and targeted support and improvement activities under section 1111(d). In addition, section 1003(i) requires States to include on State report cards a list of all LEAs and schools receiving funds under section 1003, including the amount of funds each school received and the types of strategies each school implemented.
To receive funds under section 1003, an LEA must submit an application to the State that includes, at a minimum, a description of how the LEA will carry out its responsibilities for school improvement under section 1111(d), including how the LEA will: Help schools develop and implement comprehensive and targeted support and improvement plans; monitor schools receiving funds under section 1003; use a rigorous review process to recruit, screen, select, and evaluate any external partners with whom the LEA will partner; align other Federal, State, and local resources to carry out the activities supported with funds under section 1003; and, as appropriate, modify practices or policies to provide operational flexibility that enables full and effective implementation of school improvement plans.
Section 1003(g) of the ESEA, as amended by NCLB, authorized an additional source of school improvement funding through the School Improvement Grants (SIG) program, which was first funded in fiscal year 2007 and which provided formula grants to States that then were competitively subgranted to LEAs to support the activities required under sections 1116 and 1117.
Following a one-time appropriation of $3 billion for SIG under the American Recovery and Reinvestment Act of 2009, the Department promulgated regulations to significantly strengthen the SIG program.
The proposed regulations would clarify that an LEA is eligible for school improvement funds under section 1003(a) if it has one or more schools identified for comprehensive support and improvement or targeted support and improvement and if it applies to serve each school identified for comprehensive support and improvement before applying to serve a school identified for targeted support and improvement. Proposed § 200.24 would also clarify that funds may not be used to serve schools that are identified for targeted support and improvement under proposed § 200.15(b)(2)(iii) for low assessment participation rates, if the State chooses to identify such schools for targeted support and improvement, because funds for school improvement provided under section 1003 are intended to serve low-performing schools, including schools with low-performing subgroups, that are identified on the basis of the indicators under proposed § 200.14.
Proposed § 200.24 would require that an LEA seeking school improvement funds submit an application to the State that includes, at a minimum—
• A description of one or more evidence-based interventions based on strong, moderate, or promising evidence consistent with section 8101(21) that will be implemented in each school the LEA proposes to serve;
• A description of how the LEA will: (1) Carry out its responsibilities to develop and implement a comprehensive support and improvement plan that meets the requirements in proposed § 200.21 for each school identified for comprehensive support and improvement that the LEA applies to serve, and (2) support each school identified for targeted support and improvement that the LEA applies to serve in developing, approving, and implementing a targeted support and improvement plan under proposed § 200.22;
• A budget indicating how it will allocate school improvement funds among schools identified for comprehensive and targeted support and improvement that it intends to serve;
• The LEA's plan to monitor each school for which the LEA receives school improvement funds, including its plan to increase monitoring of schools that do not meet State or LEA exit criteria, as applicable;
• A description of the rigorous review process that the LEA will use to recruit, screen, select, and evaluate any external providers with which the LEA intends to partner;
• A description of how the LEA will align other Federal, State, and local resources to carry out the activities in the schools it applies to serve and sustain effective activities in such schools after funding under section 1003 is completed;
• As appropriate, a description of how the LEA will modify practices and policies to provide operational flexibility, including with respect to school budgeting and staffing, that will help enable full and effective implementation of the school's comprehensive or targeted support and improvement plan under proposed §§ 200.21 and 200.22;
• For an LEA that plans to allow a school to use the first year, or a portion of the first year, it receives school improvement funds for planning activities, a description of those planning activities, the timeline for implementation of those activities, and a description of how those activities will support successful implementation of the school's comprehensive or targeted support and improvement plan; and
• An assurance that each school the LEA proposes to serve will receive all of the State and local funds it would have otherwise received.
The proposed regulations would also clarify the State's responsibilities in allocating school improvement funds to LEAs. Specifically, they would require that a State review, in a timely manner, each LEA application and award funds to an LEA application that meets the requirements of the proposed regulations in an amount that is of sufficient size to enable the LEA to effectively implement the comprehensive or targeted support and improvement plan. Under the proposed regulations, to be of sufficient size, each award would be at least $50,000 per school identified for targeted support and improvement the LEA is applying to serve and at least $500,000 for each school identified for comprehensive support and improvement the LEA is applying to serve, except that a State could conclude, based on a demonstration from the LEA in its application, that a smaller award would be sufficient to successfully implement the plan in a particular school.
If a State has insufficient school improvement funds to make awards to all eligible LEAs that are of sufficient size, the proposed regulations would require that a State, whether through formula or a competition, award funds to an LEA applying to serve a school identified for comprehensive support and improvement before awarding funds to an LEA applying to serve a school identified for targeted support and improvement. Further, the proposed regulations would require that a State prioritize its funding such that it—
• Gives priority in funding to an LEA that demonstrates the greatest need for the funds, as determined by the State, based, at a minimum, on the number or percentage of schools in the LEA implementing either a comprehensive or targeted support and improvement plan and based on the State's review of resource inequities among and within LEAs, required under proposed § 200.23(a);
• Gives priority in funding to an LEA that demonstrates the strongest commitment to using the school improvement funds to enable the lowest-performing schools to improve, taking into consideration, with respect to each school the LEA proposes to serve: (1) The proposed use of evidence-based interventions that are supported by the strongest level of evidence available; and (2) commitment to family and community engagement; and
• Considers geographic diversity within the State. The proposed regulations would further require that a State make awards to LEAs either on a competitive or formula basis for not more than four years, which may include a planning year. If a State permits an LEA to have a planning year with respect to a particular school, the State would be required to review the performance of the LEA during the planning year against the LEA's approved application and determine that the LEA will be able to ensure that the school fully implements the activities and interventions that will be supported with school improvement funds by the beginning of the next school year before renewing the school improvement award.
The proposed regulations would require that each State—
• Establish the method to allocate school improvement funds;
• Monitor the use of school improvement funds;
• Evaluate the use of school improvement funds including by, at a minimum, engaging in ongoing efforts to examine the effects of the evidence-based interventions implemented using school improvement funds on student outcomes and other relevant outcomes and disseminate its findings to LEAs with schools required to implement evidence-based interventions;
• Determine that the school is making progress on the indicators in the statewide accountability system in proposed § 200.14 prior to renewing an LEA's award of school improvement funds with respect to a particular school is implementing evidence-based interventions with fidelity to the requirements in proposed §§ 200.21 and 200.22 in the LEA's application; and
• Reduce barriers and provide operational flexibility for schools in LEAs receiving school improvement funds, including with respect to school budgeting and staffing, as appropriate.
Further, the proposed regulations would clarify that a State may set aside up to five percent of its school improvement fund reservation under section 1003(a) of the ESEA, as amended by the ESSA, to carry out these five activities.
Finally, the proposed regulations would clarify that a State may directly provide for school improvement activities or arrange for their provision through an external partner, such as school support teams, educational service agencies, or nonprofit or for-profit entities. An external partner would be required to have expertise in using evidence-based strategies to improve student achievement, instruction, and schools, and the proposed regulations would require that, with respect to each school, either the State has the authority to take over the school consistent with State law or the LEA approves the arrangement. If the State arranges for the provision of services through an external partner, the regulations would require that the State undertake a rigorous review process in recruiting, screening, selecting, and evaluating an external partner the State uses to carry out the activities and the external partner have a demonstrated success implementing the evidence-based interventions that it will implement.
The proposed regulations would require that each State include in its State report card a list of all the LEAs and schools receiving school improvement funds, including the amount of funds each LEA receives to serve each school and the type of intervention or interventions being implemented in each school with school improvement funds.
Proposed § 200.24 would clarify that States should prioritize funding to serve schools identified for comprehensive support and improvement. Schools in comprehensive support and improvement have been identified due to systemic low performance or graduation rates for all students, or chronically low-performing subgroups of students. We recognize that, given limited resources, pervasive, schoolwide challenges in student performance and outcomes should be addressed with improvement funds prior to addressing challenges in schools that are localized or smaller in scope.
Proposed § 200.24 would clarify the statutory components of each LEA's application for funds under section 1003 from the State, with a particular emphasis on how the application requirements align with the expectations of LEAs to support schools identified for comprehensive or targeted support and improvement under section 1111(d), in implementing evidence-based interventions. Proposed § 200.24 would specify that one or more school interventions funded under section 1003 must meet a higher level of evidence (
In addition, the proposed regulations would clarify the minimum requirements an LEA must address in its application to the State to receive funds under section 1003 to ensure effective local implementation of comprehensive support and improvement plans and targeted support and improvement plans for schools in LEAs that receive school improvement funds. For example, in addition to describing the LEA's plan to monitor each school for which the LEA receives school improvement funds, the LEA would also be required to include its plan to increase monitoring of schools that do not meet the exit criteria. This would help ensure that schools identified for comprehensive or targeted support and improvement do not linger in such a status for multiple years without increased attention from the LEA, and reinforce the goals of the statewide accountability system. An LEA would also describe how it will plan for school improvement activities to be sustained in schools once funding is completed, in addition to describing how it will align Federal, State, and local resources.
To ensure funding for school improvement has a meaningful impact, particularly for schools that are the lowest-performing in the State and require comprehensive support and improvement and whole-school reform, the proposed regulations would require States to allocate grants of sufficient size so that each school identified for comprehensive support and improvement would receive at least $500,000 per year and each school identified for targeted support and improvement would receive at least $50,000 per year, unless the LEA provides a justification to the State that a lesser amount would be sufficient. The minimum award amount of $500,000 for a school identified for comprehensive support and improvement would help ensure that it has the resources it needs to implement the comprehensive interventions that will lead to sustained school improvements. The amount is based on data about the size of awards under the School Improvement Grants program, under which low-performing schools implemented whole-school comprehensive reform models aimed at turning around the schools' performance.
The proposed regulations would also emphasize that, in determining the greatest need for funds if insufficient funds are available to award a grant of sufficient size to all LEAs, States must examine the number and percentage of schools identified in the LEA for comprehensive or targeted support and improvement, the resource inequities the State has identified under proposed § 200.23, and academic achievement and student outcomes in the identified schools. Similarly, in determining the strongest commitment, a State must examine the proposed use of evidence-based interventions, and the LEA's commitment to family and community engagement. The purpose of these proposed regulations is to increase the likelihood that funds are awarded to LEAs that will successfully implement interventions in schools identified for comprehensive or targeted support and improvement. Specifically, the use of more rigorous evidence-based interventions and strong support from the local community are likely to increase a school's chances of significantly improving student achievement and outcomes.
Proposed § 200.24 would clarify the statutory requirements for States to support LEAs in using funds under section 1003, and help align these responsibilities with the expectations on the State to support schools identified for comprehensive or targeted support and improvement under section 1111(d). For example, States would be required to evaluate the use of funds under section 1003 including by examining the effects of evidence-based interventions on student achievement and outcomes in schools supported by 1003 funds and disseminating those
In addition, section 1111(h)(1)(C) of the ESEA, as amended by the ESSA, establishes minimum requirements for the content of State report cards, including requirements for a State to include disaggregated information for certain data elements by subgroup. Included among the subgroups for which disaggregation is required for some data elements are migrant status, homeless status, status as a child in foster care, and status as a student with a parent who is a member of the Armed Forces on active duty.
Finally, section 1111(i) of the ESEA, as amended by the ESSA, provides that disaggregation of data for State report cards shall not be required if such disaggregation will reveal personally identifiable information about any student, teacher, principal, or other school leader, or will provide data that are insufficient to yield statistically reliable information.
Proposed § 200.30(a) restates statutory requirements that a State that receives title I, part A funds must prepare and disseminate widely to the public an annual State report card, which must include, at a minimum the information required under section 1111(h)(1)(C) of the ESEA, as amended by the ESSA. It also requires that State report cards include, for each authorized public chartering agency in the State, demographic and academic achievement data for each school authorized by such agency compared to the community in which the charter school is located.
Proposed § 200.30(b) restates the statutory requirement that a State report card be concise and presented in an understandable and uniform format that is developed in consultation with parents. It also would clarify that to meet these requirements, a State, in addition to meeting all minimum requirements under section 1111(h)(1)(C) of the ESEA, as amended by the ESSA, must develop with parental input a report card format that begins with a clearly labeled overview section that is prominently displayed. Under proposed § 200.30(b), the overview section of a State report card would include statewide results for all students and, at a minimum, each subgroup of students described in proposed § 200.16(a)(2) on the following: The State's academic assessments in each of reading/language arts, mathematics, and science; each measure within the Academic Progress indicator for public elementary schools and secondary schools that are not high schools; the four-year adjusted cohort graduation rate, and each measure within each indicator of School Quality or Student Success. In addition, the overview section would include the number and percentage of English learners achieving English language proficiency on the State's English language proficiency assessment.
Proposed § 200.30(c) would also require that each State report card be in a format and language, to the extent practicable, that parents can understand consistent with proposed § 200.21(b)(1)-(3).
Proposed § 200.30(d) would restate the statutory requirements for a State to disseminate widely to the public the State report card, which at a minimum must be made available on a single page of the SEA's Web site, and to include on the SEA's Web site the report card for each LEA in the State required under proposed § 200.31 as well as the annual report to the Secretary required under section 1111(h)(5) of the ESEA, as amended by the ESSA.
Proposed § 200.30(e) would require the dissemination of the State report cards no later than December 31 each year, beginning with report cards based on information from the 2017-2018 school year. If a State is unable to meet this deadline for the 2017-2018 school year for some or all of the newly required information under section 1111(h)(1)(C) of the ESEA, as amended by the ESSA, proposed § 200.30(e) would allow the State to request from the Secretary a one-time, one-year extension for reporting on such required elements of the report cards. A State would be required to submit an extension request to the Secretary by July 1, 2018, and include evidence demonstrating that the State cannot meet the deadline, as well as a plan and timeline for how the State would publish the newly required information by December 31, 2019.
Finally, proposed § 200.30(f) would define certain terms related to the subgroups for which disaggregated data must be reported under section 1111(h) of the ESEA, as amended by the ESSA. It would clarify the meaning of the terms “migrant status,” “homeless status,” “child in foster care status,” and “student with a parent who is a member of the armed forces on active duty” by reference to established statutory and regulatory definitions. Proposed § 200.30(e) would also clarify that, consistent with proposed § 200.17, disaggregation on State and LEA report cards is not required if the number of students in the subgroup is insufficient to yield statistically reliable information or the results would reveal personally identifiable information about a student.
With respect to State report cards, section 1111(h)(1) of the ESEA, as
Proposed § 200.30 would require States to develop a format and process to share report cards with parents, as well as the public in a manner that is concise, accessible, informative, timely, and understandable. The proposed regulations would specify that States design and disseminate an overview section that would be prominently displayed on annual report cards. These requirements would help parents and the public more effectively access and use State-level data.
The proposed regulations would also encourage States to creatively design and publish report cards that are truly concise while not abandoning minimum report card requirements related to transparent and accurate presentation of a broad range of data. These requirements would maintain a commitment to the civil rights legacy of the ESEA by ensuring that objective, disaggregated evidence of student academic achievement, graduation rates, other academic indicators, and indicators of school quality or success are visible to the public in a format that clearly conveys where gaps exist between subgroups of students.
Proposed § 200.30(c)-(d) is also intended to provide clarity to States related to statutory reporting requirements that call for report cards to be widely accessible, including on the SEA's Web site. To clarify this statutory requirement, proposed § 200.30(c) would require that report cards be provided in a format and language, to the extent practicable, that parents can understand, increasing the access and availability to all members of the public, regardless of language barrier or disability.
Proposed § 200.30(e) would also require States to make report cards publicly available no later than December 31 each year. This would create a more well-informed public that is better prepared to work with educators and local school officials during the school year to effectively address and close achievement, opportunity, and equity gaps in a timely manner.
To ensure States and LEAs disaggregate student data on report cards so that it is accurate and comparable across and within States and LEAs, proposed § 200.30(f) would define the terms used to identify certain subgroups for which disaggregated data must be provided under applicable reporting requirements in section 1111(h)(1)(C) of the ESEA, as amended by the ESSA. Specifically, proposed § 200.30(f) would clarify the meaning of the terms “migrant status,” “homeless status,” “child in foster care status,” and “student with a parent who is a member of the Armed Forces on active duty” by reference to established statutory and regulatory definitions. In addition to clarifying these definitions, proposed § 200.30 would also correct a technical error under section 1111(h)(1)(C)(ii) of the ESEA, as amended by the ESSA, which defines “active duty” by reference to 10 U.S.C. 101(d)(5). Section 101(d)(5) of title 10 of the United States Code defines “full-time National Guard duty,” not “active duty.” “Active duty” is defined under 10 U.S.C. 101(d)(1) to mean full-time duty in the active military service of the United States, including “full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. Such term does not include full-time National Guard duty.” Finally, to ensure States and LEAs report disaggregated data that is reliable and protects student privacy, proposed § 200.30 would also reinforce statutory requirements under section 1111(i) of the ESEA, as amended by the ESSA, and proposed § 200.17, which require that disaggregated data only be shared when information is statistically reliable and in a format that protects the identity of individual students.
The Department will pursue options to help ensure the transparency, accessibility, and utility of State report cards, which may include providing links to State report cards on our Web site.
In addition, sections 1111(h)(1)(C) and 1111(h)(2)(C) establish minimum requirements for the content of LEA report cards, including requirements for an LEA to include disaggregated information for certain data elements by subgroup. Included among the subgroups for which disaggregation is required for some data elements are migrant status, homeless status, status as a child in foster care, and status as a student with a parent who is a member of the Armed Forces on active duty.
Finally, section 1111(i) of the ESEA, as amended by the ESSA, provides that disaggregation of data for LEA report cards shall not be required if such disaggregation will reveal personally identifiable information about any student, teacher, principal, or other school leader, or will provide data that are insufficient to yield statistically reliable information.
Proposed § 200.31(a) restates statutory requirements that an LEA that receives title I, part A funds must prepare and disseminate to the public an annual LEA report card, which must include, at a minimum, the information required under section 1111(h)(1)(C) of the ESEA, as amended by the ESSA, for the LEA as a whole and each school served by the LEA.
Proposed § 200.31(b) restates the statutory requirement that an LEA report card be concise and presented in an understandable and uniform format. Proposed § 200.31(b) would clarify that, to meet these requirements, an LEA, in
Proposed § 200.31(c) would also require that each LEA report card be in a format and language, to the extent practicable, that parents can understand consistent with proposed § 200.21(b)(1)-(3).
Proposed § 200.31(d) would restate the statutory requirements for an LEA report card to be made available on the LEA's Web site, except that an LEA that does not operate a Web site may provide the information to the public in another manner determined by the LEA. Proposed § 200.31(d) would further require that the LEA provide the information required for the overview section under proposed § 200.31(b)(2) to parents of each student enrolled in each school in the LEA directly though such means as regular mail or email and in a timely manner consistent with § 200.31(e).
Proposed § 200.31(e) would require the dissemination of LEA report cards on the same timeline as State report cards under proposed § 200.30(e). If an LEA is unable to meet this deadline for some or all of the newly required information under section 1111(h)(1)(C) of the ESEA, as amended by the ESSA, proposed § 200.31(e) would allow the State to request from the Secretary, on behalf of the LEA, a one-time, one-year extension for reporting on such required elements consistent with the requirements for State report card extensions under § 200.31(e)(2). Additionally, proposed § 200.31(f) would incorporate by reference the requirements regarding disaggregation of data under proposed § 200.30(f).
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Figlio, D.N. & Lucas, M.E. (2004). “What's in a grade? School report cards and the housing market.” American Economic Review, 94 (3): 591-604.
Hastings, J.S. & Weinstein, J.M. (2008). “Information, school choice, and academic achievement: Evidence from two experiments.” Quarterly Journal of Economics, 123 (4): 1373-414.
Jacobsen, R. & Saultz, A. (2013). “Do good grades matter? Public accountability data and perceptions of school quality.” In The Infrastructure of Accountability, ed. Anagnostopoulos, D., Rutledge, S.A., & Jacobsen, R. Cambridge, MA: Harvard Education Press.
Jacobsen, R., Saultz, A. & Snyder, J.W. (2013). “When accountability strategies collide: Do policy changes that raise accountability standards also erode public satisfaction?” Educational Policy, 27 (2): 360-89.
Koning, P. & Wiel, K.V.D. (2013). “Ranking the Schools: How school-quality information affects school choice in the Netherlands.” Journal of the European Economic Association, 11 (2): 466-493.
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Rockoff, J.E. & Turner, L.J. (2008).
Recognizing the importance of LEA and school information to parents, proposed § 200.31(d) includes an additional requirement, not included in the State report card requirements under proposed § 200.30, that would require an LEA to provide the information required for the overview section under proposed § 200.31(b)(2) to parents of each student enrolled a school served by the LEA directly though such means as regular mail or email and in a timely manner consistent with proposed § 200.31(e). This proposed requirement is necessary to ensure that key information about LEA and school performance reaches parents on a timeline such that they have relevant information to work effectively with educators and local school officials during the school year.
• The minimum number of students that the State determines are necessary to be included in each of the subgroups of students, as defined in section 1111(c)(2), for use in the accountability system;
• The long-term goals and measurements of interim progress for all students and for each of the subgroups of students, as defined in section 1111(c)(2);
• The indicators described in section 1111(c)(4)(B) used to meaningfully differentiate all public schools in the State;
• The State's system for meaningfully differentiating all public schools in the State, including: The specific weight of the indicators described in section 1111(c)(4)(B) in such differentiation; the methodology by which the State differentiates all such schools; the methodology by which the State identifies a school as consistently underperforming for any subgroup of students described in section 1111(c)(4)(C)(iii), including the time period used by the State to determine consistent underperformance; and the methodology by which the State identifies a school for comprehensive
• The number and names of all public schools in the State identified by the State for comprehensive support and improvement under section 1111(c)(4)(D)(i) or implementing targeted support and improvement plans under section 1111(d)(2); and
• The exit criteria established by the State as required under section 1111(d)(3)(A)(i) for schools in comprehensive support and improvement and for schools requiring additional targeted support, including the number of years by which a school requiring additional targeted support must meet the exit criteria as established under section 1111(d)(3)(A)(i)(II).
• The minimum number of students under proposed § 200.17;
• The long-term goals and measurements of interim progress under proposed § 200.13;
• The indicators under proposed § 200.14 and the State's uniform procedure for averaging data across years or combining data across grades under proposed § 200.20, if applicable;
• The system of annual meaningful differentiation under proposed § 200.18, including the weight of each indicator, how participation rates factor into such differentiation consistent with proposed § 200.15, and the methodology to differentiate among schools using performance levels and summative ratings;
• The methodology used to identify schools with one or more consistently underperforming subgroups for targeted support and improvement consistent with proposed § 200.19(c);
• The methodology used to identify schools for comprehensive support and improvement consistent with proposed § 200.19(a); and
• The exit criteria established by the State under §§ 200.21(f) and 200.22(f) for schools in comprehensive support and improvement and for schools in targeted support and improvement with low-performing subgroups consistent with proposed § 200.19(b)(2), including the number of years by which schools must meet the applicable exit criteria.
Further, proposed § 200.32(b) would clarify that, to the extent that a description of the required accountability system elements is provided in the State plan or in another location on the SEA's Web site, a State or LEA may provide the Web address or URL of, or direct link to, the State plan or other location on the SEA's Web site to meet the reporting requirements for these accountability system elements. The Web site content referred to in such a Web address or link must be in a format and language that parents can understand, in compliance with the requirements under § 200.21(b)(1)-(3).
Proposed § 200.32(c) would also require LEA report cards to include, for each school served by the LEA, the performance level described in proposed § 200.18(b)(3) on each indicator under proposed § 200.14, as well as the school's single summative rating described in proposed § 200.18(b)(4). In reporting each school's performance level on each of the accountability system indicators, an LEA would be required to include, if the State accountability system includes more than one measure within any indicator, results on all such measures individually in addition to the performance level for each indicator (which takes into account the school's results on all of the measures within the indicator).
Proposed § 200.32(c) would also require State and LEA report cards to include the reason for which the State identified a school for comprehensive support and improvement under proposed § 200.19(a) (
The statute requires each State and LEA report card to describe certain elements of the accountability system, and proposed § 200.32(a) clarifies these elements in order to ensure they reflect the proposed regulations in §§ 200.13 through 200.24 and provide the public with a complete picture of how each required element works together in a coherent system of accountability, including the State's: Minimum n-size; long-term goals and measurements of interim progress; indicators and procedures for averaging data across years or grades; system for annual meaningful differentiation, including the weighting of each indicator and role of participation rates; methodology to identify schools for comprehensive or targeted support and improvement; and exit criteria for identified schools.
Proposed § 200.32(b) also would permit the State or LEA report card to link to the State plan or another location on the SEA's Web site for certain elements of the accountability system description. The Department recognizes that repeating this information on the report card may be burdensome and may also undermine the design of a concise report card. We also recognize that a detailed description of some of the accountability system elements may not add significantly to parents' or other stakeholders' understanding. For these reasons, we believe it is appropriate to allow the State or LEA to provide a Web address for, or direct link to, the State plan or another location on the SEA's Web site for detailed information on the accountability system description required under 1111(h)(1)(C)(i) (
In addition to a description of the accountability system, proposed § 200.32(c) would require school-level accountability results to also be included on report cards. Because of the potential complexity of multi-indicator State accountability systems under the ESEA, as amended by the ESSA, information on a school's performance level on each of the individual indicators is critical for parents and stakeholders to understand school performance across multiple dimensions of success and the relationship of the performance on each indicator to how a school is ultimately identified in the State's accountability system. Further, knowing a school's single summative rating will be important for conveying a school's performance overall, in a way that reflects performance across the individual indicators. For these reasons, proposed § 200.32(c) would require each LEA report card to include each school's performance level on every indicator, as well as the summative rating.
In addition to reporting on the performance levels, proposed § 200.32(c) would require that State and LEA report cards include, along with the number and names of all schools identified for comprehensive or targeted support and improvement as required by statute, the particular reason for such identification, including, as applicable, any subgroup of students whose performance contributed to such identification. This information would help parents and the public better understand the quality of public schools in their communities and bolster the efforts of schools, districts, and States to target support, resources, and technical assistance to address specific needs of students and schools.
• 95 percent of all students and 95 percent of each subgroup of students who are enrolled in the school, LEA, or State, respectively; or
• the number of such students participating in these assessments;
• 95 percent of all students and 95 percent of each subgroup of students who are enrolled in the school, LEA, or State, respectively; or
• the number of all such students participating in these assessments.
Finally, proposed § 200.33(c) would clarify that, to meet the requirements under section 1111(h)(1)(C)(vii), State and LEA report cards would include information on the percentage of all students and each subgroup of students assessed and not assessed in reading/language arts, mathematics, and science based on a calculation method in which the denominator includes all students enrolled in the school, LEA, or State, respectively.
Section 8101(23) and (25) of the ESEA, as amended by the ESSA, requires the State to use a specific definition and process for the calculation of the adjusted cohort graduation rate. This section specifies that the denominator must consist of students who form the original grade 9 cohort, adjusted by adding students into the cohort who join later and subtracting students who leave the cohort. The section further specifies that the numerator must consist of (1) students who earn a regular high school diploma within four years (or one or more additional years for any extended-year cohort), and (2) students with the most significant cognitive disabilities who are assessed using the alternate assessment aligned to alternate academic achievement standards and earn an alternate diploma defined by the State. This section specifies that the alternate diploma must be standards-based, aligned with State requirements for the regular high school diploma, and obtained within the time period for which the State ensures the availability of a free appropriate public education (FAPE) under section 612(a)(1) of the IDEA.
Section 8101(23) and (25) requires that the State obtain documentation to remove a student from the cohort, and specifies that a student can be removed from the cohort only if the student transfers out, emigrates to another country, transfers to a juvenile justice facility or prison, or is deceased. Further, this section requires that a student can be transferred out only if the student transfers to another school from which the student is expected to receive a regular high school diploma or to another educational program from which the student is expected to receive a regular high school diploma or alternate diploma that meets the statutory requirements. If there is no documentation for a student transferring out of the cohort, or if the student participates in a program that does not issue or provide credit toward diploma types that meet the requirements of this section, such a student must remain in the cohort.
Section 8101(23) and (25) outlines special rules for high schools starting after grade 9. It also includes special rules for small schools, which apply to section 1111(c)(4) and are not applicable to report card requirements under section 1111(h).
Finally, section 1111(c)(4)(F) of the ESEA, as amended by the ESSA, describes how States and LEAs must include students in the adjusted cohort graduation rate cohort if they have attended a school for less than half of the academic year and leave the school without earning a regular high school diploma, or alternate diploma for students with the most significant cognitive disabilities, and without transferring to a high school that grants such a diploma. The section allows the State to decide whether to include such a student in the adjusted cohort for the school where the student was enrolled for the greatest proportion of school days while enrolled in grades 9 through 12, or the school in which the student was most recently enrolled.
Section 200.19(b)(2) allows States to use a transitional graduation rate prior to implementation of the adjusted cohort graduation rate. When calculating the transitional graduation rate, § 200.19 requires States to define “regular high school diploma” and “standard number of years” in the same manner they are defined for the purpose of calculating an adjusted cohort graduation rate, and does not allow dropouts to be included as transfers. Section 200.19(b)(3) requires States to set a single graduation rate goal and annual targets for all students and for each subgroup of students that reflect continuous and substantial improvement toward meeting or exceeding the goal. It further requires States to meet or exceed the graduation rate goal or target in order to meet AYP.
Section 200.19(b)(4) requires a State and its LEAs to report the four-year adjusted cohort graduation rate on annual report cards at the school, LEA, and State levels, in the aggregate and disaggregated by each subgroup of students. It also requires a State and its LEAs to report separately an extended-year graduation rate, if the State has adopted such a rate, beginning with the first year that the State calculates such a rate. Prior to the year in which the State implements the adjusted cohort graduation rate, this section requires the State to use its transitional rate.
Section 200.19(b)(5) describes the timelines for using the adjusted cohort graduation rate for AYP determinations, and the requirements for including graduation rates in making AYP determinations prior to the use of the adjusted cohort graduation rate. Section 200.19(b)(6) requires the State to update its Accountability Workbook with:
• Information about the State's transitional graduation rate and plan to transition to the adjusted cohort graduation rate;
• The State's goals and targets and the rationale for how they were established;
• Percentiles of its most recent graduation rates; and
• An explanation of how the State chooses to use its extended-year graduation rate (if applicable).
Section 200.19(b)(7) allows the State to request an extension from the Secretary if it cannot meet the requirements of the section and can submit satisfactory evidence demonstrating why it cannot meet the requirements.
Proposed § 200.34(a) would clarify statutory language to ensure that the adjusted cohort graduation rate is calculated as intended (
Additionally, proposed § 200.34(e) would ensure that families and other stakeholders have timely access to comparable adjusted cohort graduation rate information by requiring on-time reporting of four-year adjusted cohort graduation rates and, if adopted by the State, extended-year adjusted cohort graduation rates and specifying that States cannot lag reporting of graduation rates for report card purposes; they must provide the data for the immediately preceding school year. Proposed § 200.34(e) would also clarify reporting requirements related to the new statutory language allowing States to include students with the most significant cognitive disabilities that earn an alternate diploma within the time period in which a State ensures the availability of a FAPE. Proposed § 200.34 would not allow States to delay reporting until after the time period in which the State ensures the availability of a FAPE has ended. States would be required to report on all students in a timely manner, but could annually update their report cards to reflect students with the most significant cognitive disabilities graduating within the time period during which the State ensures the availability of a FAPE. This
Taken together, the requirements in proposed § 200.34 would generally promote increased consistency in graduation rate reporting and support States in implementing new statutory requirements related to reporting accurate and timely graduation rates. However, a number of commenters responding to the RFI expressed concern that States use different criteria for including students in certain subgroups when calculating the adjusted cohort graduation rate for inclusion on their State and LEA report cards. Accordingly, we are seeking comment on whether to regulate to standardize the criteria for including children with disabilities, English learners, children who are homeless, and children who are in foster care in their corresponding subgroups within the adjusted cohort graduation rate. For example, should a student's membership in the subgroup be determined only at the time when the student is enrolled in the cohort or should a student be included in the subgroup if the student is identified as a child with disabilities, English learner, homeless child, or child who is in foster care at any time during the cohort period? Should the criteria be standardized across subgroups, or should different criteria apply to different subgroups?
Proposed § 200.35 would also establish minimum requirements for the State and LEA per-pupil expenditure uniform procedure. Specifically, in calculating per-pupil expenditures, a State and its LEAs would be required to use current expenditures, include or exclude in the numerator certain types of expenditures consistent with existing Federal expenditure reporting requirements, and use an October 1 student membership count as the denominator. In addition, a State and its LEAs would be required to report per-pupil expenditures in total (
In addition, the proposed requirement to include title VII (Impact Aid) funds as State and local funds, rather than Federal funds, in disaggregated reporting is appropriate because these funds compensate LEAs for the fiscal impact of Federal activities by partially replacing revenues that LEAs do not receive due to the exemption of Federal property from local property taxes.
Overall, proposed § 200.35 would increase the likelihood that LEAs within a State will publicly report expenditure data in a manner that is informative, accurate, comparable, and timely. It would also ensure States and LEAs are able to accurately assess resource inequities, as described in proposed §§ 200.21, 200.22, and 200.23, and would provide the public with information needed to analyze differences in school spending so they are able to, if necessary, demand a more equitable approach to school spending. In addition, by requiring States and LEAs to report expenditure data for the preceding fiscal year no later than December 31, consistent with proposed §§ 200.30(e) and 200.31(e), stakeholder awareness of LEA budget decisions from the preceding fiscal year would increase, allowing for more informed budgetary decisions in the subsequent fiscal year.
By requiring States to define programs of postsecondary education using the definition in section 101(a) of the HEA, proposed § 200.36 would promote consistency in data reporting, which would allow users to compare outcomes across States, LEAs, and schools. Proposed § 200.36 would also help advance the Department's goals of raising awareness about the differences across States and LEAs in rates of enrollment in programs that are offered by accredited two-and four-year institutions by increasing the transparency of postsecondary outcomes.
Proposed § 200.36 would also clarify that the ESEA, as amended by the ESSA, requires that, in calculating a postsecondary education enrollment rate, the numerator include students who enroll in postsecondary education in the academic year immediately following their high school graduation, instead of within 16 months after receiving a high school diploma, as was the reporting requirement under the State Fiscal Stabilization Fund, a program authorized under the American Recovery and Reinvestment Act of 2009. Proposed § 200.36 would also require that the denominator include only students receiving a regular high school diploma or an alternate diploma (consistent with proposed § 200.34) in the immediately preceding school year. This is the easiest population for States to track, as it would already be a defined group for reporting on graduation rates. It is also the population of students for which high schools in the State are directly accountable in a given year. As such, outcomes for that student population are the most representative of how successfully public high schools have prepared them for postsecondary programs. Finally, by requiring a State to report information if it is routinely obtaining such information or if the information is obtainable to the State on a routine basis, we seek to ensure that as many States as possible make postsecondary education enrollment information publicly available. According to information from the Data Quality Campaign, 47 States can currently produce high school feedback reports, which are reports that provide information on a class of high school graduates and their postsecondary outcomes.
Proposed § 299.13(b) would require SEAs to engage in timely and meaningful consultation, including notification and outreach requirements, with required stakeholders in the development of a consolidated State plan or individual program State plans. Specifically, proposed § 299.13(b) would require SEAs to engage stakeholders during the design and development of the State plan, following the completion of the State plan, and prior to the submission of any revisions or amendments to the State plan. Additionally, proposed § 299.13(b) would require an SEA to meet the requirements of section 8540 of the ESEA, as amended by the ESSA, regarding consultation with the Governor during the development of a consolidated State plan or individual title I or title II State plan and prior to submitting that State plan to the Secretary.
Proposed § 299.13(c) would describe the assurances all SEAs would submit to the Secretary in order to receive Federal funds whether submitting an individual program State plan or a consolidated State plan. In addition to the assurances required in section 8304 of the ESEA, as amended by the ESSA, proposed § 299.13(c) would specify that the SEA would need to meet new assurances that address the requirements in title I, part A regarding partial school enrollment consistent with proposed § 200.34(f) and transportation of children in foster care to their school of origin under section 1112(c)(5)(B); part A of title III regarding English learners; and subpart 2 of part b of title V regarding the Rural and Low-Income School Program.
Proposed § 299.13(d) would specify the process for submitting a consolidated State plan or an individual program State plan including the specific timelines for submission and requirements for periodic review of State plans that SEAs must follow. Proposed § 299.13(d)(2)(i) would clarify that the Secretary has the authority to establish a deadline for submission of a consolidated State plan or individual program State plan. Proposed § 299.13(d)(2)(ii) would clarify that an SEA's consolidated State plan or individual program State plan would be considered to be received by the Secretary for the purpose of making a determination under sections 1111(a)(4)(A)(v) or 8451 of the ESEA, as amended by the ESSA, on the deadline date established by the Secretary if it addresses all of the requirements in § 299.14 or all statutory and regulatory application requirements. Proposed § 299.13(d)(2)(iii) would require each SEA to submit either a consolidated State plan or an individual program State plan for all of the programs in proposed § 299.13(i) in a single submission. Proposed § 299.13(d)(3) would allow an SEA to request a two-year extension if it is unable to calculate and report the educator equity data outlined in proposed § 299.18(c)(3), which requires student-level data to be used in calculating disparities in access to certain types of teachers for students from low-income families and minority students, at the time it submits its initial consolidated State plan or title I, part A individual program State plan for approval.
Proposed § 299.13(e) would provide an SEA the opportunity to revise its initial consolidated State plan or its individual program State plan in response to a preliminary written determination by the Secretary. While the SEA revises its plan, the period for Secretarial review under sections 1111(a)(4)(A)(v) or 8451 of the ESEA, as amended by the ESSA, would be suspended. If an SEA failed to submit revisions to its plan within 45 days of receipt of the preliminary written determination, proposed § 299.13(e) clarifies that the Secretary would be able to issue a final written determination under sections 1111(a)(4)(A)(v) or 8451 of the ESEA, as amended by the ESSA.
Proposed § 299.13(f) would require each SEA to publish its approved consolidated State plan or its individual program State plans on the SEA's Web site. Proposed § 299.13(g) would require an SEA that makes a significant change to its State plan to submit an amendment to the Secretary for review and approval after engaging in timely and meaningful consultation as defined in proposed § 299.13(b). Proposed § 299.13(h) would also require each SEA to periodically review and revise its consolidated State plan or individual program State plans, at a minimum, every four years after engaging in timely and meaningful consultation. Each State
In addition to the programs that may be included in a consolidated State plan under section 8002(11) of the ESEA, as amended by the ESSA, proposed § 299.13(j) would include two additional programs consistent with the Secretary's authority in section 8302 of the ESEA, as amended by the ESSA: Section 1201 of title I, part B (Grants for State Assessments and Related Activities) and the Education for Homeless Children and Youths program under subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (McKinney-Vento).
Proposed § 299.13(k) would describe the requirements an SEA would have to meet if it chose to submit individual program State plans for one or more of the programs listed in proposed § 299.13(j) instead of including the program in a consolidated State plan. In doing so, an SEA would address all individual State plan or application requirements established in the ESEA, as amended by the ESSA for the individual programs not included in its consolidated State plan, including all required assurances and any applicable regulations. Additionally, the proposed regulations would require SEAs submitting individual program State plans to meet requirements described as part of the consolidated State plan in three places: (1) Proposed § 299.18(c) regarding educator equity when addressing section 1111(g)(1)(B) of the ESEA, as amended by the ESSA; (2) proposed § 299.19(c)(1) regarding the SEA's process and criteria for approving waivers of the 40-percent poverty threshold to operate schoolwide programs; and (3) proposed § 299.19(c)(3) regarding English learners when addressing section 3113(b)(2) of the ESEA, as amended by the ESSA.
Section 299.13(b) proposes specific requirements to ensure timely and meaningful consultation with stakeholders when developing, revising, or amending a State plan. The proposed regulations would clarify that timely and meaningful consultation includes both notification and outreach. The proposed regulations align with the consultation, public review, and public comment requirements in sections 1111(a)(1), 1111(a)(5), 1111(a)(8), 1111(g), 1304(c), 2101(d), and 3113(d) of the ESEA, as amended by the ESSA. Specifically, the proposed regulations would require each SEA to engage stakeholders during the design and development of the State plan, prior to the submission of the initial State plan, and prior to the submission of any revisions or amendments to the State plan. The proposed regulations would require an SEA to conduct outreach at more than one stage of State plan development because stakeholders should have an opportunity to ensure that the concerns raised during public comment are adequately considered and addressed prior to submission of a consolidated State plan or individual program State plans. Proposed § 299.13(b)(4) also codifies the statutory requirements in section 8540 of the ESEA, as amended by the ESSA, regarding consultation with the Governor in order to ensure that the SEA includes the Governor's office during the development of and prior to the submission of its consolidated State plan or individual title I or title II State plan.
Proposed § 299.13(c) would require an SEA, whether submitting a consolidated State plan or an individual program State plan, to submit to the Secretary specific assurances for certain covered programs, in addition to those assurances described in section 8304 of the ESEA, as amended by the ESSA. These additional assurances are essential for clarifying the steps all SEAs would need to implement to successfully meet statutory requirements and ensure public transparency and protections for vulnerable student populations. Consistent with section 8304 of the ESEA, as amended by the ESSA, an SEA submitting a consolidated State plan would not have to submit the individual programmatic assurances included in the ESEA, as amended by the ESSA, for programs included in its consolidated State plan. However, consistent with proposed § 299.13(l), an SEA would be required to maintain documentation of compliance with all statutory requirements, including programmatic assurances whether submitting a consolidated State plan or an individual program State plan.
Proposed § 299.13(d)(2) would clarify that the Secretary will establish a deadline for submission of consolidated State plans or individual program State plans on a specific date and time. We intend to establish two deadlines by which each SEA would choose to submit either a consolidated State plan or individual program State plans: March 6 or July 5, 2017. Developing thoughtful State plans that consider stakeholder feedback in response to timely and meaningful consultation takes a substantial amount of time. Those States already engaging in timely and meaningful consultation and developing plans that align with the proposed requirements in § 299.14 and relevant program requirements included in the ESEA, as amended by the ESSA, would have the opportunity to submit plans in March. A second, later deadline in July 2017 would ensure that all States have sufficient time to develop thorough State plans that consider stakeholder feedback and meet the proposed requirements of § 299.14 or relevant program requirements, as applicable. The Secretary plans to request that SEAs file an optional notice of intent to submit indicating which of the two deadlines the SEA is planning towards in order to assist the Department in designing a high quality peer review process.
We recognize that some States may not have the ability to calculate and report the data outlined in proposed § 299.18(c)(3) related to educator equity. Proposed § 299.13(d)(3) would offer each State a one-time extension if it is unable to calculate and report the data outlined in proposed § 299.18(c)(3) at the student level at the time it submits its consolidated State plan or individual title I, part A program State plan for approval. We anticipate that the majority of States, including those that have received funds from the Department through the State Longitudinal Data System grant program, would not need to request such an extension.
Proposed § 299.13(e) would provide an SEA the opportunity to revise its initial consolidated State plan or its individual program State plan in response to a preliminary written determination by the Secretary regarding whether the State plan meets statutory and regulatory requirements based on comments from the required peer review process under sections 1111(a)(4) and 8451 of the ESEA, as amended by the ESSA. While the SEA revises its plan, the period of Secretarial review would be suspended. This would ensure an SEA has sufficient time to follow its process for review and revision prior to any final written determination by the Secretary under
Proposed § 299.13(f) would require each SEA to publish its approved consolidated State plan or individual program State plans on the SEA's Web site. Section 1111(a)(5) of the ESEA, as amended by the ESSA, requires the Secretary to publish information regarding the approval of State plans on the Department's Web site to ensure transparency. Publication of the approved consolidated State plan or individual program State plans on each SEA's Web site will ensure that stakeholders have access to the valuable information in each SEA's State plan to ensure ongoing meaningful consultation with stakeholders regarding implementation of the ESEA, as amended by the ESSA.
Section 1111(a)(6)(B) of the ESEA, as amended by the ESSA, requires States to periodically review and revise State plans and submit revisions or amendments when there are significant changes to the plan. Under section 1111(a)(6)(B)(i), significant changes include the adoption of new challenging State academic standards, academic assessments or changes to its accountability system. Proposed § 299.13(g) would require an SEA to submit amendments to its State plan that reflect these changes in order to ensure transparency and compliance with statutory requirements. Consistent with section 1111(a)(6)(A)(ii) of the ESEA, as amended by the ESSA, proposed § 299.13(h) would require each SEA to periodically review all components and revise as necessary its consolidated State plan or individual program State plans, at a minimum, every four years, and submit its revisions to the Secretary. Four years is a reasonable time period because it will allow SEAs and LEAs sufficient time to implement strategies and activities outlined in its consolidated State plan or individual program State plans; collect and use data, including input from stakeholders to assess the quality of implementation; monitor SEA and LEA implementation; and continuously improve SEA and LEA strategies to ensure high-quality implementation of programs and activities under the ESEA, as amended by the ESSA. In addition, proposed § 299.13(b)(2)(iii), (g) and (h) would require a State to engage in timely and meaningful consultation prior to submitting any amendments or revisions to the Department. Soliciting stakeholder feedback on significant changes or revisions is necessary to improve implementation and ensure progress towards State and local goals. Finally, this amendment, review and submission process would ensure that each State and the Department have the most up to date State plan information ensuring transparency and compliance with statutory requirements.
Proposed § 299.13(j) would identify the programs that may be included in a consolidated State plan under section 8302 of the ESEA, as amended by the ESSA, including section 1201 of title I, part B (Grants for State Assessments and Related Activities) and the McKinney-Vento program. Consistent with the 2002 NFR, section 1201 of title I, part B of the ESEA, as amended by the ESSA (previously section 6111 of the ESEA, as amended by NCLB), directly relates to the goals of other covered programs in that it supports State efforts to build high-quality assessment systems that are essential for informing State accountability systems and the identification of needs for subgroups of students. Proposed § 299.13(j) also would include the McKinney-Vento program because it closely aligns with the title I, part D program that is included as a covered program. Both programs—McKinney-Vento and title I, part-D—serve particularly vulnerable populations and have similar program goals.
Proposed § 299.13(k) would require an SEA that chooses to submit an individual program State plan for title I, part A to also meet the State plan requirements for consolidated State plans in proposed § 299.18(c) related to educator equity and proposed § 299.19(c)(1) related to schoolwide waivers of the 40-percent poverty threshold. An SEA that chooses to submit an individual program State plan for title III, part A must meet the State plan requirements in proposed § 299.19(c)(3) related to English learners. It is essential for all State plans to address these requirements as they provide necessary clarifications for each SEA as it addresses new statutory requirements included in the ESEA, as amended by the ESSA. Additional rationales for those sections are included in § 299.18(c) and § 299.19(c)(3).
Consistent with the 2002 NFR, proposed § 299.13(l) would emphasize the requirement that each SEA must administer all programs in accordance with all applicable statutes, regulations, program plans, and applications, and maintain documentation of this compliance.
Proposed § 299.14(b) would establish the framework for a consolidated State plan. The Department has identified five overarching components and corresponding elements that cut across all of the included programs. Each SEA would address each component in its consolidated State plan. Within each component, each SEA would be required to provide descriptions, strategies, timelines, and funding sources, if applicable, related to implementation of the programs included in the consolidated State plan. The proposed components, as reflected in proposed §§ 299.15 through 299.19 are:
• Consultation and Coordination (proposed § 299.15);
• Challenging Academic Standards and Academic Assessments (proposed § 299.16);
• Accountability, Support, and Improvement for Schools (proposed § 299.17);
• Supporting Excellent Educators (proposed § 299.18); and
• Supporting All Students (proposed § 299.19).
Under proposed § 299.14(c), for all of the components, except Consultation and Coordination, each SEA would be required to provide a description, including strategies and timelines, of its system of performance management of implementation of State and LEA plans. This description would include the SEA's process for supporting the development, review, and approval of the activities in LEA plans; monitoring SEA and LEA implementation; continuously improving implementation; and the SEA's plan to provide differentiated technical assistance to LEAs and schools.
Proposed § 299.15 would combine requirements across all included programs for each SEA to engage in timely and meaningful consultation with relevant stakeholders, consistent with proposed § 299.13(b), and coordinate its plans across all programs under the ESEA, as amended by the ESSA, as well as other Federal programs such as the IDEA in order to ensure all children receive a fair, equitable, and high-quality education. SEAs that submit a consolidated State plan would address how they consulted with stakeholders for the following components of the consolidated State plan: Challenging Academic Standards and Assessments; Accountability, Support, and Improvement for Schools; Supporting Excellent Educators; and Supporting All Students.
Proposed § 299.16 would outline the State plan requirements for challenging academic standards and academic assessments consistent with section 1111(b) of the ESEA, as amended by the ESSA. Proposed § 299.16(a) would include the requirements related to challenging State academic standards under section 1111(b)(1) of the ESEA, as amended by the ESSA. Specifically, this section would require each SEA to provide evidence demonstrating that: It has adopted challenging academic content standards and aligned academic achievement standards in the required subjects and grades; its alternate academic achievement standards for students with the most significant cognitive disabilities meet the requirements of section 1111(b)(1)(E) of the ESEA, as amended by the ESSA; and it has adopted English language proficiency standards consistent with the requirements of section 1111(b)(1)(F) of the ESEA, as amended by the ESSA. Proposed § 299.16(b) would require SEAs to describe how the State is meeting the requirements related to academic assessments under section 1111(b)(2) of the ESEA, as amended by the ESSA, and the proposed requirements in §§ 200.2 to 200.6 that were subject to negotiated rulemaking under the ESSA and on which the negotiated rulemaking committee reached consensus. Specifically, each SEA would identify the high-quality student academic assessments it is implementing in the required grades and subjects, including any alternate assessments aligned to alternate academic achievement standards for students with the most significant cognitive disabilities, the annual assessment of English proficiency for all English learners, any approved locally selected nationally recognized high school assessments consistent with § 200.3, and any assessments used under the exception for advanced middle school mathematics. Each SEA would not be required to submit information and evidence that is collected as part of the Department's assessment peer review process in its State plan. Each SEA would also meet the requirements related to assessments in languages other than English consistent with proposed § 200.6 and describe how it will ensure all students have the opportunity to take advanced coursework in mathematics consistent with proposed § 200.5. Finally, each SEA would provide a description of how they intend to use the formula grant funds awarded under section 1201 of the ESEA, as amended by the ESSA to support assessment and assessment-related activities. These activities may include ensuring that assessments are high-quality, result in actionable, objective information about students' knowledge and skills; time-limited; fair for all students and used to support equity; and fully transparent to students and parents.
Proposed § 299.17 would include the State plan requirements related to statewide accountability systems and school support and improvement activities consistent with the requirements in section 1111(c) and 1111(d) of the ESEA, as amended by the ESSA, and proposed §§ 200.12 through 200.24. Proposed § 299.17(a) would require each SEA to provide its State-determined long-term goals and measurements of interim progress for academic achievement, graduation rates, and English language proficiency under section 1111(c)(4)(A) of the ESEA, as amended by the ESSA, and proposed § 200.13. Consistent with section 1111(c) of the ESEA, as amended by the ESSA, and proposed §§ 200.12 through 200.20, proposed § 299.17(b) and (c) would require each SEA to describe its statewide accountability system that: Is based on challenging State academic standards for reading/language arts and mathematics; includes all indicators under proposed § 200.14 and meets the participation rate requirements under proposed § 200.15; meaningfully differentiates all public schools in the State on an annual basis under proposed § 200.18; and identifies schools for comprehensive and targeted support and improvement under proposed § 200.19.
Proposed § 299.17(d) would require each SEA to describe its State support and improvement activities for low-performing schools. Each SEA would describe how it will allocate funds consistent with the requirements under section 1003 of the ESEA, as amended by the ESSA, and proposed § 200.24, and the supports it is providing to LEAs with schools identified for comprehensive and targeted support and improvement under proposed §§ 200.21 through 200.23 in order to improve student academic achievement and school success. Proposed § 299.17(e) would require each SEA to describe its processes for approving, monitoring, and periodically reviewing LEA comprehensive support and improvement plans for identified schools consistent with section 1111(d)(1)(B) of the ESEA, as amended by the ESSA, and proposed § 200.21. Further, each SEA would describe additional activities to support continued improvement consistent with proposed § 200.23, including State review of resource allocation, technical assistance for LEAs with schools identified for comprehensive and targeted support and improvement, and additional State action to support LEA improvement.
Proposed § 299.18 would require each SEA to provide key descriptions, strategies, and funding sources outlining the State's approach to supporting excellent educators for all students. Proposed § 299.18(a) would require each SEA to describe its educator development, retention, and advancement systems consistent with the requirements in sections 2101 and 2102 of the ESEA, as amended by the ESSA. Further, in proposed § 299.18(b), each SEA would describe how it intends
Proposed § 299.18(c) would clarify the steps for each State to take in order to meet the statutory requirement in section 1111(g)(1)(B) of the ESEA, as amended by the ESSA, that low-income students and minority students are not taught at disproportionate rates by ineffective, out-of-field, or inexperienced teachers. The definitions that would be required under proposed § 299.18(c)(2) ensure that calculations of disproportionality can be conducted and reported statewide using data that is similar across districts. Proposed § 299.18(c)(3) would clarify that the calculation required under proposed § 299.18(c)(1) must be conducted using student level data, subject to appropriate privacy protections. Proposed § 299.18(c)(4) and (5) would clarify the publishing and reporting expectations and specify that data on disproportionality must be reported annually to ensure transparency for parents and stakeholders regarding progress towards closing equity gaps. Proposed § 299.18(c)(6)(i) and (ii) would clarify the steps a State must take if it demonstrates under proposed § 299.18(c)(3) that low income or minority students enrolled in schools receiving funds under title I, part A of the ESEA, as amended by the ESSA, are taught at disproportionate rates by ineffective, out-of-field, or inexperienced teachers. These steps would include a description of the root cause analysis, including the level of disaggregation (
Proposed § 299.19 would require each SEA to describe how it will ensure that all children have a significant opportunity to meet the State's challenging academic standards and attain a regular high school diploma. In proposed § 299.19(a)(1), each SEA would describe its strategies, rationale, timelines, and funding sources that address the continuum of a student's education from preschool through grade 12, equitable access to a well-rounded education and rigorous coursework, school conditions to support student learning, effective use of technology, parent and family engagement, and the accurate identification of English learners and children with disabilities. In developing these strategies, each SEA must consider the unique needs of all subgroups of students included in proposed § 299.19(a)(2)(i) and the information and data from a resource equity review as described in proposed § 299.19(a)(3), including the data that is collected and reported consistent with section 1111(h) of the ESEA, as amended by ESSA and proposed § 200.35 and § 200.37. Proposed § 299.19(a)(4) would require each SEA to describe how it will leverage title IV, part A and part B funds, along with other Federal funds, to support its State-level strategies described in proposed § 299.19(a)(1) and the process it will use to award subgrants authorized under included programs, as applicable.
In addition to the performance management and technical assistance requirements in proposed § 299.14(c), each SEA would describe how it uses the data described in proposed § 299.19(a)(3) to inform its review and approval of local applications for ESEA program funds.
Under proposed § 299.19(c), each SEA would be required to address essential program-specific requirements to ensure compliance with statutory requirements for particular programs included in the consolidated State plan. Proposed § 299.19(c)(1) would require each SEA to describe the process and criteria it will use under section 1114(a)(1)(B) of the Act to grant waivers of the 40-percent poverty threshold required to operate a schoolwide program. The Department is not proposing to limit State discretion to grant such waivers, but believes it is important that each State develop and implement a process for approving requested waivers of the 40-percent schoolwide program poverty threshold that is consistent with the purposes of a schoolwide program and that protects the interests of students most at risk of not meeting challenging State academic standards.
Proposed § 299.19(c)(3) includes the new requirement in section 3113(b)(2) of the ESEA, as amended by the ESSA, for each State to establish standardized statewide entrance and exit procedures for English learners under title III. The proposed regulations would clarify that this statutory provision requires State procedures for both entrance and exit of English learners to include uniform criteria that are applied statewide.
In developing the framework for the consolidated State plan outlined in proposed § 299.14, we seek to improve teaching and learning by encouraging greater cross-program coordination, planning, and service delivery; provide greater flexibility to State and local authorities through consolidated plans and reporting; and enhance the
The proposed Performance Management and Technical Assistance requirements in § 299.14(c) are grounded in the SEA's responsibilities to support the development of, review, and approval of LEA plans; monitor SEA and LEA implementation; continuously improve implementation; and provide technical assistance to support implementation across the included programs. Proposed § 299.14(c) would focus on how the SEA will coordinate planning, monitoring, and use of data and stakeholder feedback to improve State and local plans if they are not leading to satisfactory progress towards improved student outcomes. Further, each SEA would describe how it will provide technical assistance to LEAs and schools to support and improve implementation and build capacity to support sustained improvement in student outcomes.
The consultation requirements in proposed § 299.15(a) are essential to ensuring that each SEA solicits input in the development of each component of its consolidated State plan. These requirements are consistent with the requirements for timely and meaningful consultation under proposed § 299.13(b). In addition, by requiring each SEA to describe how it is coordinating across programs with respect to each of the components, proposed § 299.15(b) would help to ensure that each SEA is thinking holistically about implementation across all programs to close achievement gaps and support all children.
Proposed § 299.16 would require each SEA to demonstrate that it is meeting the requirements in the ESEA, as amended by the ESSA and to have challenging academic standards and a high-quality, annual statewide assessment system that includes all students. Such a system is essential to provide local leaders, educators, and parents with the information they need to identify the resources and supports that are necessary to help every student succeed and continue the work toward equity and closing achievement gaps among subgroups of historically underserved students by holding all students to the same high expectations. An SEA would not be required to submit information required under proposed § 299.16(a) and (b)(2) with its initial consolidated State plan because each SEA is required to submit such information as part of the separate peer review of State assessment systems.
The requirements in proposed § 299.17(a)-(c) would ensure accountability and support for all subgroups of students and all public schools consistent with the requirements for accountability systems in section 1111(c) of the ESEA, as amended by the ESSA, and the related regulations in proposed §§ 200.12 through 200.20. Proposed § 299.17(d) would require an SEA to describe how it will meet the statutory requirements outlined in sections 1003 and 1111(d) of the ESEA, as amended by the ESSA, and the related regulations proposed in §§ 200.21 through 200.24 related to school support and improvement. Finally, proposed § 299.17(e) would include specific performance management and technical assistance requirements consistent with proposed § 200.23. Please see proposed §§ 200.12 through 200.24 for a detailed discussion of the rationale of the proposed regulations.
Proposed § 299.18 would require each SEA to include key descriptions, strategies, and applicable funding sources to outline the State's approach to supporting excellent educators. These descriptions are necessary to provide stakeholders and the public with a complete understanding of each State's plan, coupled with the resources that each State intends to make available, for ensuring that educators have the necessary training, support, and advancement opportunities at each stage of their career to best support all subgroups of students and improve student outcomes. Proposed § 299.18(a) would require each SEA to describe its systems of educator development, retention, and advancement systems consistent with the requirements in sections 2101 and 2102 of the ESEA, as amended by the ESSA, and in doing so, would help to ensure that such systems are designed and implemented with the stakeholder awareness and input that will ultimately yield success in implementation. Proposed § 299.18(b) would support implementation of the systems described in proposed § 299.18(a) by requiring each SEA to describe how it intends to use title II, part A funds, as well as funds from other included programs, to fund strategies to support and develop excellent educators in order to improve student outcomes and increase teacher and leader effectiveness for all students. If it chooses to use funds from one or more of the programs included in its consolidated State plan for these purposes, each State would also describe how it will work with LEAs in the State to develop or implement State or local teacher and principal or other school leader evaluation and support systems and how it will improve educator preparation programs. For States and LEAs that elect to implement such systems, teacher and principal evaluation and support systems provide rich data that enable educators to improve throughout their career. Further, high-quality educator preparation programs are essential for ensuring that all educators have the skills they need to serve student populations with unique academic and non-academic needs.
Proposed § 299.18(c) would clarify the steps each State must take to meet the statutory requirement in section 1111(g)(1)(B) of the ESEA, as amended by the ESSA, that low-income students and minority students are not taught at disproportionate rates by ineffective, out-of-field, or inexperienced teachers. These requirements align with the work all States have been doing in recent years to develop and implement State Plans to Ensure Equitable Access to Excellent Educators (Educator Equity Plans). The definitions that would be required under proposed § 299.18(c)(2) ensure that calculations of disproportionality would be conducted and reported statewide using data that is similar across districts. The definitions must be different from each other and based on distinct criteria so that each provides useful information about educator equity and disproportionality rates. Proposed § 299.18(c)(3) would clarify that the calculations required under proposed § 299.18(c)(1) must be conducted using student level data, subject to appropriate privacy protections. Such transparency is critical to enable stakeholders and the public to understand how each State is meeting its statutory obligation under section 1111(g)(1)(B) of the ESEA, as amended by the ESSA. Student-level data are essential to illuminate within-school disproportionalities that a school-level analysis would necessarily obscure. Nevertheless, we recognize that not all States may be prepared to calculate these data at the student level by submission of their initial consolidated State plan; therefore, as described in proposed § 299.13(d)(3), we provide an opportunity for a one-time extension, if necessary. Proposed § 299.18(c)(4) and (5) would clarify the publishing and
To encourage SEAs and LEAs to think comprehensively about how to implement strategies and interventions to improve student outcomes, proposed § 299.19 would focus on support for all students, rather than separately for individual subgroups of students under each included program in order to ensure all students meet the State's challenging academic standards and attain a regular high school diploma that will prepare them to succeed in college and careers. Each SEA would describe its strategies, timelines, and funding sources for each of the requirements included in proposed § 299.19(a)(1). Requiring a State to consider a student's education from preschool through grade 12 would support that State's efforts to ensure that all students, beginning at the earliest stage in their education and continuing through high school, have the opportunity to acquire the skills and abilities necessary to earn a high school diploma, which is critical to allow them to pursue postsecondary education or a career of their choosing. Because these skills and abilities increase over the course of a child's schooling, it is essential for States to consider equitable access across a student's educational experience, beginning in preschool and ensure that all subgroups of students have access to a well-rounded education, including accelerated and advanced coursework. Proposed § 299.19(a)(1)(iii) would emphasize school conditions for student learning consistent with the requirement in section 1111(g)(1)(C) of the ESEA, as amended by the ESSA, so all students have access to a safe and healthy learning environment. Each SEA would also describe strategies for the effective use of technology to improve academic achievement and digital literacy so all students have the skills they need to participate in the global economy. Finally, proposed § 299.19(a)(1)(v) and (vi) would require each State to include strategies for meaningful and active parent and family engagement in their children's education and ensure the accurate identification of English learners and children with disabilities.
When developing the strategies in § 299.19(a)(1), each State would be required to consider all dimensions of schooling, including both academic and nonacademic factors, for each subgroup of students and the data and information from its review of resource equity consistent with proposed § 299.19(a)(3). An SEA may describe strategies that address all or a portion of the subgroups of students, or specific strategies based on the unique needs of particular student groups. Proposed § 299.19(a)(3) would require each SEA to use information and data on resource equity that section 1111(h) of the ESEA, as amended by the ESSA and proposed § 200.35 and § 200.37, requires them to publically report. This will help each State identify inequities that may hinder a student's educational success at any point in terms of access to the well-rounded education necessary for them to meet the State's challenging academic standards and earn a high school diploma.
Proposed § 299.19(b) would require each SEA to describe how it will utilize the resource equity data and information in proposed § 299.19(a)(3) to inform the review and approval of LEA plans and technical assistance to LEAs. This review is essential to ensure that local plans meet the unique needs of each LEA and school and SEAs target technical assistance to those LEAs and schools most in need.
In developing the consolidated State plan, we recognized that a number of covered programs include specific statutory requirements that are unique and essential to the implementation and oversight of those programs. Therefore, proposed § 299.19(c) captures those requirements to ensure each SEA provides sufficient detail to award funds for title I, part A; title I, part C; title III, part A; title V, part B, subpart 2; and the McKinney-Vento Act to supplement the descriptions, strategies, and timelines it provides in its consolidated State plan. Regarding title I, part A, proposed 299.19(c)(1) would not limit State discretion to grant such waivers, but we believe it is important that each State develop and implement a process for approving requested waivers of the 40-percent schoolwide program poverty threshold that is consistent with the purposes of a schoolwide program and that protects the interests of students most at risk of not meeting challenging State academic standards. Regarding the title III entrance and exit procedures required by section 3113(b)(2) of the ESEA, as amended by the ESSA, proposed § 299.19(c)(3) would clarify that this statutory provision requires a State to set uniform procedures that include criteria for both entrance into and exit from the English learner subgroup that are applied statewide, and prohibits a “local option,” which cannot be standardized and under which LEAs could have widely varying criteria. We consider this clarification essential so that each State will adopt uniform procedures that will increase transparency around how students are identified, ensure consistency within a State with respect to which students are identified as English learners, and promote better outcomes for English learners. Specifically, the proposed regulations would clarify that exit procedures must include objective, valid, and reliable criteria, including a score of proficient on the State's annual English language proficiency assessment, to ensure each State implements the statutory requirement regarding exit from the English learner subgroup and to ensure consistency with civil rights obligations for English learners.
Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—
(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);
(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or
(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.
This proposed regulatory action is an economically significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.
We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—
(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account, among other things and to the extent practicable, the costs of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and
(5) Identify and assess available alternatives to direct regulation, including economic incentives such as user fees or marketable permits, to encourage the desired behavior, or provide information that enables the public to make choices.
Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”
We also have determined that this regulatory action would not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.
We have assessed the potential costs and benefits of this regulatory action. The potential costs associated with the proposed regulations are those resulting from statutory requirements and those we have determined as necessary for administering these programs effectively and efficiently. Elsewhere in this section under Paperwork Reduction Act of 1995, we identify and explain burdens specifically associated with information collection requirements.
In assessing the potential costs and benefits—both quantitative and qualitative—of these proposed regulations, we have determined that the benefits would justify the costs.
The Department believes that the majority of the changes proposed in this regulatory action would not impose significant costs on States, LEAs, or other entities that participate in programs addressed by this regulatory action. For example, the proposed regulatory framework for State accountability systems, which primarily incorporates statutory requirements, closely parallels current State systems, which include long-term goals and measurements of interim progress; multiple indicators, including indicators of academic achievement, graduation rates, and other academic indicators selected by the State; annual differentiation of school performance; the identification of low-performing schools, and the implementation of improvement plans for identified schools. In addition, the proposed regulations, consistent with the requirements of the ESEA, as amended by the ESSA, provide considerable flexibility to States and LEAs in determining the specific approaches to meeting new requirements, including the rigor of long-term goals and measurements of interim progress, the timeline for meeting those goals, the selection and weighting of indicators of student and school progress, the criteria for identification of schools for improvement, and the development and implementation of improvement plans. For example, this flexibility allows States and LEAs to build on existing measures, systems, and interventions rather than creating new ones, and to determine the most cost-efficient and least burdensome means of meeting proposed regulatory requirements, instead of a standardized set of prescriptive requirements.
The proposed regulations also reflect certain statutory changes to the accountability systems and school improvement requirements of the ESEA, as amended by the ESSA, which would result in a significant reduction in costs and administrative burdens for States and LEAs. First, the current regulations, which are based on the core goal of ensuring 100 percent proficiency in reading and mathematics for all students and all subgroups, potentially result in the identification of the overwhelming majority of participating title I schools for improvement,
Second, under the proposed regulations, LEAs also would not be required to make available SES to students from low-income families who attend schools identified for improvement. This means that States would not be required to develop and maintain lists of approved SES providers, review provider performance, monitor LEA implementation of SES requirements, or set aside substantial amounts of title I, part A funding for SES. States and LEAs also would no longer be required to report on either student participation or expenditures related to public school choice or SES. While States participating in ESEA flexibility generally already have benefited from waivers of the statutory and regulatory requirements related to public school choice and SES, the proposed regulations would extend this relief to all States and LEAs without the additional burden of seeking waivers.
Third, the proposed regulations would eliminate requirements for State identification of LEAs for improvement and the development and implementation of LEA improvement and corrective action plans. As would be the case for schools, the current regulations would require such plans for virtually all participating title I LEAs; the proposed regulations would no longer require identification of LEAs for improvement and related actions.
While most of the elements and requirements of State accountability systems required by the proposed regulations involve minimal or even significantly reduced costs compared to the requirements of the current regulations, there are certain proposed changes that could entail additional costs, as described below.
Proposed § 200.13 would require States to establish a uniform procedure for setting long-term goals and measurements of interim progress for English learners that can be applied consistently and equitably to all students and schools for accountability purposes and that consider individual student characteristics (
Proposed § 200.14(b)(5) would require States to develop at least one indicator of School Quality or Student Success that measures such factors as student access to and completion of advanced coursework, postsecondary readiness, school climate and safety, student engagement, educator engagement, or any other measure the State chooses. Proposed § 200.14(c) would specify that measures within School Quality and Student Success indicators must, among other requirements, be valid, reliable, and comparable across all LEAs in the State and support meaningful differentiation of performance among schools. We recognize that the development and implementation of new School Quality and Student Success indicators, which may include the development of instruments to collect and report data on one or more such measures, could impose significant additional costs on a State that elects to develop an entirely new measure. However, the Department also believes, based in part on its experience in reviewing waiver requests under ESEA flexibility, that all States currently collect data on one or more measures that may be suitable as a measure of school quality and student success consistent with the requirements of proposed § 200.14(b)(5). Consequently, we believe that all, or nearly all, States will choose to adapt a current measure to the purposes of proposed § 200.14(b)(5), rather than developing an entirely new measure, and thus that the proposed regulation would not impose significant new costs or administrative burdens on States and LEAs.
Proposed § 200.15(c)(2) would require an LEA with a significant number of schools that fail to assess at least 95 percent of all students or 95 percent of students in any subgroup to develop and implement an improvement plan that includes support for school-level plans to improve participation rates that must be developed under proposed § 200.15(c)(1). Proposed § 200.15(c)(2) would further require States to review and approve these LEA plans.
These proposed requirements are similar to current regulations that require States to: Annually review the progress of each LEA in making AYP; identify for improvement any LEA that fails to make AYP for two consecutive years, including any LEA that fails to make AYP as a result of not assessing 95 percent of all students or each subgroup of students; and provide technical assistance and other support related to the development and implementation of LEA improvement
The school improvement requirements proposed in this regulatory action generally are similar to those required under the current regulations. The current regulations require identification of schools for multiple improvement categories, State and LEA notification of identified schools, the development and implementation of improvement plans with stakeholder involvement, State support for implementation of improvement plans, LEA provision of public school choice and SES options (the latter of which also imposes significant administrative burdens on States), and more rigorous actions for schools that do not improve over time. However, the current regulations include a prescriptive timeline under which schools that do not improve must advance to the next stage of improvement, typically only after a year or two of implementation at the previous stage (
The proposed regulations would clarify certain elements of the school improvement process required by the ESEA, as amended by the ESSA, including the needs assessment for schools identified for comprehensive support and improvement, the use of evidence-based interventions in schools identified for both comprehensive support and improvement and targeted support and improvement, and the review of resource inequities required for schools identified for comprehensive support and improvement as well as for schools identified for additional targeted support and improvement under proposed § 200.19(b)(2). Proposed § 200.21 would require an LEA with such a school to carry out, in partnership with stakeholders, a comprehensive needs assessment that takes into account, at a minimum, the school's performance on all indicators used by the State's accountability system and the reason(s) the school was identified. The proposed regulations also would require the LEA to develop a comprehensive support and improvement plan that is based on the needs assessment and that includes one or more evidence-based interventions. These proposed requirements are similar to the requirements in the current regulations, under which LEAs with schools identified for improvement must develop improvement plans that include consultation with stakeholders. Thus we believe that the proposed regulations related to conducting a needs assessment and the use of evidence-based interventions would not increase costs or administrative burdens significantly for LEAs, as compared to the current regulations. Moreover, we believe that these proposed requirements would have the significant benefit of helping to ensure that the required improvement plans include effective interventions that meet the demonstrated educational needs of students in identified schools, and ultimately could improve outcomes for those students.
Proposed § 200.21 also would require LEAs with schools identified for comprehensive support and improvement, as well as schools identified for additional targeted support and improvement under proposed § 200.19(b)(2), to identify and address resource inequities, including any disproportionate assignment of ineffective, out-of-field, or inexperienced teachers and possible inequities related to the per-pupil expenditures of Federal, State, and local funds. While this is not a new requirement, it would involve an additional use of data and methods that LEAs would be required to develop and apply to meet other requirements in the proposed regulations, including requirements related to ensuring that low-income and minority students are not taught at disproportionate rates by ineffective, out-of-field, or inexperienced teachers, the inclusion of per-pupil expenditure data on State and LEA report cards, and the use of per-pupil expenditure data to meet the title I supplement not supplant requirement. In addition, the proposed regulations would not specify how an LEA must address any resource inequities identified through its review. We believe it is critically important to ensure equitable access to effective teachers, and that the fair and equitable allocation of other educational resources is essential to ensuring that all students, particularly the low-achieving, disadvantaged, and minority students who are the focus of ESEA programs, have equitable access to the full range of courses, instructional materials, educational technology, and programs that help ensure positive educational outcomes.
Proposed § 200.21 would establish a new requirement for State review and approval of each comprehensive support and improvement plan developed by LEAs with one or more schools identified for comprehensive support and improvement, as well as proposed amendments to previously approved plans. This proposed requirement would potentially impose additional costs compared to the requirements in the current regulations. The Department estimates that States would identify approximately 4,000 schools for comprehensive support and improvement under the proposed regulations, and that it would take, on average, 20 hours for a State to review and approve each LEA comprehensive support and improvement plan, including any necessary revisions to an initial plan. Assuming a cost of $40 per hour for State staff, the proposed review and approval process would cost an estimated total of $3,200,000. Over the course of the four-year authorization of the law, this cost is expected to be incurred twice. We note that under the proposed regulations, States would incur these costs once every three years, when they identify schools for comprehensive support and improvement. We also note that this cost represents less than 2 percent of the funds that States are authorized to reserve annually for State-level administrative and school improvement activities under part A of title I of the ESEA, as amended by the ESSA. Given the critical importance of ensuring that LEAs implement rigorous improvement plans in their lowest-performing comprehensive support and improvement schools, and that a significant proportion of the approximately $1 billion that States will reserve annually under section 1003 of the ESEA, as amended by the ESSA, will be used to support effective implementation of these plans, we believe that the potential benefits of State review and approval of comprehensive support and improvement plans would far outweigh the costs. Moreover, those costs would be fully paid for with formula grant funds made available through the ESEA, as amended by the ESSA, including the 1 percent administrative reservation under title I, part A and the 5 percent State-level share of section 1003 school improvement funds.
The proposed regulations also would require that the State monitor and periodically review each LEA's implementation of approved comprehensive support and improvement plans. We believe that this proposed requirement is essentially the same as the current requirement for States to ensure that LEAs carry out their school improvement responsibilities related to schools identified for improvement, corrective action, and restructuring, as well as State-level monitoring requirements under the School Improvement Grants program. In addition, section 1003 of the ESEA, as amended by the ESSA, which requires States to reserve a total of approximately $1 billion annually to support implementation of comprehensive support and improvement and targeted support and improvement plans, permits States to use up to 5 percent of these funds for State-level activities, including “monitoring and evaluating the use of funds” by LEAs using such funds for comprehensive support and improvement plans. For these reasons, we believe that the proposed requirement to monitor and periodically review each LEA's implementation of approved comprehensive support and improvement plans would impose few, if any, additional costs compared to current regulatory requirements, and that any increased costs would be paid for with Federal funding provided for this purpose.
States also would be required to establish exit criteria for schools implementing comprehensive support and improvement plans and for certain schools identified for additional targeted support under proposed § 200.19(b)(2) and implementing enhanced targeted support and improvement plans. In both cases, the proposed regulations would require that the exit criteria established by the State ensure that a school (1) has improved student outcomes and (2) no longer meets the criteria for identification. Schools that do not meet exit criteria following a State-determined number of years would be identified for additional improvement actions (as outlined by an amended comprehensive support and improvement plan for schools already implementing such plans, and a comprehensive support and improvement plan for schools previously identified for additional targeted support). We believe that the proposed requirement for States to establish exit criteria for schools implementing comprehensive support and improvement plans, as well as additional targeted support plans, would be minimally burdensome and entail few, if any, additional costs for States. Moreover, most States already have developed similar exit criteria for their priority and focus schools under ESEA flexibility, and would be able to easily adapt existing criteria for use under the proposed regulations. Rigorous exit criteria linked to additional improvement actions are essential for ensuring that low-performing schools, and, more importantly, the students who attend them, do not continue to underperform for years without meaningful and effective interventions. Moreover, the additional improvement actions primarily involve revision of existing improvement plans, which would be less burdensome, for example, than moving from corrective action to restructuring under current regulations, which requires the creation of an entirely new plan involving significantly different interventions. For these reasons, we believe that the benefits of the proposed regulations would outweigh the minimal costs.
In addition to requiring States to review and approve comprehensive support and improvement plans, monitor implementation of those plans, and establish exit criteria, the proposed regulations would require States to provide technical assistance and other support to LEAs serving a significant number of schools identified either for comprehensive support and improvement or targeted support and improvement.
Proposed § 200.23 would require each State to review resource allocations periodically between LEAs and between schools. The proposed regulations also would require each State to take action, to the extent practicable, to address any resource inequities identified during its review. These reviews would not require the collection of new data and, in many cases, would likely involve re-examining information and analyses provided to States by LEAs during the process of reviewing and approving comprehensive support and improvement plans and meeting title I requirements regarding disproportionate assignment of low-income and minority students to ineffective, out-of-field, or inexperienced teachers. In addition, the proposed regulations would give States flexibility to identify the LEAs targeted for resource allocation reviews. Consequently, we believe that the proposed regulations regarding State resource allocation reviews would be minimally burdensome and entail few if any new costs, while contributing to the development of statewide strategies for addressing resource inequities that can help improve outcomes for students served under ESEA programs.
Similarly, proposed § 200.23(b) would require each State to describe in its State
The ESEA, as amended by the ESSA, expanded reporting requirements for States and LEAs in order to provide parents, practitioners, policy makers, and public officials at the Federal, State, and local levels with actionable data and information on key aspects of our education system and the students served by that system, but in particular those students served by ESEA programs. The proposed regulations would implement these requirements primarily by clarifying definitions and, where possible, streamlining and simplifying reporting requirements consistent with the purposes of the ESEA. Although the proposed regulatory changes in §§ 200.30 through 200.37 involve new requirements that entail additional costs for States and LEAs, we believe the costs are reasonable in view of the potential benefits, which include a more comprehensive picture of the structure and performance of our education system under the new law. Importantly, the ESEA, as amended by the ESSA, gives States and LEAs considerable new flexibility to develop and implement innovative, evidence-based approaches to addressing local educational needs, and the proposed regulations would help ensure that the comprehensive data reporting requirements of the ESEA, as amended by the ESSA, capture the shape and results of that innovation without imposing unreasonable burdens on program participants.
The Department estimates that, to meet new data reporting requirements in the proposed regulations, it would impose a one-time increased burden of 230 hours per State. Assuming an average cost of $40 an hour for State staff, we estimate a total one-time cost of $478,400 for meeting the new State report card requirements. The Department further estimates that the preparation and dissemination of LEA report cards would require a new one-time burden of 80 hours per respondent in the first year and annual burden of 10 hours per respondent, resulting in a one-time total burden across 16,970 LEAs of 1,357,600 hours and annual burden of 169,700 hours per LEA.
A key challenge faced by States in meeting current report card requirements has been developing clear, effective formats for the timely delivery of complex information to a wide range of customers. Proposed §§ 200.30 and 200.31 specifies requirements intended to promote improvements in this area, including a required overview aimed at ensuring essential information is provided to parents in a manageable, easy-to-understand format; definitions for key elements; dissemination options; accessible formats; and deadlines for publication. We believe the benefits of this proposed regulation are significant and include transparency, timeliness, and wide accessibility of data to inform educational improvement and accountability.
Proposed § 200.32 would streamline reporting requirements related to State and local accountability systems by permitting States and LEAs to meet those requirements by referencing or obtaining data from other existing documents and descriptions created to meet other requirements in the proposed regulations. For example, proposed § 200.32 would allow States and LEAs to meet the requirement relating to a description of State accountability systems through a link to a Web address, rather than trying to condense a complex, lengthy description of a statewide accountability system into an accessible, easy-to-understand “report card” format. Proposed § 200.33 would clarify calculations and reporting of data on student achievement and other measures of progress, primarily through modifications to existing measures and calculations. These proposed changes would help ensure that State and local report cards serve their intended purpose of providing the public with information on a variety of measures in a State's accountability system that conveys a complete picture of school, LEA, and State performance. The proposed regulations would have a key benefit of requiring all LEA report cards to include results from all State accountability system indicators for all schools served by the LEA to ensure that parents, teachers, and other key stakeholders have access to the information for which schools are held accountable.
A critical new requirement in the ESEA, as amended by the ESSA, is the collection and reporting of per-pupil expenditures. Proposed § 200.35 includes requirements and definitions aimed at helping States and LEAs collect and report reliable, accurate, comparable data on these expenditures. We believe that these data will be essential in helping districts meet their obligations under the supplement, not supplant requirement in Title I-A, which requires districts to develop a methodology demonstrating that federal funds are used to supplement state and local education funding. In addition, making such data widely available has tremendous potential to highlight disparities in resource allocations that can have a significant impact on both the effective use of Federal program funds and educational opportunity and outcomes for the students served by ESEA programs. Broader knowledge and understanding of such disparities among educators, parents, and the public can lead to a more informed debate about how to improve the
Proposed § 200.36 would provide specifications for the newly required collection of information on student enrollment in postsecondary education, including definitions of key data elements. Proposed §§ 200.34 and 200.37 would clarify guidelines for calculating graduation rates and reporting on educator qualifications, respectively, and reflect a change to existing reporting requirements in current regulations rather than new items (
We believe that the proposed State plan regulations in §§ 299.13 to 299.19 generally would not impose significant costs on States. As discussed in the
Moreover, the proposed regulations would implement statutory provisions expressly intended to reduce burden on States by simplifying the process for applying for Federal education program funds. Section 8302 of the ESEA, as amended by the ESSA, allows States to submit a consolidated State plan in lieu of multiple State plans for individual covered programs. The Department anticipates, based on previous experience, that all States will take advantage of the option in proposed § 299.13 to submit a consolidated State plan, and we believe that the content areas and requirements proposed for those plans in §§ 299.14 to 299.19 are appropriately limited to those needed to ensure that States and their LEAs provide all children significant opportunity to receive a fair, equitable, and high-quality education and close achievement gaps, consistent with the purpose of title I of the ESEA, as amended by the ESSA.
As discussed elsewhere in this document, section 8302(a)(1) of the ESEA, as amended by the ESSA, permits the Department to designate programs for inclusion in consolidated State plans in addition to those covered by the statute. In § 299.13, the Department proposes adding to the covered programs the Grants for State Assessments and Related Activities in section 1201 of title I, part B of the ESEA, as amended by the ESSA, and the Education for Homeless Children and Youths program in subpart B of title VII of the McKinney-Vento Act. Inclusion of these programs in a consolidated State plan would further reduce the burden on States in applying for Federal education program funds.
In general, the Department believes that the costs of the proposed State plan regulations (which are discussed in more detail in the following paragraphs) are clearly outweighed by their benefits, which include, in addition to reduced burden on States: Increased flexibility in State planning, improved stakeholder engagement in plan development and implementation, better coordination in the use of Federal education program funds and elimination of funding “silos”, and a sustained focus on activities critical to providing all students with equitable access to a high-quality education.
Proposed § 299.13 would establish the procedures and timelines for State plan submission and revision, including requirements for timely and meaningful consultation with stakeholders that are based on requirements in titles I, II, and III of the ESEA, as amended by the ESSA. The Department does not believe that the proposed consultation requirements would impose significant costs on States. We expect that, as part of carrying out their general education responsibilities, States will have already developed procedures for notifying the public and for conducting outreach to, and soliciting input from, stakeholders, as the regulations would require. In the Department's estimation, States would not incur significant costs in implementing those procedures for the State plans.
Proposed §§ 299.14 to 299.19 would establish requirements for the content of consolidated State plans (
Proposed § 299.15 would require States to describe how they engaged in timely and meaningful consultation with specified stakeholder groups in consolidated State plan development and how they are coordinating administration of covered programs and other Federal education programs. We estimate that the costs of complying with the proposed requirements in this section would be minimal.
Proposed § 299.16 would require States to demonstrate that their academic standards and assessments meet the requirements in section 1111(b) of the ESEA, as amended by the ESSA, and to describe how they will use Grants for State Assessments and Related Activities program funds to develop and administer such assessments or carry out other allowable activities. These proposed requirements would not impose significant new costs on States, which are already separately engaged in a review of their standards and assessment systems that would satisfy the applicable proposed requirements in this section.
The Department believes that the proposed requirements in §§ 299.17 and 299.18 would similarly not involve significant new costs for most States. Proposed § 299.17 would establish consolidated State plan requirements for describing the State's long-term goals, accountability system, school identifications, and support for low-performing schools, consistent with the requirements in section 1111(c) and (d) of the ESEA, as amended by the ESSA. Proposed § 299.18 would require States to describe their educator development, retention, and advancement systems and their use of Federal education program funds for State-level activities to improve educator quality and effectiveness, and to demonstrate that low-income and minority students in title I-participating schools are not taught at disproportionate rates by ineffective, out-of-field, or inexperienced teachers compared to their peers, consistent with the requirements in sections 1111(g), 2101, and 2102 of the ESEA, as amended by the ESSA. The Department anticipates that, in complying with proposed
Finally, proposed § 299.19 would require States to describe how they and their LEAs are using Federal and other funds to close achievement gaps and provide all students equitable access to a high-quality education, and would include program-specific requirements necessary to ensure that such access is provided to particularly vulnerable student groups, including migrant students, English learners, and homeless children and youths. We believe that the proposed requirements in this section would accomplish this purpose with minimal burden on, and cost to, States, consistent with section 8302(b)(3) of the ESEA, as amended by the ESSA.
The major benefit of these proposed regulations, taken in their totality, is a more flexible, less complex and costly accountability framework for the implementation of the ESEA that respects State and local decision-making while continuing to ensure that States and LEAs use ESEA funds to ensure that all students have significant opportunity to receive a fair, equitable, and high-quality education, and to close educational achievement gaps.
As required by OMB Circular A-4 (available at
Executive Order 12866 and the Presidential memorandum “Plain Language in Government Writing” require each agency to write regulations that are easy to understand.
The Secretary invites comments on how to make these proposed regulations easier to understand, including answers to questions such as the following:
• Are the requirements in the proposed regulations clearly stated?
• Do the proposed regulations contain technical terms or other wording that interferes with their clarity?
• Does the format of the proposed regulations (grouping and order of sections, use of headings, paragraphing, etc.) aid or reduce their clarity?
• Would the proposed regulations be easier to understand if we divided them into more (but shorter) sections? (A “section” is preceded by the symbol “§ ” and a numbered heading: for example, § 361.1 Purpose.)
• Could the description of the proposed regulations in the
• What else could we do to make the proposed regulations easier to understand?
To send any comments that concern how the Department could make these proposed regulations easier to understand, see the instructions in the
Under the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1531), an agency must assess the effects of its regulatory actions on State, local, and tribal governments. The Department has set forth that assessment in the
The Secretary certifies that these proposed requirements would not have a significant economic impact on a substantial number of small entities. Under the U.S. Small Business Administration's Size Standards, small entities include small governmental jurisdictions such as cities, towns, or school districts (LEAs) with a population of less than 50,000. Although the majority of LEAs that receive ESEA funds qualify as small entities under this definition, the requirements proposed in this document would not have a significant economic impact on these small LEAs because the costs of implementing these requirements would be covered by funding received by these small LEAs under ESEA formula grant programs, including programs that provide funds exclusively for such small LEAs (
As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.
Sections 200.30, 200.31, 200.32, 200.33, 200.34, 200.35, 200.36, 200.37, and 299.13 contain information collection requirements. Under the PRA the Department has submitted a copy of these sections to OMB for its review.
A Federal agency may not conduct or sponsor a collection of information unless OMB approves the collection under the PRA and the corresponding information collection instrument displays a currently valid OMB control number. Notwithstanding any other provision of law, no person is required to comply with, or is subject to penalty for failure to comply with, a collection of information if the collection instrument does not display a currently valid OMB control number. In the final regulations, we will display the OMB control numbers assigned by OMB to any information collection requirement in the proposed regulations and adopted in the final regulations.
The proposed regulations would affect two currently approved information collections, 1810-0576 and 1810-0581. Under 1810-0576,
Proposed § 299.13 would permit a State to submit a consolidated State plan, instead of individual program applications. Each consolidated State plan must meet the requirements described in proposed §§ 299.14 to 299.19.
States may choose not to submit consolidated State plans; however, for purposes of estimating the burden, we will assume all States will choose to submit consolidated State plans. We estimate that over the three-year period for which we seek information collection approval, each of the 52 grantees will spend 1,200 additional hours developing the accountability systems to be described in the consolidated State plans, reporting on all elements that must be described in the consolidated State plans, and making any optional amendments to the consolidated State plans. Accordingly, we anticipate the total additional burden over three years to be 62,400 hours for all respondents, resulting in an increased annual burden of 20,800 hours under current information collection 1810-0576. Overall, the total burden under OMB 1810-0576 will be 23,200.
Under 1810-0581,
Section 1111(h) of the ESEA, as amended by the ESSA, requires States and LEAs to prepare and disseminate annual report cards; these report cards provide essential information to school communities regarding activities under title I of the ESEA.
Proposed § 200.30(a) would require each State to prepare and disseminate an annual State report card, and proposed 200.30(c) would require each annual State report card to be accessible. Currently, under 1810-0581, the Department estimates that the preparation and dissemination of State report cards requires 370 hours per respondent, resulting in a total burden across 52 States of 19,240 hours annually. On an annual basis, the Department estimates that the preparation and dissemination of accessible State report cards will continue to take 370 hours per respondent. However, as described below, the Department also anticipates a one-time increase in burden relating to some report card elements, based upon the changes in the proposed regulations.
Proposed § 200.30(b)(2) would require each State to add an overview to each report card. We anticipate that these requirements would require a one-time increase in burden for each State of 80 hours, for a total increase in burden across 52 grantees of 4,160 hours. Over the three-year period for which we seek approval for this information collection, this would result in an annual increase in burden of 1,387 hours.
Proposed § 200.30(e) would require each State that is unable to update its State and LEA report cards to reflect the proposed regulations by the established deadline to request an extension of the deadline, and to submit a plan to the Secretary addressing the steps the State will take to update the report cards. We anticipate the development of such a plan would require a one-time increase in burden for 15 States of 50 hours, for a total increase in burden of 750 hours. Over the three-year period for which we seek approval for this information collection, this would result in an annual increase in burden of 250 hours.
Proposed § 200.32(a) would require each State to describe provide a description of the State's accountability system. We anticipate that this requirement would add a one-time increase in burden for each State of 30 hours, for a total increase in burden across 52 grantees of 1,560 hours. Over the three-year period for which we seek approval for this information collection, this would result in an annual increase in burden of 520 hours.
Proposed §§ 200.32(c), 200.33, 200.34, 200.35, 200.36 and 200.37 would establish new requirements regarding the ways in which States calculate and report elements that are required on the State and LEA report cards. In total, we anticipate that these requirements would require a one-time increase in burden for each State to adjust its data system to address these requirements of 120 hours, for a total increase in burden across 52 grantees of 6,240 hours. Over the three-year period for which we seek approval for this information collection, this would result in an annual increase in burden of 2,080 hours.
Additionally, under 1810-0581, the Department is authorized to collect information regarding SES providers and ESEA flexibility. As SES is not required, and ESEA flexibility is not applicable, under the ESEA, as amended by the ESSA, we intend to reduce the burden attributable to these elements. The Department also includes burden estimates for some reporting requirements that we now intend to reduce, because these elements include data system adjustments that have already been completed. These changes decrease the annual burden for SEAs by 35,426 hours. Overall, the total burden for SEAs under 1810-0581 is reduced by 31,189 hours.
Proposed §§ 200.21(d)(6) and 200.22(d)(2) would require each LEA to make publicly available, including by notifying parents under proposed §§ 200.21(b) and 200.22(b), the comprehensive and targeted support and improvement plans, including any amendments, for all identified schools served by the LEA to help ensure that plans may be developed in partnership with parents, teachers, and principals and other school leaders. We estimate that the resulting burden for each LEA will be 30 hours, on average, resulting in a total burden for 16,970 LEAs of 509,100 hours. Over the three-year period for which we seek approval, this would result in an annual increase in burden of 169,700 hours.
Proposed § 200.31(a) would require each LEA to prepare and disseminate an annual LEA report card, and proposed § 200.31(c) would require each annual LEA report card to be accessible. Currently, under 1810-0581, the Department estimates that the preparation and dissemination of LEA report cards requires 16 hours per respondent; we do not anticipate that the annual burden for each respondent will change, based upon the proposed regulations. However, we are changing the burden estimate, based upon an increase in the number of LEAs according to the most recently available data; there are currently 16,970 LEAs, an increase of 3,883 LEAs from the last estimate. As a result, we increase the estimated annual burden for preparation and dissemination of LEA report cards by 16 hours for each of these LEAs not previously incorporated, or 62,128 hours.
Proposed § 200.31(b)(2) would require each LEA to add an overview to each report card. We anticipate that these requirements would require a one-time increase in burden for each LEA of 80 hours, for a total increase in burden across 16,970 LEAs of 1,357,600 hours. Over the three-year period for which we seek approval, this would result in an annual increase in burden of 452,533 hours.
Proposed §§ 200.32 to 200.37 would establish requirements regarding the ways in which LEAs calculate and report elements that are currently required on the LEA report cards. However, we expect that the increase in burden resulting from these required changes would be addressed by similar required changes in the State's data system. Therefore, we do not anticipate an increase in the burden on LEAs resulting from these requirements.
Additionally, under 1810-0581, the Department is authorized to collect information regarding requirements from the ESEA, as amended by the NCLB, which are no longer applicable, such as restructuring plans for schools that do not meet AYP. The Department also includes in this information collection burden estimates for some reporting requirements that we now intend to reduce, because these elements include data system adjustments that have already happened. These changes result in a total decrease in annual burden for LEAs of 1,261,039 hours. Overall, based on the addition of new burden and the removal of burden that is no longer applicable, the total burden for LEAs under 1810-0581 is reduced by 786,070 hours.
We have prepared an Information Collection Request (ICR) for these collections. If you want to review and comment on the ICR please follow the instructions listed under the
• Deciding whether the collections are necessary for the proper performance of our functions, including whether the information will have practical use;
• Evaluating the accuracy of our estimate of the burden of the collections, including the validity of our methodology and assumptions;
• Enhancing the quality, usefulness, and clarity of the information we collect; and
• Minimizing the burden on those who must respond.
This includes exploring the use of appropriate automated, electronic, mechanical, or other technological collection techniques.
OMB is required to make a decision concerning the collections of information contained in these proposed regulations between 30 and 60 days after publication of this document in the
Electronically mail
This program is not subject to Executive Order 12372 and the regulations in 34 CFR part 79.
In accordance with section 411 of the General Education Provisions Act, 20 U.S.C. 1221e-4, the Secretary particularly requests comments on whether these proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.
You may also access documents of the Department published in the
Elementary and secondary education, Grant programs—education, Indians—education, Infants and children, Juvenile delinquency, Migrant labor, Private schools, Reporting and recordkeeping requirements
Administrative practice and procedure, Elementary and secondary education, Grant programs—education, Private schools, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Secretary of Education proposes to amend parts 200 and 299 of title 34 of the Code of Federal Regulations as follows:
20 U.S.C. 6301 through 6376, unless otherwise noted.
(a)(1) Each State must describe in its State plan under section 1111 of the Act that the State has developed and will implement, beginning no later than the 2017-2018 school year, a single, statewide accountability system that meets all requirements under paragraph (b) of this section in order to improve student academic achievement and school success among all public elementary and secondary schools, including public charter schools.
(2) A State that submits an individual program State plan for subpart A of this part under § 299.13(j) must meet all application requirements in § 299.17.
(b) The State's accountability system must—
(1) Be based on the challenging State academic standards under section 1111(b)(1) of the Act and academic assessments under section 1111(b)(2) of the Act, and include all indicators under § 200.14;
(2) Be informed by the State's long-term goals and measurements of interim progress under § 200.13;
(3) Take into account the achievement of all public elementary and secondary school students, consistent with §§ 200.15 through 200.17 and 200.20;
(4) Be the same accountability system the State uses to annually meaningfully differentiate all public schools in the State under § 200.18, and to identify schools for comprehensive and targeted support and improvement under § 200.19; and
(5) Include the process the State will use to ensure effective development and implementation of school support and improvement plans, including evidence-based interventions, to hold all public schools accountable for student academic achievement and school success consistent with §§ 200.21 through 200.24.
(c) The accountability provisions under this section must be overseen for public charter schools in accordance with State charter school law.
In designing its statewide accountability system under § 200.12, each State must establish long-term goals and measurements of interim progress for, at a minimum, each of the following:
(a)
(2) In establishing the long-term goals and measurements of interim progress under paragraph (a)(1) of this section, a State must—
(i) Apply the same high standards of academic achievement to all public school students in the State, except as provided for students with the most significant cognitive disabilities consistent with section 1111(b)(1) of the Act;
(ii) Set the same multi-year timeline to achieve the State's long-term goals for all students and for each subgroup of students;
(iii) Measure achievement separately for reading/language arts and for mathematics; and
(iv) Take into account the improvement necessary for each subgroup of students described in § 200.16(a)(2) to make significant progress in closing statewide proficiency gaps, such that the State's measurements of interim progress require greater rates of improvement for subgroups of students that are lower-achieving.
(b)
(2) A State's long-term goals and measurements of interim progress under paragraph (b)(1) of this section must include—
(i) The four-year adjusted cohort graduation rate consistent with § 200.34(a); and
(ii) If a State chooses to use an extended-year adjusted cohort graduation rate as part of its Graduation Rate indicator under § 200.14(b)(3), the extended-year adjusted cohort graduation rate consistent with § 200.34(d), except that a State must set more rigorous long-term goals for such graduation rate, as compared to the long-term goals for the four-year adjusted cohort graduation rate.
(3) In establishing the long-term goals and measurements of interim progress under paragraph (b)(1) of this section, a State must—
(i) Set the same multi-year timeline to achieve the State's long-term goals for all students and for each subgroup of students; and
(ii) Take into account the improvement necessary for each subgroup of students described in § 200.16(a)(2) to make significant progress in closing statewide graduation rate gaps, such that a State's measurements of interim progress require greater rates of improvement for subgroups that graduate high school at lower rates.
(c)
(2) The goals and measurements of interim progress under paragraph (c)(1) of this section—
(i) Must set expectations that each English learner will—
(A) Make annual progress toward attaining English language proficiency; and
(B) Attain English language proficiency within a period of time after the student's identification as an English learner, except that an English learner that does not attain English language proficiency within such time must not be exited from English learner services or status; and
(ii) Must be determined using a State-developed uniform procedure applied consistently to all English learners in the State that takes into consideration, at the time of a student's identification as an English learner, the student's English language proficiency level, and may take into consideration, at a State's discretion, one or more of the following student characteristics:
(A) Time in language instruction educational programs.
(B) Grade level.
(C) Age.
(D) Native language proficiency level.
(E) Limited or interrupted formal education, if any.
(a) In its statewide accountability system under § 200.12, each State must, at a minimum, include four distinct indicators for each school that—
(1) Measure performance for all students and separately for each subgroup of students under § 200.16(a)(2); and
(2) Use the same measures within each indicator for all schools in the State, except as provided in paragraph (c)(2) of this section.
(b) A State must annually measure the following indicators consistent with paragraph (a) of this section:
(1) For all schools, an Academic Achievement indicator which—
(i) Must equally measure grade-level proficiency on the annual reading/language arts and mathematics assessments required under section 1111(b)(2)(B)(v)(I) of the Act;
(ii) Must include the performance of at least 95 percent of all students and 95 percent of all students in each subgroup consistent with § 200.15(b)(1); and
(iii) For high schools, may also measure, at the State's discretion, student growth based on the reading/language arts and mathematics assessments required under section 1111(b)(2)(B)(v)(I) of the Act.
(2) For elementary and secondary schools that are not high schools, an Academic Progress indicator, which must include either—
(i) A measure of student growth based on the annual assessments required under section 1111(b)(2)(B)(v)(I) of the Act; or
(ii) Another academic measure that meets the requirements of paragraph (c) of this section.
(3) For high schools, a Graduation Rate indicator, which—
(i) Must measure the four-year adjusted cohort graduation rate consistent with § 200.34(a); and
(ii) May measure, at the State's discretion, the extended-year adjusted cohort graduation rate consistent with § 200.34(d).
(4) For all schools, a Progress in Achieving English Language Proficiency indicator, based on English learner performance on the annual English language proficiency assessment required under section 1111(b)(2)(G) of the Act in each of grades 3 through 8 and in grades for which English learners are otherwise assessed under section 1111(b)(2)(B)(v)(I)(bb) of the Act, that—
(i) Takes into account students' English language proficiency level and,
(ii) Uses objective and valid measures of progress such as student growth percentiles;
(iii) Is aligned with the State-determined timeline for attaining English language proficiency under § 200.13(c)(2)(i)(B); and
(iv) May also include a measure of proficiency (
(5) One or more indicators of School Quality or Student Success that meets the requirements of paragraph (c) of this section, which may vary by each grade span and include indicators of one or more of the following:
(i) Student access to and completion of advanced coursework.
(ii) Postsecondary readiness
(iii) School climate and safety.
(iv) Student engagement.
(v) Educator engagement.
(vi) Any other indicator the State chooses that meets the requirements of paragraph (c) of this section.
(c) A State must demonstrate in its State plan under section 1111 of the Act that each measure it selects to include within an indicator under this section—
(1) Is valid, reliable, and comparable across all LEAs in the State;
(2) Is calculated in the same way for all schools across the State, except that measures within the indicator of Academic Progress and within any indicator of School Quality or Student Success may vary by each grade span;
(3) Is able to be disaggregated for each subgroup of students described in § 200.16(a)(2); and
(4) Is used no more than once in its system of annual meaningful differentiation under § 200.18.
(d) A State must demonstrate in its State plan under section 1111 of the Act that each measure it selects to include within the indicators of Academic Progress and School Quality or Student Success is supported by research that performance or progress on such measures is likely to increase student achievement or, for measures within indicators at the high school level, graduation rates.
(e) A State must demonstrate in its State plan under section 1111 of the Act that each measure it selects to include within the indicators of Academic Progress and School Quality or Student Success aids in the meaningful differentiation of schools under § 200.18 by demonstrating varied results across all schools in the State.
(a)(1) Each State must annually measure the achievement of at least 95 percent of all students, and 95 percent of all students in each subgroup of students under § 200.16(a)(2), who are enrolled in each public school on the assessments required under section 1111(b)(2)(B)(v)(I) of the Act.
(2) Each State must measure participation rates under paragraph (a)(1) of this section separately in reading/language arts and mathematics.
(b) For purposes of annual meaningful differentiation under § 200.18 and identification of schools under § 200.19, a State must—
(1) Calculate any measure in the Academic Achievement indicator under § 200.14(b)(1) so that the denominator of such measure, for all students and for all students in each subgroup, includes the greater of—
(i) 95 percent of all such students in the grades assessed who are enrolled in the school; or
(ii) The number of all such students enrolled in the school who are participating in the assessments required under section 1111(b)(2)(B)(v)(I) of the Act; and
(2) Factor the requirement for 95 percent student participation in assessments under paragraph (a) of this section into its system of annual meaningful differentiation so that missing such requirement, for all students or for any subgroup of students in a school, results in at least one of the following actions:
(i) A lower summative rating in the State's system of annual meaningful differentiation under § 200.18(b)(4).
(ii) The lowest performance level on the Academic Achievement indicator in the State's system of annual meaningful differentiation under § 200.18(b)(3).
(iii) Identification for, and implementation of, a targeted support and improvement plan consistent with the requirements under § 200.22.
(iv) Another equally rigorous State-determined action described in its State plan under section 1111 of the Act that will result in a similar outcome for the school in the system of annual meaningful differentiation and will improve the school's participation rate so that the school meets the requirements under paragraph (a) of this section. (c) To support the State in meeting the requirements of paragraph (a) of this section—
(1) A school that fails to assess at least 95 percent of all students or 95 percent of each subgroup of students must develop and implement an improvement plan that—
(i) Is developed in partnership with stakeholders (including principals and other school leaders, teachers, and parents);
(ii) Includes one or more strategies to address the reason or reasons for low participation rates in the school and improve participation rates in subsequent years;
(iii) Is approved by the LEA prior to implementation; and
(iv) Is monitored, upon submission and implementation, by the LEA; and
(2) An LEA with a significant number of schools that fail to assess at least 95 percent of all students or 95 percent of each subgroup of students must develop and implement an improvement plan that includes additional actions to support effective implementation of the school-level plans developed under paragraph (c)(1) and that is reviewed and approved by the State.
(3) If a State chooses to identify a school for targeted support and improvement under paragraph (b)(2)(iii) of this section, the requirement for such a school to develop and implement a targeted support and improvement plan consistent with § 200.22 fulfills the requirements of this paragraph.
(d)(1) A State must provide a clear and understandable explanation of how it has met the requirements of paragraph (b) of this section in its State plan under section 1111 of the Act and in its description of the State's system for annual meaningful differentiation of schools on its State report card pursuant to section 1111(h)(1)(C)(i)(IV) of the Act.
(2) A State, LEA, or school may not systematically exclude students in any subgroup of students under § 200.16(a) from participating in the assessments required under section 1111(b)(2)(B)(v)(I) of the Act.
(3) To count a student who is assessed based on alternate academic achievement standards described in section 1111(b)(1)(E) of the Act as a participant for purposes of meeting the requirements of this section, the State must have guidelines that meet the requirements described in section 1111(b)(2)(D)(ii) of the Act and must ensure that its LEAs adhere to such guidelines.
(4) A State may count a recently arrived English learner as defined in section 1111(b)(3)(A) of the Act as a
(a)
(1) All public school students.
(2) Each of the following subgroups of students, separately:
(i) Economically disadvantaged students.
(ii) Students from each major racial and ethnic group.
(iii) Children with disabilities, as defined in section 8101(4) of the Act.
(iv) English learners, as defined in section 8101(20) of the Act.
(b)
(i) A State may include such a student's performance within the English learner subgroup under paragraph (a)(2)(iv) of this section for not more than four years after the student ceases to be identified as an English learner for purposes of calculating the Academic Achievement indicator if the State develops a uniform statewide procedure for doing so that includes all such students and includes them—
(A) For the same State-determined period of time; and
(B) In determining if a school meets the State's minimum number of students for the English learner subgroup under § 200.17(a)(1).
(ii) A State may not include such a student within the English learner subgroup under paragraph (a)(2)(iv) of this section for—
(A) Any purpose in the accountability system, except as described in paragraph (b)(1)(i) of this section; or
(B) Purposes of reporting information on State and LEA report cards under section 1111(h) of the Act, except for providing information on each school's level of performance on the Academic Achievement indicator consistent with § 200.18(b)(3).
(2) With respect to an English learner with a disability for whom there are no appropriate accommodations for one or more domains of the English language proficiency assessment required under section 1111(b)(2)(G) of the Act because the disability is directly related to that particular domain (
(3) With respect to a recently arrived English learner as defined in section 1111(b)(3)(A) of the Act, a State must include such an English learner's results on the assessments under section 1111(b)(2)(B)(v)(I) of the Act upon enrollment in a school in one of the 50 States or the District of Columbia (hereafter “a school in the United States”) in calculating long-term goals and measurements of interim progress under § 200.13(a), annually meaningfully differentiating schools under § 200.18, and identifying schools under § 200.19, except that the State may either—
(i)(A) Exempt such an English learner from the first administration of the reading/language arts assessment;
(B) Exclude such an English learner's results on the assessments under section 1111(b)(2)(B)(v)(I) and 1111(b)(2)(G) of the Act in calculating the Academic Achievement and Progress in Achieving English Language Proficiency indicators in the first year of such an English learner's enrollment in a school in the United States; and
(C) Include such an English learner's results on the assessments under section 1111(b)(2)(B)(v)(I) and 1111(b)(2)(G) of the Act in calculating the Academic Achievement and Progress in Achieving English Language Proficiency indicators in the second year of such an English learner's enrollment in a school in the United States and every year of enrollment thereafter; or
(ii)(A) Assess, and report the performance of, such an English learner on the assessments under section 1111(b)(2)(B)(v)(I) of the Act in each year of such an English learner's enrollment in a school in the United States;
(B) Exclude such an English learner's results on the assessments under section 1111(b)(2)(B)(v)(I) of the Act in calculating the Academic Achievement indicator in the first year of such an English learner's enrollment in a school in the United States;
(C) Include a measure of such an English learner's growth on the assessments under section 1111(b)(2)(B)(v)(I) of the Act in calculating the Academic Progress indicator, in the case of an elementary or middle school, and the Academic Achievement indicator, in the case of a high school, in the second year of such an English learner's enrollment in a school in the United States; and
(D) Include a measure of such an English learner's proficiency on the assessments under section 1111(b)(2)(B)(v)(I) of the Act in calculating the Academic Achievement indicator in the third year of such an English learner's enrollment in a school in the United States and every year of enrollment thereafter.
(4) A State may choose one of the exceptions described in paragraphs (b)(3)(i) or (ii) of this section for recently arrived English learners and must—
(i)(A) Apply the same exception to all recently arrived English learners in the State; or
(B) Develop and consistently implement a uniform statewide procedure for all recently arrived English learners that, in determining whether such an exception is appropriate for an English learner, considers the student's English language proficiency level and that may, at a State's discretion, consider one or more of the student characteristics under § 200.13(c)(2)(ii)(B) through (E); and
(ii) Report on State and LEA report cards under section 1111(h) of the Act the number and percentage of recently arrived English learners who are exempted from taking such assessments or whose results on such assessments are excluded from any indicator under § 200.14 on the basis of each exception described in paragraphs (b)(3)(i) and (ii) of this section.
(c)
(a)
(i) Yield statistically reliable information for each purpose for which disaggregated data are used, including purposes of reporting information under section 1111(h) of the Act or for purposes of the statewide accountability system under section 1111(c) of the Act; and
(ii) Ensure that, to the maximum extent practicable, each student subgroup in § 200.16(a)(2) is included at the school level for annual meaningful differentiation and identification of schools under §§ 200.18 and 200.19.
(2) Such number—
(i) Must be the same number for all students and for each subgroup of students in the State described in § 200.16(a)(2);
(ii) Must be the same number for all purposes of the statewide accountability system under section 1111(c) of the Act, including measuring school performance for each indicator under § 200.14;
(iii) Must not exceed 30 students, unless the State provides a justification for doing so in its State plan under section 1111 of the Act consistent with paragraph (a)(3)(v) of this section; and
(iv) May be a lower number for purposes of reporting under section 1111(h) under the Act than for purposes of the statewide accountability system under section 1111(c) of the Act.
(3) A State must include in its State plan under section 1111 of the Act—
(i) A description of how the State's minimum number of students meets the requirements of paragraphs (a)(1) of this section;
(ii) An explanation of how other components of the statewide accountability system, such as the State's uniform procedure for averaging data under § 200.20(a), interact with the State's minimum number of students to affect the statistical reliability and soundness of accountability data and to ensure the maximum inclusion of all students and each student subgroup under § 200.16(a)(2);
(iii) A description of the strategies the State uses to protect the privacy of individual students for each purpose for which disaggregated data is required, including reporting under section 1111(h) of the Act and the statewide accountability system under section 1111(c) of the Act, as required in paragraph (b) of this section;
(iv) Information regarding the number and percentage of all students and students in each subgroup described in § 200.16(a)(2) for whose results schools would not be held accountable in the State accountability system for annual meaningful differentiation under § 200.18; and
(v) If applicable, a justification, including data on the number and percentage of schools that would not be held accountable for the results of students in each subgroup under § 200.16(a)(2) in the accountability system, that explains how a minimum number of students exceeding 30 promotes sound, reliable accountability determinations.
(b)
(2) To determine whether the collection and dissemination of disaggregated information would reveal personally identifiable information about an individual student, teacher, principal, or other school leader, a State must apply the requirements under section 444 of the General Education Provisions Act (the Family Educational Rights and Privacy Act of 1974).
(3) Nothing in paragraph (b)(1) or (2) of this section may be construed to abrogate the responsibility of a State to implement the requirements of section 1111(c) of the Act to annually meaningfully differentiate among all public schools in the State on the basis of the performance of all students and each subgroup of students under section 1111(c)(2) of the Act on all indicators under section 1111(c)(4)(B) of the Act.
(4) Each State and LEA must implement appropriate strategies to protect the privacy of individual students in reporting information under section 1111(h) of the Act and in establishing annual meaningful differentiation of schools in its statewide accountability system under section 1111(c) of the Act on the basis of disaggregated subgroup information.
(c)
(d)
(a) In its State plan under section 1111 of the Act each State must describe how its statewide accountability system under § 200.12 establishes a system for annual meaningful differentiation for all public schools.
(b) A State must define annual meaningful differentiation in a manner that—
(1) Includes the performance of all students and each subgroup of students in a school, consistent with §§ 200.16, 200.17, and 200.20(c), on each of the indicators described in § 200.14;
(2) Includes, for each indicator, at least three distinct levels of school performance that are consistent with attainment of the long-term goals and measurements of interim progress under § 200.13 and that are clear and understandable to the public;
(3) Provides information on a school's level of performance on each indicator described in § 200.14, separately, as part of the description of the State's system for annual meaningful differentiation on LEA report cards under § 200.32;
(4) Results in a single rating from among at least three distinct rating categories for each school, based on a school's level of performance on each indicator, to describe a school's summative performance as part of the description of the State's system for annual meaningful differentiation on LEA report cards under §§ 200.31 and 200.32;
(5) Meets the requirements of § 200.15 to annually measure the achievement of at least 95 percent of all students and 95 percent of all students in each subgroup of students on the assessments described in section 1111(b)(2)(B)(v)(I) of the Act; and
(6) Informs the State's methodology described in § 200.19 for identifying schools for comprehensive support and
(c) In providing annual meaningful differentiation among all public schools in the State, including providing a single summative rating for each school, a State must—
(1) Afford substantial weight to each of the following indicators, as applicable, under § 200.14—
(i) Academic Achievement indicator.
(ii) Academic Progress indicator.
(iii) Graduation Rate indicator.
(iv) Progress in Achieving English Language Proficiency indicator;
(2) Afford, in the aggregate, much greater weight to the indicators in paragraph (c)(1) of this section than to the indicator or indicators of School Quality or Student Success under § 200.14(b)(5), in the aggregate; and
(3) Within each grade span, afford the same relative weight to each indicator among all schools consistent with paragraph (e)(3) of this section.
(d) To show that its system of annual meaningful differentiation meets the requirements of paragraph (c) of this section, a State must—
(1) Demonstrate that performance on the indicator or indicators of School Quality or Student Success may not be used to change the identity of schools that would otherwise be identified for comprehensive support and improvement under § 200.19(a) unless such a school is also making significant progress, for all students consistent with § 200.16(a)(1), on at least one of the indicators described in paragraph (c)(1)(i) through (iii) of this section;
(2) Demonstrate that performance on the indicator or indicators of School Quality or Student Success may not be used to change the identity of schools that would otherwise be identified for targeted support and improvement under § 200.19(b), unless such a school is also making significant progress, for each consistently underperforming or low-performing subgroup of students, on at least one of the indicators described in paragraph (c)(1) of this section; and
(3) Demonstrate, based on the performance of all students and each subgroup of students, that a school performing in the lowest performance level under paragraph (b)(2) of this section on any of the indicators described in paragraph (c)(1) of this section receives a different summative rating than a school performing in the highest performance level on all indicators under § 200.14; and
(e)(1) A State must demonstrate in its State plan under section 1111 of the Act how it has met the requirements of paragraphs (c) and (d) of this section, including a description of how a State calculates the performance levels on each indicator and a summative rating for each school.
(2) In meeting the requirement in paragraph (c)(1) of this section to afford substantial weight to certain indicators, a State is not required to afford each such indicator the same substantial weight.
(3) If a school does not meet the State's minimum number of students under § 200.17(a)(1) for the English learner subgroup, a State must—
(i) Exclude the Progress in Achieving English Language Proficiency indicator from the annual meaningful differentiation for such a school under paragraph (b) of this section; and
(ii) Afford the Academic Achievement, Academic Progress, Graduation Rate, and School Quality or Student Success indicators the same relative weights in such a school as are afforded to such indicators in a school that meets the State's minimum number of students for the English learner subgroup.
(a)
(1)
(2)
(3)
(b)
(1)
(2)
(c)
(1) Consider each school's performance among each subgroup of students in the school consistent with §§ 200.16 and 200.17, over no more than two years consistent with § 200.20(a);
(2) Take into account the indicators under § 200.14 used for annual meaningful differentiation under § 200.18 consistent with the requirements for weighting of indicators described in § 200.18(c); and
(3) Define a consistently underperforming subgroup of students in a uniform manner across all LEAs in the State, which must include one or more of the following:
(i) A subgroup of students that is not meeting the State's measurements of interim progress or is not on track to meet the State-designed long-term goals under § 200.13.
(ii) A subgroup of students that is performing at the lowest performance level under § 200.18(b)(3) in the system of annual meaningful differentiation on at least one indicator under § 200.14, or is particularly low performing on a measure within an indicator (
(iii) A subgroup of students that is performing at or below a State-determined threshold as compared to the average performance among all students, or the highest-performing subgroup of students, in the State.
(iv) A subgroup of students that is performing significantly below the average performance among all students, or the highest-performing subgroup, in the State, such that the performance gap is among the largest in the State.
(v) Another definition that the State demonstrates in its State plan meets the requirements of paragraphs (c)(1) and (2) of this section.
(d)
(ii) A State must identify schools with one or more consistently underperforming subgroups of students for targeted support and improvement under paragraph (b) of this section annually, beginning with identification for the 2018-2019 school year.
(iii) A State must identify schools with one or more low-performing subgroups of students for targeted support and improvement under paragraph (b)(2) of this section at least once every three years, with such identification occurring in each year, consistent with paragraph (d)(1)(i) of this section, that the State identifies schools under for comprehensive support and improvement, beginning with identification for the 2017-2018 school year.
(2) A State must identify schools for comprehensive and targeted support and improvement by the beginning of each school year, with the year of identification defined as the school year immediately following the most recent school year in which the State measured the school's performance on the indicators under § 200.14 that resulted in the school's identification (
(a)
(1)
(ii) If a State averages data across school years for these purposes, the State must—
(A) Use the same uniform procedure for averaging data from the school year for which the identification is made with data from one or two school years immediately preceding that school year for all public schools;
(B) Report data for a single school year, without averaging, on report cards under section 1111(h) of the Act; and
(C) Explain its uniform procedure for averaging data in its State plan under section 1111 of the Act and specify that such procedure is used in its description of the indicators used for annual meaningful differentiation on the State report card pursuant to section 1111(h)(1)(C)(i)(III) of the Act.
(2)
(ii) If a State combines data across grades for these purposes, the State must—
(A) Use the same uniform procedure for combining data for all public schools;
(B) Report data for each grade in the school on report cards under section 1111(h) of the Act; and
(C) Explain its uniform procedure for combining data in its State plan under section 1111 of the Act, and specify that such procedure is used in its description of the indicators used for annual meaningful differentiation in its accountability system on the State report card pursuant to section 1111(h)(1)(C)(i)(III) of the Act.
(b)
(2) A State may not use the performance of a student who has been enrolled in the same school within an LEA for less than half of the academic year in its system of annual meaningful differentiation and identification of schools, except that—
(i) An LEA must include such student in calculating the Graduation Rate indicator under § 200.14(b)(3), if applicable;
(ii) If such student exited a high school without receiving a regular high school diploma and without transferring to another high school that grants a regular high school diploma during such school year, the LEA must assign such student, for purposes of calculating the Graduation Rate indicator and consistent with the approach established by the State under § 200.34(f), to either—
(A) The high school in which such student was enrolled for the greatest proportion of school days while enrolled in grades 9 through 12; or
(B) The high school in which the student was most recently enrolled; and
(iii) All students, regardless of their length of enrollment in a school within an LEA during the academic year, must be included for purposes of reporting on the State and LEA report cards under section 1111(h) of the Act for such school year.
(a)
(b)
(1) Be in an understandable and uniform format;
(2) Be, to the extent practicable, written in a language that parents can understand or, if it is not practicable to provide written translations to a parent with limited English proficiency, be orally translated for such parent; and
(3) Be, upon request by a parent or guardian who is an individual with a disability as defined by the Americans with Disabilities Act, 42 U.S.C. 12102, provided in an alternative format accessible to that parent.
(c)
(1) Academic achievement data on each of the assessments required under section 1111(b)(2)(B)(v) of the Act for all students in the school, including for each subgroup of students described in § 200.16(a)(2);
(2) The school's performance, including among subgroups of students described in § 200.16(a)(2), on the indicators and long-term goals and measurements of interim progress described in §§ 200.13 and 200.14;
(3) The reason or reasons the school was identified for comprehensive support and improvement under § 200.19(a); and
(4) At the LEA's discretion, the school's performance on additional, locally selected indicators that are not included in the State's system of annual meaningful differentiation under § 200.18 and that affect student outcomes in the identified school.
(d)
(1) Is developed in partnership with stakeholders (including principals and other school leaders, teachers, and parents), as demonstrated, at a minimum, by describing in the plan how—
(i) Early stakeholder input was solicited and taken into account in the development of the plan, including the changes made as a result of such input; and
(ii) Stakeholders will participate in an ongoing manner in the plan's implementation;
(2) Includes and is based on the results of the needs assessment described in paragraph (c) of this section;
(3) Includes one or more interventions (
(i) Meet the definition of “evidence-based” under section 8101(21) of the Act;
(ii) Are supported, to the extent practicable, by evidence from a sample population or setting that overlaps with the population or setting of the school to be served;
(iii) Are supported, to the extent practicable, by the strongest level of evidence that is available and appropriate to meet the needs identified in the needs assessment under paragraph (c) of this section; and
(iv) May be selected from among any State-established evidence-based interventions or a State-approved list of evidence-based interventions, consistent with State law and § 200.23(c)(2) and (3);
(4) Identifies and addresses resource inequities, by—
(i) Including a review of LEA and school-level resources among schools and, as applicable, within schools with respect to—
(A) Disproportionate rates of ineffective, out-of-field, or inexperienced teachers identified by the State and LEA consistent with sections 1111(g)(1)(B) and 1112(b)(2) of the Act; and
(B) Per-pupil expenditures of Federal, State, and local funds required to be reported annually consistent with section 1111(h)(1)(C)(x) of the Act; and
(ii) Including, at the LEA's discretion, a review of LEA- and school-level budgeting and resource allocation with respect to resources described in paragraph (d)(4)(i) of this section and the availability and access to any other resource provided by the LEA or school, such as—
(A) Advanced coursework;
(B) Preschool programs; and
(C) Instructional materials and technology;
(5) Must be fully implemented in the school year for which such school is identified, except that an LEA may have a planning year during which the LEA must carry out the needs assessment required under paragraph (c) of this section and develop the comprehensive support and improvement plan to prepare for successful implementation of interventions required under the plan on, at the latest, the first full day of the school year following the school year for which the school was identified;
(6) Must be made publicly available by the LEA, including to parents consistent with the requirements under paragraphs (b)(1) through (3) of this section; and
(7) Must be approved by the school identified for comprehensive support and improvement, the LEA, and the State.
(e)
(1) Review such plan against the requirements of this section and approve the plan in a timely manner, as determined by the State, taking all actions necessary to ensure that the school and LEA are able to meet all of the requirements of paragraphs (a) through (d) of this section to develop and implement the plan within the required timeframe; and
(2) Monitor and periodically review each LEA's implementation of such plan.
(f)
(i) Improve student outcomes; and
(ii) No longer meet the criteria for identification under § 200.19(a) within a State-determined number of years (not to exceed four years).
(2) If a school does not meet the exit criteria established under paragraph (f)(1) of this section within the State-determined number of years, the State must, at a minimum, require the LEA to conduct a new comprehensive needs assessment that meets the requirements under paragraph (c) of this section.
(3) Based on the results of the new needs assessment, the LEA must, with respect to each school that does not meet the exit criteria, amend its
(i) Address the reasons the school did not meet the exit criteria, including whether the school implemented the interventions with fidelity and sufficient intensity, and the results of the new needs assessment;
(ii) Update how it will continue to address previously identified resource inequities and to identify and address any newly identified resource inequities consistent with the requirements in paragraph (d)(4) of this section; and
(iii) Include implementation of additional interventions in the school that may address school-level operations (which may include staffing, budgeting, and changes to the school day and year) and that must—
(A) Be determined by the State, which may include requiring an intervention from among any State-established evidence-based interventions or a State-approved list of evidence-based interventions, consistent with State law and § 200.23(c)(2) and (3);
(B) Be more rigorous such that one or more evidence-based interventions in the plan are supported by strong or moderate evidence, consistent with section 8101(21)(A) of the Act; and
(C) Be supported, to the extent practicable, by evidence from a sample population or setting that overlaps with the population or setting of the school to be served.
(4) Each LEA must—
(i) Make the amended comprehensive support and improvement plan described in paragraph (f)(3) of this section publicly available, including to parents consistent with paragraphs (b)(1) through (3) of this section; and
(ii) Submit the amended plan to the State in a timely manner, as determined by the State.
(5) After the LEA submits the amended plan to the State, the State must—
(i) Review and approve the amended plan, and any additional amendments to the plan, consistent with the review process required under paragraph (e)(1) of this section; and
(ii) Increase its monitoring, support, and periodic review of each LEA's implementation of such plan.
(g)
(1) Permit differentiated improvement activities consistent with paragraph (d)(3) of this section as part of the comprehensive support and improvement plan, including in schools that predominantly serve students—
(i) Returning to education after having exited secondary school without a regular high school diploma; or
(ii) Who, based on their grade or age, are significantly off track to accumulate sufficient academic credits to meet high school graduation requirements, as established by the State; and
(2) In the case of such a school that has a total enrollment of less than 100 students, permit the LEA to forego implementation of improvement activities required under this section.
(h)
(a)
(1) Notify, no later than the beginning of the school year for which such school is identified, each LEA serving such school of the identification; and
(2) Ensure such LEA provides notification to each school identified for targeted support and improvement, including the reason for identification (
(b)
(2) The notice must include—
(i) The reason or reasons for the identification under § 200.19(b) (
(ii) An explanation of how parents can become involved in developing and implementing the targeted support and improvement plan described in paragraph (c) of this section.
(c)
(1) Is developed in partnership with stakeholders (including principals and other school leaders, teachers, and parents) as demonstrated by, at a minimum, describing in the plan how—
(i) Early stakeholder input was solicited and taken into account in the development of each component of the plan, including the changes made as a result of such input; and
(ii) Stakeholders will have an opportunity to participate in an ongoing manner in such plan's implementation;
(2) Is designed to improve student performance for the lowest-performing students on each of the indicators under § 200.14 that led to the identification of the school for targeted support and improvement or, in the case of schools implementing targeted support and improvement plans consistent with § 200.15(b)(2)(iii), to improve student participation in the assessments required under section 1111(b)(2)(B)(v)(I) of the Act;
(3) Takes into consideration—
(i) The school's performance on the indicators and long-term goals and measurements of interim progress described in §§ 200.13 and 200.14, including student academic achievement on each of the assessments required under section 1111(b)(2)(B)(v) of the Act; and
(ii) At the school's discretion, the school's performance on additional, locally selected indicators that are not included in the State's system of annual meaningful differentiation under § 200.18 and that affect student outcomes in the identified school;
(4) Includes one or more interventions to address the reason or reasons for identification and improve student outcomes for the lowest-performing students in the school that—
(i) Meet the definition of “evidence-based” under section 8101(21) of the Act;
(ii) Are supported, to the extent practicable, by evidence from a sample population or setting that overlaps with the population or setting of the school to be served;
(iii) May be selected from among a State-approved list of evidence-based interventions, consistent with § 200.23(c)(2); and
(iv) Are supported, to the extent practicable, by the strongest level of evidence that is available and appropriate to improve student outcomes for the lowest-performing students in the school;
(5) Must be fully implemented in the school year for which such school is identified, except that a school identified under § 200.19(b)(2) or (c) may have a planning year during which the school must develop the targeted support and improvement plan and complete other activities necessary to prepare for successful implementation of interventions required under the plan on, at the latest, the first full day of the school year following the school year for which the school was identified;
(6) Is submitted to the LEA for approval, pursuant to paragraph (d) of this section;
(7) In the case of a school with low-performing subgroups as described in § 200.19(b)(2), identifies and addresses resource inequities and their effect on each low-performing subgroup in the school by—
(i) Including a review of LEA and school-level resources among schools and, as applicable, within schools with respect to—
(A) Disproportionate rates of ineffective, out-of-field, or inexperienced teachers identified by the State and LEA consistent with sections 1111(g)(1)(B) and 1112(b)(2) of the Act; and
(B) Per-pupil expenditures of Federal, State, and local funds required to be reported annually consistent with section 1111(h)(1)(C)(x) of the Act; and
(ii) Including, at the school's discretion, a review of LEA and school-level budgeting and resource allocation with respect to resources described in paragraph (c)(7)(i) of this section and the availability and access to any other resource provided by the LEA or school, such as—
(A) Advanced coursework;
(B) Preschool programs; and
(C) Instructional materials and technology; and
(8) For any school operating a schoolwide program under section 1114 of the Act, addresses the needs identified by the needs assessment required under section 1114(b)(6) of the Act.
(d)
(1) Review each plan against the requirements of this section and approve such plan in a timely manner, taking all actions necessary to ensure that each school is able to meet all of the requirements under paragraphs (a) through (c) of this section within the required timeframe;
(2) Make the approved plan, and any amendments to the plan, publicly available, including to parents consistent with the requirements under § 200.21(b)(1) through (3); and
(3) Monitor the school's implementation of the plan.
(e)
(1) The school has successfully implemented its targeted support and improvement plan such that it no longer meets the criteria for identification and has improved student outcomes for its lowest-performing students, including each subgroup of students that was identified as consistently underperforming under § 200.19(c), or, in the case of a school implementing a targeted support and improvement plan consistent with § 200.15(b)(2)(iii), has met the requirement under § 200.15(a) for student participation in the assessments required under section 1111(b)(2)(B)(v)(I) of the Act, and may exit targeted support and improvement status.
(2) The school has unsuccessfully implemented its targeted support and improvement plan such that it has not improved student outcomes for its lowest-performing students, including each subgroup of students that was identified as consistently underperforming under § 200.19(c), or, in the case of a school implementing a targeted support and improvement plan consistent with § 200.15(b)(2)(iii), has failed to meet the requirement under § 200.15(a) for student participation in the assessments required under section 1111(b)(2)(B)(v)(I) of the Act, in which case the LEA must subsequently—
(i) Require the school to amend its targeted support and improvement plan to include additional actions that continue to meet all requirements under paragraph (c) of this section and address the reasons the school did not meet the exit criteria, and encourage interventions that either meet a higher level of evidence under paragraph (c)(4) of this section than the interventions included in the school's original plan or increase the intensity of effective interventions in the school's original plan;
(ii) Review and approve the school's amended plan consistent with the review process required under paragraph (d)(1) of this section; and
(iii) Increase its monitoring and support of such school's implementation of the plan.
(f)
(i) Improves student outcomes for its lowest-performing students, including each subgroup identified as low-performing under § 200.19(b)(2); and
(ii) No longer meets the criteria for identification under § 200.19(b)(2).
(2) If a school does not satisfy the exit criteria established under paragraph (f)(1) of this section, the State must identify the school for comprehensive support and improvement under § 200.19(a)(3), consistent with the requirement under § 200.19(d)(1)(i) for States to identify such schools at least once every three years.
(a)
(b)
(1) Develop and implement comprehensive support and improvement plans that meet the requirements of § 200.21;
(2) Ensure schools develop and implement targeted support and improvement plans that meet the requirements of § 200.22; and
(3) Develop or use tools related to—
(i) Conducting a school-level needs assessment consistent with § 200.21(c);
(ii) Selecting evidence-based interventions consistent with §§ 200.21(d)(3) and 200.22(c)(4); and
(iii) Reviewing resource allocation and identifying strategies for addressing any identified resource inequities consistent with §§ 200.21(d)(4) and 200.22(c)(7).
(c)
(1) Take action to initiate additional improvement in any LEA, or in any authorized public chartering agency consistent with State charter school law, with a significant number of schools that are consistently identified for comprehensive support and improvement under § 200.19(a) and are not meeting exit criteria established under § 200.21(f) or a significant number of schools identified for targeted support and improvement under § 200.19(b), including school-level actions such as reorganizing a school to implement a new instructional model; replacing school leadership; converting a school to a public charter school; changing school governance; closing a school; or, in the case of a public charter school, revoking or non-renewing the school's charter consistent with State charter school law;
(2) Establish an exhaustive or non-exhaustive list of State-approved, evidence-based interventions consistent with the definition of evidenced-based under section 8101(21) of the Act for use in schools implementing comprehensive or targeted support and improvement plans under §§ 200.21 and 200.22;
(3) Consistent with State law, establish evidence-based State-determined interventions consistent with the definition of “evidenced-based” under section 8101(21) of the Act that can be used by LEAs in a school identified for comprehensive support and improvement under § 200.19(a), which may include whole-school reform models; and
(4) Request that LEAs submit to the State for review and approval, in a timely manner, the amended targeted support and improvement plan for each school in the LEA described in § 200.22(e)(2) prior to the approval of such plan by the LEA.
(a)
(2) An LEA may apply for school improvement funds if—
(i) It has one or more schools identified for comprehensive support and improvement under § 200.19(a) or targeted support and improvement under § 200.19(b); and
(ii) It applies to serve each school in the LEA identified for comprehensive support and improvement that it has sufficient capacity to serve before applying to serve any school in the LEA identified for targeted support and improvement.
(b)
(1) A description of one or more evidence-based interventions that are based on strong, moderate, or promising evidence under section 8101(21)(A) of the Act and that will be implemented in each school the LEA proposes to serve.
(2) A description of how the LEA will carry out its responsibilities under §§ 200.21 and 200.22 for schools it will serve with funds under this section, including how the LEA will—
(i) Develop and implement a comprehensive support and improvement plan that meets the requirements of § 200.21 for each school identified under § 200.19(a), for which the LEA receives school improvement funds to serve; and
(ii) Support each school identified under § 200.19(b), for which the LEA receives school improvement funds to serve, in developing and implementing a targeted support and improvement plan that meets the requirements of § 200.22.
(3) A budget indicating how it will allocate school improvement funds among schools identified for comprehensive and targeted support and improvement that it commits to serve.
(4) The LEA's plan to monitor schools for which the LEA receives school improvement funds, including the LEA's plan to increase monitoring of a school that does not meet the exit criteria consistent with § 200.21(f) or § 200.22(e) and (f).
(5) A description of the rigorous review process the LEA will use to recruit, screen, select, and evaluate any external partners with which the LEA will partner in carrying out activities supported with school improvement funds.
(6) A description of how the LEA will align other Federal, State, and local resources to carry out the activities supported with school improvement funds, and sustain effective activities in schools after funding under this section is complete.
(7) As appropriate, a description of how the LEA will modify practices and policies to provide operational flexibility, including with respect to school budgeting and staffing, that enables full and effective implementation of comprehensive targeted support and improvement plans.
(8) For any LEA that plans to use the first year of its school improvement funds for planning activities in a school that it will serve, a description of the activities that will be supported with school improvement funds, the timeline for implementing those activities, how such timeline will ensure full implementation of the comprehensive or targeted support and improvement
(9) An assurance that each school the LEA proposes to serve will receive all of the State and local funds it would have received in the absence of funds received under this section.
(c)
(2) In awarding school improvement funds under this section, a State must—
(i) Award the funds on a competitive or formula basis;
(ii) Make each award of sufficient size, with a minimum award of $500,000 per year for each school identified for comprehensive support and improvement to be served and a minimum award of $50,000 per year for each school identified for targeted support and improvement to be served, to enable the LEA to effectively implement all requirements of a support and improvement plan under § 200.21 or § 200.22, as applicable, including selected evidence-based interventions, except that a State may determine that an award of less than the minimum award amount is appropriate if the LEA demonstrates, in its application, that such lesser amount will be sufficient to support effective implementation of such plan; and
(iii) Make awards not to exceed four years, which may include a planning year consistent with paragraph (b)(7) of this section during which the LEA must plan to carry out activities that will be supported with school improvement funds by, at the latest, the beginning of the school year following the school year for which the school was identified, and that will support the successful implementation of interventions required under §§ 200.21 and 200.22, as applicable.
(3) If a State permits an LEA to have a planning year for a school under paragraph (c)(2)(iii) of this section, prior to renewing the LEA's school improvement award with respect to such school, the State must review the performance of the LEA in supporting such school during the planning year against the LEA's approved application and determine that the LEA will be able to ensure such school fully implements the activities and interventions that will be supported with school improvement funds by the beginning of the school year following the planning year.
(4) If a State has insufficient school improvement funds to award a grant of sufficient size to each LEA that submits an approvable application consistent with paragraph (c)(1) of this section, the State must, whether awarding funds through a formula or competition—
(i) Award funds to an LEA applying to serve a school identified for comprehensive support and improvement before awarding funds to an LEA applying to serve a school identified for targeted support and improvement;
(ii) Give priority in funding to an LEA that demonstrates the greatest need for such funds, as determined by the State, and based, at a minimum, on—
(A) The number or percentage of elementary and secondary schools in the LEA implementing plans under §§ 200.21 and 200.22;
(B) The State's review of resource allocation among and within LEAs under § 200.23(a); and
(C) Current academic achievement and student outcomes in the school or schools the LEA is proposing to serve.
(iii) Give priority in funding to an LEA that demonstrates the strongest commitment to use such funds to enable the lowest-performing schools to improve academic achievement and student outcomes, taking into consideration, with respect to the school or schools to be served—
(A) The proposed use of evidence-based interventions that are supported by the strongest level of evidence available; and
(B) Commitment to family and community engagement.
(iv) Take into consideration geographic diversity within the State.
(d)
(i) Establish the method described in paragraph (c) of this section that the State will use to allocate school improvement funds to LEAs;
(ii) Monitor the use of funds by LEAs receiving school improvement funds;
(iii) Evaluate the use of school improvement funds by LEAs receiving such funds including by, at a minimum—
(A) Engaging in ongoing efforts to analyze the impact of the evidence-based interventions implemented using funds allocated under this section on student outcomes or other relevant outcomes; and
(B) Disseminating on a regular basis the State's findings on effectiveness of the evidence-based interventions to LEAs with schools identified under § 200.19;
(iv) Prior to renewing an LEA's award of school improvement funds with respect to a particular school each year and consistent with paragraph (c)(2)(ii) of this section, determine that—
(A) The school is making progress on the State's long-term goals and measurements of interim progress and accountability indicators under §§ 200.13 and 200.14; and
(B) The school is implementing evidence-based interventions with fidelity to the LEA's application and the requirements under §§ 200.21 and 200.22, as applicable; and
(v) As appropriate, reduce barriers and provide operational flexibility for each school in an LEA receiving funds under this section, including flexibility around school budgeting and staffing.
(2) A State may—
(i) Set aside up to five percent of the school improvement funds the State reserves under section 1003(a) of the Act to carry out the activities under paragraph (d)(1) of this section; and
(ii) Directly provide for school improvement activities funded under this section or arrange for their provision in a school through external partners such as school support teams, educational service agencies, or nonprofit or for-profit entities with expertise and a record of success in implementing evidence-based strategies to improve student achievement, instruction, and schools if the State has the authority under State law to take over the school or, if the State does not have such authority, with LEA approval with respect to each such school, and—
(A) The State undertakes a rigorous review process in recruiting, screening, selecting, and evaluating any external partner the State uses to carry out activities directly with school improvement funds; and
(B) The external provider has demonstrated success implementing the evidence-based intervention or interventions that are based on strong, moderate, or promising evidence consistent with section 8101(21)(A) of the Act that it will implement.
(e)
(a)
(2) Each State report card must include, at a minimum—
(i) The information required under section 1111(h)(1)(C) of the Act;
(ii) As applicable, for each authorized public chartering agency in the State—
(A) How the percentage of students in each subgroup defined in section 1111(c)(2) of the Act for each charter school authorized by such agency compares to such percentage for the LEA or LEAs from which the charter school draws a significant portion of its students, or the geographic community within the LEA in which the charter school is located, as determined by the State; and
(B) How academic achievement under § 200.30(b)(2)(i)(A) for students in each charter school authorized by such agency compares to that for students in the LEA or LEAs from which the charter school draws a significant portion of its students, or the geographic community within the LEA in which the charter school is located, as determined by the State; and
(iii) Any additional information that the State believes will best provide parents, students, and other members of the public with information regarding the progress of each of the State's public elementary schools and secondary schools, which may include the number and percentage of students requiring remediation in postsecondary education and the number and percentage of students attaining career and technical proficiencies.
(b)
(2) The State report card must begin with a clearly labeled overview section that is prominently displayed and includes the following statewide information for the most recent school year:
(i) For all students and disaggregated, at a minimum, for each subgroup of students under § 200.16(a)(2), results on—
(A) Each of the academic assessments in reading/language arts, mathematics, and science under section 1111(b)(2) of the Act, including the number and percentage of students at each level of achievement;
(B) Each measure included within the Academic Progress indicator under § 200.14(b)(2) for students in public elementary schools and secondary schools that are not high schools;
(C) The four-year adjusted cohort graduation rate and, if adopted by the State, any extended-year adjusted cohort graduation rate consistent with § 200.34; and
(D) Each measure included within the School Quality or Student Success indicator under § 200.14(b)(5).
(ii) The number and percentage of English learners achieving English language proficiency, as measured by the English language proficiency assessments under section 1111(b)(2)(G) of the Act.
(3) If the overview section required under paragraph (b)(2) of this section does not include disaggregated data for each subgroup required under section 1111(h)(1)(C) of the Act, a State must ensure that the disaggregated data not included in the overview section are otherwise included on the State report card.
(c)
(d)
(i) Disseminate widely to the public the State report card by, at a minimum, making it available on a single page of the SEA's Web site; and
(ii) Include on the SEA's Web site—
(A) The report card required under § 200.31 for each LEA in the State; and
(B) The annual report to the Secretary required under section 1111(h)(5) of the Act.
(e)
(2) If a State cannot meet the December 31, 2018, deadline for reporting some or all of the newly required information under section 1111(h)(1)(C) of the Act for the 2017-2018 school year, the State may request from the Secretary a one-time, one-year extension for reporting on those To receive an extension, a State must submit to the Secretary, by July 1, 2018—
(i) Evidence satisfactory to the Secretary demonstrating that the State cannot meet the deadline in paragraph (e)(1) of this section; and
(ii) A plan and timeline addressing the steps the State will take to disseminate, as expeditiously as possible, report cards for the 2017-2018 school year consistent with this section.
(f)
(i) The term “migrant status” means status as a “migratory child” as defined in section 1309(3) of the Act, which means a child or youth who made a qualifying move in the preceding 36 months—
(A) As a migratory agricultural worker or a migratory fisher; or
(B) With, or to join, a parent or spouse who is a migratory agricultural worker or a migratory fisher.
(ii) The term “homeless status” means status as “homeless children and youths” as defined in section 725 of the McKinney-Vento Homeless Assistance Act, which means individuals who lack a fixed, regular, and adequate nighttime residence (within the meaning of section 103(a)(1) of the McKinney-Vento Homeless Assistance Act) and includes—
(A) Children and youths who are—
(
(
(
(
(B) Children and youths who have a primary nighttime residence that is a public or private place not designed for or ordinarily used as a regular sleeping accommodation for human beings (within the meaning of section 103(a)(2)(C) of the McKinney-Vento Homeless Assistance Act);
(C) Children and youths who are living in cars, parks, public spaces, abandoned buildings, substandard housing, bus or train stations, or similar settings; and
(D) Migratory children (as defined in this paragraph) who qualify as homeless for the purposes of this section because they are living in circumstances described in paragraph (f)(1)(ii)(A) through (C) of this section.
(iii) With respect to the term “status as a child in foster care,” the term “foster care” has the same meaning as defined in 45 CFR 1355(a), which means 24-hour substitute care for children
(iv) With respect to the term “student with a parent who is a member of the Armed Forces on active duty,” the terms “Armed Forces” and “active duty” have the same meanings as defined in 10 U.S.C. 101(a)(4) and 101(d)(1):
(A) “Armed Forces” means the Army, Navy, Air Force, Marine Corps, and Coast Guard.
(B) “Active duty” means full-time duty in the active military service of the United States, including full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. Such term does not include full-time National Guard duty.
(2) A State is not required to report disaggregated data for information required on report cards under section 1111(h) of the Act if the number of students in the subgroup is insufficient to yield statistically sound and reliable information or the results would reveal personally identifiable information about an individual student, consistent with § 200.17.
(a)
(2) Each LEA report card must include, at a minimum, the information required under section 1111(h)(2)(C) of the Act.
(b)
(2) Each LEA report card must begin with, for the LEA as a whole and for each school served by the LEA, a clearly labeled overview section that is prominently displayed and includes the following information for the most recent school year:
(i) For all students and disaggregated, at a minimum, for each subgroup of students required under § 200.16(a)(2)—
(A) All information required under § 200.30(b)(2);
(B) For the LEA, how academic achievement under § 200.30(b)(2)(i)(A) compares to that for students in the State as a whole; and
(C) For each school, how academic achievement under § 200.30(b)(2)(i)(A) compares to that for students in the LEA and the State as a whole.
(ii) For each school—
(A) The summative rating of the school consistent with § 200.18(b)(4);
(B) Whether the school is identified for comprehensive support and improvement under § 200.19(a) and, if so, the reason for such identification (
(C) Whether the school is identified for targeted support and improvement under § 200.19(b) and, if so, each consistently underperforming or low-performing subgroup for which it is identified.
(iii) Identifying information, including, but not limited to, the name, address, phone number, email, student membership count, and status as a participating Title I school.
(3) Each LEA must ensure that the overview section required under paragraph (b)(2) of this section for each school served by the LEA can be distributed to parents, consistent with paragraph (d)(2)(i) of this section, on a single piece of paper.
(4) If the overview section required under paragraph (b)(2) of this section does not include disaggregated data for each subgroup required under section 1111(h)(1)(C) of the Act, an LEA must ensure that the disaggregated data not included in the overview section are otherwise included on the LEA report card.
(c)
(d)
(2) At a minimum the LEA report card must be made available on the LEA's Web site, except that an LEA that does not operate a Web site may provide the information to the public in another manner determined by the LEA.
(3) An LEA must provide the information described in paragraph (b)(2) of this section to the parents of each student enrolled in each school in the LEA—
(i) Directly, through such means as regular mail or email, except that if an LEA does not have access to individual student addresses, it may provide information to each school for distribution to parents; and
(ii) In a timely manner, consistent with the requirements under paragraph (e) of this section.
(e)
(2) If an LEA cannot meet the December 31, 2018, deadline for reporting some or all of the newly required information under section 1111(h)(2)(C) of the Act for the 2017-2018 school year, a State may request from the Secretary a one-time, one-year extension for reporting on those elements on behalf of the LEA consistent with the requirements under § 200.30(e)(2).
(f)
(a)
(1) The minimum number of students that the State establishes under § 200.17 for use in the accountability system;
(2) The long-term goals and measurements of interim progress that the State establishes under § 200.13 for all students and for each subgroup of students, as described in § 200.16(a)(2);
(3) The indicators used by the State under § 200.14 to annually meaningfully
(4) The State's system for annually meaningfully differentiating all public schools in the State under § 200.18, including—
(i) The specific weight, consistent with § 200.18(c), of each indicator described in § 200.14(b) in such differentiation;
(ii) The way in which the State factors the requirement for 95 percent student participation in assessments under § 200.15(a) into its system of annual meaningful differentiation described in §§ 200.15(b) and 200.18(b)(5);
(iii) The methodology by which the State differentiates all such schools under § 200.18(b), including information on the performance levels and summative ratings provided by the State consistent with § 200.18(b)(3) and (4);
(iv) The methodology by which the State identifies a school for comprehensive support and improvement as described in § 200.19(a); and
(v) The methodology by which the State identifies a school with one or more consistently underperforming subgroups of students for targeted support and improvement as described in § 200.19(c), including the time period used by the State to determine consistent underperformance of a subgroup; and
(5) The exit criteria established by the State under §§ 200.21(f) and 200.22(f), including the number of years by which a school must meet the exit criteria.
(b)
(c)
(i) Comprehensive support and improvement under § 200.19(a); or
(ii) Targeted support and improvement under § 200.19(b).
(2) For each school identified by the State for comprehensive support and improvement under § 200.19(a), the State and LEA report card must indicate which of the following reasons led to such identification:
(i) Lowest-performing school under § 200.19(a)(1).
(ii) Low graduation rates under § 200.19(a)(2).
(iii) One or more chronically low-performing subgroups under § 200.19(a)(3), including the subgroup or subgroups that led to such identification.
(3) For each school identified by the State for targeted support and improvement under § 200.19(b), the State and LEA report card must indicate—
(i) Which subgroup or subgroups led to the school's identification; and
(ii) Whether the school has one or more low-performing subgroups, consistent with § 200.19(b)(2).
(4) Each LEA report card must include, for each school served by the LEA, the school's performance level consistent with § 200.18(b)(3) on each indicator in § 200.14(b) and the school's summative rating consistent with § 200.18(b)(4).
(5) If a State includes more than one measure within any indicator under § 200.14(b), the LEA report card must include each school's results on each individual measure and the single performance level for the indicator overall, across all such measures.
(a)
(2) Consistent with paragraph (a)(3) of this section, each LEA report card must also—
(i) Compare the results under paragraph (a)(1) of this section for students served by the LEA with students in the State as a whole; and
(ii) For each school served by the LEA, compare the results under paragraph (a)(1) of this section for students enrolled in the school with students served by the LEA and students in the State as a whole.
(3) Each State and LEA must include, with respect to each reporting requirement under paragraphs (a)(1) and (2) of this section—
(i) Information for all students;
(ii) Information disaggregated by—
(A) Each subgroup of students in § 200.16(a)(2);
(B) Migrant status;
(C) Gender;
(D) Homeless status;
(E) Status as a child in foster care; and
(F) Status as a student with a parent who is a member of the Armed Forces on active duty; and
(iii) Results based on both—
(A) The percentage of students at each level of achievement, in which the denominator includes the greater of—
(
(
(B) The percentage of students at each level of achievement, in which the denominator includes all students with a valid test score.
(b)
(2) To meet the requirements of paragraph (b)(1) of this section, each State and LEA must calculate the percentage of students who are proficient and above on the State assessments required under section 1111(b)(2)(B)(v)(I) of the Act based on a denominator that includes the greater of—
(i) 95 percent of all students, and 95 percent of each subgroup of students, who are enrolled in the school, LEA, or State, respectively; or
(ii) The number of all such students enrolled in the school, LEA, or State, respectively who participate in the assessments required under section 1111(b)(2)(B)(v)(I) of the Act.
(c)
(2) To meet the requirements of paragraph (c)(1) of this section, each State and LEA must include in the denominator of the calculation all students enrolled in the school, LEA, or State, respectively, at the time of testing.
(a)
(1) The numerator must consist of the sum of—
(i) All students who graduate in four years with a regular high school diploma; and
(ii) All students with the most significant cognitive disabilities in the cohort, assessed using an alternate assessment aligned to alternate academic achievement standards under section 1111(b)(2)(D) of the Act and awarded a State-defined alternate diploma.
(2) The denominator must consist of the number of students who form the adjusted cohort of entering first-time students in grade 9 enrolled in the high school no later than the date by which student membership data is collected annually by the State for submission to the National Center for Education Statistics.
(3) For those high schools that start after grade 9, the cohort must be calculated based on the earliest high school grade students attend.
(b)
(2) “Students who transfer into the cohort” means the students who enroll after the beginning of the date of the determination of the cohort, up to and including in grade 12.
(3) To remove a student from the cohort, a school or LEA must confirm in writing that the student—
(i) Transferred out, such that the school or LEA has official written documentation that the student enrolled in another school or educational program that culminates in the award of a regular high school diploma, or a State-defined alternate diploma for students with the most significant cognitive disabilities;
(ii) Emigrated to another country;
(iii) Transferred to a prison or juvenile facility and participates in an educational program that culminates in the award of a regular high school diploma, or State-defined alternate diploma for students with the most significant cognitive disabilities; or
(iv) Is deceased.
(4) A student who is retained in grade, enrolls in a general equivalency diploma program or other alternative education program that does not issue or provide credit toward the issuance of a regular high school diploma or a State-defined alternate diploma, or leaves school for any reason other than those described in paragraph (b)(3) of this section may not be counted as having transferred out for the purpose of calculating the graduation rate and must remain in the adjusted cohort.
(c)
(1) “Students who graduate in four years” means students who earn a regular high school diploma at the conclusion of their fourth year, before the conclusion of their fourth year, or during a summer session immediately following their fourth year.
(2) “Regular high school diploma” means the standard high school diploma awarded to the preponderance of students in the State that is fully aligned with State standards, or a higher diploma, except that a regular high school diploma shall not be aligned to the alternate academic achievement standards described in section 1111(b)(1)(E) of the ESEA, as amended by the ESSA; and does not include a general equivalency diploma, certificate of completion, certificate of attendance, or any similar or lesser credential, such as a diploma based on meeting individualized education program (IEP) goals that are not fully aligned with the State's grade-level academic content standards.
(3) “Alternate diploma” means a diploma for students with the most significant cognitive disabilities, consistent with the State's definition under the proposed requirement in § 200.6(d)(1) that was subject to negotiated rulemaking under the ESSA and on which the negotiated rulemaking committee reached consensus, who are assessed with a State's alternate assessment aligned to alternate academic achievement standards under section 1111(b)(2)(D) of the Act and is—
(i) Standards-based;
(ii) Aligned with the State's requirements for a regular high school diploma; and
(iii) Obtained within the time period for which the State ensures the availability of a free appropriate public education under section 612(a)(1) of the Individuals with Disabilities Education Act (20 U.S.C. 11412(a)(1)).
(d)
(1)
(2) A State may calculate one or more extended-year adjusted cohort graduation rates, except that no extended-year adjusted cohort graduation rate may be for a cohort period longer than seven years.
(e)
(i) Four-year adjusted cohort graduation rates and, if adopted by the State, extended-year adjusted cohort graduation rates for all students and disaggregated by each subgroup of students in § 200.16(a)(2), homeless status, and status as a child in foster care.
(ii) Whether all students and each subgroup of students described in § 200.16(a)(2) met or did not meet the State measurements of interim progress for graduation rates under § 200.13(b).
(2) A State and its LEAs must report the four-year adjusted cohort graduation rate and, if adopted by the State, extended-year adjusted cohort graduation rate that reflects results of the immediately preceding school year.
(3) If a State adopts an extended-year adjusted cohort graduation rate, the State and its LEAs must report the extended-year adjusted cohort graduation rate separately from the four-year adjusted cohort graduation rate.
(4) A State that offers an alternate diploma for students with the most significant cognitive disabilities within the time period for which the State ensures the availability of a free appropriate public education must—
(i) Not delay the timely reporting of graduation rates under paragraph (e)(2) of this section; and
(ii) Annually update the four-year adjusted cohort graduation rates and, if adopted by the State, extended-year adjusted cohort graduation rates reported for a given year to include in the numerator any students with the most significant cognitive disabilities who obtain a State-defined alternate diploma within the time period for which the State ensures the availability of a free appropriate public education.
(f)
(1) At the school in which such student was enrolled for the greatest proportion of school days while enrolled in grades 9 through 12; or
(2) At the school in which the student was most recently enrolled.
(a)
(i) Current expenditures per pupil from Federal, State, and local funds, for the preceding fiscal year, consistent with the timeline in § 200.30(e), for each LEA in the State, and for each school served by each LEA—
(A) In the aggregate; and
(B) Disaggregated by source of funds, including—
(
(
(ii) The Web address or URL of, or direct link to, a description of the uniform procedure required under paragraph (c) of this section that complies with the requirements under § 200.21(b)(1) through (3).
(2) Each State report card must also separately include, for each LEA, the amount of current expenditures per pupil that were not allocated to public schools in the LEA.
(b)
(i) Current expenditures per pupil from Federal, State, and local funds, for the preceding fiscal year, consistent with the timeline in § 200.31(e), for the LEA and each school served by the LEA—
(A) In total (Federal, State, and local funds); and
(B) Disaggregated by source of funds, including—
(
(
(ii) The Web address or URL of, or direct link to, a description of the uniform procedure required under paragraph (c) of this section.
(2) Each LEA report card must also separately include the amount of current expenditures per pupil that were not allocated to public schools in the LEA.
(c)
(1) The numerator consists of current expenditures, which means actual personnel costs (including actual staff salaries) and actual nonpersonnel expenditures of Federal, State, and local funds, used for public education—
(i) Including, but not limited to, expenditures for administration, instruction, instructional support, student support services, pupil transportation services, operation and maintenance of plant, fixed charges, and preschool, and net expenditures to cover deficits for food services and student body activities; but
(ii) Not including expenditures for community services, capital outlay, and debt service; and
(2) The denominator consists of the aggregate number of students in elementary and secondary schools to whom the State and LEA provide free public education on October 1, consistent with the student membership data collected annually by States for submission to the National Center for Education Statistics.
(a)
(i) Programs of public postsecondary education in the State; and
(ii) If data are available and to the extent practicable, programs of private postsecondary education in the State or programs of postsecondary education outside the State.
(2) For the purposes of this section, “programs of postsecondary education” has the same meaning as the term “institution of higher education” under section 101(a) of the Higher Education Act of 1965, as amended.
(b)
(1) The numerator must consist of the number of students who enroll in a program of postsecondary education in the academic year immediately following the students' high school graduation.
(2) The denominator must consist of the number of students who graduated with a regular high school diploma or a State-defined alternate diploma from each high school in the State, in accordance with § 200.34, in the immediately preceding school year.
(c)
(i) The State is routinely obtaining the information; or
(ii) The information is obtainable by the State on a routine basis.
(2) If the postsecondary enrollment information described in paragraph (a) of this section is not available or is partially available, the State and LEA report cards must include the school year in which such information is expected to be fully available.
(a)
(1) Inexperienced teachers, principals, and other school leaders;
(2) Teachers teaching with emergency or provisional credentials; and
(3) Teachers who are not teaching in the subject or field for which the teacher is certified or licensed.
(b)
(1) “High-poverty schools” means schools in the top quartile of poverty in the State and “low-poverty schools” means schools in the bottom quartile of poverty in the State; and
(2) Each State must adopt, and the State and each LEA in the State must use, a statewide definition of the term “inexperienced” and of the phrase “not teaching in the subject or field for which the teacher is certified or licensed.”
(a)
(1) Consolidated State plan requirements detailed in §§ 299.14 to 299.19; or
(2) Individual program application requirements under the Act (hereinafter “individual program State plan”) as detailed in paragraph (k) of this section.
(b)
(1) Provide public notice, in a format and language, to the extent practicable, that the public can access and understand in compliance with the requirements under § 200.21(b)(1) through (3), of the SEA's processes and procedures for developing and adopting its consolidated State plan or individual program State plan.
(2) Conduct outreach to, and solicit input from, the individuals and entities listed in § 299.15(a) for submission of a consolidated State plan or the individuals and entities listed in the applicable statutes for submission of an individual program State plan—
(i) During the design and development of the SEA's plan to implement the programs included in paragraph (j) of this section;
(ii) Prior to submission of the consolidated State plan or individual program State plan by making the plan available for public comment for a period of not less than 30 days; and
(iii) Prior to the submission of any revisions or amendments to the consolidated State plan or individual program State plan.
(3) Describe how the consultation and public comment were taken into account in the consolidated State plan or individual program State plan submitted for approval, including—
(i) How the SEA addressed the issues and concerns raised through consultation and public comment; and
(ii) Any changes made as a result of consultation and public comment.
(4) Meet the requirements under section 8540 of the Act regarding
(c)
(1)
(A) At the school in which such student was enrolled for the greatest proportion of school days while enrolled in grades 9 through 12; or
(B) At the school in which the student was most recently enrolled.
(ii) The SEA will ensure that an LEA receiving funds under title I, part A of the Act will provide children in foster care transportation, as necessary, to and from their schools of origin, consistent with the procedures developed by the LEA in collaboration with the State or local child welfare agency under section 1112(c)(5)(B) of the Act, even if the LEA and local child welfare agency do not agree on which agency or agencies will pay any additional costs incurred to provide such transportation.
(2)
(i) All students who may be English learners are assessed for such status using a valid and reliable instrument within 30 days after enrollment in a school in the State;
(ii) It has established procedures for the timely identification of English learners after the initial identification period for students who were enrolled at that time but were not previously identified; and
(iii) It has established procedures for removing the English learner designation from any student who was erroneously identified as an English learner, which must be consistent with Federal civil rights obligations.
(3)
(d)
(1)
(2)
(ii) A consolidated State plan or an individual program State plan is considered to be submitted on the date and time established by the Secretary if it is received by the Secretary on or prior to that date and time and addresses all of the required components in § 299.14 for a consolidated State plan or all statutory and regulatory application requirements for an individual program State plan.
(iii) Each SEA must submit either a consolidated State plan or an individual program State plan for all of the programs in paragraph (j) in a single submission on the date and time established by the Secretary consistent with paragraph (d)(2)(i) of this section.
(3)
(i) To receive an extension, the SEA must submit to the Secretary, by eight weeks after the effective date of this section—
(A) Evidence satisfactory to the Secretary demonstrating that the State cannot calculate and report the data described under paragraph § 299.18(c)(3)(i) when it submits either its initial consolidated State plan or individual title I, part A program State plan; and
(B) A detailed plan and timeline addressing the steps the SEA will take to calculate and report, as expeditiously as possible but no later than two years from the date it submits its initial consolidated State plan or individual title I, part A program State plan, the data required under § 299.18(c)(3)(i).
(ii) An SEA that receives an extension under paragraph (d)(3) of this section must, when it submits either its initial consolidated State plan or individual title I, part A program State plan, still calculate and report disproportionalities based on school-level data for each of the groups listed in § 299.18(c)(2) and describe how the SEA will eliminate any disproportionate rates consistent with § 299.18(c)(6).
(e)
(f)
(g)
(h)
(i)
(j)
(i) Title I, part A: Improving Basic Programs Operated by State and Local Educational Agencies;
(ii) Title I, part C: Education of Migratory Children;
(iii) Title I, part D: Prevention and Intervention Programs for Children and Youth Who Are Neglected, Delinquent, or At-Risk;
(iv) Title II, part A: Supporting Effective Instruction;
(v) Title III, part A: Language Instruction for English Learners and Immigrant Students;
(vi) Title IV, part A: Student Support and Academic Enrichment Grants;
(vii) Title IV, part B: 21st Century Community Learning Centers; and
(viii) Title V, part B, Subpart 2: Rural and Low-Income School Program.
(2) In addition to the programs identified in paragraph (j)(1) of this section, under section 8302(a)(1)(B) of the Act, an SEA may also include in the consolidated State plan the following programs as designated by the Secretary—
(i) The Grants for State Assessments and Related Activities program under section 1201 of title I, part B of the Act.
(ii) The Education for Homeless Children and Youths program under subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (McKinney-Vento).
(k)
(1) For title I, part A, must:
(i) Meet the educator equity requirements in § 299.18(c) in order to address section 1111(g)(1)(B) of the Act; and
(ii) Meet the schoolwide waiver requirements in § 299.19(c)(1) in order to implement section 1114(a)(1)(B) of the Act; and
(2) For title III, must meet the English learner requirements in § 299.19(c)(2) in order to address section 3113(b)(2) of the Act.
(l)
(a)
(b)
(1) Consultation and coordination.
(2) Challenging academic standards and academic assessments.
(3) Accountability, support, and improvement for schools.
(4) Supporting excellent educators.
(5) Supporting all students.
(c)
(1) The SEA's process for supporting the development of, review, and approval of the activities in LEA plans in accordance with statutory and regulatory requirements, including a description of how the SEA will determine if LEA activities are aligned with the specific needs of the LEA and the State's strategies described in its consolidated State plan.
(2) The SEA's plan, including strategies and timelines, to—
(i) Collect and use data and information, including input from stakeholders, to assess the quality of SEA and LEA implementation of strategies and progress toward improving student outcomes and meeting the desired program outcomes;
(ii) Monitor SEA and LEA implementation of included programs using the data in paragraph (c)(2)(i) of this section to ensure compliance with statutory and regulatory requirements; and
(iii) Continuously improve implementation of SEA and LEA strategies and activities that are not leading to satisfactory progress toward improving student outcomes and meeting the desired program outcomes; and
(3) The SEA's plan, including strategies and timelines, to provide differentiated technical assistance to LEAs and schools to support effective implementation of SEA, LEA, and other subgrantee strategies.
(a)
(1) The Governor, or appropriate officials from the Governor's office;
(2) Members of the State legislature;
(3) Members of the State board of education (if applicable);
(4) LEAs, including LEAs in rural areas;
(5) Representatives of Indian tribes located in the State;
(6) Teachers, principals, other school leaders, paraprofessionals, specialized instructional support personnel, and organizations representing such individuals;
(7) Charter school leaders, if applicable;
(8) Parents and families;
(9) Community-based organizations;
(10) Civil rights organizations, including those representing students with disabilities, English learners, and other historically underserved students;
(11) Institutions of higher education (IHEs);
(12) Employers; and
(13) The public.
(b)
(a)
(1) Provide evidence at such time and in such manner specified by the Secretary that the State has adopted challenging academic content standards and aligned academic achievement standards in the required subjects and grades consistent with section 1111(b)(1)(A)-(D) of the Act;
(2) If the State has adopted alternate academic achievement standards for students with the most significant cognitive disabilities, provide evidence at such time and in such manner specified by the Secretary that those standards meet the requirements of section 1111(b)(1)(E) of the Act; and
(3) Provide evidence at such time and in such manner specified by the Secretary that the State has adopted English language proficiency standards under section 1111(b)(1)(F) of the Act that—
(i) Are derived from the four recognized domains of speaking, listening, reading, and writing;
(ii) Address the different proficiency levels of English learners; and
(iii) Are aligned with the State's challenging academic standards.
(b)
(1) Identify the high-quality student academic assessments that the State is implementing under section 1111(b)(2) of the Act, including:
(A) High-quality student academic assessments in mathematics, reading or language arts, and science consistent with the requirements under section 1111(b)(2)(B) of the Act;
(B) Any assessments used under the exception for advanced middle school mathematics under section 1111(b)(2)(C)(iii) of the Act;
(C) Alternate assessments aligned with the challenging State academic standards and alternate academic achievement standards for students with the most significant cognitive disabilities;
(D) Uniform statewide assessment of English language proficiency, including reading, writing, speaking, and listening skills consistent with § 200.6(f)(3); and
(E) Any approved locally selected nationally recognized high school assessments consistent with § 200.3;
(2) Provide evidence at such time and in such manner specified by the Secretary that the State's assessments identified in paragraph (b)(1) of this section meet the requirements of section 1111(b)(2) of the Act;
(3) Describe its strategies to provide all students in the State the opportunity to be prepared for and to take advanced mathematics coursework in middle school consistent with section 1111(b)(2)(C) and § 200.5;
(4) Describe the steps it has taken to incorporate the principles of universal design for learning, to the extent feasible, in the development of its assessments, including any alternate assessments aligned with alternate academic achievement standards that the State administers consistent with sections 1111(b)(2)(B)(xiii) and 1111(b)(2)(D)(i)(IV) of the Act;
(5) Consistent with § 200.6, describe how it will ensure that the use of appropriate accommodations, if applicable, do not deny an English learner—
(A) The opportunity to participate in the assessment; and
(B) Any of the benefits from participation in the assessment that are afforded to students who are not English learners;
(6) Describe how it is complying with the requirements in § 200.6(f)(1)(ii)(B) through (E) related to assessments in languages other than English;
(7) Describe how the State will use formula grant funds awarded under section 1201 of the Act to pay the costs of development of the high-quality State assessments and standards adopted under section 1111(b) of the Act or, if a State has developed those assessments, to administer those assessments or carry out other assessment activities consistent with section 1201(a) of the Act.
(a)
(b)
(1) The measures included in each of the indicators and how those measures meet the requirements described in § 200.14(c) through (e) and section 1111(c)(4)(B) of the Act for all students and separately for each subgroup of students used to meaningfully differentiate all public schools in the State;
(2) The subgroups of students from each major racial and ethnic group, consistent with § 200.16(a)(2);
(3) If applicable, the statewide uniform procedures for:
(i) Former English learners consistent with § 200.16(b)(1), and
(ii) Recently arrived English learners in the State to determine if an exception is appropriate for an English learner consistent with section 1111(b)(3) of the Act and § 200.16(b)(4);
(4) The minimum number of students that the State determines are necessary to be included in each of the subgroups of students consistent with § 200.17(a)(3);
(5) The State's system for meaningfully differentiating all public schools in the State, including public charter schools, consistent with the requirements of section 1111(c)(4)(C) of the Act and § 200.18, including—
(i) The distinct levels of school performance, and how they are calculated, under § 200.18(b)(3) on each indicator in the statewide accountability system;
(ii) The weighting of each indicator, including how certain indicators receive substantial weight individually and much greater weight in the aggregate, consistent with § 200.18(c) and (d); and
(iii) The summative ratings, including how they are calculated, that are provided to schools under § 200.18(b)(4);
(6) How the State is factoring the requirement for 95 percent student participation in assessments into its
(7) The State's uniform procedure for averaging data across school years and combining data across grades as defined in § 200.20(a), if applicable;
(8) If applicable, how the State includes all public schools in the State in its accountability system if it is different from the methodology described in paragraph (b)(5), including—
(i) Schools in which no grade level is assessed under the State's academic assessment system (
(ii) Schools with variant grade configurations (
(iii) Small schools in which the total number of students that can be included on any indicator under § 200.14 is less than the minimum number of students established by the State under § 200.17(a)(1
(iv) Schools that are designed to serve special populations (
(v) Newly opened schools that do not have multiple years of data, consistent with a State's uniform procedure for averaging data under § 200.20(a), if applicable.
(c)
(1) The methodologies by which the State identifies schools for comprehensive support and improvement under section 1111(c)(4)(D)(i) of the Act and § 200.19(a), including:
(i) Lowest-performing schools;
(ii) Schools with low high school graduation rates; and
(iii) Schools with chronically low-performing subgroups;
(2) The uniform statewide exit criteria for schools identified for comprehensive support and improvement established by the State under section 1111(d)(3)(A)(i) of the Act and consistent with the requirements in § 200.21(f)(1), including the number of years over which schools are expected to meet such criteria;
(3) The State's methodology for identifying schools with “consistently underperforming” subgroups of students, including the definition and time period used by the State to determine consistent underperformance, under § 200.19(b)(1) and (c);
(4) The State's methodology for identifying additional targeted support schools with low-performing subgroups of students under § 200.19(b)(2); and
(5) The uniform exit criteria for schools requiring additional targeted support due to low-performing subgroups established by the State consistent with the requirements in § 200.22(f).
(d)
(1) Its process for making grants to LEAs under section 1003 of the Act consistent with the requirements of § 200.24 to serve schools implementing comprehensive or targeted support and improvement plans under section 1111(d) of the Act and consistent with the requirements in §§ 200.21 and 200.22;
(2) Its process to ensure effective development and implementation of school support and improvement plans, including evidence-based interventions, to hold all public schools accountable for student academic achievement and school success consistent with §§ 200.21 through 200.24, and, if applicable, the list of State-approved, evidence-based interventions for use in schools implementing comprehensive or targeted support and improvement plans;
(3) The more rigorous interventions required for schools identified for comprehensive support and improvement that fail to meet the State's exit criteria within a State-determined number of years consistent with section 1111(d)(3)(A)(i) of the Act and § 200.21(f);
(4) Its process, consistent with the requirements in section 1111(d)(3)(A)(ii) of the Act and § 200.23(a), for periodically reviewing and addressing resource allocation to ensure sufficient support for school improvement in each LEA in the State serving a significant number of schools identified for comprehensive support and improvement and in each LEA serving a significant number of schools implementing targeted support and improvement plans; and
(5) Other State-identified strategies, including timelines and funding sources from included programs consistent with allowable uses of funds provided under those programs, as applicable, to improve low-performing schools.
(e)
(1) Its process to approve, monitor, and periodically review LEA comprehensive support and improvement plans consistent with the requirements in section 1111(d)(1)(B)(v) and (vi) of the Act and § 200.21(e); and
(2) The technical assistance it will provide to each LEA in the State serving a significant number of schools identified for comprehensive and targeted support and improvement, including technical assistance related to selection of evidence-based interventions, consistent with the requirements in section 1111(d)(3)(A)(iii) of the Act and § 200.23(b).
(3) Any additional improvement actions the State may take consistent with § 200.23(c), including additional supports for or interventions in LEAs, or in any authorized public chartering agency consistent with State charter school law, with a significant number of schools identified for comprehensive support and improvement that are not meeting exit criteria or a significant number of schools identified for targeted support or improvement.
(a)
(1) The State's system of certification and licensing of teachers and principals or other school leaders;
(2) The State's system to ensure adequate preparation of new educators, particularly for low-income and minority students; and
(3) The State's system of professional growth and improvement, which may include the use of an educator evaluation and support system, for educators that addresses induction, development, compensation, and advancement for teachers, principals, and other school leaders if the State has elected to implement such a system. Alternatively, the SEA must describe how it will ensure that each LEA has and is implementing a system of professional growth and improvement for teachers, principals, and other school leaders that addresses induction, development, compensation, and advancement.
(b)
(i) Increase student achievement consistent with the challenging State academic standards;
(ii) Improve the quality and effectiveness of teachers and principals or other school leaders;
(iii) Increase the number of teachers and principals or other school leaders who are effective in improving student academic achievement in schools; and
(iv) Provide low-income and minority students greater access to effective teachers, principals, and other school leaders consistent with the provisions described in paragraph (c) of this section.
(2) In its consolidated State plan, each SEA must describe—
(i) How the SEA will improve the skills of teachers, principals, or other school leaders in identifying students with specific learning needs and providing instruction based on the needs of such students consistent with section 2101(d)(2)(J) of the Act, including strategies for teachers of, and principals or other school leaders in schools with:
(A) Low-income students;
(B) Lowest-achieving students;
(C) English learners;
(D) Children with disabilities;
(E) Children and youth in foster care;
(F) Migratory children, including preschool migratory children and migratory children who have dropped out of school;
(G) Homeless children and youths;
(H) Neglected, delinquent, and at-risk children identified under title I, part D of the Act;
(I) Immigrant children and youth;
(J) Students in LEAs eligible for grants under the Rural and Low-Income School Program under section 5221 of the Act;
(K) American Indian and Alaska Native students;
(L) Students with low literacy levels; and
(M) Students who are gifted and talented;
(ii) If the SEA or its LEAs plan to use funds under one or more of the included programs for this purpose, how the SEA will work with LEAs in the State to develop or implement State or local teacher, principal or other school leader evaluation and support systems consistent with section 2101(c)(4)(B)(ii) of the Act; and
(iii) If the SEA plans to use funds under one or more of the included programs for this purpose, how the State will improve educator preparation programs consistent with section 2101(d)(2)(M) of the Act.
(3) In its consolidated State plan, each SEA must describe its rationale for, and its timeline for the design and implementation of, the strategies identified under paragraph (b)(1) and (2) of this section.
(c)
(2) For the purposes of this section, each SEA must establish and provide in its State plan different definitions, using distinct criteria so that each provides useful information about educator equity and disproportionality rates, for each of the terms included in paragraphs (c)(2)(i) through (iii) of this section—
(i) A statewide definition of “ineffective teacher”, or statewide guidelines for LEA definitions of “ineffective teacher”, that differentiates between categories of teachers;
(ii) A statewide definition of “out-of-field teacher” consistent with § 200.37;
(iii) A statewide definition of “inexperienced teacher” consistent with § 200.37;
(iv) A statewide definition of “low-income student”;
(v) A statewide definition of “minority student” that includes, at a minimum, race, color, and national origin, consistent with title VI of the Civil Rights Act of 1964; and
(vi) Such other definitions for any other key terms that a State elects to define and use for the purpose of making the demonstration required under paragraph (c)(1) of this section.
(3) For the purpose of making the demonstration required under paragraph (c)(1) of this section—
(i)
(A) Low-income students enrolled in schools receiving funds under title I, part A of the Act, are taught by—
(
(
(
(B) Non-low-income students enrolled in schools not receiving funds under title I, part A of the Act, are taught by—
(
(
(
(C) Minority students enrolled in schools receiving funds under title I, part A of the Act are taught by—
(
(
(
(D) Non-minority students enrolled in schools not receiving funds under title I, part A of the Act are taught by—
(
(
(
(ii)
(iii)
(4) Each SEA must publish and annually update—
(i) The rates and disproportionalities required under paragraph (c)(3) of this section;
(ii) The percentage of teachers categorized in each LEA at each effectiveness level established as part of the definition of “ineffective teacher” under paragraph (c)(2)(i) of this section, consistent with applicable State privacy policies;
(iii) The percentage of teachers categorized as out-of-field teachers consistent with § 200.37; and
(iv) The percentage of teachers categorized as inexperienced teachers consistent with § 200.37.
(v) The information required under paragraphs (c)(4)(i) through (iv) of this section in a manner that is easily accessible and comprehensible to the general public, available at least on a public Web site, and, to the extent practicable, provided in a language that parents of students enrolled in all schools in the State can understand, in compliance with the requirements under § 200.21(b)(1) through (3). If the information required under paragraphs (c)(4)(i) through (iv) is made available in ways other than on a public Web site, it must be provided in compliance with the requirements under § 200.21(b)(1) through (3).
(5) Each SEA must describe where it will publish and annually update the rates and disproportionalities calculated under paragraph (c)(3) of this section and report on the rates and disproportionalities in the manner described in paragraph (c)(4)(v) of this section.
(6) Each SEA that demonstrates, under paragraph (c)(1) of this section, that low-income or minority students enrolled in schools receiving funds under title I, part A of this Act are taught at disproportionate rates by ineffective, out-of-field, or inexperienced teachers must—
(i) Describe the root cause analysis, including the level of disaggregation of disproportionality data (
(ii) Provide its strategies, including timelines and funding sources, to eliminate the disproportionate rates demonstrated under paragraph (c)(1) of this section that—
(A) Is based on the root cause analysis required under paragraph (c)(6)(i) of this section; and
(B) Focuses on the greatest or most persistent rates of disproportionality demonstrated under paragraph (c)(1) of this section, including by prioritizing strategies to support any schools identified for comprehensive or targeted support and improvement under § 200.19 that are contributing to those disproportionate rates.
(7) To meet the requirements of paragraph (c)(6) of this section, an SEA may—
(i) Direct an LEA, including an LEA that contributes to the disproportionality demonstrated by the SEA in paragraph (c)(1) of this section, to use a portion of its title II, part A, funds in a manner that is consistent with allowable activities identified in section 2103(b) of the Act to provide low-income and minority students greater access to effective teachers and principals or other school leaders, and
(ii) Require an LEA to describe in its title II, part A plan or consolidated local plan how it will use title II, part A funds to address disproportionality in educator equity as described in this paragraph (c) and deny an LEA's application for title II, part A funds if an LEA fails to describe how it will address identified disproportionalities or fails to meet other local application requirements applicable to title II, part A.
(a)
(i) The continuum of a student's education from preschool through grade 12, including transitions from early childhood education to elementary school, elementary school to middle school, middle school to high school, and high school to post-secondary education and careers, in order to support appropriate promotion practices and decrease the risk of students dropping out;
(ii) Equitable access to a well-rounded education and rigorous coursework in subjects such as English, reading/language arts, writing, science, technology, engineering, mathematics, foreign languages, civics and government, economics, history, geography, computer science, music, career and technical education, health, physical education, and any other subjects in which female students, minority students, English learners, children with disabilities, and low-income students are underrepresented;
(iii) School conditions for student learning, including activities to reduce—
(A) Incidents of bullying and harassment;
(B) The overuse of discipline practices that remove students from the classroom, such as out-of-school suspensions and expulsions; and
(C) The use of aversive behavioral interventions that compromise student health and safety;
(iv) The effective use of technology to improve the academic achievement and digital literacy of all students;
(v) Parent, family, and community engagement;
(vi) The accurate identification of English learners and children with disabilities; and
(vii) Other State-identified strategies.
(2) In describing the strategies, rationale, timelines, and funding sources in paragraph (a)(1) of this section, each SEA must consider—
(i) The academic and non-academic needs of subgroups of students including—
(A) Low-income students.
(B) Lowest-achieving students.
(C) English learners.
(D) Children with disabilities.
(E) Children and youth in foster care.
(F) Migratory children, including preschool migratory children and migratory children who have dropped out of school.
(G) Homeless children and youths.
(H) Neglected, delinquent, and at-risk students identified under title I, part D of the Act.
(I) Immigrant children and youth.
(J) Students in LEAs eligible for grants under the Rural and Low-Income School program under section 5221 of the Act.
(K) American Indian and Alaska Native students.
(ii) Data and information on resource equity consistent with paragraph (a)(3) of this section.
(3) In its consolidated State plan, the SEA must use information and data on resource equity collected and reported under section 1111(h) of the Act and §§ 200.35 and 200.37 including a review of LEA-level budgeting and resource allocation related to—
(A) Per-pupil expenditures of Federal, State, and local funds;
(B) Educator qualifications as described in § 200.37;
(C) Access to advanced coursework; and
(D) The availability of preschool.
(4) In its consolidated State plan, each SEA must describe how it will use title IV, part A and part B funds, and other Federal funds—
(i) To support the State-level strategies described in paragraph (a)(1) of this section and other State-level strategies, as applicable; and
(ii) To ensure that, to the extent permitted under applicable law and regulations, the processes, procedures, and priorities used to award subgrants under an included program are consistent with the requirements of this section.
(b)
(c)
(2)
(i) How the SEA and its local operating agencies (which may include LEAs) will—
(A) Establish and implement a system for the proper identification and recruitment of eligible migratory children on a statewide basis, including the identification and recruitment of preschool migratory children and migratory children who have dropped out of school, and how the SEA will verify and document the number of eligible migratory children aged 3 through 21 residing in the State on an annual basis;
(B) Assess the unique educational needs of migratory children, including preschool migratory children and migratory children who have dropped out of school, and other needs that must be met in order for migratory children to participate effectively in school;
(C) Ensure that the unique educational needs of migratory children, including preschool migratory children and migratory children who have dropped out of school, and other needs that must be met in order for migratory children to participate effectively in school, are identified and addressed through the full range of services that are available for migratory children from appropriate local, State, and Federal educational programs; and
(D) Use funds received under title I, part C to promote interstate and intrastate coordination of services for migratory children, including how the State will provide for educational continuity through the timely transfer of pertinent school records, including information on health, when children move from one school to another, whether or not such move occurs during the regular school year;
(ii) The unique educational needs of the State's migratory children, including preschool migratory children and migratory children who have dropped out of school, and other needs that must be met in order for migratory children to participate effectively in school, based on the State's most recent comprehensive needs assessment;
(iii) The current measurable program objectives and outcomes for title I, part C, and the strategies the SEA will pursue on a statewide basis to achieve such objectives and outcomes;
(iv) How it will ensure there is consultation with parents of migratory children, including parent advisory councils, at both the State and local level, in the planning and operation of title I, part C programs that span not less than one school year in duration consistent with section 1304(c)(3) of the Act;
(v) Its processes and procedures for ensuring that migratory children who meet the statutory definition of “priority for services” are given priority for title I, part C services, including—
(A) The specific measures and sources of data used to determine whether a migratory child meets each priority for services criteria;
(B) The delegation of responsibilities for documenting priority for services determinations and the provision of services to migratory children determined to be priority for services; and
(C) The timeline for making priority for services determinations, and communicating such information to title I, part C service providers.
(3)
(i) Include a score of proficient on the State's annual English language proficiency assessment;
(ii) Be the same criteria used for exiting students from the English learner subgroup for title I reporting and accountability purposes;
(iii) Not include performance on an academic content assessment; and
(iv) Be consistent with Federal civil rights obligations.
(4)
(5)
(i) The procedures it will use to identify homeless children and youths in the State and assess their needs;
(ii) Programs for school personnel (including liaisons designated under section 722(g)(1)(J)(ii) of the McKinney-Vento Act, principals and other school leaders, attendance officers, teachers, enrollment personnel, and specialized instructional support personnel) to heighten the awareness of such school personnel of the specific needs of homeless children and youths, including such children and youths who are runaway and homeless youths;
(iii) Its procedures to ensure that—
(A) Disputes regarding the educational placement of homeless children and youths are promptly resolved;
(B) Youths described in section 725(2) of the McKinney-Vento Act and youths separated from the public school are identified and accorded equal access to appropriate secondary education and support services, including by identifying and removing barriers that prevent youths described in this paragraph from receiving appropriate credit for full or partial coursework satisfactorily completed while attending a prior school, in accordance with State, local, and school polices;
(C) Homeless children and youths have access to public preschool programs, administered by the SEA or LEA, as provided to other children in the State;
(D) Homeless children and youths who meet the relevant eligibility criteria do not face barriers to accessing academic and extracurricular activities; and
(E) Homeless children and youths who meet the relevant eligibility criteria are able to participate in Federal, State, and local nutrition programs; and
(iv) Its strategies to address problems with respect to the education of homeless children and youths, including problems resulting from enrollment delays and retention, consistent with section 722(g)(1)(H) and (I) of the McKinney-Vento Act.
U.S. Customs and Border Protection, Department of Homeland Security.
Notice of intent to distribute offset for Fiscal Year 2016.
Pursuant to the
Certifications to obtain a continued dumping and subsidy offset under a particular order or finding must be received by August 1, 2016. Any certification received after August 1, 2016 will be denied, making claimants ineligible for the distribution.
Certifications and any other correspondence (whether by mail, or an express or courier service) must be addressed to the Acting Executive Assistant Commissioner, Enterprise Services, U.S. Customs and Border Protection, Revenue Division, Attention: CDSOA Team, 6650 Telecom Drive, Suite 100, Indianapolis, IN, 46278.
CDSOA Team, Revenue Division, 6650 Telecom Drive, Suite 100, Indianapolis, IN, 46278; telephone (317) 614-4462.
The
The CDSOA amended title VII of the
(A) Was a petitioner or interested party in support of a petition with respect to which an antidumping order, a finding under the
(B) Remains in operation continuing to produce the product covered by the countervailing duty order, the antidumping duty order, or the finding under the
(C) Has not been acquired by another company or business that is related to a company that opposed the antidumping or countervailing duty investigation that led to the order or finding (
Section 7601(a) of the
Historically, the antidumping and countervailing duties assessed and received by CBP on CDSOA-subject entries, along with the interest assessed and received on those duties pursuant to 19 U.S.C. 1677g, were transferred to the CDSOA Special Account for distribution (66 FR 48546, Sept. 21, 2001)
Section 605 of the
Surety payments received from October 1, 2014, through September 30, 2016, for which delinquency, equitable, and 19 U.S.C. 580 interest are subject to distribution under Section 605 of the TFTEA will be deposited into the Special Account during Fiscal Year 2016 for inclusion in the Fiscal Year 2016 distribution. Any domestic producer seeking distribution of interest as provided under Section 605 of the TFTEA for payments received from October 1, 2014, through September 30, 2016, must file a timely Fiscal Year 2016 certification. CBP will utilize the Fiscal Year 2016 certifications to determine each domestic producer's pro-rata share of the assessed duties received during Fiscal Year 2016, the assessed 19 U.S.C. 1677g interest received during Fiscal Year 2016, as well as the interest provided for under Section 605 of the TFTEA for payments received from October 1, 2014, through September 30, 2016.
On February 2, 2015, President Obama ordered the sequester of non-exempt budgetary resources for Fiscal Year 2016 pursuant to section 251A of the
Because of the statutory constraints in the assessments of antidumping and countervailing duties, as well as the additional time involved when the Government must initiate litigation to collect delinquent antidumping and countervailing duties, the CDSOA distribution process will be continued for an undetermined period. Consequently, the full impact of the CDSOA repeal on amounts available for distribution may be delayed for several years. It should also be noted that amounts distributed may be subject to recovery as a result of reliquidations, court actions, administrative errors, and other reasons.
It is the responsibility of the U.S. International Trade Commission (USITC) to ascertain and timely forward to CBP a list of the affected domestic producers that are potentially eligible to receive an offset in connection with an order or finding. In this regard, it is noted that USITC has supplied CBP with the list of individual antidumping and countervailing duty cases, and the affected domestic producers associated with each case who are potentially eligible to receive an offset. This list appears at the end of this document.
A significant amount of litigation has challenged various provisions of the CDSOA, including the definition of the term “affected domestic producer.” In two decisions the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) upheld the constitutionality of the support requirement contained in the CDSOA. Specifically, in
Domestic producers who are not on the USITC list but believe they nonetheless are eligible for a CDSOA distribution under one or more antidumping and/or countervailing duty cases are required, as are all potential claimants that expressly appear on the list, to properly file their certification(s) within 60 days after this notice is published. Such domestic producers must allege all other bases for eligibility in their certification(s). CBP will evaluate the merits of such claims in accordance with the relevant statutes, regulations, and decisions. Certifications that are not timely filed within the requisite 60 days and/or that fail to sufficiently establish a basis for eligibility will be summarily denied. Additionally, CBP may not make a final decision regarding a claimant's eligibility to receive funds until certain legal issues which may affect that claimant's eligibility are resolved. In these instances, CBP may withhold an amount of funds corresponding to the claimant's alleged
It should also be noted that the Federal Circuit ruled in
It is noted that CBP published Treasury Decision (T.D.) 01-68 (Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers) in the
This document announces that CBP intends to distribute to affected domestic producers the assessed antidumping or countervailing duties that are available for distribution in Fiscal Year 2016 in connection with those antidumping duty orders or findings or countervailing duty orders that are listed in this document. All distributions will be issued by paper check to the address provided by the claimants. Section 159.62(a) of title 19, Code of Federal Regulations (19 CFR 159.62(a)) provides that CBP will publish such a notice of intention to distribute assessed duties at least 90 calendar days before the end of a fiscal year. Failure to publish the notice at least 90 calendar days before the end of the fiscal year will not affect an affected domestic producer's obligation to file a timely certification within 60 days after the notice is published.
To obtain a distribution of the offset under a given order or finding, an affected domestic producer (and anyone alleging eligibility to receive a distribution) must submit a certification for each order or finding under which a distribution is sought, to CBP, indicating its desire to receive a distribution. To be eligible to obtain a distribution, certifications must be received by CBP no later than 60 calendar days after the date of publication of this notice of intent to distribute in the
As required by 19 CFR 159.62(b), this notice provides the case name and number of the order or finding concerned, as well as the specific instructions for filing a certification under § 159.63 to claim a distribution. Section 159.62(b) also provides that the dollar amounts subject to distribution that are contained in the Special Account for each listed order or finding are to appear in this notice. However, these dollar amounts were not available in time for inclusion in this publication.
CBP will provide general information to claimants regarding the preparation of certification(s). However, it remains the sole responsibility of the domestic producer to ensure that the certification is correct, complete, and accurate so as to demonstrate the eligibility of the domestic producer for the distribution requested. Failure to ensure that the certification is correct, complete, and accurate as provided in this notice will result in the domestic producer not receiving a distribution and/or a demand for the return of funds.
Specifically, to obtain a distribution of the offset under a given order or finding, each potential claimant must timely submit a certification containing the required information detailed below as to the eligibility of the domestic producer (or anyone alleging eligibility) to receive the requested distribution and the total amount of the distribution that the domestic producer is claiming. Certifications should be submitted to the Acting Executive Assistant Commissioner, Enterprise Services, U.S. Customs and Border Protection, Revenue Division, Attention: CDSOA Team, 6650 Telecom Drive, Suite 100, Indianapolis, IN, 46278. The certification must enumerate the qualifying expenditures incurred by the domestic producer since the issuance of an order or finding and it must demonstrate that the domestic producer is eligible to receive a distribution as an affected domestic producer or allege another basis for eligibility. Any false statements made in connection with certifications submitted to CBP may give rise to liability under the
A successor to a company that was an affected domestic producer at the time of acquisition should consult 19 CFR 159.61(b)(1)(i). Any company that files a certification claiming to be the successor company to an affected domestic producer will be deemed to have consented to joint and several liability for the return of any overpayments arising under § 159.64(c)(3) that were previously paid to the predecessor. CBP may require the successor company to provide documents to support its eligibility to receive a distribution as set out in § 159.63(d). Additionally, any individual or company who purchases any portion of the operating assets of an affected domestic producer, a successor to an affected domestic producer, or an entity that otherwise previously received distributions may be jointly and severally liable for the return of any overpayments arising under § 159.64(c)(3) that were previously paid to the entity from which the operating assets were purchased or its predecessor, regardless of whether the purchasing individual or company is deemed a successor company for purposes of receiving distributions.
A member company (or its successor) of an association that appears on the list of affected domestic producers in this notice, where the member company itself does not appear on this list, should consult 19 CFR 159.61(b)(1)(ii). Specifically, for a certification under 19 CFR 159.61(b)(1)(ii), the claimant must name the association of which it is a member, specifically establish that it was a member of the association at the time the association filed the petition with the USITC, and establish that the claimant is a current member of the association. In order to promote accurate filings and more efficiently process the distributions, we offer the following guidance:
• If claimants are members of an association but the association does not file on their behalf, its association will need to provide its members with a statement that contains notarized company-specific information including dates of membership and an original signature from an authorized representative of the association.
• An association filing a certification on behalf of a member must also provide a power of attorney or other evidence of legal authorization from each of the domestic producers it is representing.
• Any association filing a certification on behalf of a member is responsible for verifying the legal sufficiency and accuracy of the member's financial records, which support the claim, and is responsible for that certification. As such, an association filing a certification on behalf of a member is jointly and severally liable with the member for repayment of any claim found to have been paid or overpaid in error.
The association may file a certification in its own right to claim an offset for that order or finding, but its qualifying expenditures would be limited to those expenditures that the association itself has incurred after the date of the order or finding in connection with the particular case.
As provided in 19 CFR 159.63(a), certifications to obtain a distribution of an offset must be received by CBP no later than 60 calendar days after the date of publication of the notice of intent in the
A list of all certifications received will be published on the CBP Web site (
While there is no required format for a certification, CBP has developed a standard certification form to aid claimants in filing certifications. The certification form is available at
(1) The date of this
(2) The Commerce case number;
(3) The case name (producer/country);
(4) The name of the domestic producer and any name qualifier, if applicable (for example, any other name under which the domestic producer does business or is also known);
(5) The mailing address of the domestic producer (if a post office box, the physical street address must also appear) including, if applicable, a specific room number or department;
(6) The Internal Revenue Service (IRS) number (with suffix) of the domestic producer, employer identification number, or social security number, as applicable;
(7) The specific business organization of the domestic producer (corporation, partnership, sole proprietorship);
(8) The name(s) of any individual(s) designated by the domestic producer as the contact person(s) concerning the certification, together with the phone number(s), mailing address, and, if available, facsimile transmission number(s) and electronic mail (email) address(es) for the person(s). Correspondence from CBP may be
(9) The total dollar amount claimed;
(10) The dollar amount claimed by category, as described in the section below entitled “Amount Claimed for Distribution”;
(11) A statement of eligibility, as described in the section below entitled “Eligibility to Receive Distribution”; and
(12) For certifications not submitted electronically through
Qualifying expenditures that may be offset under the CDSOA encompass those expenditures incurred by the domestic producer after issuance of an antidumping duty order or finding or a countervailing duty order, and prior to its termination, provided that such expenditures fall within certain categories. The CDSOA repeal language parallels the termination of an order or finding. Therefore, for duty orders or findings that have not been previously revoked, expenses must be incurred before October 1, 2007, to be eligible for offset. For duty orders or findings that have been revoked, expenses must be incurred before the effective date of the revocation to be eligible for offset. For example, assume for case A-331-802 certain frozen warm-water shrimp and prawns from Ecuador, that the order date is February 1, 2005, and that the revocation effective date is August 15, 2007. In this case, eligible expenditures would have to be incurred between February 1, 2005, and August 15, 2007.
For the convenience and ease of the domestic producers, CBP is providing guidance on what the agency takes into consideration when making a calculation for each of the following categories:
(1) Manufacturing facilities (Any facility used for the transformation of raw material into a finished product that is the subject of the related order or finding);
(2) Equipment (Goods that are used in a business environment to aid in the manufacturing of a product that is the subject of the related order or finding);
(3) Research and development (Seeking knowledge and determining the best techniques for production of the product that is the subject of the related order or finding);
(4) Personnel training (Teaching of specific useful skills to personnel, that will improve performance in the production process of the product that is the subject of the related order or finding);
(5) Acquisition of technology (Acquisition of applied scientific knowledge and materials to achieve an objective in the production process of the product that is the subject of the related order or finding);
(6) Health care benefits for employees paid for by the employer (Health care benefits paid to employees who are producing the specific product that is the subject of the related order or finding);
(7) Pension benefits for employees paid for by the employer (Pension benefits paid to employees who are producing the specific product that is the subject of the related order or finding);
(8) Environmental equipment, training, or technology (Equipment, training, or technology used in the production of the product that is the subject of the related order or finding, that will assist in preventing potentially harmful factors from affecting the environment);
(9) Acquisition of raw materials and other inputs (Purchase of unprocessed materials or other inputs needed for the production of the product that is the subject of the related order or finding); and
(10) Working capital or other funds needed to maintain production (Assets of a business that can be applied to its production of the product that is the subject of the related order or finding).
In calculating the amount of the distribution being claimed as an offset, the certification must indicate:
(1) The total amount of any qualifying expenditures previously certified by the domestic producer, and the amount certified by category;
(2) The total amount of those expenditures which have been the subject of any prior distribution for the order or finding being certified under 19 U.S.C. 1675c; and
(3) The net amount for new and remaining qualifying expenditures being claimed in the current certification (the total amount previously certified as noted in item “(1)” above minus the total amount that was the subject of any prior distribution as noted in item “(2)” above). In accordance with 19 CFR 159.63(b)(2)(i)-(iii), CBP will deduct the amount of any prior distribution from the producer's claimed amount for that case. Total amounts disbursed by CBP under the CDSOA for some prior Fiscal Years are available on the CBP Web site.
Additionally, under 19 CFR 159.61(c), these qualifying expenditures must be related to the production of the same product that is the subject of the order or finding, with the exception of expenses incurred by associations which must be related to a specific case. Any false statements made to CBP concerning the amount of distribution being claimed as an offset may give rise to liability under the
As noted, the certification must contain a statement that the domestic producer desires to receive a distribution and is eligible to receive the distribution as an affected domestic producer or on another legal basis. Also, the domestic producer must affirm that the net amount certified for distribution does not encompass any qualifying expenditures for which distribution has previously been made (19 CFR 159.63(b)(3)(i)). Any false statements made in connection with certifications submitted to CBP may give rise to liability under the
Furthermore, under 19 CFR 159.63(b)(3)(ii), where a domestic producer files a separate certification for more than one order or finding using the same qualifying expenditures as the basis for distribution in each case, each certification must list all the other orders or findings where the producer is claiming the same qualifying expenditures.
Moreover, as required by 19 U.S.C. 1675c(b)(1) and 19 CFR 159.63(b)(3)(iii), the certification must include information as to whether the domestic producer remains in operation at the time the certifications are filed and continues to produce the product covered by the particular order or finding under which the distribution is sought. If a domestic producer is no longer in operation, or no longer produces the product covered by the order or finding, the producer will not be considered an affected domestic producer entitled to receive a distribution.
In addition, as required by 19 U.S.C. 1675c(b)(5) and 19 CFR 159.63(b)(3)(iii), the domestic producer must state whether it has been acquired by a company that opposed the investigation or was acquired by a business related to a company that opposed the investigation. If a domestic producer has been so acquired, the producer will not be considered an affected domestic producer entitled to receive a distribution. However, CBP may not make a final decision regarding a
The certification must be executed and dated by a party legally authorized to bind the domestic producer and it must state that the information contained in the certification is true and accurate to the best of the certifier's knowledge and belief under penalty of law, and that the domestic producer has records to support the qualifying expenditures being claimed (see section below entitled “Verification of Certification”). Moreover as provided in 19 CFR 159.64(b)(3), overpayments to affected domestic producers are recoverable by CBP and CBP reserves the right to use all available collection tools to recover overpayments, including but not limited to garnishments, court orders, administrative offset, enrollment in the Treasury Offset Program, and/or offset of tax refund payments. Overpayments may occur for a variety of reasons such as reliquidations, court actions, settlements, insufficient verification of a certification in response to an inquiry from CBP, and administrative errors. With diminished amounts available over time, the likelihood that these events will require the recovery of funds previously distributed will increase. As a result, domestic producers who receive distributions under the CDSOA may wish to set aside any funds received in case it is subsequently determined that an overpayment has occurred. CBP considers the submission of a certification and the negotiation of any distribution checks received as acknowledgements and acceptance of the claimant's obligation to return those funds upon demand.
A certification that is submitted in response to this notice of intent to distribute and received within 60 calendar days after the date of publication of the notice in the
Certifications are subject to CBP's verification. The burden remains on each claimant to fully substantiate all elements of its certification. As such, claimants may be required to provide copies of additional records for further review by CBP. Therefore, parties are required to maintain, and be prepared to produce, records adequately supporting their claims for a period of five years after the filing of the certification (19 CFR 159.63(d)). The records must demonstrate that each qualifying expenditure enumerated in the certification was actually incurred, and they must support how the qualifying expenditures are determined to be related to the production of the product covered by the order or finding. Although CBP will accept comments and information from the public and other domestic producers, CBP retains complete discretion regarding the initiation and conduct of investigations stemming from such information. In the event that a distribution is made to a domestic producer from whom CBP later seeks verification of the certification and sufficient supporting documentation is not provided as determined by CBP, then the amounts paid to the affected domestic producer are recoverable by CBP as an overpayment. CBP reserves the right to use all available collection tools to recover overpayments, including but not limited to garnishments, court orders, administrative offset, enrollment in the Treasury Offset Program, and/or offset of tax refund payments. CBP considers the submission of a certification and the negotiation of any distribution checks received as acknowledgements and acceptance of the claimant's obligation to return those funds upon demand. Additionally, the submission of false statements, documents, or records in connection with a certification or verification of a certification may give rise to liability under the
The name of the claimant, the total dollar amount claimed by the party on the certification, as well as the total dollar amount that CBP actually disburses to that affected domestic producer as an offset, will be available for disclosure to the public, as specified in 19 CFR 159.63(e). To this extent, the submission of the certification is construed as an understanding and acceptance on the part of the domestic producer that this information will be disclosed to the public and a waiver of any right to privacy or non-disclosure. Additionally, a statement in a certification that this information is proprietary and exempt from disclosure may result in CBP's rejection of the certification.
The list of individual antidumping duty orders or findings and countervailing duty orders is set forth below together with the affected domestic producers associated with each order or finding who are potentially eligible to receive an offset. Those domestic producers not on the list must allege another basis for eligibility in their certification. Appearance of a domestic producer on the list is not a guarantee of distribution.
Environmental Protection Agency (EPA).
Proposed rule.
Under section 211 of the Clean Air Act, the Environmental Protection Agency (EPA) is required to set renewable fuel percentage standards every year. This action proposes the annual percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that would apply to all motor vehicle gasoline and diesel produced or imported in the year 2017. The EPA is proposing a cellulosic biofuel volume that is below the applicable volume specified in the Act. Relying on statutory waiver authorities, the EPA is also proposing to reduce the applicable volumes of advanced biofuel and total renewable fuel. The proposed standards are expected to continue driving the market to overcome constraints in renewable fuel distribution infrastructure, which in turn is expected to lead to substantial growth over time in the production and use of renewable fuels. In this action, we are also proposing the applicable volume of biomass-based diesel for 2018.
Comments must be received on or before July 11, 2016. EPA will announce the public hearing date and location for this proposal in a supplemental
Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2016-0004, at
Julia MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 734-214-4131; email address:
Entities potentially affected by this final rule are those involved with the production, distribution, and sale of transportation fuels, including gasoline and diesel fuel or renewable fuels such as ethanol, biodiesel, renewable diesel, and biogas. Potentially regulated categories include:
This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this proposed action. This table lists the types of entities that EPA is now aware could potentially be regulated by this proposed action. Other types of entities not listed in the table could also be regulated. To determine whether your entity would be regulated by this proposed action, you should carefully examine the applicability criteria in 40 CFR part 80. If you have any questions regarding the applicability of this proposed action to a particular entity, consult the person listed in the
The Renewable Fuel Standard (RFS) program began in 2006 pursuant to the requirements in Clean Air Act (CAA) section 211(o) that were added through the Energy Policy Act of 2005 (EPAct). The statutory requirements for the RFS program were subsequently modified through the Energy Independence and Security Act of 2007 (EISA), resulting in the publication of major revisions to the regulatory requirements on March 26, 2010.
The fundamental objective of the RFS provisions under the CAA is clear: To increase the use of renewable fuels in the U.S. transportation system every year in order to reduce greenhouse gases (GHGs) and increase energy security. Renewable fuels represent an opportunity for the U.S. to move away from fossil fuels towards a set of lower lifecycle GHG transportation fuels, and a chance for a still-developing lower lifecycle GHG technology sector to grow. While renewable fuels include corn starch ethanol, which is the predominant renewable fuel in use to date, Congress envisioned the majority of growth over time to come from advanced biofuels, as the non-advanced (conventional) volumes remain constant in the statutory volume tables starting in 2015 while the advanced volumes continue to grow.
The statute includes annual volume targets, and requires EPA to translate those volume targets (or alternative volume requirements established by EPA in accordance with statutory waiver authorities) into compliance obligations that refiners and importers must meet every year. In this action, we are proposing the annual percentage standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel that would apply to all gasoline and diesel produced or imported in 2017. We are also proposing the applicable volume of biomass-based diesel for 2018.
In this action, we are proposing standards that are designed to achieve the Congressional intent of increasing renewable fuel use over time in order to reduce lifecycle GHG emissions of transportation fuels and increase energy security, while at the same time accounting for the real-world challenges that have slowed progress toward such goals. Those challenges have made the volume targets established by Congress for 2017 beyond reach for all but the minimum 1.0 billion gallons for biomass-based diesel (BBD). We are proposing to use the waiver mechanisms provided by Congress to establish volume requirements that would be lower than the statutory targets for fuels other than biomass-based diesel, but set at a level that we believe would spur growth in renewable fuel use, consistent with Congressional intent.
Our proposed 2017 volume requirements are ambitious, with substantial growth in all categories relative to 2016. We are also proposing a volume requirement for BBD for 2018 that would continue the growth in that category of renewable fuel. The proposed volume requirements are shown in Table I-1 below.
Our decision to propose volumes for total renewable fuel that rely on using both the cellulosic waiver authority and the general waiver authority is based on the same fundamental reasoning we relied upon in the final rule “Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume for 2017,” which established the standards for 2014, 2015, and 2016 (hereinafter referred to as the “2014-2016 final rule”).
We believe that the RFS program can and will drive renewable fuel use, and we have considered the ability of the market to respond to the standards we set when we assessed the amount of renewable fuel that can be supplied. Therefore, while this proposed rule applies the tools Congress provided to make adjustments to the statutory volume targets in recognition of the constraints that exist today, we believe the standards we are proposing will drive growth in renewable fuels, particularly advanced biofuels, which achieve the lowest lifecycle GHG emissions. In our view, while Congress recognized that supply challenges may exist as evidenced by the waiver provisions, it did not intend growth in the renewable fuels market to be stopped by those challenges, including those associated with the “E10 blendwall.”
As for past rulemakings establishing the annual standards under the RFS program, the final standards that we set for 2017 and the final BBD volume requirement for 2018 will take into account comments received in response to this proposal and relevant new or updated information that becomes available prior to the final rule.
The national volume targets of renewable fuel that are intended to be achieved under the RFS program each year (absent an adjustment or waiver by EPA) are specified in CAA section 211(o)(2). The statutory volumes for 2017 are shown in Table I.A-1. The cellulosic biofuel and BBD categories are nested within the advanced biofuel category, which is itself nested within the total renewable fuel category. This means, for example, that each gallon of cellulosic biofuel or BBD that is used to satisfy the individual volume requirements for those fuel types can also be used to satisfy the requirements for advanced biofuel and total renewable fuel.
Under the RFS program, EPA is required to determine and publish annual percentage standards for each compliance year. The percentage standards are calculated to ensure use in transportation fuel of the national “applicable volumes” of the four types of biofuel (cellulosic biofuel, BBD, advanced biofuel, and total renewable fuel) that are set forth in the statute or established by EPA in accordance with the Act's requirements. The percentage standards are used by obligated parties (generally, producers and importers of gasoline and diesel fuel) to calculate their individual compliance obligations. Each of the four percentage standards is applied to the volume of non-renewable gasoline and diesel that each obligated party produces or imports during the specified calendar year to determine their individual volume obligations with respect to the four renewable fuel types. The individual volume obligations determine the number of RINs of each renewable fuel type that each obligated party must acquire and retire to demonstrate compliance.
EPA is proposing the annual applicable volume requirements for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2017, and for BBD for 2018.
As shown
With regard to BBD, Congress chose to set aside a portion of the advanced biofuel standard for BBD and CAA section 211(o)(2)(B) specifies the applicable volumes of BBD to be used in the RFS program only through year 2012. For subsequent years the statute sets a minimum volume of 1 billion gallons, and directs EPA, in coordination with the U.S. Departments of Agriculture (USDA) and Energy (DOE), to determine the required volume after review of the renewable fuels program and consideration of a number of factors. The BBD volume requirement must be established 14 months before the year in which it will apply. In the 2014-2016 final rule we established the BBD volume for 2017. In Section IV of this preamble we discuss our proposed assessment of statutory and other relevant factors and our proposed volume requirement for BBD for 2018, which has been developed in coordination with USDA and DOE.
Regarding advanced biofuel and total renewable fuel, Congress provided several mechanisms through which those volumes could be reduced if necessary. If we lower the applicable volume of cellulosic biofuel below the volume specified in CAA 211(o)(2)(B)(i)(III), we also have the authority to reduce the applicable volumes of advanced biofuel and total renewable fuel by the same or a lesser amount. We refer to this as the “cellulosic waiver authority.” We may also reduce the applicable volumes of any of the four renewable fuel types using the “general waiver authority” provided in CAA 211(o)(7)(A) if EPA, in consultation with USDA and DOE, finds that implementation of the statutory volumes would severely harm the economy or environment of a State, region, or the United States, or if there is inadequate domestic supply. Section II of this proposed rule describes our use of the cellulosic waiver authority to reduce volumes of advanced biofuel and total renewable fuel and the general waiver authority to further reduce volumes of total renewable fuel. Consistent with the views that we expressed in the 2014-2016 final rule, we continue to believe that the exercise of our waiver authorities is necessary to address important realities, including:
• Substantial limitations in the supply of cellulosic biofuel,
• Insufficient supply of other advanced biofuel to offset the shortfall in cellulosic biofuel, and
• Practical and legal constraints on the ability of the market to supply renewable fuels to the vehicles and engines that can use them.
We believe these realities continue to justify the exercise of the authorities Congress provided us to waive the statutory volumes. At the same time, we are mindful that the primary objective of the statute is to increase renewable fuel use over time. While available volumes of all categories of renewable fuel have been increasing in recent years, the statutory volume targets have been increasing as well. For the total renewable fuel requirement in this rule, we are proposing to use both the cellulosic biofuel and general waiver authorities only to the extent necessary to derive the applicable volume of total renewable fuel that reflects the
For the advanced biofuel volume requirements, we are proposing to use the cellulosic waiver authority alone to derive the volume requirement for 2017 that is reasonably attainable and which to a significant extent would result in backfilling the shortfall in cellulosic biofuel volumes with other advanced biofuels that also provide substantial GHG emission reductions.
This section briefly summarizes the major provisions of this proposed rule. We are proposing applicable volume requirements and associated percentage standards for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2017, as well as the percentage standard for BBD for 2017, and the applicable volume requirement for BBD for 2018.
It is our intention that the volume requirements and associated percentage standards for 2017 will be issued on the statutory schedule, providing the market with the time allotted by Congress to react to the standards we set. For advanced biofuel and total renewable fuel, our proposed assessment of supply simultaneously reflects the statute's purpose to drive growth in renewable fuels, while also accounting for constraints in the market that make the volume targets specified in the statute beyond reach in the time set forth in the Act, as described more fully in Section II. As described in Section III, the proposed 2017 cellulosic biofuel volume requirement is based on a projection of production that reflects a neutral aim at accuracy. Our proposed determination regarding the 2018 BBD volume requirement reflects an analysis of a set of factors stipulated in CAA 211(o)(2)(B)(ii), as described in more detail in Section IV.
The approach we have taken in this proposal is essentially the same as that presented in the 2014-2016 final rule. We believe that the approach that we took in the 2014-2016 final rule to determining the 2016 volume requirements was successful in targeting levels that took into account constraints in the supply of renewable fuel while simultaneously accounting for the ability of the market to be responsive to the standards we set to overcome some of those constraints. As a result, we believe that it is appropriate to use the same approach in our proposal for the 2017 volume requirements, and the discussion of the derivation of the proposed volume requirements in this proposal makes frequent reference to the 2014-2016 final rule. Where data, analyses, or other information have changed since release of the 2014-2016 final rule, we have noted the impact of such changes on our assessment of achievable volumes for 2017.
Since the EISA-amended RFS program began in 2010, we have reduced the applicable volume of cellulosic biofuel each year in the context of our annual RFS standards rulemakings to the projected production levels, and we have considered whether to also reduce the advanced biofuel and total renewable fuel statutory volumes pursuant to the waiver authority in section 211(o)(7)(D)(i). In the 2014-2016 final rule, we determined that the volume of ethanol in the form of E10 or higher ethanol blends such as E15 or E85 that could be supplied to vehicles in 2016, together with the volume of non-ethanol renewable fuels that could be supplied to vehicles, would be insufficient to attain the statutory targets for both total renewable fuel and advanced biofuel. As a result, we used the waiver authorities provided in CAA 211(o)(7)(D) to set lower volume requirements for these renewable fuel categories in 2016, and we also used the waiver authority in CAA 211(o)(7)(A) to provide an additional further increment of reduction for total renewable fuel.
We believe that the conditions compelling us to reduce the applicable 2016 volume requirements for advanced biofuel and total renewable fuel below the statutory targets remain relevant in 2017. Our proposed determination that the required volumes of advanced biofuel and total renewable fuel should be reduced from the statutory targets is based on a consideration of:
• The ability of the market to supply such fuels through domestic production or import.
• The ability of available renewable fuels to be used as transportation fuel, heating oil, or jet fuel.
• The ability of the standards to bring about market changes in the time available.
• The ability of reasonably attainable volumes of non-cellulosic advanced biofuels to backfill for unavailable volumes of cellulosic biofuel.
As described in more detail in Section II.A, we believe that the availability of qualifying renewable fuels and constraints on their supply to vehicles that can use them are valid considerations under both the cellulosic waiver authority under CAA section 211(o)(7)(D)(i) and the general waiver authority under CAA section 211(o)(7)(A). As for 2016, we are proposing to use the waiver authorities in a limited way that reflects our understanding of how to reconcile real marketplace constraints with Congress' intent to spur growth in renewable fuel use over time.
We are proposing applicable volumes for advanced biofuel and total renewable fuel for 2017 that would result in significant volume growth over the volume requirements for 2016. Moreover, the proposed volume requirements for total renewable fuel are, in our judgment, as ambitious as can reasonably be justified, and reflect the growth rates that can be attained under a program explicitly designed to compel the market to respond. We anticipate that the proposed advanced biofuel volume requirement would result in reasonably attainable volumes of advanced biofuel backfilling for missing cellulosic biofuel volumes.
In EISA, Congress chose to set aside a portion of the advanced biofuel standard for BBD, but only through 2012. Beyond 2012 Congress stipulated that EPA, in coordination with other
Given current and recent market conditions, the advanced biofuel volume requirement is driving the biodiesel and renewable diesel volumes, and we expect this to continue. Nevertheless we believe that it is appropriate to set increasing BBD applicable volumes to provide a floor to support continued investment to enable increased production and use of BBD. In doing so we also believe in the importance of maintaining opportunities for other types of advanced biofuel, such as renewable diesel co-processed with petroleum, renewable gasoline blend stocks, and renewable heating oil, as well as others that are under development.
Thus, based on a review of the implementation of the program to date and all the factors required under the statute, and in coordination with USDA and DOE, we are proposing an increase of 100 million gallons in the applicable volume of BBD, to 2.1 billion gallons for 2018. We believe that this increase will support the overall goals of the program while also maintaining the incentive for development and growth in production of other advanced biofuels. Establishing the volumes at this level will encourage BBD producers to manufacture higher volumes of fuel that will contribute to the advanced biofuel and total renewable fuel requirements, while also leaving considerable opportunity within the advanced biofuel mandate for investment in and growth in production of other types of advanced biofuel with comparable or potentially superior environmental or other attributes.
In the past several years the cellulosic biofuel industry has continued to make progress towards significant commercial scale production. Cellulosic biofuel production reached record levels in 2015, driven largely by compressed natural gas (CNG) and liquefied natural gas (LNG) derived from biogas. Cellulosic ethanol, while produced in much smaller quantities than CNG/LNG derived from biogas, was also produced consistently in 2015. In this rule we are proposing a cellulosic biofuel volume requirement of 312 million ethanol-equivalent gallons for 2017 based on the information we have received regarding individual facilities' capacities, production start dates and biofuel production plans, as well as input from other government agencies, and EPA's own engineering judgment.
As part of estimating the volume of cellulosic biofuel that will be made available in the U.S. in 2017, we considered all potential production sources by company and facility. This included sources still in the planning stages, facilities under construction, facilities in the commissioning or start-up phases, and facilities already producing some volume of cellulosic biofuel.
The renewable fuel standards are expressed as a volume percentage and are used by each producer and importer of fossil-based gasoline or diesel to determine their renewable fuel volume obligations. The percentage standards are set so that if each obligated party meets the standards, and if EIA projections of gasoline and diesel use for the coming year prove to be accurate, then the amount of renewable fuel, cellulosic biofuel, BBD, and advanced biofuel actually used will meet the volume requirements used to derive the percentage standards, required on a nationwide basis.
Four separate percentage standards are required under the RFS program, corresponding to the four separate renewable fuel categories shown in Table I.A-1. The specific formulas we use in calculating the renewable fuel percentage standards are contained in the regulations at 40 CFR 80.1405. The percentage standards represent the ratio of renewable fuel volume to projected non-renewable gasoline and diesel volume. The volume of transportation gasoline and diesel used to calculate the final percentage standards was provided by the Energy Information Administration (EIA). The proposed percentage standards for 2017 are shown in Table I.B.5-1. Detailed calculations can be found in Section V, including the projected gasoline and diesel volumes used.
As in the past, we acknowledge that a number of challenges still need to be overcome in order to fully realize the potential for greater use of renewable fuels in the United States as envisioned by Congress in establishing the RFS requirements. The RFS program plays a central role in creating the incentives for realizing that potential. The standards being proposed reflect our understanding of the significant progress that is being made in overcoming those challenges. We expect future standards to both reflect and anticipate progress of the industry and market in providing for continued expansion in the supply of renewable fuels, and we intend to set standards in future years that continue to capitalize on the market's ability to respond to those standards with expansions in production and infrastructure.
We believe that the supply of renewable fuels can continue to increase in the coming years despite the
In future years, we would expect to use the most up-to-date information available to project the growth that can realistically be achieved considering the ability of the RFS program to spur growth in the volume of ethanol, biodiesel, and other renewable fuels that can be supplied and consumed by vehicles as we have for the 2017 volumes in this proposal. In particular, we will focus on the emergence of advanced biofuels including cellulosic biofuel, consistent with the statute. Many companies are continuing to invest in efforts ranging from research and development, to the construction of commercial-scale facilities to increase the production potential of next generation biofuels. We will continue to evaluate new pathways especially for advanced biofuels and respond to petitions, expanding the availability of feedstocks, production technologies, and fuel types eligible under the RFS program.
In addition to ongoing efforts to evaluate new pathways for advanced biofuel production, we are aware that other actions can also play a role in overcoming challenges that limit the potential for supply of increased volumes of renewable fuels. We are currently considering and evaluating regulatory provisions that should enhance the ability of the market to increase not only the production of advanced and cellulosic biofuels but also the use of higher-level ethanol blends such as E15 and E85. DOE and USDA are continuing to provide funds for the development of new technologies and expansion of infrastructure. All of this, as well as actions not yet defined, is expected to continue to help clear hurdles to support the ongoing growth in the use of renewable fuels in future years.
The national volume targets of advanced biofuel and total renewable fuel to be used under the RFS program each year through 2022 are specified in CAA section 211(o)(2). Congress set targets that envisioned growth at a pace that far exceeded historical growth and prioritized that growth as occurring principally in advanced biofuels (contrary to historical growth patterns). Congressional intent is evident in the fact that the non-advanced volumes remain at a constant 15 billion gallons in the statutory volume tables starting in 2015 while the advanced volumes continue to grow through 2022 to a total of 21 billion gallons, for a total of 36 billion gallons in 2022.
While Congress set ambitious volume targets as a mechanism to push renewable fuel volume growth under the RFS program, Congress also provided EPA with waiver authority, in part to address the situation where supply of renewable fuel does not match these ambitious target levels. EPA may reduce the volume targets to the extent that we reduce the applicable volume for cellulosic biofuel pursuant to CAA 211(o)(7)(D), or if the criteria are met for use of the general waiver authority under CAA 211(o)(7)(A). As described in this section, we believe that reductions in both the advanced biofuel and total renewable fuel volume targets are necessary for 2017.
While the statute and legislative history offer little guidance on the specific considerations underlying the statutory volume targets, we believe it is highly unlikely that Congress expected those volume targets to be reached only through the consumption of E10 and biomass-based diesel; while the statute does require the use of a minimum volume of BBD, it does not explicitly require the use of ethanol. Today we know that possible approaches to significantly expand renewable fuel use fall into a number of areas, such as:
• Increased use of E15 in model year 2001 and later vehicles,
• Increased use of E85 or other higher level ethanol blends in flex-fuel vehicles (FFVs),
• Increased production and/or importation of non-ethanol biofuels (
• Increased use of biogas in CNG vehicles,
• Increased use of renewable jet fuel and heating oil,
• Increased use of cellulosic and other non-food based feedstocks, and
• Co-development of new technology vehicles and engines optimized for new fuels.
While we believe that developments in some of these areas have been and will continue to occur, and that such changes will contribute to growth in supply in 2017, we do not believe that those developments will be sufficient to reach the statutory volume targets in this year. Volume requirements over the longer term that are issued in a timely manner and which provide the certainty of a guaranteed and growing future market are necessary for the industry to have the incentive to invest in the development of new technology and expanded infrastructure for production, distribution, and dispensing capacity. We believe that over time use of both higher level ethanol blends and non-ethanol biofuels can and will increase, consistent with Congressional intent to increase total renewable fuel use through the enactment of EPAct and EISA. As stated above, while Congress provided waiver authority to account for supply and other challenges, we do not believe that Congress intended that the E10 blendwall or any other particular limitation would present a barrier to the expansion of renewable fuels. The fact that Congress set volume targets reflecting increasing and substantial amounts of renewable fuel use clearly signals that it intended the RFS program to create incentives to increase renewable fuel supplies and overcome supply limitations. Notwithstanding these facts, Congress also authorized EPA to adjust statutory volumes as necessary to reflect situations involving shortfalls in cellulosic biofuel production, inadequate domestic supply, or where EPA determines that severe economic or environmental harm would result from program implementation.
We have evaluated the capabilities of the market and have concluded that the volumes for advanced biofuel and total renewable fuel specified in the statute cannot be achieved in 2017. This is due in part to the expected continued shortfall in cellulosic biofuel; production of this fuel type has consistently fallen short of the statutory targets by 95% or more (about 4 billion gallons in 2016), and projected production volumes for 2017, while continuing to grow, are consistent with this trend. In addition, although in earlier years of the RFS program we determined that the available supply of advanced biofuel and other considerations justified our retaining the statutory advanced biofuel and total renewable fuel volumes notwithstanding the shortfall in cellulosic biofuel production, the more recent statutory targets and continued sluggish pace of cellulosic biofuel production precluded such a determination for 2014, 2015, and 2016. We project that the same circumstances will continue in 2017. As a result, we are proposing to exercise the statutory waiver authorities to reduce the
Our analytic approach is to first ascertain the maximum reasonably achievable volumes of all types of renewable fuel. Having done so, we next determine the extent to which a portion of those fuels should be required to be advanced. We then propose to use the cellulosic waiver authority to provide equal reductions in advanced and total renewable fuel volumes, and the general waiver authority to justify the additional incremental reduction in total volumes necessary to alleviate inadequacy of supply of total renewable fuels. Based on this approach, the volumes that we are proposing are shown below.
In CAA 211(o)(2), Congress specified increasing annual volume targets for total renewable fuel, advanced biofuel, and cellulosic biofuel for each year through 2022, and for biomass-based diesel through 2012, and authorized EPA to set volume requirements for subsequent years in coordination with USDA and DOE, and after consideration of specified factors. However, Congress also recognized that circumstances may arise that necessitate deviation from the statutory volumes and thus provided waiver provisions in CAA 211(o)(7). We believe, as we did in setting the volumes from 2014-2016, that the circumstances justifying use of the waiver authorities and thus a reduction in statutory volumes are currently present, and we are proposing to again use our waiver authorities under both 211(o)(7)(D) and 211(o)(7)(A) to reduce volume requirements. Congress envisioned that there would be 5.5 billion gallons of cellulosic biofuel in 2017, while we estimate the potential for 312 million gallons. Under 211(o)(7)(D), EPA must lower the required cellulosic volume to the projected production volumes. Doing so also provides EPA with authority to lower advanced and total renewable fuel volumes by the same or a lesser amount. Additionally, we believe that even after reducing total renewable fuel volumes to the full extent possible under the cellulosic waiver authority in 211(o)(7)(D), there is an inadequate domestic supply of renewable fuel to achieve those volumes, both warranting and justifying a further reduction in the total renewable fuel volumes under the authority of 211(o)(7)(A). The inadequate domestic supply is due to a combination of projected limitations in the production and importation of qualifying renewable fuels, as well as factors limiting supplying those fuels to the vehicles that can consume them.
Section 211(o)(7)(D) of the CAA provides that if the projected volume of cellulosic biofuel production is less than the minimum applicable volume in the statute, EPA shall reduce the applicable volume of cellulosic biofuel required to the projected volume available. For 2017, we are proposing to reduce the applicable volume of cellulosic biofuel under this authority.
Section 211(o)(7)(D) also provides EPA with the authority to reduce the applicable volume of total renewable fuel and advanced biofuel in years where it reduces the applicable volume of cellulosic biofuel. The reduction must be less than or equal to the reduction in cellulosic biofuel. For 2017, we are also proposing to reduce applicable volumes of advanced biofuel and total renewable fuel under this authority.
The cellulosic waiver authority is discussed in detail in the preamble to the 2014-2016 final rule. See also,
Section 211(o)(7)(A) of the CAA provides that EPA, in consultation with the Secretary of Agriculture and the Secretary of Energy, may waive the applicable volumes of total renewable fuel, after public notice and comment based on a determination that there is an inadequate domestic supply. In addition to proposing to use the cellulosic waiver authority to lower total renewable fuel volumes, we are also proposing to further reduce total renewable fuel volumes for 2017 using the general waiver authority.
EPA interpreted and applied this waiver provision in the 2014-2016 final rule, and concluded that it was appropriate to use this authority in combination with the cellulosic waiver authority to reduce total renewable volumes for those years. EPA, in consultation with DOE and USDA, continues to find that the circumstances justifying the use of the general waiver authority exist and support a finding of inadequate domestic supply. As discussed in the 2014-2016 final rule, we find that this undefined provision is reasonably and best interpreted to encompass the full range of constraints that could result in an inadequate supply of renewable fuel to the ultimate consumers, including fuel production, infrastructure and other constraints. This includes, for example, factors affecting the ability to produce or import biofuels as well as factors affecting the ability to distribute, blend, dispense, and consume those renewable fuels as transportation fuel, jet fuel or heating oil.
A full discussion of EPA's interpretation of this waiver authority can be found in the 2014-2016 final rule. A full discussion of EPA's proposed determination that there is an “inadequate domestic supply” of total
We are again proposing to reduce the applicable volumes of total renewable fuel for 2017 using two distinct authorities. Proposed initial reductions in total renewable fuel correspond to the volume reduction in advanced biofuels, using the cellulosic waiver authority. We are proposing to reduce total renewable fuel further based on a determination of inadequate domestic supply. We are proposing to use the cellulosic waiver authority to reduce the statutory volume for total renewable fuel by an initial increment of 5.0 billion gallons for 2017. In addition, we are proposing to use the general waiver authority exclusively as the basis for further reducing the applicable volume of total renewable fuel by an additional 0.2 billion gallons in 2017.
In order to use the general waiver authority in CAA 211(o)(7)(A) to reduce the applicable volumes of total renewable fuel, we must make a determination that there is either “inadequate domestic supply” or that implementation of the statutory volumes would severely harm the economy or environment of a State, a region or the United States. This section summarizes our proposed determination that there will be an inadequate domestic supply of total renewable fuel in 2017, and thus that the statutory volume targets are not achievable with volumes that can reasonably be supplied in this year. Additionally, this proposed determination that the statutory volume targets are not achievable with volumes supplied would also support our use of the cellulosic waiver authority under CAA 211(o)(7)(D) to reduce the applicable volumes of advanced and total renewable fuel.
The statute sets a target of 24.0 billion gallons of total renewable fuel for 2017. We believe that this volume cannot be achieved under even the most optimistic assumptions given current and near-future circumstances. To make this proposed determination, we began by assuming that every gallon of gasoline would contain 10% ethanol, and that the supply of conventional and advanced biodiesel and renewable diesel volumes would be equal to those supplied in 2015. These volumes are clearly attainable, based on readily available information and analysis. However, when these supplies of renewable fuel are taken into account, a significant additional volume of renewable fuel would be needed to meet the statutory volume target.
Based on the current and near-future capabilities of the industry, we expect that only a relatively small portion of the additional volumes needed would come from non-ethanol cellulosic biofuel, non-ethanol advanced biofuels other than BBD, and non-ethanol conventional renewable fuels other than biodiesel and renewable diesel. In 2015, the total ethanol-equivalent volume for all of these sources was 163 million gallons, and we projected that 235 million gallons would be available in 2016 in our 2014-2016 final rule. In 2017 we believe that these sources could be 300 million gallons or more based on the expectation that the growth which is expected to occur between 2015 and 2016 will continue in 2017. Taking these sources into account, we estimate that the volume of additional renewable fuel needed in 2017 would be about 6,600 million gallons.
Aside from these relatively small sources, renewable fuel that could fulfill the need for the additional volumes needed to reach the statutory targets in 2017 would be additional ethanol in the form of E15 or E85, additional biodiesel and renewable diesel, or some combination of these sources. Table II.B-2 provides examples of the additional volumes that would be needed if the 2017 statutory target for total renewable fuel were not waived.
Although a combination of E15, E85, and biodiesel would in theory reduce the overall burden on the market to supply the additional volumes needed, the necessary volumes would nevertheless still be far beyond reach. E85 volumes in 2014 only reached about 150 million gallons, and in 2015 we estimate that it rose to about 166 million gallons.
Similarly, we do not believe that 2.98 billion gallons of E15 can be supplied in 2017. We projected that 320 million gallons of E15 could be supplied in 2016 based on new infrastructure paid for through USDA's BIP program, and this volume could double in 2017 after the BIP program is fully phased in. As described more fully in Section II.E below, under favorable conditions E15 volumes as high as 800 million gallons might be possible in 2017. However, achieving nearly 3 billion gallons of E15 would require significantly higher growth rates in the number of retail stations offering E15, and/or significantly more favorable pricing for E15 compared to E10. We have seen no evidence that the market is capable of such dramatic changes between today and the end of 2017.
Finally, the necessary volume of advanced and conventional biodiesel that would be needed to avoid a waiver of the statutory target for total renewable fuel, even if combined with substantial increases in E15 and E85 use, is also beyond reach in 2017. For instance, the 2.98 billion gallons of biodiesel shown in Table II.B-2 would be in addition to the 1.9 billion gallons already assumed in Table II.B-1, such that the total volume of conventional and advanced biodiesel needed would be about 5 billion gallons. A total of 5 billion gallons is far higher than the production capacity of all domestic biodiesel facilities, even if accounting for those facilities that are not currently registered under the RFS program. Imports of biodiesel and renewable diesel have historically been much lower than domestic production, reaching a maximum of 470 million gallons in 2015, and thus could not reasonably be expected to fill the gap left by the shortfall in domestic production capacity. The use of 5 billion gallons of biodiesel, equivalent to about 10% of the nationwide diesel pool, would also be constrained by distribution, blending, and dispensing infrastructure. Not only are some areas of the country beyond reasonable reach of biodiesel supply centers, as described in Section III.E.3.iv, but some retailers reduce or modify offerings of biodiesel blends in winter months to account for the higher propensity of biodiesel blends to gel in colder temperatures. Also, a significant portion of the in-use fleet is made up of highway and nonroad diesel engines that are warranted for no more than 5% biodiesel. These considerations are similar to those referenced in the 2014-2016 final rule since little has changed in the months since that could significantly change the potential supply in 2017. In the 2014-2016 final rule, we projected that total biodiesel and renewable diesel volumes could reach 2.5 billion gallons in 2016, which was a significant increase from the 2015 actual supply of 1.9 billion gallons. Even under the most optimistic circumstances, total biodiesel and renewable diesel supply cannot double within one year.
We are also proposing to use the cellulosic waiver authority to reduce volumes of advanced biofuel. Our proposed action is based in part on a determination that the statutory volume targets for advanced biofuel cannot be met in 2017. To make this proposed determination, we took a similar approach to that used for total renewable fuel in Table II.B-1: We first accounted for our proposed volume requirements for cellulosic biofuel and BBD, as well as an estimate of the volume of other non-ethanol advanced biofuel that may be possible in 2017 based on supply in previous years to yield an estimate of readily available volumes. When these supplies of advanced biofuel are taken into account, a significant additional volume of advanced biofuel would still be needed for the statutory volume targets to be met.
Based on historic patterns and our understanding of production capacity and feedstock availability, we believe that advanced biofuel that could fulfill the need for the additional volumes needed to reach the statutory target in 2017 would primarily be imported sugarcane ethanol or BBD in excess of the BBD standard. Table II.B-4 provides examples of the additional volumes that would be needed.
Even if the additional volumes of advanced biofuel needed to avoid a waiver were shared between imported sugarcane ethanol and BBD, the necessary volumes of both would be far in excess of what we believe is reasonably achievable. For instance, imports of sugarcane ethanol have been highly variable in the past, and the highest volume of sugarcane ethanol that has ever been imported to the U.S. was 680 million gallons in 2006. Moreover, notwithstanding an estimate of 2 billion gallons of sugarcane ethanol supply from the Brazilian Sugarcane Industry Association (UNICA) submitted in response to the June 10, 2015 proposal for the 2016 standards, we do not believe that 2.26 billion gallons could be exported from Brazil to the U.S. in 2017. The 2016 standards that we established in the 2014-2016 final rule were based in part on a projection of 200 million gallons of imported sugarcane ethanol. Our current views of the potential supply of imported sugarcane ethanol for 2017 are largely the same as those discussed in the 2014-2016 final rule, and we refer readers to that rule for further discussion.
Under a scenario wherein growth in sugarcane ethanol and BBD both contributed to providing the additional volumes needed to avoid a waiver of the advanced biofuel statutory target, the total volume of BBD required under the RFS program would also be far in excess of what is achievable in 2017. For instance, the 2.26 billion gallons of BBD shown in Table II.B-4 above would be in addition to the 2.0 billion gallon volume requirement for BBD, such that the total volume of BBD needed would be 4.26 billion gallons. For many of the same reasons discussed above in the context of the inability to meet the statutory targets for total renewable fuel, this level of BBD is not achievable in 2017.
In the 2014-2016 final rule, we discussed the fact that the market is not unlimited in its ability to respond to the standards EPA sets. We continue to believe that setting the volume requirements at the statutory targets would not compel the market to respond with sufficient changes in production levels, infrastructure, and fuel pricing at retail to result in the statutory volumes actually being consumed in 2017, but would instead lead to a complete draw-down in the bank of carryover RINs (which, as discussed in Section II.C, we do not believe to be in the best interest of the program), noncompliance, and/or additional petitions for a waiver of the standards.
We are proposing to exercise our authority to waive the volume of total renewable fuel under the general waiver authority for 2017, since reductions using the cellulosic authority alone would be insufficient to alleviate the inadequacy in supply. Our objective is to exercise the general waiver authority only to the extent necessary to address the inadequacy in supply. We are seeking to determine the “maximum” volumes of renewable fuel that are reasonably achievable in light of supply constraints. To clarify, we are not aiming to identify the absolute maximum domestic supply that could be available in an ideal or unrealistic situation, or a level that might be anticipated under conditions that are possible, but unlikely to occur. Rather, we are attempting to identify what we believe is the most likely maximum volume that can be made available under real world conditions, taking into account the ability of the standards we set to cause a market response and result in increases in the supply of renewable fuels. This is a very challenging task not only in light of the myriad complexities of the fuels market and how individual aspects of the industry might change in the future, but also because we cannot precisely predict how the market will respond to the volume-driving provisions of the RFS program. Thus, although the determination is founded on our analyses and evaluation of the available information, the determination is also one that we believe is not given to precise measurement and necessarily involves considerable exercise of judgment.
Our intention for 2017 is to establish a requirement for total renewable fuel that takes into account the ability of the market to respond to the standards we set, and is the maximum that is reasonably achievable given the various constraints on supply. In this context, we continue to believe that the constraints associated with the E10 blendwall do not represent a firm barrier that cannot or should not be crossed. Rather, the E10 blendwall marks the transition from relatively straightforward and easily achievable increases in ethanol consumption as E10 to those increases in ethanol consumption as E15 and E85 that are more challenging to achieve. To date we have seen no compelling evidence that the nationwide average ethanol concentration in gasoline cannot exceed 10.0%.
However, we also recognize that the market is not unlimited in its ability to respond to the standards we set. This is true both for expanded use of ethanol and for non-ethanol renewable fuels. The fuels marketplace in the United States is large, diverse, and complex, made up of many different players with different, and often competing, interests. Substantial growth in the renewable fuel volumes beyond current levels will require action by many different parts of the fuel market, and a constraint in any one part of the market can limit the growth in renewable fuel supply. Whether the primary constraint is in the technology development and commercialization stages, as has been the case with cellulosic biofuels, or is instead related to the development of distribution infrastructure, as is recently the case with ethanol and biodiesel in the United States, the end result is that these constraints limit the growth rate in the available supply of renewable fuel as transportation fuel, heating oil, or jet fuel. These constraints were discussed in detail in the 2014-2016 final rule, and we believe that the same constraints will operate to limit supply for 2017 as well.
While the constraints are real and must be taken into account when we determine maximum reasonably achievable volumes of total renewable fuel for 2017, none of those constraints represent insurmountable barriers to growth. Rather, they are challenges that can be overcome in a responsive marketplace given enough time and with appropriate investment. The speed with which the market can overcome these constraints is a function of whether and how effectively parties involved in the many diverse aspects of renewable fuel supply respond to the challenges associated with transitioning from fossil-based fuels to renewable fuels, the incentives provided by the RFS program, and other programs designed to incentivize renewable fuel use. As discussed in the following sections, we believe that the total renewable fuel volume requirements that we are proposing for 2017 reflect the extent to which market participants can reasonably be expected to respond within the time period in question to increase renewable fuel supplies.
Consistent with our approach in the 2014-2016 final rule, we have also considered the availability of carryover RINs in our proposed decision to exercise our waiver authorities in setting the volume requirements for 2017. Other than requiring a credit program, neither the statute nor EPA regulations specify how or whether EPA should consider the availability of carryover RINs in exercising its waiver authorities either in the standard-setting context or in response to petitions for a waiver during a compliance year. The availability of carryover RINs is important both to individual compliance flexibility and operability of the program as whole. We believe that carryover RINs are extremely important in providing obligated parties compliance flexibility in the face of substantial uncertainties in the transportation fuel marketplace, and in providing a liquid and well-functioning RIN market upon which success of the entire program depends. As described in the 2007 rulemaking establishing the RFS regulatory program,
At the time of the 2014-2016 final rule, we estimated that there were at most 1.74 billion carryover RINs available and decided that carryover RINs should not be counted on to avoid or minimize the need to reduce the 2014, 2015, and 2016 statutory volume targets. We also stated that we may or may not take a similar approach in future years, and that we would evaluate the issue on a case-by-case basis considering the facts present in future years. Since that time, obligated parties have submitted their compliance demonstrations for the 2013 compliance year and we now estimate that there are now at most 1.72 billion carryover RINs available, a decrease of 20 million RINs from the previous estimate of 1.74 billion carryover RINs. Since we established the 2014 and the 2015 RFS volume standards at essentially the same level of renewable fuel supplied for those years, we do not expect there to be an appreciable change in the number of available carryover RINs after compliance demonstrations are made for the 2014 and 2015 compliance years.
For 2016, we established standards that represented a significant increase in the renewable fuel volume targets from 2014 and 2015. In the 2014-2016 final rule, we stated that these standards may result in a drawdown in the carryover RIN bank, although an intentional drawdown was not assumed in setting the volume standards. However, we will likely not have data showing whether or not there has been an appreciable change in the size of the bank of carryover RINs until after the 2017 RFS standards have been established.
For the reasons noted above, and consistent with the approach we took in the 2014-2016 final rule, we believe that the collective bank of carryover RINs that we anticipate will be available in 2017 should be retained, and not intentionally drawn down, to provide an important and necessary programmatic buffer that will both facilitate individual compliance and provide for smooth overall functioning of the program. Therefore, we are not proposing to set renewable fuel volume requirements at levels that would envision the drawdown in the bank of carryover RINs.
Ethanol is the most widely produced and consumed biofuel, both domestically and globally. Since the beginning of the RFS program, the total volume of renewable fuel produced and consumed in the United States has grown substantially each year, primarily due to the increased production and use of corn ethanol. However, the rate of growth in the supply of ethanol has decreased in recent years as the gasoline market has become saturated with E10, and efforts to expand the use of higher ethanol blends such as E15 and E85 have not been sufficient to maintain past growth rates in total ethanol supply. The low number of retail stations selling these higher-level ethanol blends, along with poor price advantages compared to E10, a limited number of FFVs, and limited marketing of these fuels, among others, represent challenges to the continued growth of the supply of ethanol as a transportation fuel in the United States.
In the 2014-2016 final rule we discussed in detail the factors that constrain growth in ethanol supply and the opportunities that exist for pushing the market to overcome those
Ethanol supply is not currently limited by production and import capacity, which is in excess of 15 billion gallons. Instead, the amount of ethanol supplied is constrained by the following:
• Overall gasoline demand and the volume of ethanol that can be blended into gasoline as E10 (the so-called E10 blendwall).
• The number of retail stations that offer higher ethanol blends such as E15 and E85.
• The number of vehicles that can both legally and practically consume E15 and/or E85.
• Relative pricing of E15 and E85 versus E10 and the ability of RINs to affect this relative pricing.
• The demand for gasoline without ethanol (E0).
However, as described in detail in the 2014-2016 final rule, the RFS program is not unlimited in its ability to compel changes in the market to accommodate greater supply of ethanol. For instance, while we do believe that the number of retail stations offering E85 will expand under the influence of the RFS program, an examination of efforts to expand E85 offerings at retail in the past suggests that there are limits in how quickly this can occur even under the most favorable market conditions. While the average rate of expansion has recently been about 120 new E85 stations per year, the growth in E85 stations was more substantial in late 2010 and early 2011—equivalent to about 400 new stations per year. The more recent experience in particular suggests that the growth in 2017 is unlikely to exceed several hundred additional stations each year.
We have also found that greater E85 price discounts relative to gasoline have not been associated with the substantial increases in E85 sales volumes that some stakeholders believe have occurred, or could occur in the near future. Based on an analysis of E85 consumption in five states (including the frequently cited E85 consumption data from Minnesota) and the E85 price reductions relative to gasoline in those states, we estimate that increasing the national average E85 price reduction relative to E10 from 17.5% to 30% would have increased total 2014 E85 consumption from 150 million gallons to only 200 million gallons.
Another significant factor in estimating the total volume of ethanol that can be supplied is the E10 blendwall, which is in turn a function of total gasoline demand. While the E10 blendwall does not represent a barrier to increasing ethanol supply, it does mark the point at which additional ethanol supply becomes more challenging to achieve. As the pool-wide ethanol concentration increases from 10% to higher levels of ethanol, the market transitions from mild resistance to obstacles that are more difficult to overcome, particularly with regard to infrastructure and relative pricing for higher ethanol blends such as E15 and E85. Because of this dynamic, it is helpful to identify the total volume of ethanol that could be supplied if all gasoline was E10 and there were no higher ethanol blends.
Based on the April 2016 Short-Term Energy Outlook (STEO) from the Energy Information Administration, total demand for gasoline energy in 2017 is projected to be 17.10 quadrillion Btu.
It is difficult to identify the precise boundary between ethanol supply volumes that can be realistically achieved in 2017 and those that likely cannot realistically be achieved in that timeframe. Nevertheless, we believe that ongoing efforts to increase the availability of E15 and E85 at retail will create opportunities for greater supply of ethanol in 2017 in comparison to 2016.
In the 2014-2016 final rule, we projected that ethanol supply in 2016 could exceed that supplied in 2015 by about 170 million gallons based on changes in gasoline demand, the influence of programs such as USDA's BIP program, and our expectation for how the RFS standards we set would influence sales of E0, E15, and E85 between the two years. For 2017, we believe that slightly larger increases in ethanol supply are possible. For the purpose of assessing the supply of total renewable fuel to require in 2017, we are proposing to use an ethanol supply of 14.4 billion gallons for 2017. While the market will ultimately determine the extent to which compliance with the annual standards is achieved through the use of greater volumes of ethanol versus other, non-ethanol renewable fuels, we nevertheless believe that this ethanol volume represents a realistically achievable level that takes into account the ability of the market to respond to the standards we set. We request comment on whether 14.4 billion gallons of ethanol is an appropriate volume to use in the determination of the applicable total renewable fuel volume requirement for 2017. For the final rule, we will consider comments received in response to this proposal, additional data and information that has become available, and more up-to-date projections of gasoline demand in estimating the total volume of ethanol that can be supplied.
While the market constraints on ethanol supply are readily identifiable as being primarily in the areas of refueling infrastructure and ethanol consumption, it is more difficult to identify and assess the market components that may limit potential growth in the use of biodiesel in 2017. Nevertheless, as discussed in the final rule establishing the RFS standards for 2014-2016, there are several factors that may, to varying degrees and at different times limit the growth of biodiesel and renewable diesel in future years, including local feedstock availability, production and import capacity, and the capacity to distribute, sell, and consume increasing volumes of biodiesel and renewable diesel. We continue to believe that the supply of biodiesel and renewable diesel as transportation fuel in the United States, while growing, is not without limit in the near term.
In the 2014-2016 rule we discussed the current status of each of the factors that impacts the supply of biodiesel and renewable diesel used as transportation fuel in the United States. While the market for biodiesel and renewable diesel has continued to develop, little has changed that would significantly impact our assessment of these factors. Instead, we expect that the growth in the supply of biodiesel and renewable diesel will largely be driven by incremental developments across the marketplace in 2017 to steadily increase volumes. For the purpose of deriving our proposed volumes for advanced biofuel and total renewable fuel we have projected that 2.7 billion gallons of biodiesel and renewable diesel (including both advanced and conventional biofuel) can be supplied in 2017, up from the 2.5 billion gallons that was projected for 2016. This volume exceeds the previously established BBD volume requirement of 2.0 billion gallons in 2017, as we believe additional volumes of both conventional and advanced biodiesel and renewable diesel can be supplied to the United States in 2017 (see Section IV for further discussion of the BBD standard). The following sections discuss our expectations for developments in key areas affecting the supply of biodiesel and renewable diesel in 2017. For a more detailed discussion of each of these factors, see the discussion in the 2014-2016 final rule.
In previous years, the primary feedstocks used to produce biodiesel and renewable diesel in the United States have been vegetable oils (primarily soy, corn, and canola oils) and waste fats, oils, and greases. We anticipate that these feedstocks will continue to be the primary feedstocks used to produce biodiesel and renewable diesel in 2017. Supplies of these oils are expected to increase slowly over time, as oilseed crop yields increase and an increasing portion of waste oils are recovered. While some have suggested that industries that compete with the biodiesel and renewable diesel industry for vegetable oil feedstocks will turn to alternative feedstock sources, resulting in greater feedstock availability for biodiesel and renewable diesel producers, such a shift in renewable oil feedstock use would not result in an increase in the total available supply of renewable oil feedstocks, and would therefore not alter the fundamental feedstock supply dynamics for biodiesel and renewable diesel production.
We anticipate that there will be a modest increase in the available supply of feedstocks that can be used to produce biodiesel and renewable diesel in 2017. Oil crop yield increases over the next few years are expected to be modest, and significant increases in the planted acres of oil crops are expected to be limited by competition for arable land from other higher value crops. The recovery of corn oil from distillers grains and the recovery of waste oils are already widespread practices, limiting the potential for growth from these sectors. Based on currently available information, we do not believe that it is likely that the availability of feedstocks will significantly limit the supply of biodiesel and renewable diesel used for transportation fuel in the United States in 2017, as other factors that impact the available supply (discussed below) are likely to present greater challenges. However, it is possible that biodiesel production at some individual facilities, especially those built to take advantage of low-cost, locally available feedstocks, may be limited by their access to affordable feedstocks in 2017, rather than their facility capacity. Large increases in the available supply of biodiesel and renewable diesel in future years will likely depend on the development and use of new, high-yielding feedstocks, such as algal oils or alternative oilseed crops.
The capacity for all registered biodiesel production facilities is currently at least 2.7 billion gallons. The capacity for all registered renewable diesel production facilities is more than 0.6 billion gallons. Active production capacity is lower, however, as many registered facilities were idle in 2015. Additionally, as discussed above, the availability of economically viable feedstocks may limit biodiesel production at any given facility to a volume lower than the facility capacity.
Another important market component in assessing biodiesel and renewable diesel supply is the potential for imported volumes and the diversion of biodiesel and renewable diesel exports to domestic uses. In addition to the approximately 560 million gallons imported into the U.S. in 2015, there were about 90 million gallons exported from the United States to overseas markets. Given the right incentives, it might be possible to redirect a portion of the biodiesel consumed in foreign countries to use in the U.S. in 2017. However, the amount of biodiesel and renewable diesel that can be imported into the United States is difficult to predict, as the incentives to import biodiesel and renewable diesel to the U.S. are a function not only of the RFS and other U.S. policies and economic drivers, but also those in the other countries around the world. These policies and economic drivers are not fixed, and change on a continuing basis. Over the years there has been significant variation in both the imports and exports of biodiesel and renewable diesel as a result of varying policies and relative economic policies (See Figure II.C.2.iii-1 below). Increasing net imports significantly would require a clear signal that increasing imports was economically advantageous, potential re-negotiations of existing contracts, and upgrades and expansions at U.S. import terminals. Because of demand for biodiesel and renewable diesel in other countries and potential biodiesel distribution constraints in the United States (discussed below), we do not expect a dramatic increase in the net imports of biodiesel and renewable diesel (total biodiesel and renewable diesel imports minus exports) in 2017, but rather a moderate increase, consistent with the general trend observed in previous years.
While biodiesel and renewable diesel are similar in that they are both diesel fuel replacements produced from the same types of feedstocks, there are significant differences in their fuel properties that result in differences in the way the two fuels are distributed and consumed. Biodiesel is an oxygenated fuel rather than a pure hydrocarbon. It cannot currently be
The infrastructure needed to store and distribute biodiesel has generally been built in line with the local demand for biodiesel. In most cases the infrastructure must be expanded to bring biodiesel to new markets, and additional infrastructure may also be needed to increase the supply of biodiesel in markets where it is already being sold. Renewable diesel, in contrast, is a pure hydrocarbon fuel that is nearly indistinguishable from petroleum-based diesel. As a result, there are fewer constraints on its growth with respect to distribution capacity.
Another factor potentially constraining the supply of biodiesel is the number of terminals and bulk plants that currently distribute biodiesel. At present there are about 600 distribution facilities reported as selling biodiesel either in pure form or blended form, the majority of which are bulk plants.
The net result is that the expansion of terminals and bulk plants selling biodiesel and biodiesel blends, and the distribution infrastructure necessary to store and transport biodiesel to and from these facilities, is a significant challenge we believe will limit the potential for the rapid expansion of the biodiesel supply. This is an area in which the biodiesel industry has made steady progress over time, and we anticipate that this progress can and will continue into the future, particularly with the ongoing incentive for biodiesel growth provided by the RFS standards. Low oil prices, however, present a challenge to the expansion of biodiesel distribution infrastructure, since such projects generally have long payback timelines and parties may be hesitant to invest in new infrastructure to enable additional biodiesel distribution at a time when diesel prices are low. As with many of these potential supply constraints, increasing biodiesel storage and distribution capacity will require time and investment, limiting the potential growth in 2017.
For renewable diesel, we do not expect that refueling infrastructure (
Virtually all diesel vehicles and engines now in the in-use fleet have been warranted for the use of B5 blends. Both the Federal Trade Commission (FTC) and ASTM International (ASTM) specification for diesel fuel (16 CFR part 306 and ASTM D975 respectively) allows for biodiesel concentrations of up to five volume percent (B5) to be sold as diesel fuel, with no separate labeling required at the pump. Biodiesel blends of up to 5% are therefore indistinguishable in this regard. Using biodiesel blends above B5 in diesel engines may, however, require changes in design, calibration, and/or maintenance practices.
Given the long life of diesel engines and the number of new engines not warranted for biodiesel blends above B5, turning over a significant portion of the fleet to engines designed and warranted for B20 is still many years off into the future. As of 2015, EPA estimates that nearly one third of the heavy duty diesel vehicles on the road were at least 15 years old, and that approximately 7 percent were at least 25 years old. The relatively large number of older diesel engines in the fleet, the significant number of new engines that are not warranted to use biodiesel blends above B5, and the fact that most diesel fuel retailers sell only a single blend of biodiesel (discussed above), means that in the near term the opportunity to sell B20 exclusively to vehicles designed and warranted to run on these blends will likely be limited to centrally-fueled fleets or retailers large enough to offer multiple biodiesel blend levels.
We believe it is likely that in 2017 it will become increasingly necessary to sell higher-level biodiesel blends, greater quantities of renewable diesel, or additional volumes of biodiesel in qualifying nonroad applications to increase the total supply of biodiesel and renewable diesel. If the diesel pool contained 5% biodiesel nationwide, consumption of biodiesel would reach approximately 2.9 billion gallons in 2017. Alternatively, assuming the availability of approximately 500 million gallons of renewable diesel in 2017 (approximately a 100 million gallon increase from 2015) and the use of 100 million gallons of biodiesel in qualifying nonroad uses, approximately 73% of the highway diesel pool in 2017 would have to be sold as a B5 blend to achieve the total projected supply of biodiesel and renewable diesel of 2.7 billion gallons in 2017. Alternatively, selling appreciable volumes of biodiesel blends above B5 would mean that a smaller percentage of the diesel pool would have to contain biodiesel to achieve the proposed standards. While we believe that achieving these blend levels nationwide is possible in 2017, it will require significant effort and investment in the distribution infrastructure for biodiesel. Biodiesel consumption capacity in areas that currently have access to biodiesel blends is one of the factors likely to slow the growth of the supply of biodiesel and renewable diesel in 2017 and in future years.
Consumer response to the availability of renewable diesel and low-level biodiesel blends (B5 or less) has been generally positive, and this does not appear to be a significant impediment to growth in biodiesel and renewable diesel use. Because of its similarity to petroleum diesel, consumers who purchase renewable diesel are unlikely to notice any difference between renewable diesel and petroleum-derived diesel fuel. Similarly, biodiesel blends up to B5 are unlikely to be noticed by consumers, especially since, as mentioned above, they may be sold without specific labeling. Consumer response to biodiesel blends is also likely aided by the fact that despite biodiesel having roughly 10 percent less energy content than diesel fuel, when blended at 5 percent the fuel economy impact of B5 relative to petroleum-derived diesel is a decrease of only 0.5%, an imperceptible difference. Consumer response has been further aided by the lower prices that many wholesalers and retailers have been willing to provide to the consumers for the use of biodiesel blends. The economic incentives provided by the biodiesel blenders tax credit and the RIN have made it possible for some retailers to realize additional profits while selling biodiesel blends, while in many cases offering these blends at a lower price per gallon than diesel fuel that has not been blended with biodiesel. The ability for retailers to offer biodiesel blends at competitive prices relative to diesel that does not contain biodiesel, even at times when oil prices are low, is a key factor in the consumer acceptance of biodiesel and renewable diesel.
Due to the large number of market segments where actions and investments may be needed to support the continued growth of biodiesel blends, it is difficult to isolate the specific constraint or group of constraints that would be the limiting factor or factors to the supply of biodiesel and renewable diesel in the United States in 2017. Not only are many of the potential constraints inter-related, but they are likely to vary over time. The challenges in identifying a single factor limiting the growth in the supply of biodiesel and renewable diesel in 2017 does not mean, however, that there are no constraints to the growth in supply.
A starting point in developing a projection of the available supply of biodiesel and renewable diesel in 2017 is a review of the volumes of these fuels supplied for RFS compliance in previous years. In examining the data, both the absolute volumes of the supply of biodiesel and renewable diesel in previous years, as well as the rates of growth between years are relevant considerations. The volumes of biodiesel and renewable diesel (including both D4 and D6 biodiesel and renewable diesel) supplied each year from 2011 through 2015 are shown below.
To use the historical data to project the available supply of biodiesel and renewable diesel in 2017 we started with the volume expected to be supplied in 2016 (2.5 billion gallons), and then assessed how much the supply could be expected to increase in 2017 in light of the constraints discussed above. Using historic data is appropriate to the extent that growth in the year or years leading up to 2016 reflects the rate at which biodiesel and renewable diesel constraints can reasonably be expected to be addressed and alleviated in the future. In assessing the potential growth of biodiesel and renewable diesel in 2017 we believe this to be the case. There are many potential ways the historical data could be used to project the supply of biodiesel and renewable diesel in future years. Two relatively straight-forward methods would be to use either the largest observed annual supply increase (689 million gallons from 2012 to 2013) or the average supply increase (226 million gallons from 2011 to 2015) to project how much biodiesel and renewable diesel volumes could increase over 2016 levels in 2017. We appreciate that there are limitations in the probative value of past growth rates to assess what can be done in the future, however we believe there is significant value in considering historical data, especially in such cases where the future growth rate will be determined by the same variety of complex and inter-dependent factors that have factored into historical growth.
In projecting the available supply of biodiesel and renewable diesel in 2016 for the final rule establishing the 2014-2016 standards, we estimated that the supply of biodiesel and renewable diesel could increase from the level supplied in 2015 in line with the largest observed annual supply increase from the historic record. While RIN available generation data for 2016 is limited, we continue to believe this high year-over-year increase is possible in part due to the relatively small growth in the supply of biodiesel and renewable diesel in 2014 and 2015, during which no annual standards were in place to promote growth in the supply of biodiesel and renewable diesel and during which time the biodiesel blenders tax credit was only reinstated retroactively. During these years (2014-2015) we believe that the supply of biodiesel likely grew at a slower rate than the progress being made to expand the potential supply of biodiesel and renewable diesel used as transportation fuel in the United States due to the absence of standards in these years. We believe that the significant increase in the projected supply of biodiesel and renewable diesel from 2015 to 2016 will therefore be significantly enabled by the relatively slow growth in supply in 2014 and 2015. We do not believe that a similarly large supply increase in 2017 is possible after such a large increase from 2015 to 2016. Instead, we believe that an approximately 200 million gallon per year increase, more reflective of the average annual increased observed from 2011 to 2015 (the most recent year for which data is currently available), best reflects the maximum reasonably achievable growth rate for the supply of biodiesel and renewable diesel in 2017.
We recognize that these growth rates achieved in the past (the average annual growth rate and the largest annual supply increase) do not necessarily indicate the growth rate that can be achieved in the future. In the past, biodiesel was available in fewer markets, allowing new investments to be targeted to have a maximum impact on volume. However, as the market becomes more saturated and biodiesel becomes available in an increasing number of markets, additional investments may tend to have less of an impact on volume, limiting the potential large increases in supply year over year. Additionally, much of the increase in the volume of biodiesel and renewable diesel supplied from 2012 to 2013 was renewable diesel, which is faced with far fewer distribution and consumption challenges than biodiesel for blends above B5. Such an increase in the available supply of renewable diesel in 2017 is unlikely as we are currently unaware of any renewable diesel facilities under construction that are likely to supply significant volumes of
The present constraints do not represent insurmountable barriers, but they will take time to overcome. The market has been making efforts to overcome these constraints in recent years, as demonstrated by the fact that biodiesel and renewable diesel consumption in the U.S. has been steadily increasing. We believe that opportunity for ongoing growth exists, but that the constraints listed above will continue to be a factor in the rate of growth in future years. We recognize that the market may not necessarily respond to the final total renewable standard by supplying exactly 2.7 billion gallons of biodiesel and renewable diesel to the transportation fuels market in the United States in 2017, but that the market may instead supply a slightly lower or higher volume of biodiesel and renewable diesel with corresponding changes in the supply of other types of renewable fuel. As a result, we believe there is less uncertainty with respect to achievability of the total volume requirement than there is concerning the projected 2.7 billion gallons of biodiesel and renewable diesel that we have used in deriving the proposed total renewable fuel volume requirement for 2017. We request comment on the projected supply of biodiesel and renewable diesel used as transportation fuel in the United States in 2017, as well as the factors that may enable or inhibit the growth in the supply of these fuels.
The total volume of renewable fuel that can be supplied in 2017 is driven primarily by the estimated supplies of ethanol and biodiesel/renewable diesel, as discussed in the previous sections. Cellulosic biogas can also contribute to the total volume of renewable fuel, as described more fully in Section III. While other renewable fuels such as naphtha, heating oil, butanol, and jet fuel can be expected to continue growing over the next year, collectively, we expect them to contribute considerably less to the total volume of renewable fuel that can be supplied in 2017.
Most biofuel types can be produced as either advanced biofuel (with a D code of 3, 4, 5, or 7) or as conventional renewable fuel (with a D code of 6), depending on the feedstock and production process used. Our estimate of the supply of total renewable fuel shown in the table below includes contributions from both advanced biofuels and conventional renewable fuels.
Based on this assessment, we are proposing a total renewable fuel volume requirement of 18.8 billion gallons for 2017. We request comment on this proposed volume requirement and the basis as shown in the table above, and whether a volume requirement higher or lower than we are proposing would be more appropriate taking into consideration more recent data and factors such as the ability of the volume requirements to lead to increases in supply of renewable fuels.
We note that the contributions from individual sources shown in Table II.C.3-1 were developed only for the purpose of determining the proposed volume requirements; they do not represent EPA's projection of precisely how the market would respond if we set the total renewable fuel volume requirement at 18.8 billion gallons for 2017. As we said in the 2014-2016 final rule, any supply estimate we make for particular fuel types may be uncertain, but there is greater certainty that the overall volume requirements can be met given the flexibility in the market that is inherent in the RFS program. The contributions from individual sources that we have used in the table above are illustrative of one way in which the volume requirements for total renewable fuel could be met. Actual market responses could vary widely, as described more fully in Section II.E.
The volume of total renewable fuel that we are proposing for 2017 reflects our assessment of the maximum volumes that can reasonably be achieved, taking into account both the constraints on supply discussed previously and our judgment regarding the ability of the standards we set to result in marketplace changes. As shown in Figure II.C.3-1, the proposed volume requirements would follow an upward trend consistent with that from previous years.
As noted earlier, the CAA provides EPA with two waiver authorities. For the 2014-2016 final rule, we used the cellulosic waiver authority alone to reduce statutory volumes of advanced biofuel to levels we determined to be reasonably attainable; in doing so we did not reduce advanced biofuel by the full reduction in cellulosic biofuel. We reduced total renewable fuel by the same amount using that authority, and then by additional increment using the general waiver authority. As discussed in Section II.A, EPA has broad discretion in using the cellulosic waiver authority, since Congress did not specify the circumstances under which it may or should be used nor the factors to consider in determining appropriate volume reductions. We note that increases in the statutory volume targets after 2015 are only in advanced biofuel, and that advanced biofuel provides relatively large GHG reductions in comparison to conventional renewable fuel. In light of these facts, our approach in the 2014-2016 final rule was to set the 2016 advanced biofuel volume requirement at a level that was reasonably attainable taking into account uncertainties related to such factors as production, import, distribution, and consumption constraints associated with these fuels. The result of that approach is that reasonably attainable volumes of advanced biofuel will compensate for a portion of the shortfall in cellulosic biofuel in 2016, thereby promoting the larger RFS goals of reducing GHGs and enhancing energy security. We are proposing to take the same approach to determining the advanced biofuel volume requirement for 2017.
Our proposed approach to identifying “reasonably attainable” volumes of advanced biofuel using the cellulosic waiver authority is different than our proposed approach under the general waiver authority of identifying the “maximum reasonably achievable supply.” In proposing to exercise the cellulosic waiver authority in this rulemaking, we are not required, and do not intend, to necessarily identify the most likely “maximum” volumes of advanced biofuel that can be used in 2017. We believe that in exercising our discretion under the cellulosic waiver authority we can identify reasonably attainable volumes in a manner that is similar to, but may be less exacting than, a determination of inadequate domestic supply using the general waiver authority.
Given that advanced biofuels are a subset of total renewable fuel, the proposed 2017 volume requirement for advanced biofuel reflects our proposed assessment of the portion of total renewable fuel that should be required to be advanced biofuel. We have made this assessment separately for ethanol, biodiesel/renewable diesel, and other renewable fuels.
With regard to ethanol, the primary source of advanced biofuel continues to be imported sugarcane ethanol. As described in the 2014-2016 final rule, the supply of imported sugarcane ethanol has been highly uncertain. Both total ethanol imports and imports of Brazilian sugarcane ethanol have varied significantly since 2004, and in 2014 and 2015 they reached only 64 and 89 million gallons, respectively. Much of this variability can be tied to the worldwide price of sugar: between 2005 and 2015, year-to-year Brazilian production of sugar has increased just as often as it has decreased.
The information currently available to us does not suggest that the circumstances will be significantly different for 2017 than they are for 2016. For the purposes of deriving the proposed advanced biofuel volume requirements for 2017, then, we have assumed that imports of sugarcane ethanol will be 200 million gallons, the volume that we used in establishing the 2016 volume requirement for advanced biofuel. This volume is approximately equal to the average annual import volume between 2010 and 2015. Apart from this assumed level in the determination of the proposed advanced biofuel volume requirement for 2017, we note that actual imports of sugarcane ethanol could be higher or lower than
With regard to biodiesel and renewable diesel, past experience suggests that a high percentage of the supply of these fuel types to the United States qualifies as advanced biofuel. In previous years biodiesel and renewable diesel produced in the United States has been almost exclusively advanced biofuel. It is also likely that some advanced biodiesel will be imported in 2017, as discussed in Section II.C.2.iii. Setting the 2017 advanced biofuel volume requirement so as to require that a high percentage of the projected total supply of biodiesel and renewable diesel would be in the form of advanced biofuel would not only reflect past experience, but would also enhance the GHG benefits of the RFS program.
However, we also acknowledge that imports of conventional (D6) biodiesel and renewable diesel have increased in recent years, and are likely to continue to contribute to the supply of renewable fuel in the United States in 2017.
In the context of setting the 2016 volume requirements in the 2014-2016 final rule, we indicated that supply of conventional biodiesel and renewable diesel could increase significantly in comparison to 2015 supply. For 2017, we believe it would be prudent to assume the same level of supply until we can collect additional information on how the market is reacting to the 2016 volume requirements. Doing so also places an emphasis on growth in advanced forms of biodiesel and renewable diesel, furthering the GHG goals of the RFS program. Therefore, for the purposes of determining the proposed volume requirements in this rule, we believe it would be reasonable to assume that the increase in total biodiesel and renewable diesel in 2017 is attributed entirely to increases in the supply of advanced biodiesel and renewable diesel. The volumes that we propose using are shown below, along with the volumes that we used in setting the 2016 volume requirements.
The 2016 volume requirements represented substantial increases in both advanced and conventional biodiesel and renewable diesel in comparison to 2015. The annual increase we are proposing to use for 2017, as shown in the table above, would be more moderate. We believe that this is reasonable because the circumstances we are facing in this action are different than those we were facing in the 2014-2016 final rule. The 2016 standards were designed to reflect the fact that the 2014 and 2015 standards had not been set by the statutory deadlines even though the market had continued to make progress during that time to expand supply. There will be comparatively less time available for the market to prepare to meet the applicable standards for 2017. Moreover, as the volumes of biodiesel and renewable diesel increase, the marketplace challenges associated with them also increase, generally making each increment more difficult to attain than the last. As the country becomes saturated with retail and distribution infrastructure in the major fuel consumption areas, we expect that it will be increasingly costly to expand biodiesel and renewable diesel into areas with less favorable returns on investments.
We note that the volumes shown in Table II.D-1 above cannot themselves be viewed as volume requirements. The volumes shown in Table II.D-1 are merely the basis on which we have determined the proposed volume requirements for advanced biofuel and total renewable fuel. As discussed in more detail in Section II.E below, there are many ways that the market could respond to the volume requirements we are proposing, including biodiesel and renewable diesel volumes higher or lower than those shown in Table II.D-1.
Due to the nested nature of the standards, all cellulosic biofuel qualifies toward meeting the advanced biofuel volume requirement. As shown in Table II.C.3-1, we also believe that the market can supply about 50 million gallons of advanced biofuel other than ethanol, biodiesel, and renewable diesel in 2017. The combination of all sources of advanced biofuel lead us to believe that 4.0 billion gallons of advanced biofuel in 2017 is reasonably attainable, and that it is not necessary to reduce the advanced biofuel statutory target by the full amount permitted under the cellulosic waiver authority (which would have resulted in an advanced biofuel volume requirement of 3.8 billion gallons). This is the volume requirement that we are proposing for advanced biofuel for 2017.
We request comment on this proposed volume requirement for advanced biofuel and the basis as shown in the table above, and whether a volume requirement higher or lower than we are proposing would be more appropriate taking into consideration more recent data and factors such as the ability of the volume requirements to lead to increases in supply of renewable fuels.
As noted before, the volumes actually used to satisfy the advanced biofuel volume requirements may be different than those shown in the table above. The volumes of individual types of renewable fuel that we have used in this analysis represent our current best estimate of volumes that are reasonably attainable by a market that is responsive
The volume of advanced biofuel that we are proposing would require increases from current levels that are substantial yet reasonably attainable, taking into account the constraints on supply discussed previously, our judgment regarding the ability of the standards we set to result in marketplace changes, and the various uncertainties we have described. Figure II.D-1 shows that the proposed advanced biofuel volume requirement for 2017 would be significantly higher than the volume requirements for advanced biofuel in previous years.
We believe the reduction we have proposed in the statutory target for advanced biofuel is justifiable in light of our assessment regarding the reasonable attainability of advanced biofuel volumes in this time period. Moreover, because the proposed reduction in advanced biofuel is less than the proposed reductions in cellulosic biofuel, the reduction can be accomplished using the cellulosic waiver authority alone. We propose to use the cellulosic waiver authority to provide an equal reduction in the total renewable fuel volume, and the general waiver authority to provide an additional increment of reduction necessary to lower the total renewable fuel volume requirement to the maximum level reasonably achievable as described in Section II.C.
The transportation fuel market is dynamic and complex, and the RFS program is only one of many factors that determine the relative types and amounts of renewable fuel that will be used. We know that to meet the proposed volume requirements, the market would need to respond by increasing domestic production and/or imports of those biofuels that have fewer marketplace constraints, by expanding the infrastructure for distributing and consuming renewable fuel, and by improving the relative pricing of renewable fuels and conventional transportation fuels at the retail level to ensure that they are attractive to consumers. However, we cannot precisely predict the mix of different fuel types that would result. Nevertheless, we can delineate a range of possibilities, and doing so provides a means of demonstrating that the proposed volume requirements can reasonably be satisfied through multiple possible paths.
We evaluated a number of scenarios with varying levels of E85/E15, E0, imported sugarcane ethanol, advanced biodiesel and renewable diesel, and conventional biodiesel and renewable diesel (likely to be made from palm oil). In doing so we sought to capture the range of possibilities for each individual source, based both on levels achieved in the past and how the market might respond to the proposed standards. Each of the rows in Table II.E-1 represents a scenario in which the proposed total renewable fuel and advanced biofuel volume requirements would be satisfied.
The scenarios in the tables above are not the only ways that the market could choose to meet the total renewable fuel and advanced biofuel volume requirements that we are proposing. Indeed, other combinations are possible, with volumes higher than the highest levels we have shown above or, in some cases, lower than the lowest levels we have shown. The scenarios above cannot be treated as EPA's views on the only, or even most likely, ways that the market may respond to the proposed volume requirements. Instead, the scenarios are merely illustrative of the various ways that it could play out. Our purpose in generating the list of scenarios above is only to illustrate a range of possibilities which demonstrate that the standards we are proposing in this action can reasonably be satisfied.
We note that it would be inappropriate to construct a new scenario based on the highest volumes in each category that are shown in the tables above in order to argue for higher volume requirements than we are proposing in this action. Doing so would result in summing of values that we have determined are higher than the most likely maximum achievable volumes of the different fuel categories, resulting in a total volume that we believe would be extremely unlikely to be achievable. We have more confidence in the ability of the market to achieve the proposed volume requirements for advanced biofuel and total renewable fuel than we have in the ability of the market to achieve a specific level of, say, biodiesel, or E85. The probability that the upper limits of all sources shown in the tables above could be achieved simultaneously is very small.
We recognize that in some scenarios the volume of a particular category of renewable fuel exceeds the historical maximum or previously demonstrated production level. However, this does not mean that such levels are not achievable. The RFS program is intended to result in supply in any given year that is higher than in all previous years, and it is our proposed determination that for 2017 this is possible. We request comment on our proposed assessment of the levels of supply that are reasonably achievable in 2017.
With regard to E85, under highly favorable conditions related to growth in the number of E85 retail stations, retail pricing, and consumer response to that pricing, it is possible that E85 volumes as high as 400 million gallons could be reached. USDA's Biofuels Infrastructure Partnership grant program, an important program to expand ethanol retail infrastructure, is expected to help in this regard. This program will increase the number of retail stations that have blender pumps by nearly 1,500. While the program requires only that the blender pumps be certified to offer E15, it is likely that some will also be certified to offer E85. If all of them are certified to dispense both E15 and E85, the total number of retail stations offering E85 could increase from about 3,100 today to 4,500 by 2017, an increase of about 50%. Increases in the price of D6 RINs since the release of the 2014-2016 final rule can help to increase the E85 price discount relative to E10 if producers and marketers of E85 pass the value of the RIN to the prices offered to customers at retail, providing greater incentive to FFV owners to refuel with E85 instead of E15. Efforts to increase the visibility of E85, including expanded marketing and education, can also help to increase E85 sales. As shown in a memorandum to the docket, 400 million gallons of E85, while unlikely, could be reached under these circumstances.
Similarly, we believe that under favorable conditions, it is possible that E15 volumes as high as 800 million gallons could be reached in 2017. The nearly 1,500 additional blender pumps that are expected to be installed as a result of USDA's Biofuels Infrastructure Partnership grant program must be certified to offer E15. Combined with previously existing retail stations registered to offer E15 and ongoing efforts to expand E15 offerings at retail apart from USDA's program, it is possible that 1,700 stations could offer E15 by 2017. Since the average retail station will sell about 950 thousand gallons of gasoline in 2017, 800 million gallons of E15 could be sold if about half of the gasoline sold at each of these 1,700 stations was E15.
As the tables above illustrate, the proposed volume requirements could result in the consumption of more than 2.7 billion gallons of biodiesel and renewable diesel in 2017. While this level is approximately the same as our estimate of the production capacity of facilities that are currently registered under the RFS program (about 2.7 billion gallons for biodiesel, plus smaller amounts for renewable diesel at dedicated facilities), such facilities are not the only possible source. Not only is there more than several hundred million gallons of unregistered biodiesel production capacity, but there is also the potential for production of renewable diesel at existing crude oil refineries. Finally, imports of biodiesel and renewable diesel reached about 560 million gallons in 2015 and there is no reason to believe that such imports would be substantially less in 2017.
While renewable diesel is chemically indistinguishable from fossil-based diesel fuel, and thus is not subject to any constraints with regard to distribution, cold temperatures, or engine warranties, biodiesel is constrained to some degree in these areas. Out of the maximum of about 2.7 billion gallons of biodiesel and renewable diesel shown in Table II.E-1, more than 2.4 billion gallons could be advanced biodiesel. While this is higher than the 2.3 billion gallons that we used in determining the proposed advanced biofuel volume requirement, it could be supplied from current domestic production capacity which is at least 2.7 billion gallons. The existing fleet of diesel engines may be able to accommodate this volume of biodiesel despite the fact that many in-use diesel engines are only warranted for B5 or less.
In this section we provide illustrative cost estimates for the proposed standards. By “illustrative costs,” EPA means the cost estimates provided are not meant to be precise measures, nor do they attempt to capture the full impacts of the proposed rule. These estimates are provided solely for the purpose of showing how the cost to produce a gallon of a “representative” renewable fuel compares to the cost of petroleum fuel. There are a significant number of caveats that must be considered when interpreting these cost estimates. First, there are a number of different feedstocks that could be used to produce ethanol and biodiesel, and there is a significant amount of heterogeneity in the costs associated with these different feedstocks and fuels. Some fuels may be cost competitive with the petroleum fuel they replace; however we do not have cost data on every type of feedstock and every type of fuel. Therefore, we do not attempt to capture this range of potential costs in our illustrative estimates.
Second, as discussed in the final rule establishing the 1.28 billion gallon requirement for BBD in 2013, the costs and benefits of the RFS program as a whole are best assessed when the program is fully mature in 2022 and beyond.
Third, at least two different scenarios could be considered the “baseline” for the assessment of the costs of this rule. One scenario would be the statutory volumes (
EPA is providing cost estimates for three illustrative scenarios—one, if the entire change in the proposed advanced standards is met with soybean oil BBD; two, if the entire change in the proposed advanced standards is met with sugarcane ethanol from Brazil; and three, if the entire proposed change in the total renewable fuel volume standards that can be satisfied with conventional biofuels (
For this analysis, we estimate the per gallon costs of producing biodiesel, sugarcane ethanol, and corn ethanol relative to the petroleum fuel they replace at the wholesale level, then multiply these per gallon costs by the proposed applicable volumes in this rule for the advanced (for biodiesel and sugarcane ethanol) and non-advanced component of the total renewable fuel (for corn ethanol) categories. More background information on this section, including details of the data sources used and assumptions made for each of the scenarios, can be found in a Memorandum submitted to the docket.
Because we are focusing on the wholesale level in each of the three scenarios, these comparisons do not consider taxes, retail margins, and any other costs or transfers that occur at or after the point of blending (
For our first illustrative cost scenario, we estimate the costs of soybean-based biodiesel to meet the entire change in the advanced biofuel standards proposed for 2017.
For our
For our third illustrative cost scenario, we assess the difference in cost associated with a change in the implied volumes available for conventional (
These illustrative
For the purpose of this annual rulemaking, we have not quantified benefits for the 2017 proposed standards. We do not have a quantified estimate of the GHG impacts for a single year (
Through the RFS program, EPA is creating a sustained market signal to incentivize low greenhouse gas renewable fuels, especially for advanced biofuels. This should provide a way to reduce GHG emissions in future years as the market for renewable fuels develops further.
In the past several years the cellulosic biofuel industry has continued to make progress towards significant commercial-scale production. Cellulosic biofuel production reached record levels in 2015, driven largely by compressed natural gas (CNG) and liquefied natural gas (LNG) derived from biogas.
In order to project the volume of cellulosic biofuel production in 2017 we considered data reported to EPA through the EPA Moderated Transaction System (EMTS) and information we collected regarding individual facilities that have produced or have the potential to produce qualifying volumes for consumption as transportation fuel, heating oil, or jet fuel in the U.S. in 2017. At this time, EPA has not received projections of cellulosic biofuel production in 2017 from the EIA, however we anticipate considering these estimates, together with updated information regarding the potential for contributions from individual facilities and groups of facilities, in determining the projected volume of cellulosic biofuel production in 2017 for the final rule.
New cellulosic biofuel production facilities projected to be brought online in the United States over the next few years would significantly increase the production capacity of the cellulosic industry. Operational experience gained at the first few commercial scale cellulosic biofuel production facilities should also lead to increasing production of cellulosic biofuel from existing production facilities. The following section discusses the companies the EPA reviewed in the process of projecting qualifying cellulosic biofuel production in the United States in 2017. Information on these companies forms the basis for our production projections of cellulosic biofuel that will be produced for use as transportation fuel, heating oil, or jet fuel in the United States. We are proposing a cellulosic biofuel volume requirement of 312 million gallons for 2017. We request comment on this projected volume of cellulosic biofuel production, as well as the methodology used to project these volumes.
The volumes of renewable fuel to be used under the RFS program each year (absent an adjustment or waiver by EPA) are specified in CAA section 211(o)(2). The volume of cellulosic biofuel specified in the statute for 2017 is 5.5 billion gallons. The statute provides that if EPA determines, based on EIA's estimate, that the projected volume of cellulosic biofuel production in a given year is less than the statutory volume, then EPA is to reduce the applicable volume of cellulosic biofuel to the projected volume available during that calendar year.
In addition, if EPA reduces the required volume of cellulosic biofuel below the level specified in the statute, the Act also indicates that we may reduce the applicable volumes of advanced biofuels and total renewable fuel by the same or a lesser volume, and we are required to make cellulosic waiver credits available. Our consideration of the 2017 volume requirements for advanced biofuel and total renewable fuel is presented in Section II.
In order to project cellulosic biofuel production for 2017, we have tracked the progress of several dozen potential cellulosic biofuel production facilities. As we have done in previous years, we have focused on facilities with the potential to produce commercial-scale volumes of cellulosic biofuel rather than small R&D or pilot-scale facilities. Larger commercial-scale facilities are much more likely to generate RINs for the fuel they produce and the volumes they produce will have a far greater impact on the cellulosic biofuel standards for 2017. The volume of cellulosic biofuel produced from R&D and pilot-scale facilities is quite small in relation to that expected from the commercial-scale facilities. R&D and demonstration-scale facilities have also generally not generated RINs for the fuel they have produced in the past. Their focus is on developing and
From this list of commercial-scale facilities we used information from EMTS, publically available information (including press releases and news reports), and information provided by representatives of potential cellulosic biofuel producers, to make a determination of which facilities are most likely to produce cellulosic biofuel and generate cellulosic biofuel RINs in 2017. Each of these companies was investigated further in order to determine the current status of its facilities and its likely cellulosic biofuel production and RIN generation volumes for 2017. Both in our discussions with representatives of individual companies
Our proposed approach for projecting the available volume of cellulosic biofuel in 2017 is discussed in more detail in Section III.C below. The proposed approach is very similar to the approach adopted in establishing the required volume of cellulosic biofuel in 2016.
There are a number of companies and facilities
In addition to the potential sources of cellulosic biofuel located in the United States, there are several foreign cellulosic biofuel companies that may produce cellulosic biofuel in 2017. These include facilities owned and operated by Beta Renewables, Enerkem, Ensyn, GranBio, and Raizen. All of these facilities use fuel production pathways that have been approved by EPA for cellulosic RIN generation provided eligible sources of renewable feedstock are used. These companies would therefore be eligible to register these facilities under the RFS program and generate RINs for any qualifying fuel imported into the United States. While these facilities may be able to generate RINs for any volumes of cellulosic biofuel they import into the United States, demand for the cellulosic biofuels they produce is expected to be high in local markets.
EPA is charged with projecting the volume of cellulosic biofuel that will be produced or imported into the United States. For the purposes of this proposed rule we have considered all of the companies who have registered foreign facilities under the RFS program to be potential sources of cellulosic biofuel in 2017. We believe that due to the strong demand for cellulosic biofuel in local markets, the significant technical challenges associated with the operation of cellulosic biofuel facilities, and the time necessary for potential foreign cellulosic biofuel producers to register under the RFS program and arrange for the importation of cellulosic biofuel to the United States, cellulosic biofuel imports from facilities not currently registered to generate cellulosic biofuel RINs are highly unlikely in 2017. We have therefore only considered foreign cellulosic biofuel production from facilities that are currently registered in our projection of available volume of cellulosic biofuel in 2017. Two foreign facilities that have registered as cellulosic biofuel producers have already generated cellulosic biofuel RINs for fuel exported to the United States; projected volumes from each of these facilities are included in our projection of available volumes for 2017. Two additional foreign facilities have registered as a cellulosic biofuel producer, but has not yet generated any cellulosic RINs. EPA contacted representatives from these facilities and to inquire about their intentions to export cellulosic biofuel to the United States in 2017. In cases where the companies indicated they intended to export cellulosic biofuel to the United States, EPA has included potential volumes from this facility in our 2017 volume production projection (see Table III.B.3-1 below).
The information we have gathered on cellulosic biofuel producers forms the basis for our projected volumes of cellulosic biofuel production for each facility in 2017. As discussed above, we have focused on commercial-scale cellulosic biofuel production facilities.
By 2017 there are a number of cellulosic biofuel production facilities
To project the volume of potentially available cellulosic biofuel in 2017 we are proposing to use the same methodology used to project the available volume of cellulosic biofuel in the final rule establishing the cellulosic biofuel volume standard for 2016.
To calculate the high end of the projected production range for each group of companies we considered each company individually. To determine the high end of the range of expected production volumes for companies producing liquid cellulosic biofuel we considered a variety of factors, including the expected start-up date and ramp-up period, facility capacity, and fuel off-take agreements. As a starting point, EPA calculated a production volume for these facilities using the expected start-up date, facility capacity, and a benchmark of a six-month straight-line ramp-up period representing an optimistic ramp-up scenario.
After defining likely production ranges for each group of companies we projected a likely production volume from each group of companies for 2017. We used the same percentile values to project a proposed production volume within the established ranges for 2017 as we did in the final rule for 2016; the 50th and 25th percentiles respectively for liquid cellulosic biofuel producers with and without a history of consistent cellulosic biofuel production and RIN generation, and the 75th and 50th percentiles respectively for producers of CNG/LNG from biogas with and without a history of consistent commercial-scale production and RIN generation. As discussed in the final rule establishing the 2016 cellulosic biofuel standard, we believe these percentages appropriately reflect the uncertainties associated with each of these groups of companies.
We believe our range of projected production volumes for each company (or group of companies for cellulosic CNG/LNG producers) represents the range of what is likely to actually happen, and that projecting overall production in 2017 in the manner described above results in a neutral estimate (neither biased to produce a projection that is unreasonably high or low) of likely cellulosic biofuel production in 2017 (312 million gallons). A brief overview of individual companies we believe will produce cellulosic biofuel and make it commercially available in 2017 can be found in a memorandum to the docket.
In this section we discuss the proposed biomass-based diesel (BBD) applicable volumes for 2018. We are proposing this volume in advance of those for other renewable fuel categories in light of the statutory requirement in 211(o)(2)(B)(ii) to establish the applicable volume of BBD for years after 2012 no later than 14 months before the applicable volume will apply. We are not at this time proposing the BBD percentage standards that would apply to obligated parties in 2018 but intend to do so in the Fall of 2017, after receiving EIA's estimate of gasoline and diesel consumption for 2018. Although the BBD applicable volume would set a floor for required BBD use because the BBD volume requirement is nested within both the advanced biofuel and the total renewable fuel volume requirements, any “excess” BBD produced beyond the mandated BBD volume can be used to satisfy both of these other applicable volume requirements. Therefore, these other standards can also influence BBD production and use.
The statute establishes applicable volume targets for years through 2022 for cellulosic biofuel, advanced biofuel, and total renewable fuel. For BBD, applicable volume targets are specified in the statute only through 2012. For years after those for which volumes are specified in the statute, EPA is required under CAA section 211(o)(2)(B)(ii) to determine the applicable volume of BBD, in coordination with the Secretary of Energy and the Secretary of Agriculture, based on a review of the implementation of the program during calendar years for which the statute specifies the volumes and an analysis of the following factors:
1. The impact of the production and use of renewable fuels on the environment, including on air quality, climate change, conversion of wetlands, ecosystems, wildlife habitat, water quality, and water supply;
2. The impact of renewable fuels on the energy security of the United States;
3. The expected annual rate of future commercial production of renewable fuels, including advanced biofuels in each category (cellulosic biofuel and BBD);
4. The impact of renewable fuels on the infrastructure of the United States, including deliverability of materials, goods, and products other than renewable fuel, and the sufficiency of infrastructure to deliver and use renewable fuel;
5. The impact of the use of renewable fuels on the cost to consumers of transportation fuel and on the cost to transport goods; and
6. The impact of the use of renewable fuels on other factors, including job creation, the price and supply of agricultural commodities, rural economic development, and food prices.
The statute also specifies that the volume requirement for BBD cannot be less than the applicable volume for calendar year 2012, which is 1.0 billion gallons. The statute does not, however, establish any other numeric criteria, or provide any guidance on how the EPA should weigh the importance of the often competing factors, and the overarching goals of the statute when the EPA sets the applicable volumes of BBD in years after those for which the statute specifies such volumes. In the period 2013-2022, the statute specifies increasing applicable volumes of cellulosic biofuel, advanced biofuel, and total renewable fuel, but provides no guidance, beyond the 1.0 billion gallon minimum, on the level at which BBD volumes should be set.
One of the primary considerations in determining the proposed biomass-based diesel volume for 2018 is a review of the implementation of the program to date, as it effects biomass-based diesel. This review is required by the CAA, and also provides insight into the capabilities of the industry to produce, import, export, and distribute BBD. It also helps us to understand what factors, beyond the BBD standard, may incentivize the production and import of BBD. The number of BBD RINs generated, along with the number of RINs retired due to export or for reasons other than compliance with the annual BBD standards from 2011-2015 are shown in Table IV.B.1-1 below.
In reviewing
The BBD standard is nested within the advanced biofuel and total renewable fuel standards. This means that when an obligated party retires a BBD RIN (D4) to satisfy their BBD obligation, this RIN also counts towards meeting their advanced biofuel and total renewable fuel obligations. It also means that obligated parties may use BBD RINs in excess of their BBD obligations to satisfy their advanced biofuel and total renewable fuel obligations. Higher advanced biofuel and total renewable fuel standards, therefore, create demand for BBD, especially if there is an insufficient supply of other advanced or conventional renewable fuels to satisfy the standards, or if BBD RINs can be acquired at or below the price of other advanced or conventional biofuel RINs.
In reviewing the implementation of the RFS program to date, it is apparent that the advanced and/or total renewable fuel requirements were in fact helping grow the market for volumes of biodiesel above the BBD standard. In 2013 the number of advanced RINs generated from fuels other than BBD was not large enough to satisfy the implied standard for “other advanced” biofuel (advanced biofuel needed to satisfy the advanced biofuel standard after the BBD and cellulosic biofuel standards are met), and additional volumes of BBD filled the gap (see Table IV.B.2-1 below). In fact, the amount by which the available BBD RINs exceeded the 1.28 billion gallon BBD volume requirement (421 million RINs) was larger than the amount of such excess BBD needed to satisfy the advanced biofuel standard (278 million RINs), suggesting that the additional increment was incentivized by the total renewable fuel standard. As discussed above, the 2014 and 2015 BBD standards were intended to reflect the full number of available BBD RINs in these years and were set in late 2015, at which point the number of available RINs in these years was largely known. We can therefore draw no conclusions about the ability for the advanced and total renewable fuel standards to incentivize BBD production from these years. While the available BBD RINs in 2012 were slightly less than the BBD standard despite the opportunity to contribute towards meeting the advanced and total renewable fuel standards, there are several factors beyond the RFS standards (2012 drought, expiration of the biodiesel tax credit, opportunities for increased ethanol blending as E10) that likely impacted BBD production in 2012. We continue to believe that the advanced biofuel and total renewable fuel standards can provide a strong incentive for increased BBD volume in the United States in excess of that required to satisfy the BBD standard (for further discussion on this issue see 80 FR 77492).
The prices paid for advanced biofuel and BBD RINs beginning in early 2013 through 2015 also support the conclusion that advanced biofuel and/or total renewable fuel standards provide a sufficient incentive for additional biodiesel volume beyond what is required by the BBD standard. Because the BBD standard is nested within the advanced biofuel and total renewable fuel standards, and therefore can help to satisfy three RVOs, we would expect the price of BBD RINs to exceed that of advanced and conventional renewable RINs.
In establishing the BBD and cellulosic standards as nested within the advanced biofuel standard, Congress clearly intended to support development of BBD and cellulosic biofuels, while also providing an incentive for the growth of other non-specified types of advanced biofuels. That is, the advanced biofuel standard provides an opportunity for other advanced biofuels (advanced biofuels that do not qualify as cellulosic biofuel or BBD) to be used to satisfy the advanced biofuel standard after the cellulosic biofuel and BBD standards have been met. Indeed, since Congress specifically directed growth in BBD only through 2012, leaving development of volume targets for BBD to EPA for later years while also specifying substantial growth in the cellulosic biofuel and advanced biofuel categories, we believe that Congress clearly intended for EPA to evaluate in setting BBD volume requirements after 2012 the appropriate rate of participation of BBD within the advanced biofuel standard.
When viewed in a long-term perspective, BBD can be seen as competing for research and development dollars with other types of advanced biofuels for participation as advanced biofuels in the RFS program. We believe that preserving space within the advanced biofuel standard for advanced biofuels that do not qualify as BBD or cellulosic biofuel provides the appropriate incentives for the continued development of these types of fuels. In addition to the long-term impact of our action in establishing the BBD volume requirements, there is also the potential for short-term impacts during the compliance years in question. By proposing BBD volume requirements at levels lower than the advanced biofuel volume requirements (and lower than the expected production of BBD to satisfy the advanced biofuel requirement), we are proposing to continue to allow the potential for some competition between BBD and other advanced biofuels to satisfy the advanced biofuel volume standard. We continue to believe that preserving space under the advanced biofuel standard for non-BBD advanced biofuels, as well as BBD volumes in excess of the BBD standard, will help to encourage the development and production of a variety of advanced biofuels over the long term and without reducing the incentive for additional volumes of BBD beyond the BBD standard in 2017. A variety of different types of advanced biofuels, rather than a single type such as BBD, would positively impact energy security (
While a single-minded focus on the ability of the advanced and total renewable fuel standards to incentivize increasing production of the lowest cost qualifying biofuels, regardless of fuel type, would suggest that a flat or even decreasing BBD volume requirement may be the optimal solution, this is not the only consideration. Despite many of these same issues being present in previous years, we have consistently increased the BBD standard each year. Our decisions to establish increasing BBD volumes each year have been made in light of the fact that while cellulosic biofuel production has fallen far short of the statutory volumes, the available supply of BBD in the United States has grown each year. This growing supply of BBD allowed EPA to establish higher advanced biofuel standards, and to realize the GHG benefits associated with greater volumes of advanced biofuel, than would otherwise have been possible in light of the continued shortfall in the availability of cellulosic biofuel. It is in this context that we determined that steadily increasing the BBD requirements was appropriate to encourage continued investment and innovation in the BBD industry, providing necessary assurances to the industry to increase production, while also serving the long term goal of the RFS statute to increase volumes of advanced biofuels over time.
Although the BBD industry has performed well in recent years, we believe that continued appropriate increases in the BBD volume requirement will help provide stability to the BBD industry and encourage continued growth. This industry is currently the single largest contributor to the advanced biofuel pool, one that to date has been largely responsible for providing the growth in advanced biofuels envisioned by Congress. Nevertheless, many factors that impact the viability of the BBD industry in the United States, such as commodity prices and the biodiesel tax credit, remain uncertain. Continuing to increase the BBD volume requirement should help to provide market conditions that allow these BBD production facilities to operate with greater certainty. This result is consistent with the goals of the Act to increase the production and use of advanced biofuels (for further discussion of these issues see 80 FR 77492).
With the considerations discussed in Section IV.B.2 in mind, as well as our analysis of the factors specified in the statute, we are proposing the applicable volume of BBD at 2.1 billion gallons for 2018. This volume represents an annual increase of 100 million gallons over the applicable volume of BBD in 2017. We believe this is appropriate for the same reasons reflected in the December 14, 2015 final rule: To provide additional support for the BBD industry while allowing room within the advanced biofuel volume requirement for the participation of non-BBD advanced fuels. Although we are not proposing an advanced biofuel applicable volume for 2018 at this time, we anticipate that the 2018 advanced biofuel requirement will be larger than the proposed 2017 advanced biofuel volume requirement, and the proposed 2018 BBD volume requirement reflects this anticipated approach. Our assessment of the required statutory factors, summarized in the next section and in a memorandum to the docket, supports this proposal.
We believe this proposal strikes the appropriate balance between providing a market environment where the development of other advanced biofuels is incentivized, while also maintaining support for growth in BBD volumes. Given the volumes for advanced biofuel we anticipate requiring in 2018, setting the BBD standard in this manner would continue to allow a considerable portion of the advanced biofuel volume to be satisfied by either additional gallons of BBD or by other unspecified types of qualifying advanced biofuels. We request comment on our proposal for increasing the BBD applicable volume in 2018 and whether a higher or lower volume requirement would be more appropriate.
In this section we discuss our consideration of the statutory factors set forth in CAA section 211(o)(2)(B)(ii)(I)-(VI). As noted earlier in Section IV.B.2, the BBD volume requirement is nested within the advanced biofuel requirement and the advanced biofuel requirement is, in turn, nested within the total renewable fuel volume requirement. This means that any BBD produced beyond the mandated BBD volume can be used to satisfy both these other applicable volume requirements. The result is that in considering the statutory factors we must consider the potential impacts of increasing BBD in comparison to other advanced biofuels.
EPA's primary assessment of the statutory factors for the proposed 2018 BBD applicable volume is that because the proposed BBD requirement is nested within the advanced biofuel volume requirement, we expect that the 2018 advanced volume requirement will largely determine the level of BBD production and imports; the same volume of BBD would likely be supplied regardless of the BBD volume that we require for 2018. This assessment is based, in part, on our review of the RFS program implementation to date, as discussed in Section IV.B.1. While we are not proposing the 2018 advanced biofuel volume requirement in this action, our proposal for the BBD volume requirement for 2018 is nevertheless not expected to impact the volume of BBD that is actually produced and imported during this time period. Thus we do not expect our decision to result in a difference in the factors we are required to consider pursuant to CAA section 211(o)(2)(B)(ii)(I)-(VI). However, we note that our proposed approach of setting BBD volume requirements at a higher level in 2018, while still at a volume level lower than anticipated overall production and consumption of BBD, is consistent with our evaluation of statutory factors 211(o)(2)(B)(ii) (I), (II) and (III), since we believe that our decision on the BBD volume requirement can have a positive impact on the future development and marketing of other advanced biofuels and can also result in potential environmental and energy security benefits, while still sending a supportive signal to potential BBD investors, consistent with the objectives of the Act to support the continued growth in production and use of renewable fuels.
Even though we are proposing only the 2018 BBD volume requirement at this time and not the 2018 advanced biofuel requirement, we believe that our primary assessment with respect to the 2018 BBD volume requirement is appropriate, as is clear from the fact that
As an additional supplementary assessment, we have considered the potential impacts of selecting an applicable volume of BBD other than 2.1 billion gallons in 2018 based on the assumption that in guaranteeing the BBD volume at any given level there could be greater use of BBD and a corresponding decrease in the use of other types of advanced biofuels. However, setting a BBD volume requirement higher or lower than 2.1 billion gallons in 2018 would only be expected to impact BBD volumes on the margin, protecting to a lesser or greater degree BBD from being outcompeted by other advanced biofuels. In this supplementary assessment we have considered all of the statutory factors found in CAA 211(2)(B)(ii), and as described in a memorandum to the docket,
In proposing the 2018 advanced biofuel volume requirement, we have assumed reasonably attainable volumes of BBD and other advanced biofuels. After determining that it is in the interest of the goals of the program to propose a BBD volume requirement at a level below anticipated BBD production and imports, so as to provide continued incentives for research and development of alternative advanced biofuels, it is apparent that excess BBD above the BBD volume requirement will compete with other advanced biofuels, rather than petroleum based diesel.
Overall and as described in our memorandum to the docket, we have determined that both the primary assessment and the supplemental assessment of the statutory factors specified in CAA section 211(o)(2)(B)(ii)(I)-(VI) for the year 2018 does not provide significant support for setting the BBD standard at a level higher or lower than 2.1 billion gallons in 2018.
The renewable fuel standards are expressed as volume percentages and are used by each obligated party to determine their Renewable Volume Obligations (RVOs). Since there are four separate standards under the RFS program, there are likewise four separate RVOs applicable to each obligated party. Each standard applies to the sum of all non-renewable gasoline and diesel produced or imported. The percentage standards are set so that if every obligated party meets the percentages by acquiring and retiring an appropriate number of RINs, then the amount of renewable fuel, cellulosic biofuel, biomass-based diesel (BBD), and advanced biofuel used will meet the applicable volume requirements on a nationwide basis.
Sections II, III, and IV provide our rationale and basis for the proposed volume requirements for advanced biofuel and total renewable fuel, cellulosic biofuel, and BBD, respectively. The volumes used to determine the proposed percentage standards are shown in Table V-1.
The formulas used to calculate the percentage standards applicable to producers and importers of gasoline and diesel are provided in § 80.1405. The formulas rely on estimates of the volumes of gasoline and diesel fuel, for both highway and nonroad uses, which are projected to be used in the year in which the standards will apply. The projected gasoline and diesel volumes are provided by EIA, and include ethanol and biodiesel used in transportation fuel. Since the percentage standards apply only to the non-renewable gasoline and diesel produced or imported, the volumes of ethanol and biodiesel are subtracted out of the EIA projections of gasoline and diesel.
Transportation fuels other than gasoline or diesel, such as natural gas, propane, and electricity from fossil fuels, are not currently subject to the standards, and volumes of such fuels are not used in calculating the annual percentage standards. Since under the regulations the standards apply only to producers and importers of gasoline and diesel, these are the transportation fuels used to set the percentage standards, as well as to determine the annual volume obligations of an individual gasoline or diesel producer or importer.
As specified in the March 26, 2010 RFS2 final rule, the percentage standards are based on energy-equivalent gallons of renewable fuel, with the cellulosic biofuel, advanced biofuel, and total renewable fuel standards based on ethanol equivalence and the BBD standard based on biodiesel equivalence. However, all RIN generation is based on ethanol-equivalence. For example, the RFS regulations provide that production or import of a gallon of qualifying biodiesel will lead to the generation of 1.5 RINs. In order to ensure that demand for the required physical volume of BBD will be created in each year, the
In CAA section 211(o)(9), enacted as part of the Energy Policy Act of 2005, and amended by the Energy Independence and Security Act of 2007, Congress provided a temporary exemption to small refineries
EPA has granted some exemptions pursuant to this process in the past. However, at this time, no exemptions have been approved for 2017, and therefore we have calculated the proposed percentage standards for this year without an adjustment for exempted volumes. Any requests for exemptions for 2017 that are approved prior to the final rule will be reflected in the relevant standards in the final rule, as provided in the formulas described in the preceding section. As stated in the final rule establishing the 2011 standards, “EPA believes the Act is best interpreted to require issuance of a single annual standard in November that is applicable in the following calendar year, thereby providing advance notice and certainty to obligated parties regarding their regulatory requirements. Periodic revisions to the standards to reflect waivers issued to small refineries or refiners would be inconsistent with the statutory text, and would introduce an undesirable level of uncertainty for obligated parties.”
The formulas in § 80.1405 for the calculation of the percentage standards require the specification of a total of 14 variables covering factors such as the renewable fuel volume requirements, projected gasoline and diesel demand for all states and territories where the RFS program applies, renewable fuels projected by EIA to be included in the gasoline and diesel demand, and exemptions for small refineries. The values of all the variables used for this proposal are shown in Table V.C-1.
Projected
Using the volumes shown in Table V.C-1, we have calculated the proposed percentage standards for 2017 as shown in Table V.C-2.
We request comment on all aspects of this proposal. This section describes how you can participate in this process.
We are opening a formal comment period by publishing this document. We will accept comments during the period indicated under the
Your comments will be most useful if you include appropriate and detailed supporting rationale, data, and analysis. Commenters are especially encouraged
You may submit comments electronically through the electronic public docket,
Do not submit information that you consider to be CBI electronically through the electronic public docket,
In addition to one complete version of the comments that include any information claimed as CBI, a copy of the comments that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. This non-CBI version of your comments may be submitted electronically, by mail, or through hand delivery/courier. If you submit the copy that does not contain CBI on disk or CD-ROM, mark the outside of the disk or CD-ROM clearly that it does not contain CBI. Information not marked as CBI will be included in the public docket without prior notice. If you have any questions about CBI or the procedures for claiming CBI, please consult the person identified in the
This proposed action is an economically significant regulatory action that was submitted to the Office of Management and Budget (OMB) for review. Any changes made in response to OMB recommendations have been documented in the docket. The EPA prepared an analysis of illustrative costs associated with this action. This analysis is presented in Section II.F of this preamble.
This proposed action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control numbers 2060-0637 and 2060-0640. The proposed standards would not impose new or different reporting requirements on regulated parties than already exist for the RFS program.
I certify that this proposed action would not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the small entities subject to the rule.
The small entities directly regulated by the RFS program are small refiners, which are defined at 13 CFR 121.201. We have evaluated the impacts of this proposal on small entities from two perspectives; as if the proposed 2017 standards were a standalone action or if they are a part of the overall impacts of the RFS program as a whole.
When evaluating the proposed standards as if they were a standalone action separate and apart from the original rulemaking which established the RFS2 program, then the proposed standards could be viewed as increasing the volumes required of obligated parties between 2016 and 2017. To evaluate the proposed rule from this perspective, EPA has conducted a screening analysis
While the screening analysis described above supports a certification that this proposed rule would not have a significant economic impact on small refiners, we continue to believe that it is more appropriate to consider the proposed standards as a part of, and ongoing implementation of the overall RFS program. When considered this way the impacts of the RFS program as a whole on small entities were addressed in the RFS2 final rule (75 FR 14670, March 26, 2010), which was a rule that implemented the entire program required by the Energy Independence and Security Act of 2007 (EISA 2007). As such, the Small Business Regulatory Enforcement Fairness Act (SBREFA) panel process
For the SBREFA process for the RFS2 final rule, EPA conducted outreach, fact-finding, and analysis of the potential impacts of the program on small refiners which are all described in the Final Regulatory Flexibility Analysis, located in the rulemaking docket (EPA-HQ-OAR-2005-0161). This analysis looked at impacts to all refiners, including small refiners, through the year 2022 and found that the program would not have a significant economic impact on a substantial number of small entities, and that this impact was expected to decrease over time, even as the standards increased. The analysis included a cost-to-sales ratio test, a ratio of the estimated annualized compliance costs to the value of sales per company, for gasoline and/or diesel small refiners subject to the standards. From this test, it was estimated that all directly regulated small entities would have compliance costs that are less than one percent of their sales over the life of the program (75 FR 14862).
We have determined that this proposed rule would not impose any additional requirements on small entities beyond those already analyzed, since the impacts of this proposed rule are not greater or fundamentally different than those already considered in the analysis for the RFS2 final rule assuming full implementation of the RFS program. As shown above in Tables I-1 and I.A-1 (and discussed further in Sections II and III), this rule proposes the 2017 volume requirements for cellulosic biofuel, advanced biofuel, and total renewable fuel at levels significantly below the statutory volume targets. This exercise of EPA's waiver authorities reduces burdens on small entities, as compared to the burdens that would be imposed under the volumes specified in the Clean Air Act in the absence of waivers—which are the volumes that we assessed in the screening analysis that we prepared for implementation of the full program. Regarding the biomass-based diesel standard, we are proposing an increase in the volume requirement for 2018 over the statutory minimum value of 1 billion gallons. However, this is a nested standard within the advanced biofuel category, for which we are proposing significant reductions from the statutory volume targets. As discussed in Section IV, we are proposing to set the biomass-based diesel volume requirement at a level below what is anticipated will be produced and used to satisfy the reduced advanced biofuel requirement. The net result of the standards being proposed in this action is a reduction in burden as compared to implementation of the statutory volume targets, as was assumed in the RFS2 final rule analysis.
While the rule would not have a significant economic impact on a substantial number of small entities, there are compliance flexibilities in the program that can help to reduce impacts on small entities. These flexibilities include being able to comply through RIN trading rather than renewable fuel blending, 20% RIN rollover allowance (up to 20% of an obligated party's RVO can be met using previous-year RINs), and deficit carry forward (the ability to carry over a deficit from a given year into the following year, providing that the deficit is satisfied together with the next year's RVO). In the RFS2 final rule, we discussed other potential small entity flexibilities that had been suggested by the SBREFA panel or through comments, but we did not adopt them, in part because we had serious concerns regarding our authority to do so.
Additionally, as we realize that there may be cases in which a small entity experiences hardship beyond the level of assistance afforded by the program flexibilities, the program provides hardship relief provisions for small entities (small refiners), as well as for small refineries.
Given that this proposed rule would not impose additional requirements on small entities, would decrease burden via a reduction in required volumes as compared to statutory volume targets, would not change the compliance flexibilities currently offered to small entities under the RFS program (including the small refinery hardship provisions we continue to successfully implement), and available information shows that the impact on small entities from implementation of this rule would not be significant viewed either from the perspective of it being a standalone action or a part of the overall RFS program, we have therefore concluded that this action would have no net regulatory burden for directly regulated small entities.
This proposed action contains a federal mandate under UMRA, 2 U.S.C. 1531-1538, that may result in expenditures of $100 million or more for state, local and tribal governments, in the aggregate, or the private sector in any one year. Accordingly, the EPA has prepared a written statement required under section 202 of UMRA. The statement is discussed above in Section II.F. This action implements mandates specifically and explicitly set forth in CAA section 211(o) and we believe that this action represents the least costly, most cost-effective approach to achieve the statutory requirements of the rule.
This action is not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments.
This proposed action does not have federalism implications. It would not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This proposed action does not have tribal implications as specified in Executive Order 13175. This proposed rule would be implemented at the Federal level and affects transportation fuel refiners, blenders, marketers, distributors, importers, exporters, and renewable fuel producers and importers.
The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it implements specific standards established by Congress in statutes (CAA section 211(o)) and does not concern an environmental health risk or safety risk.
This proposed action is not a “significant energy action” because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. This action proposes the required renewable fuel content of the transportation fuel supply for 2017, consistent with the CAA and waiver authorities provided therein. The RFS program and this rule are designed to achieve positive effects on the nation's transportation fuel supply, by increasing energy independence and lowering lifecycle greenhouse gas emissions of transportation fuel.
This proposed rulemaking does not involve technical standards.
The EPA believes that this proposed action would not have potential disproportionately high and adverse human health or environmental effects on minority, low-income, or indigenous populations. This proposed rule does not affect the level of protection provided to human health or the environment by applicable air quality standards. This action does not relax the control measures on sources regulated by the RFS regulations and therefore would not cause emissions increases from these sources.
Statutory authority for this proposed action comes from section 211 of the Clean Air Act, 42 U.S.C. 7545. Additional support for the procedural and compliance related aspects of this final rule come from sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. 7414, 7542, and 7601(a).
Environmental protection, Administrative practice and procedure, Air pollution control, Diesel fuel, Fuel additives, Gasoline, Imports, Oil imports, Petroleum, Renewable fuel.
For the reasons set forth in the preamble, EPA proposes to amend 40 CFR part 80 as follows:
42 U.S.C. 7414, 7521, 7542, 7545, and 7601(a).
(a) * * *
(8)
(i) The value of the cellulosic biofuel standard for 2017 shall be 0.173 percent.
(ii) The value of the biomass-based diesel standard for 2017 shall be 1.67 percent.
(iii) The value of the advanced biofuel standard for 2017 shall be 2.22 percent.
(iv) The value of the renewable fuel standard for 2017 shall be 10.44 percent.
Commodity Futures Trading Commission.
Final rule.
On January 6, 2016, the Commodity Futures Trading Commission (“Commission” or “CFTC”) published final regulations to implement section 4s(e) of the Commodity Exchange Act, which requires the Commission to adopt initial and variation margin requirements for uncleared swaps of swap dealers and major swap participants that do not have a Prudential Regulator (collectively, “Covered Swap Entities” or “CSEs”). In this release, the Commission is adopting a rule to address the cross-border application of the Commission's margin requirements for CSEs' uncleared swaps.
The final rule is effective August 1, 2016.
Laura B. Badian, Assistant General Counsel, 202-418-5969,
In the wake of the 2008 financial crisis, Congress enacted Title VII of the Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”),
In July 2015, consistent with its authority in CEA sections 4s(e) and 2(i),
The Commission requested comment on all aspects of the proposed rule. After a careful review of the comments,
The overarching objective of the cross-border margin framework is to further the congressional mandate to ensure the safety and soundness of CSEs in order to offset the greater risk to CSEs and the financial system arising from the use of swaps that are not cleared.
The Commission recognizes that, to achieve the goals of the Dodd-Frank Act, its cross-border framework must take into account the global state of the swap market. The nature of modern financial markets means that risk is not static or contained by geographic boundaries. Market participants engage in swaps on a 24-hour basis in global markets, and many financial entities operate through a complex web of branches, subsidiaries, and affiliates that are scattered across the globe.
As the 2008 financial crisis illustrated, the global nature of the swap market heightens the potential that risks assumed by a firm overseas stemming from its uncleared swaps can be transmitted across national borders to cause or contribute to substantial losses to U.S. persons and threaten the stability of the entire U.S. financial system. Complex financial and operational relationships among domestic and international affiliates, including guarantees from U.S. entities at entities like American International Group (AIG) and Lehman Brothers Holding Inc., demonstrated how the transfer of risk across multinational affiliated entities, including risk associated with swaps, is not always transparent and can be difficult to fully assess. More recent events, including major losses from J.P. Morgan Chase &
The global nature of the swap market, coupled with the interconnectedness of market participants, also necessitate that the Commission recognize the supervisory interests of foreign regulatory authorities and consider the impact of its choices on market efficiency and competition, which are vital to a well-functioning global swap market.
Substituted compliance has long been a central element of the Commission's cross-border policy.
The Commission is mindful of the challenges involved in implementing a substituted compliance framework for margin. If implemented properly, substituted compliance has the potential to enhance market efficiency and liquidity and foster global coordination of margin requirements without compromising the safety and soundness of CSEs and the U.S. financial system. However, if substituted compliance were extended to foreign jurisdictions that do not have adequate oversight or protections with regard to uncleared swaps, the effectiveness of the Commission's margin requirements could be undermined, importing additional risk into the financial system. The Commission therefore believes that close coordination with its foreign counterparts is essential to ensuring that the benefits of substituted compliance are achieved.
Consistent with the congressional mandate to coordinate rules “to the maximum extent practicable,”
In granting the Commission new authority over swaps under the Dodd-Frank Act, Congress also called for coordination and cooperation with foreign regulatory authorities.
The Commission is adopting rules regarding how the Commission's margin requirements will apply to cross-border uncleared swaps. Broadly speaking, the final cross-border framework is designed to address the risks to a CSE, as an entity, associated with its uncleared swaps, consistent with CEA section 2(i)
The sections that follow summarize, as appropriate, the approach taken in the proposed rule, the comments received in response, and the resulting Final Rule. Section A discusses certain key definitions (“U.S. person,” “guarantee,” and “Foreign Consolidated Subsidiary” or “FCS”) in the Final Rule, which inform how the Commission's margin requirements apply to market participants in the cross-border context. Section B describes the cross-border application of the Commission's margin requirements, including the circumstances under which substituted compliance and the limited Exclusion are available and the application of two special provisions designed to accommodate swap activities in jurisdictions that do not have a legal framework to support custodial arrangements and netting in compliance with the Final Margin Rule (“non-segregation jurisdictions”
As a preliminary matter, the Commission notes that several commenters requested Commission action outside the scope of the Final Rule, including modifications to the substantive margin requirements
Commenters also requested that the Commission delay the cross-border application of its margin rules until after it has made comparability determinations.
The extent to which substituted compliance and the Exclusion are available depends on whether the relevant swap involves a U.S. person, a guarantee by a U.S. person, or a “Foreign Consolidated Subsidiary” (or “FCS”). The Final Rule adopts definitions of “U.S. person,” “guarantee,” and “Foreign Consolidated Subsidiary” solely for purposes of the margin rules. These definitions are discussed below.
Under the Final Rule, the term “U.S. person” is defined to include individuals or entities whose activities have a significant nexus to the U.S. market as a result of their being domiciled or organized in the United States or by virtue of the strength of their connection to the U.S. markets, even if they are domiciled or organized outside the United States. As discussed in section II.B.2.b.i. below, U.S. CSEs
In the proposed rule, the term “U.S. person” was defined to mean the following:
• Any natural person who is a resident of the United States (proposed § 23.160(a)(10)(i));
• Any estate of a decedent who was a resident of the United States at the time of death (proposed § 23.160(a)(10)(ii));
• Any corporation, partnership, limited liability company, business or other trust, association, joint-stock company, fund or any form of entity similar to any of the foregoing (other than an entity as described in paragraph (a)(10)(iv) or (v) of proposed § 23.160) (a legal entity), in each case that is organized or incorporated under the laws of the United States or that has its principal place of business in the United States, including any branch of
• Any pension plan for the employees, officers or principals of a legal entity as described in paragraph (a)(10)(iii) of proposed § 23.160, unless the pension plan is primarily for foreign employees of such an entity (proposed § 23.160(a)(10)(iv));
• Any trust governed by the laws of a state or other jurisdiction in the United States, if a court within the United States is able to exercise primary supervision over the administration of the trust (proposed § 23.160(a)(10)(v));
• Any legal entity (other than a limited liability company, limited liability partnership or similar entity where all of the owners of the entity have limited liability) owned by one or more persons described in paragraphs (a)(10)(i) through (v) of proposed § 23.160 who bear(s) unlimited responsibility for the obligations and liabilities of the legal entity, including any branch of the legal entity (proposed § 23.160(a)(10)(vi)); and
• Any individual account or joint account (discretionary or not) where the beneficial owner (or one of the beneficial owners in the case of a joint account) is a person described in paragraphs (a)(10)(i) through (vi) of proposed § 23.160 (proposed § 23.160(a)(10)(vii)).
The Commission explained that, as indicated in paragraphs (iii) and (vi) of the proposed rule, a legal entity's status as a U.S. person would be determined at the entity level and would therefore include a foreign branch of a U.S. person.
The proposed rule was generally consistent with the U.S. person interpretation set forth in the Guidance, with certain exceptions.
The Commission requested comment on all aspects of the proposed definition of “U.S person,” including whether the definition should include a U.S. majority-owned fund prong or an unlimited U.S. responsibility prong and whether it should be identical to the U.S. person definition adopted by the SEC.
In general, commenters raised few objections to the proposed “U.S. person” definition. Nearly all commenters supported the absence of a U.S. majority-owned fund prong,
A few commenters, however, requested changes regarding the unlimited U.S. responsibility prong. ISDA and JBA recommended that, consistent with the Guidance, the Commission require that the U.S. person(s) bearing unlimited responsibility for the obligations and liabilities of the legal entity have a majority ownership stake in the entity. ISDA argued broadly that, to avoid confusion and regulatory overlap, legal entities that have multiple owners with unlimited liability for the obligations and liabilities of the legal entity should only be subject to the jurisdiction of the majority owner.
Commenters also made certain other recommendations to further conform the U.S. person definition to the interpretation of “U.S. person” in the Guidance.
Finally, FSR and JBA requested that, in the interest of harmonizing margin requirements and reducing compliance costs, the Commission should, consistent with the SEC's cross-border rules, exclude from the U.S. person definition certain designated international organizations.
The Final Rule defines “U.S. person” as proposed, but the Commission is providing some additional clarifications in response to commenters. As stated in the Proposal, the definition generally follows a traditional, territorial approach to defining a U.S. person, and the Commission believes that this definition offers a clear, objective basis for determining those individuals or entities that should be identified as U.S. persons.
Under the Final Rule, a legal person's status as a U.S. person is determined at the entity level and therefore includes any foreign operations that are part of the legal person, regardless of their location. Consistent with this approach, the definition includes any foreign branch of a U.S. person.
Sections 23.160(a)(10)(i) through (v) and (vii) of the Final Rule identify certain persons as U.S. persons by virtue of being domiciled or organized in the United States. The Commission has traditionally looked to where a legal entity is organized or incorporated (or, in the case of a natural person, where he or she resides) to determine whether it is a U.S. person.
Consistent with this traditional approach, section 23.160(a)(10)(iii) of the Final Rule includes persons that are organized or incorporated outside the United States but have their principal place of business in the United States. For purposes of this section, the Commission interprets “principal place of business” to mean the location from which the officers, partners, or managers of the legal person primarily direct, control, and coordinate the activities of the legal person. This interpretation is consistent with the Supreme Court's decision in
The Commission is of the view that determining the principal place of business of an investment fund may require consideration of additional factors beyond those applicable to operating companies. In the case of a fund, the senior personnel that direct, control, and coordinate a fund's activities are generally not the named directors or officers of the fund but rather persons employed by the fund's investment adviser or the fund's promoter. Therefore, consistent with the Guidance, the Commission would generally consider the principal place of business of a fund to be in the United States if the senior personnel responsible for either (1) the formation and promotion of the fund or (2) the implementation of the fund's investment strategy are located in the United States, depending on the facts and circumstances that are relevant to determining the center of direction, control and coordination of the fund.
Section 23.160(a)(10)(vi) of the Final Rule defines “U.S. person” to include certain legal entities owned by one or more U.S. person(s) and for which such person(s) bear unlimited responsibility for the obligations and liabilities of the legal entity.
In line with the proposed rule, the Final Rule does not include a U.S. majority-owned funds prong. Although the U.S. owners of such funds may be adversely impacted in the event of a counterparty default, the Commission believes that, on balance, the majority-ownership test should not be included in the definition of U.S. person for purposes of the margin rules. Non-U.S. funds with U.S. majority-ownership, even if treated as a non-U.S. person, are excluded from the Commission's margin rules only in limited circumstances (namely, when these funds transact with a non-U.S. CSE that is not a consolidated subsidiary of a U.S. entity or a U.S. branch of a non-U.S. CSE). This result, coupled with the implementation issues raised by commenters, persuade the Commission that including a U.S. majority-owned funds prong in the scope of the “U.S. person” definition would not be appropriate for purposes of the margin rules.
The Commission notes that, as discussed in the proposed rule, the Final Rule defines “U.S. person” in a manner that is substantially similar to the definition used by the SEC in the context of cross-border regulation of security-based swaps.
Under the Final Rule, the term “guarantee” is defined to include arrangements, pursuant to which one party to an uncleared swap has rights of recourse against a guarantor, with respect to its counterparty's obligations under the uncleared swap. As discussed in section II.B.2.b.i. below, non-U.S. CSEs whose obligations under the relevant swap are guaranteed by a U.S. person (“U.S. Guaranteed CSEs”)
The proposed rule defined the term “guarantee” as an arrangement pursuant to which one party to a swap with a non-U.S. counterparty has rights of recourse against a U.S. person, with respect to the non-U.S. counterparty's obligations under the swap. The proposed rule defined “rights of recourse” as a conditional or unconditional legally enforceable right to receive or otherwise collect payment, in whole or in part. An arrangement would constitute a “guarantee” regardless of whether the rights of recourse were conditioned upon the non-U.S. counterparty's insolvency or failure to meet its obligations under the relevant swap or whether the counterparty seeking to enforce the guarantee is required to make a demand for payment or performance from the non-U.S. counterparty before proceeding against the U.S. guarantor. The Commission requested comment on all aspects of its proposed definition of “guarantee,” including whether it would be appropriate to distinguish guarantee arrangements with a legally enforceable right of recourse from those without direct recourse.
Most commenters supported the proposed definition of “guarantee.”
AFR and Better Markets opposed the proposed “guarantee” definition.
The Final Rule defines “guarantee” for purposes of the cross-border application of the Commission's margin rules to mean an arrangement pursuant to which one party to an uncleared swap has rights of recourse against a guarantor, with respect to its counterparty's obligations under the uncleared swap.
The Final Rule's definition of guarantee is generally consistent with the proposed rule's definition of guarantee, but reflects certain changes that are intended to more closely align it with the definition included in the Prudential Regulators' Final Margin Rule.
To illustrate, consider a swap between a non-U.S. CSE (“Party A”) and a non-U.S. person (“Party B”). Party B's obligations under the swap are guaranteed by a non-U.S. affiliate (“Party C”), who in turn has a guarantee from its U.S. CSE parent entity on Party C's swap obligations (“Parent D”). The Final Rule would deem a guarantee to exist between Party B and Parent D with respect to Party B's obligations under the swap with Party A.
The Commission is cognizant that many other financial arrangements or support, other than a recourse guarantee as defined in the Final Rule, may be provided by a U.S. person to a non-U.S. CSE. The Commission acknowledges that these other financial arrangements or support may transfer risk directly back to the U.S. financial system, with possible significant adverse effects, in a manner similar to an arrangement that is covered by the definition of a “guarantee” in the Final Rule. However, the Commission believes that, in the context of the Final Rule, non-U.S. CSEs benefitting from such other forms of U.S. financial support will likely meet the definition of an FCS, a concept included in the final margin rules adopted by the Prudential Regulators, and thereby be adequately covered by the Commission's margin requirements. In this way, the Commission believes that the Final Rule achieves the dual goals of protecting the U.S. markets while promoting a workable cross-border margin framework that closely tracks the cross-border application of the Prudential Regulators' Final Margin Rule.
Under the Final Rule, the term “Foreign Consolidated Subsidiary” identifies non-U.S. CSEs that are consolidated for accounting purposes with an ultimate parent entity that is a U.S. person (a “U.S. ultimate parent entity”). As further discussed in section II.B.2.b.ii. below, substituted compliance would be broadly available to an FCS to the same extent as any other non-U.S. CSE, but such an FCS would not be eligible for the Exclusion.
The proposed rule defined a “Foreign Consolidated Subsidiary” as a non-U.S. CSE in which an “ultimate parent entity”
The Commission requested comment on all aspects of its proposed FCS definition, including whether the Commission should instead adopt the “control test” proposed by the Prudential Regulators, which focused solely on the level of ownership and control a U.S. person would have over a non-U.S. subsidiary.
A few commenters expressed strong support for the FCS concept.
Nevertheless, AFR and IATP expressed some concern over the reliance on U.S. GAAP, particularly with respect to its ability to capture off-balance sheet entities.
AFR and IATP therefore urged the Commission to expand the FCS definition in a few ways. Both recommended that the FCS definition include entities whose U.S. parent entity is not required to prepare consolidated financial statements (
A few commenters opposed the FCS concept altogether.
The Final Rule defines “Foreign Consolidated Subsidiary” as proposed.
The Commission believes that the FCS concept offers a clear, bright-line test for identifying those non-U.S. CSEs whose uncleared swap activities present a greater supervisory interest relative to other non-U.S. CSEs. Under U.S. GAAP, an FCS' financial statements are consolidated with its U.S. ultimate parent entity by virtue of the parent's
Further, the Commission continues to believe that, in the absence of a direct recourse guarantee from a U.S. person, an FCS should not be treated in the same manner as a U.S. CSE or U.S. Guaranteed CSE. In contrast with a U.S. Guaranteed CSE, in the event of the FCS's default, the U.S. ultimate parent entity does not have a legal obligation to fulfill the obligations of the FCS. Rather that decision would depend on the business judgment of its parent.
By relying on a consolidation test, the FCS concept is intended to provide a clear, bright-line test for identifying those non-U.S. CSEs whose uncleared swaps are likely to raise greater supervisory concerns relative to other non-guaranteed non-U.S. CSEs. The Commission further believes that, as some commenters noted, reliance on familiar U.S. GAAP accounting standards will promote legal certainty. In particular, the Commission notes that consolidation accounting is a longstanding part of U.S. GAAP and that all non-U.S. CSEs with a U.S. ultimate parent entity currently prepare consolidated financial statements.
With respect to the definition's reliance on U.S. GAAP, the Commission notes that since the 2008 financial crisis, the U.S. FASB made significant changes to the consolidation model for variable interest entities (“VIEs”) and that as a result of these changes, more VIEs (including special purpose vehicles) are being consolidated with other entities (
The proposed rule provided that market participants should generally be permitted to reasonably rely on counterparty representations with regard to their status as a U.S. person. The Commission received comments regarding its proposed reliance standard
The Commission acknowledges that the information necessary for a swap counterparty to accurately assess the status of its counterparties as U.S. persons or FCSs, or to determine whether a non-U.S. counterparty's obligations under a swap are guaranteed by a U.S. person, may be unavailable, or available only through overly burdensome due diligence. For this reason, the Commission believes that a market participant should generally be permitted to reasonably rely on written counterparty representations in each of these respects. The Commission clarifies that, consistent with the reliance standard articulated in the Commission's external business conduct rules,
The following sections discuss the cross-border application of the margin requirements to swaps between CSEs and their counterparties, including when substituted compliance and the Exclusion are applicable. Section 1 provides a brief overview of the proposed rule; section 2 addresses the availability of substituted compliance; section 3 addresses the availability of the Exclusion; section 4 discusses a special provision in the Final Rule for non-segregation jurisdictions; and section 5 discusses a special provision in the Final Rule for non-netting jurisdictions.
Under the proposed rule, the application of substituted compliance and the scope of the Exclusion closely tracked the Prudential Regulators' Proposed Margin Rule.
• A U.S. CSE would be required to comply with the Commission's margin rules for all uncleared swaps but would be eligible for substituted compliance with respect to the requirement to post (but not the requirement to collect) initial margin for swaps with certain non-U.S. counterparties (referred to herein as “partial substituted compliance”).
• A U.S. Guaranteed CSE would receive the same treatment as a U.S. CSE.
• A non-U.S. CSE whose obligations under the relevant swap are not guaranteed by a U.S. person would be eligible for substituted compliance unless the counterparty to the swap is a U.S. CSE or U.S. Guaranteed CSE, in which case substituted compliance would be available with respect to the requirement to collect (but not the requirement to post) initial margin (also referred to as “partial substituted compliance”).
• A non-U.S. CSE would be eligible for an exclusion from the Final Margin Rule when trading with a non-U.S. person counterparty provided that (a) neither party's obligations under the relevant swap are guaranteed by a U.S.
The Commission requested comment on all aspects of the proposed rule, including how the rule should treat FCSs (
Most commenters argued for the greater availability of substituted compliance. Some requested that all CSEs, whether a U.S. persons or a non-U.S. person, be eligible for full substituted compliance with respect to all comparable foreign margin requirements, including any swap dealer in a BCBS-IOSCO framework-compliant jurisdiction.
With respect to U.S. CSEs and U.S. Guaranteed CSEs, IIB/SIFMA and ISDA argued that compliance with the Commission's margin requirements was not necessary to prevent the transmission of risk to the U.S. financial system because the risk would be adequately addressed by comparable foreign margin requirements.
Several commenters raised concerns with regard to the proposal to allow partial substituted compliance.
IATP, on the other hand, supported the proposed substituted compliance regime.
The Commission has determined to adopt a cross-border framework largely as proposed, but with certain modifications to address concerns raised by commenters and to further align the rule with the cross-border approach adopted by the Prudential Regulators. Generally speaking, the cross-border margin framework in the Final Rule reflects the Commission's efforts to carefully tailor the application of the Commission's margin requirements to address comity considerations and mitigate potential adverse impact on market efficiency and competition without compromising the safety and soundness of CSEs. The availability of substituted compliance under the Final Rule therefore depends on the degree of nexus the CSEs and their counterparties have to the U.S. financial system, as indicated by their status (
As a general rule, the Commission believes that, in light of their position in the U.S. financial system, U.S. persons and U.S. Guaranteed CSEs should be required to comply with the Commission's margin requirements. Under the Final Rule, however, U.S. CSEs and U.S. Guaranteed CSEs would be eligible for substituted compliance with respect to the requirement to post (but not the requirement to collect) initial margin provided that the counterparty is a non-U.S. person whose obligations under the relevant swap are not guaranteed by a U.S. person. By virtue of their being domiciled or organized in the United States, U.S. CSEs give rise to greater supervisory interests relative to other CSEs. U.S. Guaranteed CSEs create a similar supervisory interest because, as discussed in the proposed rule, the swap of a non-U.S. CSE whose obligations under the swap are guaranteed by a U.S. person is identical, in relevant aspects, to a swap entered into directly by a U.S. person.
Nevertheless, the Commission believes that, in the interest of comity, permitting substituted compliance for the limited requirement of posting initial margin would be reasonable. While requiring a CSE to post initial margin protects the counterparty in the event of default by the CSE, it also serves as a risk management tool because it limits the amount of leverage a CSE can incur by requiring that it have adequate eligible collateral to enter into an uncleared swap. Accordingly, when the counterparty is a non-U.S. person (whose obligations under the swap are not guaranteed by a U.S. person), the Commission believes that substituting the foreign margin requirements with regard to the initial margin posted would be reasonable. The Commission further believes that allowing substituted compliance in this limited instance may reduce transaction costs for U.S. CSEs when trading with non-U.S. counterparties
The Commission does not believe that partial substituted compliance would prohibit the use of a single netting set for calculating initial margin. Under the Final Rule, a U.S. CSE can comply with the Commission's initial margin requirements by posting pursuant to comparable foreign margin requirements. Accordingly, from the Commission's perspective, one netting set could encompass swaps that comply with both foreign and CFTC initial margin requirements.
The Commission understands that CSEs relying on partial substituted compliance may face certain costs or challenges not experienced by non-U.S. CSEs that are eligible for full substituted compliance. Nevertheless, as discussed above, the Commission believes that granting substituted compliance more broadly (
Finally, the Commission does not believe it would be appropriate to broaden the scope of substituted compliance available to swaps conducted through foreign branches of U.S. CSEs. A foreign branch is legally indistinguishable from the U.S. CSE itself, such that the whole U.S. CSE, and not merely the foreign branch, holds itself out to the market and assumes the risks of any uncleared swap transactions conducted by or through the foreign branch. Accordingly, swaps conducted through a foreign branch of a U.S. CSE are appropriately treated the same as swaps of the U.S. CSE as a whole. Moreover, if the Commission were to allow broader substituted compliance for swaps conducted through foreign branches than swaps conducted domestically, U.S. CSEs could be incentivized to conduct swap activity through foreign branches to avoid direct compliance with Commission's margin requirements.
Under the Final Rule, consistent with the Proposed Rule, non-U.S. CSEs (including FCSs) whose obligations under the relevant uncleared swap are
The broad substituted compliance framework available to this category of non-U.S. CSEs reflects the Commission's recognition of foreign jurisdictions' supervisory interest in CSEs that are domiciled and operating in their jurisdictions. In addition, the Commission understands that compliance with two sets of margin regulations may lead to costs and burdens for non-U.S. CSEs not faced by their competitors in the local jurisdiction and may provide disincentives for foreign clients to transact with a non-U.S. CSE. The Commission believes that making substituted compliance broadly available to non-U.S. CSEs that are not guaranteed by a U.S. person may help to reduce the potential adverse impact on market efficiency and competition, without compromising the protections for the non-U.S. CSE and the U.S. financial markets.
As discussed in the next section, a non-U.S. CSE that is not an FCS will be eligible for the Exclusion from the Commission's margin rules under certain circumstances. However, uncleared swaps entered into by an FCS will not be eligible for any exclusion because of its relationship with its U.S. ultimate parent entity, and because of the possible negative impact of its swap activities on its U.S. ultimate parent entity and the U.S. financial system. As explained in section II.A.3.c. above, the financial position, operating results, and statement of cash flows of an FCS are included in the financial statements of the U.S. ultimate parent entity and therefore have a direct impact on the consolidated entity's financial position, risk profile, and market value. The Commission is also concerned that extending the Exclusion to FCSs would incentivize U.S. entities to conduct their swap activities with non-U.S. counterparties through non-U.S. subsidiaries solely in order to avoid application of the Dodd-Frank Act margin requirements, leading to further bifurcation between U.S. and non-U.S. swap business.
The Commission recognizes that its decision not to extend the Exclusion to FCSs could put them at a disadvantage relative to other non-U.S. market participants/swap dealers (including those that are CSEs).
Several commenters supported the Exclusion because they believed that it recognized the absence of a U.S. jurisdictional nexus.
With respect to U.S. branches, IIB/SIFMA argued that distinguishing them would not be necessary from a risk-mitigation perspective because the risk remains with the non-U.S. CSE outside the United States regardless of whether the non-U.S. CSE involves U.S. personnel.
With respect to FCSs, ICI Global argued that consolidation is insufficient to create a “direct” U.S. nexus because the U.S. ultimate parent is not under a legal obligation to support the FCS.
As an alternative to extending the Exclusion to FCSs, IIB/SIFMA suggested that the Commission grant an exclusion to FCSs operating without a U.S. guarantee when transacting with non-U.S. persons operating without a U.S. guarantee, up to an aggregate 5 percent limit on the notional trading volume in uncleared swaps entered into by commonly controlled FCSs under the exclusion relative to the total notional swap trading volume of entities within the common U.S. ultimate parent entity's consolidated group.
Both AFR and Better Markets expressed support for the proposal not to extend the Exclusion to FCSs, describing it as a means of addressing the issue of de-guaranteeing.
The Commission has determined to adopt the Exclusion largely as proposed, with a modification that preserves the Commission's intent with respect to the treatment of inter-affiliate swaps under the Final Margin Rule. Under the Final Rule, an uncleared swap entered into by a non-U.S. CSE with a non-U.S. counterparty (including a non-U.S. CSE) is excluded from the Commission's margin rules, provided that neither counterparty's obligations under the relevant swap are guaranteed by a U.S. person and neither counterparty is an FCS.
The Commission notes that a non-U.S. CSE that can avail itself of the Exclusion is still subject to the Commission's margin rules with respect to all other uncleared swaps (
The Commission considered comments urging a broader scope of the Exclusion to include, for example, any FCSs so long as their swaps are not guaranteed by a U.S. person or alternatively, do not exceed a “de minimis” level of swap activity. However, the Commission does not believe that extending the Exclusion to uncleared swaps of FCSs is appropriate given the nature of their relationship to their U.S. ultimate parent entity. The limited scope of the Exclusion reflects that the benefits of the margin requirement are achieved when it is applied to all CSEs and on a firm-wide basis and therefore, any exception needs to be carefully tailored to avoid creating a significant supervisory gap and inappropriate levels of risk to the CSE and the U.S. financial system.
The Commission also disagrees with comments that the Exclusion is overly broad because it would extend to a swap between a non-U.S. CSE and a foreign subsidiary of a U.S. financial end user.
Under the Final Margin Rule, a CSE is not required to collect initial margin from its affiliate, provided, among other things, that affiliate collects initial margin on its market-facing swaps or is subject to comparable initial margin collection requirements (in the case of non-U.S. affiliates that are financial end users) on its own market-facing swaps. In order to preserve the Commission's intent with respect to the treatment of inter-affiliate swaps under the Final Margin Rule, the Exclusion is not available if the market-facing swap of the non-U.S. CSE (that is otherwise eligible for the Exclusion) is not subject to comparable initial margin collection requirements in the home jurisdiction and any of the risk associated with the uncleared swap is transferred, directly or indirectly, through inter-affiliate transactions, to a U.S. CSE or a U.S. Guaranteed CSE. This condition is intended to ensure that inter-affiliate swaps are not used to avoid the requirement to collect initial margin from third-parties.
Under the Final Rule, uncleared swaps of a U.S. branch of a non-U.S. CSE are not eligible for the Exclusion. The Commission does not believe extending the Exclusion to U.S. Branches would be appropriate. Generally speaking, U.S. branches of foreign banks
Several commenters supported the creation of a de minimis exception similar to the emerging markets exemption set out in the Guidance.
In support of such an exception, commenters argued that legal and operational constraints in emerging market jurisdictions could make compliance with margin rules difficult, if not impossible.
The Commission is adopting a special provision for swaps with counterparties in foreign jurisdictions where limitations in the legal or operational infrastructure of the jurisdiction make it impracticable for the CSE and its counterparty to comply with the custodial arrangement requirements in the Final Margin Rule (“non-segregation jurisdictions”).
Under section 23.160(e) of the Final Rule, an FCS or a foreign branch of a U.S. CSE would be eligible to engage in
This provision is narrowly tailored to limit its availability to FCSs (and foreign branches of U.S. CSEs) in foreign jurisdictions where compliance with the Final Margin Rule's custodial requirements is effectively precluded due to impediments inherent in the relevant foreign jurisdiction.
In adopting this provision, the Commission considered the various alternatives endorsed by commenters, including the adoption of a blanket exclusion, subject to a transactional volume limit (
Therefore, rather than provide an exception from all of the Commission's margin requirements to CSEs that engage in swaps activities in non-segregation jurisdictions up to a 5% limit, as suggested by some commenters, the special provision only excepts qualifying FCSs and foreign branches of U.S. CSEs from certain specified requirements, subject to specified conditions (including a 5 percent limit in each of four broad risk categories set forth in § 23.154(b)(2)(v)), as described above. The Commission believes that imposing a 5 percent limit in each of the four broad risk categories set out in § 23.154(b)(2)(v) is necessary because the FCS (or foreign branch of a U.S. CSE) may have a large notional amount outstanding in the foreign exchange and interest rate category (which is considered together as a single class) which would effectively eviscerate any limit in other lower notional risk categories.
The Commission believes that the total outstanding notional value of all
Commenters generally agreed that, at a minimum, the Commission should provide an exception for swaps with counterparties located in jurisdictions in which netting, collateral or third party custodial arrangements may not be legally effective, including in a counterparty's insolvency.
ISDA and JBA further recommended that, absent an exception for non-netting jurisdictions, CSEs should have at least some exception from the requirement to collect or post margin.
The Commission is adopting a special provision, also included in the Prudential Regulators' Final Margin Rule, for non-netting jurisdictions.
The Commission considered ISDA's request that it adopt a blanket exclusion, subject to a percentage limitation based on the level of swap activity. However, the Commission believes that a blanket exclusion, even with a transactional limit, presents a significant risk that the safety and soundness of a CSE engaged in swaps in non-netting jurisdictions would be insufficiently protected because, without the collection of sufficient margin, the CSE could be unduly exposed to counterparty default. The Commission also considered, but determined to not adopt, ISDA's request that posting to counterparties in non-netting jurisdictions not be required.
As discussed above, consistent with CEA section 2(i) and comity principles, the Final Rule permits eligible CSEs to rely on substituted compliance to the extent that the Commission determines the relevant foreign jurisdiction's margin requirements are comparable to the Commission's. Specifically, the Final Rule outlines a framework for the Commission's comparability determinations, including eligibility and submission requirements for requesters and the Commission's standard of review for making comparability determinations.
As proposed, section 23.160(c) established a process for requesting comparability determinations. Specifically, the proposed rule identified persons eligible to request a comparability determination (CSEs eligible to rely on substituted compliance and any relevant foreign regulatory authorities) and the information and documentation they should provide the Commission, including how the relevant foreign jurisdiction's margin requirements address the various elements of the Commission's margin regime (
The proposed rule also identified several factors the Commission would consider in making a comparability determination, such as how the relevant foreign margin requirements compare to International Standards
The proposed rule concluded by explaining the regulatory effect of complying with a foreign jurisdiction's margin requirements in reliance on a comparability determination, such that a violation of a foreign margin requirement could constitute a violation of the Commission's corresponding requirement. It also codified the Commission's authority to condition or otherwise modify any comparability determination it issues.
The Commission requested comment on all aspects of proposed § 23.160(c).
Commenters generally focused on the Commission's proposed approach to evaluating the comparability of a foreign jurisdiction's margin regime.
Commenters expressed concern, however, that the Commission's proposed approach was overly complicated and would undermine an outcome-based approach.
Commenters also expressed concern that issuing comparability determinations with respect to some but not all of a foreign jurisdiction's margin requirements would be challenging and costly to implement.
A majority of commenters also encouraged the Commission to make consistency with the BCBS-IOSCO framework the primary focus of its comparability determinations.
AFR, on the other hand, argued that foreign margin rules should not qualify for substituted compliance on the basis that they follow International Standards alone.
After a careful review of the comments, the Commission is adopting § 23.160(c) as proposed, but is providing some additional clarifications in response to commenters. The rule begins by identifying persons eligible to request a comparability determination with respect to the Commission's margin requirements, including any CSE that is eligible for substituted compliance under rule § 23.160
Persons requesting comparability determinations should provide the Commission with certain documents and information in support of their request. Notably, the Final Rule provides that requesters should provide copies of the relevant foreign jurisdiction's margin requirements
The Final Rule identifies certain key factors that the Commission will consider in making a comparability determination. Specifically, the Commission will consider the scope and objectives of the relevant foreign jurisdiction's margin requirements;
As indicated in the proposed rule, the Final Rule reflects an outcome-based approach to assessing the comparability of a foreign jurisdiction's margin
As commenters noted, the Commission was actively involved in developing the BCBS-IOSCO framework, and the Commission believes that the minimum standards it establishes are consistent with the objectives of the Commission's own margin requirements. However, while the BCBS-IOSCO framework establishes minimum standards that are consistent with the objectives of the Commission's own margin requirements, the Commission notes that just because a foreign jurisdiction's margin requirements are consistent with International Standards does not necessarily mean that they will be comparable to the Commission's requirements.
As stated in the proposed rule, the Commission will review the foreign margin requirements on an element-by-element basis.
As indicated in the proposed rule, the Commission is allowing for the possibility that a comparability determination may not include all elements of a foreign jurisdiction's margin regime.
The Final Rule provides that any CSE that, in accordance with a comparability determination, complies with a foreign jurisdiction's margin requirements will be deemed in compliance with the Commission's corresponding margin requirements.
The Final Rule concludes by codifying the Commission's authority to impose any terms and conditions it deems appropriate in issuing a comparability determination,
Comparability determinations issued by the Commission will require that the Commission be notified of any material changes to information submitted in support of a comparability determination, including, but not limited to, changes in the relevant foreign jurisdiction's supervisory or regulatory regime. The Commission also expects that the relevant foreign regulator will enter into, or will have entered into, an appropriate memorandum of understanding (“MOU”) or similar arrangement with the Commission in connection with a comparability determination.
As stated above, the Commission recognizes that systemic risks arising from the global and interconnected swap market must be addressed through coordinated regulatory requirements for margin across international jurisdictions. Accordingly, the Commission will continue its practice of actively engaging market participants and consulting closely with foreign regulators to encourage the international harmonization and coordination of margin requirements for uncleared swaps and to minimize market disruptions.
The Regulatory Flexibility Act (“RFA”) requires that agencies consider whether the regulations they propose will have a significant economic impact on a substantial number of small
The Commission previously has determined that swap dealers and major swap participants are not small entities for purposes of the RFA.
The Commission notes that under the Final Margin Rule, swap dealers and major swap participants would only be required to collect and post margin on uncleared swaps when the counterparties to the uncleared swaps are either other swap dealers and major swap participants or financial end users. As noted above, swap dealers and major swap participants are not small entities for RFA purposes. Furthermore, any financial end users that may be indirectly
Accordingly, the Commission finds that there will not be a substantial number of small entities impacted by the Final Rule. Therefore, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed regulations will not have a significant economic impact on a substantial number of small entities.
The Paperwork Reduction Act of 1995 (“PRA”)
Section 731 of the Dodd-Frank Act amended the CEA to add, as section 4s(e) thereof, provisions concerning the setting of initial and variation margin requirements for swap dealers and major swap participants. Each swap dealer and major swap participant for which there is a Prudential Regulator, as defined in section 1a(39) of the CEA, must meet margin requirements established by the applicable Prudential Regulator, and each CSE must comply with the Commission's regulations governing margin. With regard to the cross-border application of the swap provisions enacted by Title VII of the Dodd-Frank Act, section 2(i) of the CEA provides the Commission with express authority over activities outside the United States relating to swaps when certain conditions are met. Section 2(i) of the CEA provides that the CEA's provisions relating to swaps enacted by Title VII of the Dodd-Frank Act (including Commission rules and regulations promulgated thereunder) shall not apply to activities outside the United States unless those activities (1) have a direct and significant connection with activities in, or effect on, commerce of the United States or (2) contravene such rules or regulations as the Commission may prescribe or promulgate as are necessary or appropriate to prevent the evasion of any provision of Title VII.
As noted above, the Final Rule establishes margin requirements for uncleared swaps of CSEs, with substituted compliance available in certain circumstances, except as to a narrow class of uncleared swaps between a non-U.S. CSE and a non-U.S. counterparty that fall within the Exclusion. The Final Rule also establishes a procedural framework in which the Commission will consider permitting compliance with comparable margin requirements in a foreign jurisdiction to substitute for compliance with the Commission's margin requirements in certain circumstances. The Commission will consider whether the requirements of such foreign jurisdiction with respect to margin of uncleared swaps are comparable to the Commission's margin requirements.
Specifically, the Final Rule provides that a CSE that is eligible for substituted compliance may submit a request, individually or collectively, for a comparability determination.
In addition, the Commission expects the applicant, at a minimum, to describe how the foreign jurisdiction's margin requirements address each of the above-referenced elements, and identify the specific legal and regulatory provisions that correspond to each element (and, if necessary, whether the relevant foreign jurisdiction's margin requirements do not address a particular element). Further, the applicant must describe the objectives of the foreign jurisdiction's margin requirements, the ability of the relevant regulatory authority or authorities to supervise and enforce compliance with the foreign jurisdiction's margin requirements, including the powers of the foreign regulatory authority or authorities to supervise, investigate, and discipline entities for noncompliance with the margin requirements and the ongoing efforts of the regulatory authority or authorities to detect and deter violations of the margin requirements. Finally, the applicant must furnish copies of the foreign jurisdiction's margin requirements (including an English translation of any foreign language document) and any other information and documentation that the Commission deems appropriate.
In issuing a comparability determination, the Commission may impose any terms and conditions it deems appropriate. In addition, the Final Rule will provide that the Commission may, on its own initiative, further condition, modify, suspend, terminate, or otherwise restrict a comparability determination in the Commission's discretion. This could result, for example, from a situation where, after the Commission issues a comparability determination, the basis of that determination ceases to be true. In this regard, the Commission will require an applicant to notify the Commission of any material changes to information submitted in support of a comparability determination (including, but not limited to, changes in the foreign jurisdiction's supervisory or regulatory regime) as the Commission's comparability determination may no longer be valid.
The collection of information that is proposed by this rulemaking is necessary to implement section 4s(e) of the CEA, which mandates that the Commission adopt rules establishing minimum initial and variation margin requirements for CSEs on all swaps that are not cleared by a registered derivatives clearing organization, and section 2(i) of the CEA, which provides that the provisions of the CEA relating to swaps that were enacted by Title VII of the Dodd-Frank Act (including any rule prescribed or regulation promulgated thereunder) apply to activities outside the United States that have a direct and significant connection with activities in, or effect on, commerce of the United States. Further, the information collection is necessary for the Commission to determine whether the requirements of the foreign rules are comparable to the Commission's rules.
As noted above, any CSE who is eligible for substituted compliance may make a request for a comparability determination. Currently, there are approximately 106 swap entities provisionally registered with the Commission. The Commission further estimates that of the approximately 106 swap entities that are provisionally registered, approximately 54 are CSEs that are subject to the Commission's margin rules as they are not subject to a Prudential Regulator. The Commission notes that any foreign regulatory agency that has direct supervisory authority over one or more CSEs and that is responsible to administer the relevant foreign jurisdiction's margin requirements may also apply for a comparability determination. Further, once a comparability determination is made for a jurisdiction, it will apply for all entities or transactions in that jurisdiction to the extent provided in the determination, as approved by the Commission. The Commission estimates that it will receive requests for a comparability determination from 17 jurisdictions, consisting of the 16 jurisdictions within the G20, plus Switzerland, and that each request will impose an average of 10 burden hours.
Based upon the above, the estimated hour burden for collection is calculated as follows:
Section 23.160(e) of the Final Rule provides that, in certain foreign jurisdictions where inherent limitations in the legal or operational infrastructure of the jurisdiction make it impracticable for the CSE and its counterparty to post initial margin for the uncleared swap pursuant to custodial arrangements that comply with the Commission's margin rules, an FCS or a foreign branch of a U.S. CSE may be eligible to engage in uncleared swaps with certain non-U.S. counterparties without complying with the requirement to post initial margin, and without complying with the requirement to hold initial margin collected by the CSE with one or more custodians that are not the CSE, its counterparty, or an affiliate of the CSE or its counterparty, pursuant to section 23.157(b) of the Final Margin Rule,
Section 23.160(d) of the Final Rule includes a special provision for non-netting jurisdictions. This provision allows CSEs that cannot conclude after sufficient legal review with a well-founded basis that the netting agreement with a counterparty in a foreign jurisdiction meets the definition of an “eligible master netting agreement” set forth in the Final Margin Rule to nevertheless net uncleared swaps in determining the amount of margin that they post, provided that certain conditions are met. In order to avail itself of this special provision, the CSE must treat the uncleared swaps covered by the agreement on a gross basis in determining the amount of initial and variation margin that it must collect, but may net those uncleared swaps in determining the amount of initial and variation margin it must post to the counterparty, in accordance with the netting provisions of the Final Margin Rule. A CSE that enters into uncleared swaps in “non-netting” jurisdictions in reliance on this provision must have policies and procedures ensuring that it is in compliance with the special provision's requirements, and maintain books and records properly documenting that all of the requirements of this exception are satisfied.
As noted above, the Commission is publishing a separate notice in the
As discussed above, the Final Rule addresses the cross-border application of the Commission's margin requirements. Specifically, the Final Rule establishes certain key definitions (“U.S. person,” “guarantee,” and “Foreign Consolidated Subsidiary”); allows CSEs to rely on substituted compliance where appropriate; provides a limited Exclusion for certain transactions between non-U.S. persons; includes special provisions for “non-segregation jurisdictions”
In the sections that follow, the Commission discusses the costs and benefits associated with the Final Rule on CSEs and affected market participants and any reasonable alternatives.
The baseline against which the costs and benefits of this Final Rule are being compared is the status quo,
The Commission is mindful of the potentially significant tradeoffs inherent in the Final Rule. As discussed above, given the highly-interconnected, global swap market, overseas risk can quickly manifest in the United States. The cross-border application of the Commission's margin rules is therefore important to protecting the U.S. financial system from this risk. At the same time, competitive distortions and market inefficiencies can result—and the benefits of the Commission's cross-border framework could be reduced—if due consideration is not given to comity principles. The Commission considered these tradeoffs and worked to carefully tailor the cross-border approach in the Final Rule to address comity considerations, mitigate the potential for undue market distortions, and promote global coordination without compromising the safety and soundness of CSEs.
Although commenters generally did not comment on the cost-benefit discussion in the proposed rule itself,
The extent to which the Commission's margin requirements apply—and the availability of substituted compliance and the Exclusion—depends on whether the relevant swap involves a U.S. person, a guarantee by a U.S. person, or a Foreign Consolidated subsidiary. As discussed above, the Final Rule adopts definitions of “U.S. person,” “guarantee,” and “Foreign Consolidated Subsidiary” solely for purposes of the margin rules. The costs and benefits associated with these definitions, and any reasonable alternatives, are discussed below. In general, the Commission believes that the clear, objective nature of these terms, along with the ability to rely on related written counterparty representations, will promote legal certainty and help minimize the costs associated with applying the Final Rule.
As discussed in section II.A.1., the term “U.S. person” identifies individuals or entities whose activities have a significant nexus to the U.S. market by virtue of being organized or domiciled in the United States or the depth of their connection to the U.S. market, even if they are domiciled or organized outside the United States. The Final Rule generally follows a traditional, territorial approach to defining a U.S. person, and the Commission believes that this definition provides an objective and clear basis for determining those individuals or entities that should be identified as a U.S. person. Accordingly, the Commission does not believe market participants will face significant costs in assessing their own U.S. person status, particularly given the broad similarities between how the Final Rule defines “U.S. person” and how the term is defined in the SEC's rules. The Final Rule also makes clear that market participants may reasonably rely on counterparty representations regarding their U.S. person status absent indications to the contrary, which should further reduce any operational costs associated with assessing U.S. person status.
The Final Rule addresses many of the concerns commenters raised regarding the costs and benefits of its proposed approach to defining “U.S. person.” As discussed above, the Final Rule does not include a U.S. majority-owned prong, which commenters argued would create operational burdens for assessing U.S. person status and result in regulatory overlap. Nor does it include a catchall provision, limiting the Rule's application to a list of enumerated persons.
The Commission recognizes that, as commenters pointed out, legal entities that fall within the unlimited U.S. responsibility prong may also be subject to regulation under a foreign margin regime, creating the potential for overlapping requirements. However, as discussed in section II.A.1.c., the Commission believes that the unique nature of the relationship between the legal entity and its U.S. person owner(s) facilitates the legal entity's swap business and creates a significant nexus between the legal entity and U.S. financial markets. While the Commission understands that limiting application of the prong to circumstances where the U.S. persons are majority owners of the legal entity could mitigate the potential for overlapping requirements, as the Commission explained above, the U.S. person owner(s) responsibility for the legal entity's obligations and liabilities is unlimited regardless of the amount of equity it owns in the legal entity. Furthermore, excluding such legal entities from the scope of the U.S. person definition could create incentives for U.S. persons to establish such legal entities and use them as a pass-through for their own swap activities solely for purposes of avoiding the margin requirements of the Dodd-Frank Act.
The Commission also recognizes that further narrowing the differences between the Final Rule's U.S. person definition and either the SEC's definition or the “U.S. person” interpretation in the Guidance could provide certain benefits. Namely, market participants could enjoy reduced operational costs by relying on existing systems and U.S. person status
As explained in section II.A.2.c., under the Final Rule, the term “guarantee” is defined to include arrangements, pursuant to which one party to an uncleared swap has rights of recourse against a guarantor, with respect to its counterparty's obligations under the uncleared swap. The Final Rule further defines what it means for a party to have rights of recourse, and further encompasses any arrangement pursuant to which the guarantor itself has a conditional or unconditional legally enforceable right to receive or otherwise collect, in whole or in part, payments from any other guarantor with respect to the counterparty's obligations under the uncleared swap.
As commenters noted, limiting the scope of guarantees in the context of the margin requirements to arrangements that include a right of recourse offers the benefit of legal certainty, making the definition relatively easy to apply and helping keep down the cost of determining whether a transaction involves a U.S. Guaranteed CSE. Allowing market participants to rely on counterparty representations with regard to the presence of guarantees should also help market participants keep costs down. Although the Final Rule adopts a definition of guarantee that is different than the existing interpretation in the Guidance, which may result in market participants incurring additional costs to update their current systems, those operational challenges may be mitigated given that the definition is straight-forward and similar to that previously adopted by the SEC. In addition, while the inclusion of language that addresses indirect guarantees may result in some added operational challenges or assessment costs, the Commission believes the provision is necessary to avoid creating incentives for market participants to structure guarantee arrangements in order to avoid application of the Dodd-Frank margin requirements. The Final Rule also achieves substantial benefits in harmonizing with the guarantee definitions adopted by the Prudential Regulators.
The Commission recognizes that, as discussed in section II.B.2 and as pointed out by commenters, the definition of “guarantee” adopted in the Final Rule does not encompass all forms of financial arrangements or support that may result in a direct transfer of risk to the U.S. financial markets, such as keepwells and liquidity puts. Nor would it include instances in which a parent and a subsidiary entity are closely related and the parent faces strong reputational incentives to support the subsidiary. As discussed above, however, the Commission believes that, in the context of the Final Rule, non-U.S. CSEs benefitting from such other forms of U.S. financial support will likely meet the definition of an FCS and thus be adequately covered by the Commission's margin requirements. Given the further inclusion of language that addresses indirect guarantees and the mandate to coordinate with the Prudential Regulators, the Commission believes that a more limited “guarantee” definition is appropriate in the context of the cross-border application of the margin requirements and will not undermine the safety and soundness of CSEs or the U.S. financial markets.
As explained in section II.B.3, the Final Rule uses the term “Foreign Consolidated Subsidiary” to identify non-U.S. CSEs whose uncleared swaps raise substantial supervisory concern in the United States by virtue of their relationship with their U.S. ultimate parent entity and because their financial position, operating results, and statement of cash flows have a direct impact on the financial position, risk profile and market value of their U.S. ultimate parent entity. FCSs are not eligible for the Exclusion but are otherwise treated the same as any other non-U.S. CSEs whose obligations under the relevant swap are not guaranteed by a U.S. person.
As commenters noted, the Final Rule's use of a consolidation test that relies on U.S. GAAP to define “Foreign Consolidated Subsidiary” promotes legal certainty by articulating a clear, familiar, bright-line test. The Commission also took into account that the consolidation test is already being used in preparing financial statements, and as a result, should not result in more costs to market participants.
Section II.B describes the application of the Commission's margin rules to cross-border uncleared swaps between CSEs and their counterparties, including the availability of substituted compliance and the Exclusion. The Final Rule also includes special provisions for non-segregation
As described in section II.B.2.b and as set out in Table A, the extent to which substituted compliance is available under the Final Rule depends on whether the relevant swap involves a U.S. person, a guarantee by a U.S. person, or an FCS. U.S. CSEs and U.S. Guaranteed CSEs are eligible for substituted compliance only with respect to the requirement to post (but not the requirement to collect) initial margin, provided that their counterparty is a non-U.S. person (including a non-U.S. CSE) whose obligations under the swap are not guaranteed by a U.S. person.
The Commission recognizes that the decision to offer any substituted compliance in the first instance carries certain trade-offs. Given the global and highly-interconnected nature of the swap market, where risk does not respect national borders, market participants are likely to be subject to the regulatory interest of more than one jurisdiction. As commenters have pointed out, allowing compliance with foreign margin requirements as an alternative to domestic requirements can therefore reduce the application of duplicative or conflicting requirements, resulting in lower compliance costs and facilitating a more level playing field. Substituted compliance also helps preserve the benefits of an integrated, global swap market by fostering and advancing efforts among U.S. and foreign regulators to collaborate in establishing robust regulatory standards, as envisioned by the BCBS-IOSCO framework. If not properly implemented, however, the Commission's margin regime could lose some of its effectiveness. Accordingly, as commenters have recognized, the ultimate costs and benefits of substituted compliance are affected by the standard under which it is granted and the extent to which it is applied. The Commission was mindful of this dynamic in structuring a substituted compliance regime for the margin requirements and believes the Final Rule strikes an appropriate balance, enhancing market efficiency and fostering global coordination of margin requirements without compromising the safety and soundness of CSEs and the U.S. financial system.
The Commission also understands that, as commenters pointed out, by not offering substituted compliance equally to all CSEs, the Final Rule may lead to certain competitive disparities between CSEs and between CSEs and non-CFTC registered dealers. For example, to the extent that non-U.S. CSEs whose obligations are not guaranteed by a U.S. person can rely on substituted compliance that is not available to U.S. CSEs or U.S. Guaranteed CSEs, they may enjoy certain cost advantages (
Nevertheless, the Commission does not believe it is appropriate to make substituted compliance broadly available to all CSEs. As discussed above, the Commission has a strong supervisory interest in the uncleared swaps activity of all CSEs, including non-U.S. CSEs, by virtue of their registration with the Commission. Furthermore, U.S. CSEs and U.S. Guaranteed CSEs are particularly key swap market participants and their safety and soundness is critical to a well-functioning U.S. swap market and the stability of the U.S. financial system. Accordingly, in light of the Commission's supervisory interest in the activities of U.S. persons and its statutory obligation to ensure the safety and soundness of CSEs and the U.S. financial markets in the context of uncleared swaps, the Commission believes that substituted compliance is generally not appropriate for U.S. CSEs and U.S. Guaranteed CSEs given their importance to the U.S. financial markets.
As further discussed in section II.B.2.b.i., the Commission determined that partial substituted compliance is appropriate for U.S. CSEs and U.S. Guaranteed CSEs in the limited case of posting (but not collecting) initial margin. Contrary to commenters' assertions, the Commission does not believe that partial substituted compliance is impractical or will hinder the development of a standardized model for initial margin. As discussed above, the Commission does not expect a CSE to have two netting sets as a result of partial substituted compliance, given that the U.S. CSE is always required to collect initial margin according to the Commission's margin requirements while it has the option to post according to the Commission's or its counterparty's foreign margin requirements. If substituted compliance is elected, the U.S. CSE will be deemed to satisfy the Commission's margin requirements by meeting the foreign jurisdiction's margin requirements, which will result in one netting set. Furthermore, the Commission believes that permitting partial substituted compliance allows market participants to avoid some costs associated with complying with duplicative or conflicting requirements.
The Commission acknowledges that foreign branches may, for the reasons raised by commenters and discussed above, be at a competitive disadvantage compared to non-U.S. CSEs, with whom they may compete in the countries in which they are established, by virtue of not being eligible for substituted compliance. However, as discussed in section II.B.2.b.i., the swap activities of a foreign branch of a U.S. CSE are
Under the Final Rule, the Commission excludes from its margin requirements uncleared swaps entered into by a non-U.S. CSE with a non-U.S. counterparty (including a non-U.S. CSE), provided that neither counterparty's obligations under the relevant swap are guaranteed by a U.S. person and neither counterparty is an FCS nor a U.S. branch of a non-U.S. CSE. As discussed in section II.B.3.b above, the Commission believes that it is appropriate to tailor the application of margin requirements in the cross-border context, consistent with section 4s(e) of the CEA and comity principles, so as to exclude this narrow class of uncleared swaps involving a non-U.S. CSE and a non-U.S. counterparty.
The Commission believes that such non-U.S. CSEs may benefit from the Exclusion because it allows them to avoid duplicative or conflicting regulations where a transaction is subject to more than one uncleared swap margin regime. On the other hand, to the extent the Exclusion allows a non-U.S. CSE to rely on foreign margin requirements that are not comparable to the Commission's, the Exclusion could result in a less rigorous margin regime for such CSE or, in the extreme, the absence of any margin requirements. This would not only increase the risk posed by that CSE's swaps activities, but could create competitive disparities between non-U.S. CSEs relying on the Exclusion and other CSEs that are not eligible for the Exclusion. That is, the Exclusion could allow these non-U.S. CSEs to offer better pricing or other terms to their non-U.S. clients and put them in a better position (than CSEs ineligible for the Exclusion) to compete with non-CFTC registered dealers in the relevant foreign jurisdiction for foreign clients. The degree of competitive disparity will depend on the degree of disparity between the Commission's margin framework and that of the relevant foreign jurisdiction.
The Commission does not generally expect that the Exclusion will result in a significant diminution in the safety and soundness of the non-U.S. CSE, as discussed in section II.B.3.b above. This is based on several considerations. First, the Commission understands that most swaps are currently transacted in jurisdictions that have agreed to adhere to the BCBS-IOSCO framework, which covers financial entities.
Third, a non-U.S. CSE that can avail itself of the Exclusion will still be subject to the Commission's margin rules with respect to all uncleared swaps not meeting the criteria for the Exclusion, albeit with the possibility of substituted compliance. That the non-U.S. CSE will be subject to U.S. or comparable margin requirements when entering into a swap with U.S. counterparties reduces the possibility of a cascading event affecting U.S. counterparties and the U.S. financial markets more broadly as a result of a default by the non-U.S. CSE.
The unavailability of the Exclusion to FCSs could disadvantage them relative to other non-U.S. CSEs that are eligible for the Exclusion or non-CFTC registered dealers within a foreign jurisdiction. As commenters noted, non-U.S. CSEs that rely on the Exclusion or non-CFTC registered dealers could realize a cost advantage over FCSs and thus have the potential to offer better pricing terms to foreign clients. The competitive disparity between non-U.S. CSEs that rely on the Exclusion and FCSs, however, may be somewhat mitigated to the extent that the relevant foreign jurisdiction implements the BCBS-IOSCO framework.
As noted above in section II.B.3.a., some commenters suggested that treating U.S. branches of non-U.S. CSEs differently from the rest of the CSE with respect to eligibility for the Exclusion could present operational challenges, requiring non-U.S. CSEs to document transactions with the U.S. branch under a separate ISDA Master Agreement. However, as explained in section II.B.3.b., in most cases the Commission does not believe a separate credit support agreement will be necessary;
In order to effectuate the Commission's treatment of inter-affiliate swaps under the Final Margin Rule, the Exclusion is not available if the market-facing transaction of the non-U.S. CSE (that is otherwise eligible for the Exclusion) is not subject to comparable initial margin collection requirements in the home jurisdiction and any of the
The Final Rule includes a special provision for non-segregation jurisdictions, where custodial arrangements that comply with the Commission's requirements set out in Commission Regulation 23.157
The Commission understands from commenters that inherent legal and operational constraints in certain jurisdictions could make compliance with the custodial requirements of the Final Margin Rule impracticable. Accordingly, absent the exception, FCSs and foreign branches of U.S. CSEs would be unable to conduct uncleared swap business with clients based in such jurisdictions, contributing to further market inefficiencies. The Commission further agrees with commenters that an exception from the requirement to post (but not from the requirement to collect) initial margin when transacting with clients in non-segregation jurisdictions will accomplish the goal of ensuring a CSE's safety and soundness but with less disruption to existing business relationships than the exchange of initial and variation margin would impose.
After careful consideration, the Commission is adding a special provision so that FCSs and foreign branches of U.S. CSEs will not be foreclosed from engaging in uncleared swaps business in non-segregation jurisdictions, with appropriate conditions, including a 5 percent limitation, as discussed in section II.B.4.b above, to avoid compromising the safety and soundness of CSEs. The Commission does not believe a blanket de minimis exception from the Commission's margin requirements, as suggested by commenters, is appropriate. Rather, the Commission believes that carefully tailored relief from the Final Margin Rule's requirement to post initial margin and the custodial arrangement requirements that pertain to initial margin collected by a CSE will accomplish the goal of allowing FCSs and foreign branches of U.S. CSEs to carry on their swaps business in non-segregation jurisdictions without creating the risks that would attend wholesale exemption from margin requirements in these jurisdictions. In addition, in light of the importance of FCSs and foreign branches of U.S. CSEs to the U.S. financial system, the special provision includes certain conditions that are designed to appropriately limit the swap activities conducted by these CSEs in these jurisdictions in order to help ensure their safety and soundness. Although these conditions may place affected entities at a relative cost disadvantage when compared to non-U.S. CSEs that can rely on the Exclusion and non-CFTC registered dealers engaged in swaps activity in non-segregation jurisdictions, and may limit the overall swap dealing activity of affected entities in these jurisdictions, the Commission believes that the special provision provides a substantial benefit to the affected entities by allowing them to conduct a limited level of swaps business in non-segregation jurisdictions where they would otherwise be foreclosed. While permitting FCSs and foreign branches of U.S. CSEs to carry on their swaps business in non-segregation jurisdictions in accordance with this special provision is not without some risk, in that the initial margin collected by FCSs and foreign branches of U.S. CSEs in reliance on this provision is not subject to the custodial arrangement requirements of the Final Margin Rule, the Commission believes that the conditions to using this provision (including the 5 percent limit in each of four broad risk categories set forth in § 23.154(b)(2)(v)) should be sufficient to prevent undue risk arising from uncleared swaps by FCSs and foreign branches of U.S. CSEs relying on this provision.
The Final Rule also includes a special provision for “non-netting” jurisdictions.
As noted in section II.C above, any CSE eligible for substituted compliance may make a request for a comparability determination. Currently, there are approximately 106 swap entities provisionally registered with the Commission. The Commission further estimates that of the 106 swap entities that are registered, approximately 54 are subject to the Commission's margin rules, as they are not supervised by a Prudential Regulator. However, the Commission notes that any foreign regulatory agency that has direct supervisory authority to administer the foreign regulatory framework for margin of uncleared swaps in the requested foreign jurisdiction may apply for a comparability determination. Further, once a comparability determination is made for a jurisdiction, it will apply for all entities or transactions in that jurisdiction to the extent provided in the determination, as approved by the Commission.
Although there is uncertainty regarding the number of requests for comparability determinations that will be made under the Final Rule, the Commission estimates that it will receive applications for comparability determinations from 17 jurisdictions representing 61 separate registrants, and that each request will impose an average of 10 burden hours per registrant.
Based on the above, the Commission estimates that the preparation and filing of submission requests for comparability determinations should take no more than 170 hours annually in the aggregate (17 registrants × 10 hours). The Commission further estimates that the total aggregate cost of preparing such submission requests will be $64,600, based on an estimated cost of $380 per hour for an in-house attorney.
As summarized in section II.C.2, several commenters complained that the costs and burdens to market participants associated with the Commission's proposed framework and standard for making comparability determinations would be minimized if the Commission were to rely on the BCBS-IOSCO framework as the sole basis for its comparability analysis and take a “holistic” approach to determining comparability. As the Commission explained above, however, while the BCBS-IOSCO framework establishes minimum standards that are consistent with the objectives of the Commission's own margin requirements, consistency with International Standards is necessary but may not be sufficient to finding comparability.
Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders. Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considers the costs and benefits resulting from its discretionary determinations with respect to the section 15(a) factors.
As described above, CEA section 4s(e)(2)(A) requires the Commission to develop rules designed to ensure the safety and soundness of CSEs and the U.S. financial system. On the one hand, full application of the Commission's margin requirements to all uncleared swaps of CSEs would help to ensure the safety and soundness of CSEs and the U.S. financial system by reducing counterparty credit risk and the threat of contagion. On the other hand, extending substituted compliance to certain cross-border swaps reduces the potential for conflicting or duplicative requirements, which would, in turn, reduce market distortions and promote global harmonization. In addition, where exceptions have been permitted (
As discussed above, the Final Rule may have both a positive and negative effect on market efficiency and competitiveness. As an initial matter, substituted compliance and the Exclusion should improve resource allocation efficiency by allowing market participants to avoid potentially duplicative or conflicting requirements, reducing the aggregate cost to the market of dealing uncleared swaps. By granting this relief to some CSEs and not others, however, the Final Rule may afford such CSEs a cost advantage compared to other CSEs that may be required to comply with potentially duplicative or conflicting requirements. Non-U.S. counterparties may also be incentivized to transact with CSEs that are eligible for substituted compliance in order to avoid complying with more than one margin regime (or the Commission's margin regime alone), which could contribute to market inefficiencies. In addition, as the Exclusion is not provided to all CSEs, those that are not permitted to use the Exclusion may be at a competitive disadvantage when competing in foreign jurisdictions that do not have comparable margin rules. The Commission notes, however, that to the extent that non-U.S. CSEs are domiciled in jurisdictions with comparable requirements, this may mitigate possible regulatory arbitrage by these CSEs.
At the same time, however, the Commission understands that if it did not provide special accommodations for certain CSEs to enter into certain markets, such CSEs would be disadvantaged and even prohibited from engaging in swaps in these jurisdictions.
Furthermore, the Commission believes that the Final Rule ensures that substituted compliance and the Exclusion are extended in a tailored fashion that is consistent with protecting the integrity of the swaps market. Substituted compliance is only provided in the event that the relevant foreign jurisdiction has a comparable margin rule; if not, the CSE must comply with the Commission's margin rule. Even in instances where the Exclusion is available, the Commission notes that: (1) The Final Margin Rule will cover many of the swaps of the non-U.S. CSEs (eligible for the Exclusion) with other counterparties, namely, all U.S. counterparties; (2) the Exclusion is limited to a narrow set of swaps by non-U.S. CSEs; and (3) the excluded swaps may be covered by another foreign regulator's margin rule that is based on the BCBS-IOSCO framework.
The Commission generally believes that substituted compliance, by reducing the potential for duplicative or conflicting regulations, could reduce impediments to transact uncleared swaps on a cross-border basis. This, in turn, may enhance liquidity as more market participants may be willing to enter into uncleared swaps, thereby possibly improving price discovery—and ultimately reducing market fragmentation. Alternatively, if substituted compliance or the Exclusion were not made available, CSEs could be incentivized to consider setting up their swap operations outside the Commission's jurisdiction, and as a result, increase the potential for market fragmentation. Additionally, exceptions for non-segregation and non-netting jurisdictions could increase price discovery in such jurisdictions by opening such markets to CSEs where, by virtue of the application of the Commission's margin requirements, such CSEs would otherwise be unable to deal uncleared swaps.
The Commission believes that the Final Rule is consistent with sound risk management practices. The Final Margin Rule promotes sound risk management practices, and this Final Rule requires U.S. CSEs and U.S. Guaranteed CSEs to apply that rule in its entirety for most cross-border transactions. To the extent substituted compliance is available in limited fashion to these entities and more broadly to non-U.S. CSEs, the foreign margin requirements must be comparable to the Commission's in outcome and objectives. That should ensure that margin's critical risk management function is unaffected. Although the Exclusion could potentially lead to weaker risk management for eligible non-U.S. CSEs to the extent that they are not otherwise subject to comparable foreign margin requirements, the Commission notes that in jurisdictions that are BCBS-IOSCO compliant, such CSEs will be subject to margin requirements that satisfy the minimum International Standards established by the BCBS-IOSCO framework.
The Commission has not identified any additional public interest considerations related to the costs and benefits of the Final Rule.
Swaps, Swap dealers, Major swap participants, Capital and margin requirements.
For the reasons discussed in the preamble, the Commodity Futures Trading Commission amends 17 CFR part 23 as set forth below:
7 U.S.C. 1a, 2, 6, 6a, 6b, 6b-1, 6c, 6p, 6r, 6s, 6t, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21.
Section 23.160 also issued under 7 U.S.C. 2(i); Sec. 721(b), Pub. L. 111-203, 124 Stat. 1641 (2010).
(a)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(i) A natural person who is a resident of the United States;
(ii) An estate of a decedent who was a resident of the United States at the time of death;
(iii) A corporation, partnership, limited liability company, business or other trust, association, joint-stock company, fund or any form of entity similar to any of the foregoing (other than an entity described in paragraph (a)(10)(iv) or (v) of this section) (a “legal entity”), in each case that is organized or incorporated under the laws of the United States or that has its principal place of business in the United States, including any branch of such legal entity;
(iv) A pension plan for the employees, officers or principals of a legal entity described in paragraph (a)(10)(iii) of this section, unless the pension plan is primarily for foreign employees of such entity;
(v) A trust governed by the laws of a state or other jurisdiction in the United States, if a court within the United States is able to exercise primary supervision over the administration of the trust;
(vi) A legal entity (other than a limited liability company, limited liability partnership or similar entity where all of the owners of the entity have limited liability) that is owned by one or more persons described in paragraphs (a)(10)(i) through (v) of this section and for which such person(s) bears unlimited responsibility for the obligations and liabilities of the legal entity, including any branch of the legal entity; or
(vii) An individual account or joint account (discretionary or not) where the beneficial owner (or one of the beneficial owners in the case of a joint account) is a person described in paragraphs (a)(10)(i) through (vi) of this section.
(b)
(1)
(ii)
(A) The counterparty is neither a U.S. person nor a non-U.S. person whose obligations under the relevant swap are guaranteed by a U.S. person;
(B) The counterparty is subject to such foreign jurisdiction's margin requirements; and
(C) The Commission has issued a comparability determination under paragraph (c) of this section (“Comparability Determination”) with respect to such foreign jurisdiction's requirements regarding the posting of initial margin by the covered swap entity (that is covered in paragraph (b)(1) of this section).
(2)
(ii)
(
(
(
(
(B) Notwithstanding paragraph (b)(2)(ii)(A) of this section, any uncleared swap of a non-U.S. CSE that meets the conditions for the Exclusion set forth in paragraph (b)(2)(ii)(A) must nevertheless comply with §§ 23.150 through 23.161 if:
(
(
(iii)
(iv)
(A) The non-U.S. CSE (whose obligations under the relevant swap are not guaranteed by a U.S. person) is subject to the foreign jurisdiction's regulatory requirements; and
(B) The Commission has issued a Comparability Determination with respect to such foreign jurisdiction's margin requirements.
(c)
(i) A covered swap entity that is eligible for substituted compliance under this section; or
(ii) A foreign regulatory authority that has direct supervisory authority over one or more covered swap entities and that is responsible for administering the relevant foreign jurisdiction's margin requirements.
(2)
(i) A description of the objectives of the relevant foreign jurisdiction's margin requirements;
(ii) A description of how the relevant foreign jurisdiction's margin requirements address, at minimum, each of the following elements of the Commission's margin requirements. Such description should identify the specific legal and regulatory provisions that correspond to each element and, if necessary, whether the relevant foreign jurisdiction's margin requirements do not address a particular element:
(A) The products subject to the foreign jurisdiction's margin requirements;
(B) The entities subject to the foreign jurisdiction's margin requirements;
(C) The treatment of inter-affiliate derivative transactions;
(D) The methodologies for calculating the amounts of initial and variation margin;
(E) The process and standards for approving models for calculating initial and variation margin models;
(F) The timing and manner in which initial and variation margin must be collected and/or paid;
(G) Any threshold levels or amounts;
(H) Risk management controls for the calculation of initial and variation margin;
(I) Eligible collateral for initial and variation margin;
(J) The requirements of custodial arrangements, including segregation of margin and rehypothecation;
(K) Margin documentation requirements; and
(L) The cross-border application of the foreign jurisdiction's margin regime.
(iii) A description of the differences between the relevant foreign jurisdiction's margin requirements and the International Standards;
(iv) A description of the ability of the relevant foreign regulatory authority or authorities to supervise and enforce compliance with the relevant foreign jurisdiction's margin requirements. Such description should discuss the powers of the foreign regulatory authority or authorities to supervise, investigate, and discipline entities for compliance with the margin requirements and the ongoing efforts of the regulatory authority or authorities to detect and deter violations of, and ensure compliance with, the margin requirements; and
(v) Copies of the foreign jurisdiction's margin requirements (including an English translation of any foreign language document);
(vi) Any other information and documentation that the Commission deems appropriate.
(3)
(i) The scope and objectives of the relevant foreign jurisdiction's margin requirements;
(ii) Whether the relevant foreign jurisdiction's margin requirements achieve comparable outcomes to the Commission's corresponding margin requirements;
(iii) The ability of the relevant regulatory authority or authorities to
(iv) Any other facts and circumstances the Commission deems relevant.
(4)
(5)
(6)
(7)
(d)
(e)
(1) Inherent limitations in the legal or operational infrastructure in the applicable foreign jurisdiction make it impracticable for the CSE and its counterparty to post any form of eligible initial margin collateral recognized pursuant to § 23.156 in compliance with the custodial arrangement requirements of § 23.157;
(2) The CSE is subject to foreign regulatory restrictions that require the CSE to transact in uncleared swaps with the counterparty through an establishment within the foreign jurisdiction and do not accommodate the posting of collateral for the uncleared swap in compliance with the custodial arrangements of § 23.157 in the United States or a jurisdiction for which the Commission has issued a comparability determination under paragraph (c) of this section with respect to § 23.157;
(3) The counterparty to the uncleared swap is a non-U.S. person that is not a CSE, and the counterparty's obligations under the uncleared swap are not guaranteed by a U.S. person;
(4) The CSE collects initial margin for the uncleared swap in accordance with § 23.152(a) in the form of cash pursuant to § 23.156(a)(1)(i), and posts and collects variation margin in accordance with § 23.153(a) in the form of cash pursuant to § 23.156(a)(1)(i);
(5) For each broad risk category, as set out in § 23.154(b)(2)(v), the total outstanding notional value of all uncleared swaps in that broad risk category, as to which the CSE is relying on this paragraph (e), may not exceed 5% of the CSE's total outstanding notional value for all uncleared swaps in the same broad risk category;
(6) The CSE has policies and procedures ensuring that it is in compliance with the requirements of this paragraph (e); and
(7) The CSE maintains books and records properly documenting that all of the requirements of this paragraph (e) are satisfied.
The following table and appendices will not appear in the Code of Federal Regulations.
The following table should be read in conjunction with the rest of the preamble and the text of the Final Rule, as well as the footnotes at the end of the table.
On this matter, Chairman Massad and Commissioner Bowen voted in the affirmative. Commissioner Giancarlo voted in the negative.
I am pleased that today, the Commission has adopted a cross-border approach to our rule setting margin for uncleared swaps.
Our margin rule is one of the most important elements of swaps market regulation set forth in the Dodd-Frank Act. Margin requirements help ensure that uncleared swaps, which will always remain a sizable portion of the market, do not generate excessive uncollateralized risk. Last December, the Commission adopted a strong and sensible margin rule. It requires swap dealers and major swap participants to post and collect margin in their transactions with one another, and with financial entities with which they have significant exposures.
The risks our margin rule seeks to prevent do not only originate in the United States. The interconnected nature of the global swaps market means that risks created across the globe have the potential to flow back into the United States. We recognize that having a global swaps market is beneficial to all users. Therefore, one of the most important objectives we already accomplished was to ensure our margin rule is substantially similar to comparable international rules. Harmonization is critical to creating a sound international framework for regulation.
We also recognize that not all jurisdictions will adopt strong margin rules. And even where rules are substantially harmonized, there will still be some differences. Because cross-border transactions are commonplace, we must clarify which rules apply in different situations. Today, the Commission has acted to provide that clarification.
First, we have drawn a clear, reasonable line as to when the CFTC should take offshore risk into account. Today's action ensures that our rule, or a comparable international measure, applies to swap dealers that are foreign consolidated subsidiaries of a U.S. parent. This helps address the risk that can flow back into the United States from that offshore activity, even when the subsidiary is not explicitly guaranteed by the U.S. parent. This treatment of foreign consolidated subsidiaries—and our general cross-border approach—is also consistent with the approach taken by the U.S. prudential regulators.
At the same time, to further our efforts toward harmonization, and to avoid conflicts with the rules of other jurisdictions, we have provided for a broad scope of substituted compliance. Not only will non-U.S. swap dealers be eligible for substituted compliance, so will U.S. swap dealers with respect to the margin they post to non-U.S. persons. This approach is an appropriate response to the complex world created by the swap industry, where global swap dealers can book a swap in a variety of ways. Dealers may book swaps through different subsidiaries, branches or affiliates all over the world, and they may do so based on a number of considerations, such as the most favorable legal treatment. Our approach is intended to protect our markets against risk coming from these cross-border transactions, while taking into account the interests of other regulators.
The process for conducting a comparability assessment of another jurisdiction's rules is similar to what we have done in other areas. The rule specifies the various factors that should be considered, and indeed there is no reasonable way one can make a determination without evaluating those factors. One important consideration will be compliance with the international framework developed by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions. Our approach will look at the elements of each jurisdiction's rule set with an eye towards a flexible, outcome-based determination. The process of making comparability assessments can take time. In light of the impending September 1 compliance date, I have asked the CFTC staff to work closely with other domestic and international regulators, as well as industry participants, and endeavor to effect a smooth transition.
The approach we have finalized today helps ensure the safety and soundness of registered swap dealers, and reduces the potential for conflict with the rules of other international regulators. I thank all those who provided us with important feedback on these issues. I also thank CFTC staff for their work on this rule, and my fellow Commissioners for their careful consideration of this measure.
Margin and capital are two of the most important tools for risk mitigation for the derivatives markets. Thus it is very important that we get our rules on margin and capital right in order to accomplish the reform required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Today we vote on a critical supplement to that margin rule. Specifically, today's rule would allow registered dealers to substitute the margin rules of comparable jurisdictions for our rules, when dealing with non-US counterparties, under certain conditions. Needless to say, cross-border regulation is central to our margin rule functioning effectively since our markets are global.
I intend to vote yes for this cross-border rule because I want to give the market legal certainty, as the first compliance date for our margin rules, as well as those of regulators across jurisdictions—September 1, 2016—looms.
One of the major drawbacks of our margin rulemaking is that it was not done in conjunction with our capital rulemaking. Margin and capital are intertwined—if our margin rule is weak, our capital rule needs to be stronger to compensate. If both are strong, investors and consumers can be confident that we have learned the lessons of the past, and have placed adequate protections in place against future financial instability. But, if both are weak, we have surrendered our best defenses against contagion. We put the interests of our investors at risk when we view regulation in a piecemeal and non-comprehensive fashion, because we are not seeing the whole picture. So, as I vote today on cross-border margin, my mind is on our upcoming capital rule proposal.
Any firm that aspires to be a swap dealer is aspiring to be a significant player in our economy. They must have the capacity to not only stand ready to be the buyer to each seller and the seller to each buyer, but to maintain those positions over years. Their creditworthiness must be above reproach. In that way, market participants,
In order to create a capital rule that appropriately manages risk for the American people and our critical economy, our capital rule proposal must:
(1)
(2)
(3)
(4)
(5)
Experience has taught us that comprehensive, well-considered review is critical when considering major regulations. Ten years ago, too many people in industry did not engage in such well-considered review when crafting complicated financial deals. In the end, that lack of consideration came back to haunt us all when the mortgage bubble burst and unexpectedly exposed many large financial institutions to massive losses that threatened the entire financial system. In the end, the American public had to save the system at great expense, and the ensuing rescue left many angry, alienated, and disaffected. Today, nearly eight years later, that anger still exists. We all pay a great price when we move forward in finance with insufficient analysis and review.
Thus, for the sake of market certainty, I am voting yes to this rule. But I encourage my fellow Commissioners to work with me to develop a strong, comprehensive capital rule so that the American people can have the appropriate safeguards to secure our economy. Thank you.
I respectfully dissent from the final rule on the cross-border application of margin requirements for uncleared swaps.
In September 2009, the leaders of the G-20 countries agreed to launch a framework for “strong, sustainable and balanced global growth” to generate “a durable recovery that creates the good jobs our people need.”
In keeping with that agreement, representatives of more than 20 regulatory authorities, including the CFTC, participated in consultations with the Basel Committee on Banking Supervision (“BCBS”) and the Board of the International Organization of Securities Commissions (“IOSCO”) to develop an international framework setting margin standards for uncleared derivatives (“BCBS-IOSCO framework”).
Today, instead of recognizing and building upon the strong foundation for mutual recognition of foreign regulatory regimes created by the G-20 commitments and the BCBS-IOSCO framework, as well as the CFTC's own history of using a principles-based, holistic approach to comparability determinations,
First, the rule establishes a complicated matrix of potential cross-border counterparties under which substituted compliance is either not permitted, is partially permitted, or is fully permitted, depending upon the category in which the particular transaction fits. Next, where permitted, the CFTC will conduct an “element-by-element” analysis of CFTC and foreign margin rules under which a transaction may be subject to a patchwork of U.S. and foreign regulation.
In response to commenters who observed that today's approach will undermine the BCBS-IOSCO framework, the Commission acknowledges that consistency with the framework is necessary, but argues that the framework leaves certain elements open to interpretation by each regulator, including the CFTC.
In effect, the Commission's approach is somewhat principles-based, except when it is rules-based and somewhat objective, except when it is subjective.
Today's muddled methodology invites foreign regulators to respond in kind. It may well set us off down the same protracted, circuitous and uncertain path that the CFTC and the European Union took in the context of U.S. central counterparty clearinghouse equivalence. The approach is impractical, unnecessary and contrary to the cooperative spirit of the 2009 G-20 Pittsburgh Accords.
Rather than conducting a granular rule-by-rule comparison, the CFTC should focus on whether a foreign regulator's margin regime, in the aggregate, provides a sufficient level of risk mitigation in connection with the execution of uncleared swaps. The BCBS-IOSCO framework does just that. Compliance with it should be straightforward and unconditional to prevent the “fragmentation of markets, protectionism, and regulatory arbitrage” that global regulators were charged to avoid.
As confusing as this rule is, what is important is not that hard to understand. American workers need quality American jobs. They need them in factories, farms and offices across the United States. The businesses that employ them want to sell their goods and services both here and abroad. To succeed globally, American businesses need U.S.-based financial institutions to support them around the world with competitively priced risk management services.
Unfortunately, this complicated rule will make it harder for U.S. financial institutions to compete globally and serve American businesses. When businesses are placed at a competitive disadvantage, they hire fewer workers. With over 94 million Americans now out of the workforce,
Commodity Futures Trading Commission.
Notice.
The Commodity Futures Trading Commission (“Commission” or “CFTC”) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (“PRA”), Federal agencies are required to publish notice in the
Comments must be submitted on or before August 1, 2016.
You may submit comments, identified by “Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants; Comparability Determinations with Margin Requirements,” and “OMB Control No. 3038-0111,” by any of the following methods:
• The Agency's Web site, at
•
•
•
Please submit your comments using only one method.
All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
Laura B. Badian, Assistant General Counsel, (202) 418-5969,
Under the PRA, Federal agencies must obtain approval from the Office of Management and Budget (“OMB”) for each collection of information they conduct or sponsor. “Collection of Information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day notice in the
Concurrently with this notice, the Commission published a Final Rule that establishes margin requirements for uncleared swaps of CSEs (with substituted compliance available in certain circumstances), except as to a narrow class of uncleared swaps between a non-U.S. CSE and a non-U.S. counterparty that fall within a limited exclusion (the “Exclusion”). As described below, the adopting release for the Final Rule contained a collection of information regarding requests for comparability determinations, which was previously included in the proposing release, and for which the Office of Management and Budget (“OMB”) assigned OMB control number 3038-0111, titled “Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants; Comparability Determinations with Margin Requirements.” In addition, the adopting release included two additional information collections regarding non-segregation jurisdictions
Section 23.160(d) of the Final Rule includes a special provision for non-netting jurisdictions. This provision allows CSEs that cannot conclude after sufficient legal review with a well-founded basis that the netting agreement with a counterparty in a foreign jurisdiction meets the definition of an “eligible master netting agreement” set forth in the Final Margin Rule to nevertheless net uncleared swaps in determining the amount of margin that they post, provided that certain conditions are met.
Section 23.160(e) of the Final Rule includes a special provision for non-segregation jurisdictions that allows non-U.S. CSEs that are Foreign Consolidated Subsidiaries (as defined in the Final Rule) and foreign branches of U.S. CSEs to engage in swaps in foreign jurisdictions where inherent limitations in the legal or operational infrastructure make it impracticable for the CSE and its counterparty to post collateral in compliance with the custodial arrangement requirements of the Commission's margin rules, subject to certain conditions. In order to rely on this special provision, a Foreign Consolidated Subsidiary or foreign branch of a U.S. CSE is required to satisfy all of the conditions of the rule, including that (1) inherent limitations in the legal or operational infrastructure of the foreign jurisdiction make it impracticable for the CSE and its counterparty to post any form of eligible initial margin collateral for the uncleared swap pursuant to custodial arrangements that comply with the Commission's margin rules; (2) foreign regulatory restrictions require the CSE to transact in uncleared swaps with the counterparty through an establishment within the foreign jurisdiction and do not permit the posting of collateral for the swap in compliance with the custodial arrangements of section 23.157 of the Final Margin Rule in the United States or a jurisdiction for which the Commission has issued a comparability determination under the Final Rule with respect to section 23.157; (3) the CSE's counterparty is not a U.S. person and is not a CSE, and the counterparty's obligations under the uncleared swap are not guaranteed by a U.S. person;
With respect to each new collection of information, the CFTC invites comments on:
• Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;
• The accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
• Ways to enhance the quality, usefulness, and clarity of the information to be collected; and
• Ways to minimize the burden of collection of information on those who are to respond, including through the use of appropriate automated electronic, mechanical, or other technological collection techniques or other forms of information technology;
You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from
There are no capital costs or operating and maintenance costs associated with this collection.
44 U.S.C. 3501
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration |